UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2008

OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto.

Commission File Number0-50272

SALOMON SMITH BARNEY AAA ENERGY FUND L.P. II(Exact name of registrant as specified in its charter)


New York


03-0407557(State or other jurisdiction of


(I.R.S. Employerincorporation or organization)


Identification No.)


c/o Citigroup Managed Futures LLC
731 Lexington Avenue – 25th Fl.
New York, New York 10022(Address of principal executive offices) (Zip Code)


(212) 559-2011(Registrant’s telephone number, including area code)


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

YesXNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filerAccelerated filerNon-accelerated filerXSmaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YesNoX

As of April 30, 2008, 136,243.1393 Limited Partnership Redeemable Units were outstanding.

---



Salomon Smith Barney AAA Energy Fund L.P. II

Form 10-Q

Index

Page
NumberPART I - Financial Information:Item 1.


Financial Statements:Statements of Financial Condition at March 31, 2008 (unaudited) and December 31, 2007


3Statements of Income and Expenses and Partners’ Capital for the three months ended March 31, 2008 and 2007 (unaudited)


4Statements of Cash Flows for the three months ended March 31, 2008 and 2007 (unaudited)


5Notes to Financial Statements, including the Financial Statements of SB AAA Master Fund LLC (unaudited)


6 – 17Item 2.


Management’s Discussion and Analysis of Financial Condition and Results of Operations


18 – 22Item 3.


Quantitative and Qualitative Disclosures about Market Risk


23Item 4T.


Controls and Procedures


24PART II - Other Information


25 – 26


2

---



PART I

Item 1. Financial Statements

Salomon Smith Barney AAA Energy Fund L.P. II
Statements of Financial Condition

March 31,
2008


December 31,
2007(Unaudited)Assets:Investment in Master, at fair value



$
437,870,013




$
455,299,772Cash




156,981





133,462Distribution receivable




195,208





619,873Total assets



$
438,222,202




$
456,053,107Liabilities and Partners’ Capital:Liabilities:Accrued expenses:Brokerage commissions



$
1,814,018




$
1,572,916Management fees




727,178





757,271Administrative fees




181,795





189,318Other




101,204





117,888Redemptions payable




13,290,202





8,505,903Total liabilities




16,114,397





11,143,296Partners’ Capital:General Partner, 2,051.6401 Unit Equivalents outstanding in 2008 and 2007, respectively




5,999,119





5,853,001Special Limited Partner, 1,049.5068 and 225.0562 Redeemable Units of Limited Partnership Interest outstanding in 2008 and 2007, respectively




3,068,821





642,049Limited Partners, 141,255.7440 and 153,676.4513 Redeemable Units of Limited Partnership Interest outstanding in 2008 and 2007, respectively




413,039,865





438,414,761Total partners’ capital




422,107,805





444,909,811Total liabilities and partners’ capital



$
438,222,202




$
456,053,107


See accompanying notes to financial statements.

3

---



Salomon Smith Barney AAA Energy Fund L.P. II
Statements of Income and Expenses and Partners’ Capital
(Unaudited)

Three Months Ended
March 31,2008


2007Income:Net realized losses on closed positions allocated from Master



$
(25,648,642
)



$
(9,140,348
)Change in net unrealized gains on open positions allocated from Master




42,626,788





6,682,378Interest income allocated from Master




1,132,614





3,978,445Expenses allocated from Master




(386,905
)




(469,581
)Total income




17,723,855





1,050,894Expenses:Brokerage commissions




1,732,694





1,532,261Management fees




2,216,543





2,393,591Administrative fees




554,136





598,398Other




85,500





50,404Total expenses




4,588,873





4,574,654Net income (loss) before allocation to Special Limited Partner




13,134,982





(3,523,760
)Allocation to Special Limited Partner




(2,410,743
)




—Net income (loss) after allocation to Special Limited Partner




10,724,239





(3,523,760
)Additions – Limited Partners




3,980,000





—Additions – Special Limited Partner




2,410,743





—Redemptions – Limited Partners




(39,916,988
)




(26,331,080
)Redemptions – General Partner




—





(1,161,472
)Net decrease in Partners’ Capital




(22,802,006
)




(31,016,312
)Partners’ Capital, beginning of period




444,909,811





502,540,082Partners’ Capital, end of period



$
422,107,805




$
471,523,770Net Asset Value per Unit (144,356.8909 and 182,542.0539 Units outstanding at March 31, 2008 and 2007, respectively)



$
2,924.06




$
2,583.10Net income (loss) per Redeemable Unit of Limited Partnership Interest and General Partner Unit Equivalent



$
71.22




$
(14.41
)


See accompanying notes to financial statements.

4

---



Salomon Smith Barney AAA Energy Fund L.P. II
Statements of Cash Flows
(Unaudited)

Three Months Ended
March 31,2008


2007Cash flows from operating activities:Net income (loss) after allocation to Special Limited Partner



$
10,724,239




$
(3,523,760
)Adjustments to reconcile net income (loss) after allocation to Special Limited Partner to net cash provided by operating activities:Changes in operating assets and liabilities:Purchase of investment in Master




(4,622,049
)




(18,782,467
)Proceeds from sale of investment in Master




40,200,328





49,120,284Net change in unrealized appreciation on investment in Master




(18,148,520
)




(1,050,894
)(Increase) decrease in distribution receivable




424,665





—Accrued expenses:Increase (decrease) in brokerage commissions




241,102





(169,423
)Increase (decrease) in management fees




(30,093
)




(48,477
)Increase (decrease) in administrative fees




(7,523
)




(12,119
)Increase (decrease) in other




(16,684
)




30,370Net cash provided by operating activities




28,765,465





25,563,514Cash flows from financing activities:Proceeds from additions – Limited Partners




3,980,000





—Allocation of units – Special Limited Partner




2,410,743





—Payments for redemptions – Limited Partners




(35,132,689
)




(24,340,854
)Payments for redemptions – General Partner




—





(1,161,472
)Net cash used in financing activities




(28,741,946
)




(25,502,326
)Net change in cash




23,519





61,188Cash, at beginning of period




133,462





27,128Cash, at end of period



$
156,981




$
88,316Non-cash financing activities:Change in redemptions payable



$
4,784,299




$
—


See accompanying notes to financial statements.

5

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

1.    General:

Salomon Smith Barney AAA Energy Fund L.P. II (the ‘‘Partnership’’) is a Limited Partnership organized on March 25, 2002 under the partnership laws of the State of New York to engage, directly or indirectly, in the speculative trading of a diversified portfolio of commodity interests, including commodity options and commodity futures contracts on United States exchanges and certain foreign exchanges. The Partnership may trade commodity futures and options contracts of any kind. In addition, the Partnership may enter into swap contracts on energy-related products. During the initial offering period (May 31, 2002 through July 1, 2002), the Partnership sold 93,975 Redeemable Units of Limited Partnership Interest (‘‘Redeemable Units’’). The Partnership commenced trading on July 1, 2002.

Citigroup Managed Futures LLC (‘‘CMF’’), a Delaware Limited Liability Company, acts as the general partner (the ‘‘General Partner’’) of the Partnership. The Partnership’s commodity broker is Citigroup Global Markets Inc. (‘‘CGM’’). CGM is an affiliate of the General Partner. The General Partner is wholly owned by Citigroup Global Markets Holdings Inc. (‘‘CGMHI’’), which is the sole owner of CGM. CGMHI is a wholly owned subsidiary of Citigroup Inc.

On July 1, 2002, the Partnership allocated substantially all of its capital to SB AAA Master Fund LLC, a New York Limited Liability Company (the ‘‘Master’’). The Partnership purchased 64,945.0387 Units of the Master with a fair value of $94,925,000. The Master was formed in order to permit commodity pools managed now or in the future by AAA Capital Management Advisors, Ltd. (successor to AAA Capital Management, Inc.) (the ‘‘Advisor’’) using the Energy Program – Futures and Swaps, the Advisor’s proprietary trading program, to invest together in one trading vehicle. In addition, the Advisor is a Special Limited Partner of the Partnership. Individual and pooled accounts currently managed by the Advisor, including the Partnership, are permitted to be non-managing members of the Master. The General Partner and the Advisor believe that trading through this master/feeder structure should promote efficiency and economy in the trading process. Expenses to investors as a result of the investment in the Master are approximately the same and redemption rights are not affected. The Master’s commodity broker is CGM and its managing member is CMF. The Master may trade commodity futures and options contracts of any kind, but trades solely energy, energy-related products and grains. In addition, the Master may enter into swap contracts or trade in energy-related products. The commodity interests that are traded by the Master are volatile and involve a high degree of market risk.

As of March 31, 2008, the Partnership owned approximately 44.0% of the Master. On December 31, 2007, the Partnership owned 45.6% of the Master. It is the Partnership’s intention to continue to invest substantially all of its assets in the Master. The performance of the Partnership is directly affected by the performance of the Master. The Master’s Statements of Financial Condition, including Schedules of Investments, Statements of Income and Expenses and Members’ Capital and Statements of Cash Flows are included herein.

The accompanying financial statements are unaudited but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Partnership’s financial condition at March 31, 2008 and December 31, 2007 and the results of its operations and cash flows for the three months ended March 31, 2008 and 2007. These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. You should read these financial statements together with the financial statements and notes included in the Partnership’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the ‘‘SEC’’) for the year ended December 31, 2007.

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

6

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

The Master’s Statements of Financial Condition and Schedules of Investments as of March 31, 2008 and December 31, 2007 and Statements of Income and Expenses and Members’ Capital and Statements of Cash Flows for the three months ended March 31, 2008 and 2007 are presented below:

SB AAA Master Fund LLC
Statements of Financial Condition

March 31,
2008


December 31,
2007(Unaudited)Assets:Equity in commodity futures trading account:Cash (restricted $1,620,046 in 2008 and 2007, respectively)



$
580,826,739




$
710,357,437Unrealized appreciation on open swaps contracts




128,022,022





92,444,714Commodity options owned, at fair value (cost $485,167,409 and $359,627,764, respectively)




740,778,588





349,972,9591,449,627,349





1,152,775,110Due from brokers




967,324





5,911,586Interest receivable




467,606





1,444,226Total assets



$
1,451,062,279




$
1,160,130,922Liabilities and Members’ Capital:Liabilities:Net unrealized depreciation on open futures contracts



$
90,412,840




$
42,694,277Unrealized depreciation on open swap contracts




16,159,459





15,443,679Commodity options written, at fair value (premium $260,958,041 and $163,294,959, respectively)




345,803,202





91,112,724Accrued expenses:Other




164,614





94,011Due to brokers




2,101,520





5,772,030Distribution payable




464,267





1,438,406Redemptions payable




—





4,122,259Total liabilities




455,105,902





160,677,386Members’ Capital:Members’ Capital, 177,190.0556 and 184,668.8591 Units outstanding in 2008 and 2007, respectively




995,956,377





999,453,536Total liabilities and members’ capital



$
1,451,062,279




$
1,160,130,922


7

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

SB AAA Master Fund LLC
Schedule of Investments
March 31, 2008
(Unaudited)

Number of
Contracts


Fair Value


% of Members’
CapitalFutures Contracts PurchasedEnergyNYMEX Natural Gas May 08 - Oct 12




9,571




$
77,714,242





7.80
%Other










197,077,924





19.79Total Futures Contracts Purchased










274,792,166





27.59Futures Contracts SoldEnergyIPE Brent Crude Oil May 08 - Dec 10




(5,200
)




(77,354,404
)




(7.77
)NYMEX Natural Gas Jun 08 - Dec 13




(12,888
)




(146,721,932
)




(14.73
)Other










(140,293,920
)




(14.09
)Grains










(834,750
)




(0.08
)Total Futures Contracts Sold










(365,205,006
)




(36.67
)Options OwnedEnergyNYMEX Crude Oil EC Jun 08 - Dec 11




5,704





98,547,840





9.90NYMEX LS Crude Oil C May 08 - Dec 10




6,006





84,578,940





8.49NYMEX Natural Gas May 08 - Oct 12




23,392





392,849,466





39.45Other










158,595,811





15.92Grains










6,206,531





0.62Total Options Owned










740,778,588





74.38Options WrittenEnergyNYMEX Natural Gas May 08 - Oct 10




8,095





(136,456,652
)




(13.70
)Other










(209,346,550
)




(21.02
)Total options written










(345,803,202
)




(34.72
)Unrealized Appreciation on Swap ContractsEnergy










128,022,022





12.85Unrealized Depreciation on Swap ContractsEnergy










(16,159,459
)




(1.62
)Total fair value









$
416,425,109





41.81
%


8

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

SB AAA Master Fund LLC
Schedule of Investments
December 31, 2007

Number of
Contracts


Fair Value


% of Members’
CapitalFutures Contracts PurchasedEnergy









$
162,833,367





16.29
%Futures Contracts SoldEnergyIPE Brent Crude Oil Feb 08 - Dec 10




6,602





(77,608,996
)




(7.76
)Other










(126,738,498
)




(12.68
)Grains










(1,180,150
)




(0.12
)Total Futures Contracts Sold










(205,527,644
)




(20.56
)Options OwnedEnergyNYMEX Crude Oil Mar 08 - Dec 11




6,694





62,612,920





6.27NYMEX Natural Gas Feb 08 - Oct 12




27,108





218,208,060





21.83Other










66,409,454





6.65Grains










2,742,525





0.27Total Options Owned










349,972,959





35.02Options WrittenEnergy










(91,112,724
)




(9.12
)Unrealized Appreciation on Swap ContractsEnergy










92,444,714





9.25Unrealized Depreciation on Swap ContractsEnergy










(15,443,679
)




(1.55
)Total fair value









$
293,166,993





29.33
%


9

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

SB AAA Master Fund LLC
Statements of Income and Expenses and Members’ Capital
(Unaudited)

Three Months Ended
March 31,2008


2007Income:Net gains (losses) on trading of commodity interests:Net realized losses on closed positions



$
(57,120,997
)



$
(18,548,410
)Change in net unrealized gains on open positions




95,381,553





14,319,318Gain (loss) from trading




38,260,556





(4,229,092
)Interest income




2,646,463





8,232,510Total income




40,907,019





4,003,418Expenses:Brokerage commissions including clearing fees of $631,212 and $547,123, respectively




731,880





830,854Other




136,000





103,750Total expenses




867,880





934,604Net income




40,039,139





3,068,814Additions




14,740,134





49,003,033Redemptions




(55,642,009
)




(72,049,800
)Distribution of interest income to feeder funds




(2,634,423
)




(8,171,175
)Net decrease in Members’ Capital




(3,497,159
)




(28,149,128
)Members’ Capital, beginning of period




999,453,536





993,359,899Members’ Capital, end of period



$
995,956,377




$
965,210,771Net Asset Value per Unit (177,190.0556 and 202,132.2593 Units outstanding at March 31, 2008 and 2007, respectively)



$
5,620.84




$
4,775.14Net income per Unit of Member Interest



$
223.17




$
19.68


10

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

SB AAA Master Fund LLC
Statements of Cash Flows
(Unaudited)

Three Months Ended
March 31,2008


2007Cash flows from operating activities:Net income



$
40,039,139




$
3,068,814Adjustments to reconcile net income to net cash provided by (used in) operating activities:Changes in operating assets and liabilities:(Increase) decrease in restricted cash




—





52,065,847(Increase) decrease in net unrealized appreciation on open futures contracts




—





17,193,128(Increase) decrease in unrealized appreciation on open swaps contracts




(35,577,308
)




(17,883,399
)(Increase) decrease in commodity options owned, at fair value




(390,805,629
)




(89,094,045
)(Increase) decrease in due from brokers




4,944,262





10,370,439(Increase) decrease in interest receivable




976,620





51,457Increase (decrease) in net unrealized depreciation on open futures contracts




47,718,563





—Increase (decrease) in unrealized depreciation on open swap contracts




715,780





3,986,182Increase (decrease) in commodity options written, at fair value




254,690,478





51,541,160Accrued expenses:Increase (decrease) in other




70,603





93,550Increase (decrease) in due to brokers




(3,670,510
)




(12,524,904
)Net cash provided by (used in) operating activities




(80,898,002
)




18,868,229Cash flows from financing activities:Proceeds from additions




14,740,134





49,003,033Payments for redemptions




(59,764,268
)




(72,049,800
)Distribution of interest income to feeder funds




(3,608,562
)




(8,222,719
)Net cash used in financing activities




(48,632,696
)




(31,269,486
)Net change in unrestricted cash




(129,530,698
)




(12,401,257
)Unrestricted cash, at beginning of period




708,737,391





748,129,462Unrestricted cash, at end of period



$
579,206,693




$
735,728,205Non-cash financing activities:Change in distribution payable



$
(974,139
)



$
—Change in redemptions payable



$
(4,122,259
)



$
—


11

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

2.    Financial Highlights:

Changes in Net Asset Value per Redeemable Unit of Limited Partnership Interest for the three months ended March 31, 2008 and 2007 were as follows:

Three Months Ended
March 31,2008


2007Net realized and unrealized gains (losses)*



$
98.90




$
(19.09
)Interest income




7.32





21.07Expenses and allocation to Special Limited Partner**




(35.00
)




(16.39
)Increase (decrease) for the period




71.22





(14.41
)Net Asset Value per Redeemable Unit, beginning of period




2,852.84





2,597.51Net Asset Value per Redeemable Unit, end of period



$
2,924.06




$
2,583.10


|* | Includes Partnership commissions and expenses allocated from the Master.
|- | ------------------------------------------------------------------------

|** | Excludes Partnership commissions, expenses allocated from the Master and includes allocation to Special Limited Partner in 2008 and 2007.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------

Ratios to average net assets:***Net investment loss before allocation to Special Limited Partner****




(3.6
)%




(0.9
)%Operating expense




4.6
%




4.2
%Allocation to Special Limited Partner




0.6
%




—
%Total expenses and allocation to Special Limited Partner




5.2
%




4.2
%Total return:Total return before allocation to Special Limited Partner




3.1
%




(0.6
)%Allocation to Special Limited Partner




(0.6
)%




—
%Total return after allocation to Special Limited Partner




2.5
%




(0.6
)%


|*** | Annualized (except for allocation to Special Limited Partner, if applicable)
|--- | ----------------------------------------------------------------------------

|**** | Interest income allocated from Master less total expenses (exclusive of allocation to Special Limited Partner, if applicable)
|---- | -----------------------------------------------------------------------------------------------------------------------------

The above ratios may vary for individual investors based on the timing of capital transactions during the period. Additionally, these ratios are calculated for the Limited Partner class using the Limited Partners’ share of income, expenses and average net assets.

12

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

|
|

Financial Highlights of the Master:

Three Months Ended
March 31,2008


2007Net realized and unrealized gains (losses)*



$
209.38




$
(20.10
)Interest income




14.54





40.30Expenses**




(0.75
)




(0.52
)Increase for the period




223.17





19.68Distribution of interest income to feeder funds




(14.47
)




(40.00
)Net Asset Value per Unit of Member Interest, beginning of period




5,412.14





4,795.46Net Asset Value per Unit of Member Interest, end of period



$
5,620.84




$
4,775.14


|* | Includes brokerage commissions
|- | ------------------------------

|** | Excludes brokerage commissions
|-- | ------------------------------

Ratios to average net assets:***Net investment gain****




0.7
%




3.1
%Operating expense




0.4
%




0.4
%Total return




4.1
%




0.4
%


|*** | Annualized
|--- | ----------

|**** | Interest income less total expenses
|---- | -----------------------------------

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

13

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

3.    Trading Activities:

The Partnership was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity instruments. The Partnership invests substantially all of its assets through a ‘‘master/feeder’’ structure. The results of the Partnership’s investment in the Master are shown in the Statements of Income and Expenses and Partners’ Capital and are discussed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The customer agreements between the Partnership and CGM and the Master and CGM give the Partnership and the Master, respectively, the legal right to net unrealized gains and losses.

All of the commodity interests owned by the Master are held for trading purposes. The average fair values of these interests during the three and twelve months ended March 31, 2008 and December 31, 2007, based on a monthly calculation, were $394,806,073 and $276,061,299, respectively. The fair values of these commodity interests, including options and swaps thereon, if applicable, at March 31, 2008 and December 31, 2007 were $416,425,109 and $293,166,993, respectively. Fair values for exchange traded commodity futures and options are based on quoted market prices for those futures and options. Fair values for all other financial instruments for which market quotations are not readily available are based on other measures of fair value deemed appropriate by the General Partner.

4.    Fair Value Measurements:

Investments.The Partnership values its investment in the Master at its net asset value per unit as calculated by the Master. The Master values its investments as described in note 2 of the Master’s notes to the financial statements.

Fair Value Measurements.The Partnership adopted SFAS No. 157,Fair Value Measurements(‘‘SFAS 157’’) as of January 1, 2008. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement establishes a framework for measuring fair value and expands disclosures regarding fair value measurements in accordance with GAAP. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership did not apply the deferral allowed by FASB Staff Positions No. FAS 157-2,Effective Date of FASB Statement No. 157, for nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

14

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

The Partnership values investments in master partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership based on the end of the day net asset value of the Master (Level 1). The value of the Partnership’s investment in the Master reflects its proportional interest in the Master. The Partnership did not directly hold any derivative instruments that are priced at fair value using observable inputs for similar assets (Level 2) or unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

3/31/2008


Quoted Prices in
Active Markets for
Identical Assets
(Level 1)


Significant Other
Observable Inputs
(Level 2)


Significant
Unobservable Inputs
(Level 3)AssetsInvestment in Master



$
437,870,013




$
437,870,013




$
—




$
—Total fair value



$
437,870,013




$
437,870,013




$
—




$
—


Investments.All commodity interests of the Master (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included in equity in commodity futures trading account. Any change in net unrealized gain or loss from the preceding period is reported in the statements of income and expenses and members’ capital.

Fair Value Measurements.The Master adopted SFAS No. 157,Fair Value Measurements(‘‘SFAS 157’’) as of January 1, 2008. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement establishes a framework for measuring fair value and expands disclosures regarding fair value measurements in accordance with GAAP. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Master did not apply the deferral allowed by FASB Staff Positions No. FAS 157-2,Effective Date of FASB Statement No. 157, for nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

The Master considers prices for exchange traded commodity futures and actively traded forward and options contracts to be based on quoted prices in active markets for identical assets (Level 1). The values of swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 1). The Master did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

15

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

3/31/2008


Quoted Prices in
Active Markets for
Identical Assets
(Level 1)


Significant Other
Observable Inputs
(Level 2)


Significant
Unobservable Inputs
(Level 3)AssetsOptions owned



$
740,778,588




$
740,778,588




$
—




$
—Swaps




128,022,022





—





128,022,022





—Total assets




868,800,610





740,778,588





128,022,022





—LiabilitiesFutures



$
90,412,840




$
90,412,840




$
—




$
—Options written




345,803,202





345,803,202





—





—Swaps




16,159,459





—





16,159,459





—Total liabilites




452,375,501





436,216,042





16,159,459





—Total fair value



$
416,425,109




$
304,562,546




$
111,862,563




$
—


5.    Financial Instrument Risks:

In the normal course of its business, the Partnership, through its investment in the Master, 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, options and swaps, whose values are 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 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, swaps and certain options. Specific market movements of the commodities or futures contracts underlying an option cannot accurately be predicted. The purchaser of an option may lose the entire premium paid for the option. The writer, or seller, of an option has unlimited risk. 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. The Master’s swaps contracts are OTC contracts.

Market risk is the potential for changes in the value of the financial instruments traded by the Master 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. The Partnership is exposed to a market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short.

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 Master’s risk of loss in the event of counterparty default is typically limited to the amounts recognized in the Statements of Financial Condition and not represented by the contract or notional amounts of the instruments. The Master has credit risk and concentration risk because the sole counterparty or broker with respect to the Master’s assets is CGM.

16

---



Salomon Smith Barney AAA Energy Fund L.P. II
Notes to Financial Statements
March 31, 2008
(Unaudited)

As both a buyer and seller of options, the Partnership pays or receives a premium at the outset and then bears the risk of unfavorable changes in the price of the contract underlying the option. Written options expose the Partnership to potentially unlimited liability; for purchased options the risk of loss is limited to the premiums paid.

The General Partner/Managing Member monitors and controls the Master’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 Master is subject. These monitoring systems allow the General Partner/Managing Member 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 the inception date. However, due to the nature of the Master’s business, these instruments may not be held to maturity.

17

---



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

Liquidity and Capital Resources

The Partnership does not engage in sales of goods or services. Its only assets are its investment in the Master, cash and distribution receivable. The Master does not engage in the sale of goods or services. Because of the low margin deposits normally required in commodity futures trading, relatively small price movements may result in substantial losses to the Partnership, through its investment in the Master. While substantial losses could lead to a material decrease in liquidity, no such losses occurred during the first quarter of 2008.

The Partnership’s capital consists of the capital contributions of the partners as increased or decreased by its investment in the Master, expenses, interest income, redemptions of Redeemable Units and distributions of profits, if any.

For the three months ended March 31, 2008, Partnership capital decreased 5.1% from $444,909,811 to $422,107,805. This decrease was attributable to the redemption of 13,809.9785 Redeemable Units of Limited Partnership Interest totaling $39,916,988, which was partially offset by a net income from operations of $10,724,239 coupled with the addition of 1,389.2712 Redeemable Units of Limited Partnership Interest totaling $3,980,000 and the addition of 824.4506 Redeemable Units of Special Limited Partnership Interest totaling $2,410,743. Future redemptions could impact the amount of funds available for investment in the Master in subsequent periods.

The Master’s capital consists of the capital contributions of the members as increased or decreased by realized and/or unrealized gains or losses on commodity futures trading, expenses, interest income, redemptions of Units and distributions of profits, if any.

For the three months ended March 31, 2008, the Master’s capital decreased 0.3% from $999,453,536 to $995,956,377. This decrease was attributable to the redemptions of 10,196.0123 Redeemable Units totaling $55,642,009 and distribution of interest income to feeder funds totaling $2,634,423 to the non-managing members of the Master, which was partially offset by net income from operations of $40,039,139, coupled with the addition of 2,717.2088 Redeemable Units totaling $14,740,134. Future redemptions can impact the amount of funds available for investments in commodity contract positions in subsequent periods.

Critical Accounting Policies

Use of Estimates.The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) 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.

Investments.The Partnership values its investment in the Master at its net asset value per unit as calculated by the Master. The Master values its investments as described in note 2 of the Master’s notes to the financial statements.

Fair Value Measurements.The Partnership adopted SFAS No. 157,Fair Value Measurements(‘‘SFAS 157’’) as of January 1, 2008. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement establishes a framework for measuring fair value and expands disclosures regarding fair value measurements in accordance with GAAP. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Partnership did not apply the deferral allowed by FASB Staff Positions No. FAS 157-2,Effective Date of FASB Statement No. 157, for nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

18

---



The Partnership values investments in master partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership based on the end of the day net asset value of the Master (Level 1). The value of the Partnership’s investment in the Master reflects its proportional interest in the Master. The Partnership did not directly hold any derivative instruments that are priced at fair value using observable inputs for similar assets (Level 2) or unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

3/31/2008


Quoted Prices in
Active Markets for
Identical Assets
(Level 1)


Significant Other
Observable Inputs
(Level 2)


Significant
Unobservable Inputs
(Level 3)AssetsInvestment in Master



$
437,870,013




$
437,870,013




$
—




$
—Total fair value



$
437,870,013




$
437,870,013




$
—




$
—


Investments.All commodity interests of the Master (including derivative financial instruments and derivative commodity instruments) are held for trading purposes. The commodity interests are recorded on trade date and open contracts are recorded at fair value (as described below) at the measurement date. Investments in commodity interests denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the measurement date. Gains or losses are realized when contracts are liquidated. Unrealized gains or losses on open contracts are included in equity in commodity futures trading account. Any change in net unrealized gain or loss from the preceding period is reported in the statements of income and expenses and members’ capital.

Fair Value Measurements.The Master adopted SFAS No. 157,Fair Value Measurements(‘‘SFAS 157’’) as of January 1, 2008. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This statement establishes a framework for measuring fair value and expands disclosures regarding fair value measurements in accordance with GAAP. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to fair values derived from unobservable inputs (Level 3). The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Master did not apply the deferral allowed by FASB Staff Positions No. FAS 157-2,Effective Date of FASB Statement No. 157, for nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

The Master considers prices for exchange traded commodity futures and actively traded forward and options contracts to be based on quoted prices in active markets for identical assets (Level 1). The values of swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 1). The Master did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).

19

---



3/31/2008


Quoted Prices in
Active Markets for
Identical Assets
(Level 1)


Significant Other
Observable Inputs
(Level 2)


Significant
Unobservable Inputs
(Level 3)AssetsOptions owned



$
740,778,588




$
740,778,588




$
—




$
—Swaps




128,022,022





—





128,022,022





—Total assets




868,800,610





740,778,588





128,022,022





—LiabilitiesFutures



$
90,412,840




$
90,412,840




$
—




$
—Options written




345,803,202





345,803,202





—





—Swaps




16,159,459





—





16,159,459





—Total liabilites




452,375,501





436,216,042





16,159,459





—Total fair value



$
416,425,109




$
304,562,546




$
111,862,563




$
—


Income and Expenses Recognition.All of the income and expenses and unrealized and realized gains and losses from the commodity transactions of the Master are allocated pro rata among the investors at the time of such determination. The Master’s income and expense recognition is discussed in note 2 of the Master’s notes to financial statements.

Options.The Master may purchase and write (sell) options. An option is a contract allowing, but not requiring, its holder to buy (call) or sell (put) a specific or standard commodity or financial instrument at a specified price during a specified time period. The option premium is the total price paid or received for the option contract. When the Master writes an option, the premium received is recorded as a liability in the Statements of Financial Condition and marked to market daily. When the Master purchases an option, the premium paid is recorded as an asset in the Statements of Financial Condition and marked to market daily.

Forward Foreign Currency Contracts.Foreign currency contracts are those contracts where the Partnership agrees to receive or deliver a fixed quantity of foreign currency for an agreed-upon price on an agreed future date. Foreign currency contracts are valued daily, and the Partnership’s net equity therein, representing unrealized gain or loss on the contracts as measured by the difference between the forward foreign exchange rates at the dates of entry into the contracts and the forward rates at the reporting dates, is included in the Statement of Financial Condition. Realized gains (losses) and changes in unrealized gains (losses) on foreign currency contracts are recognized in the period in which the contract is closed or the changes occur and are included in the Statements of Income and Expenses and Partners’ Capital.

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

In 2007, the Partnership adopted FASB Interpretation No. 48 ‘‘Accounting for Uncertainty in Income Taxes’’ (‘‘FIN 48’’). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are ‘‘more-likely-than-not’’ of being sustained by the applicable tax authority. Tax positions with respect to tax at the partnership level not deemed to meet the ‘‘more-likely-than-not’’ threshold would be recorded as a tax benefit or expense in the current year. The General Partner has concluded that the adoption of FIN 48 had no impact on the operations of the Partnership for the three months ended March 31, 2008 and that no provision for income tax is required in the Partnership’s financial statements.

20

---



The following are the major tax jurisdictions for the Partnership and the earliest tax year subject to examination: United States – 2004.

Recent Accounting Pronouncement.On March 19, 2008, Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of FAS 161 and its impact on the financial statements has not yet been determined.

Results of Operations

During the Partnership’s first quarter of 2008, the Net Asset Value per Redeemable Unit increased 2.5% from $2,852.84 to $2,924.06 as compared to a decrease of 0.6% in the first quarter of 2007. The Partnership, for its own account, through its investment in the Master, experienced a net trading gain before brokerage commissions and related fees in the first quarter of 2008 of $16,978,146. Gains were primarily attributable to the Master’s trading of commodity futures in NYMEX Crude Oil, NYMEX Energy Swaps, IPE Brent Crude Oil, IPE Gas Oil, corn and OTC Energy Swaps and were partially offset by losses in NYMEX Gasoline, NYMEX Heating Oil, NYMEX Natural Gas and Unleaded Gas. The Partnership, for its own account, through its investment in the Master, experienced a net trading loss before brokerage commissions and related fees in the first quarter of 2007 of $2,457,970. Losses were primarily attributable to the Master’s trading of commodity futures in NYMEX Crude Oil, NYMEX Natural Gas, NYMEX Gasoline and NYMEX Energy Swaps and were partially offset by gains in IPE Brent Crude Oil, IPE Gas Oil, NYMEX Heating Oil, NYMEX Unleaded Gas, corn and OTC Energy Swaps.

The Partnership posted gains for the quarter as profits from fundamental trading in petroleum complex and certain refined products more than offset losses realized in natural gas. Crude prices continued to push higher and reached over $110 a barrel in March as the U.S. dollar weakened. The Partnership was favorably positioned to profit from this strong trend in crude oil throughout the quarter. Profits were also earned the long position in gas oil as prices rallied. Most of the profits in gas oil were captured in mid-March as increased refinery output is likely to push prices to lower.

Commodity futures markets are highly volatile. The potential for broad and rapid price fluctuations increases the risks involved in commodity trading, but also increases the possibility of profit. The profitability of the Partnership (and the Master) depends on the Advisor’s ability to forecast price changes in energy and energy-related commodities. Such price changes are influenced by, among other things, changing supply and demand relationships, weather, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and changes in interest rates. To the extent that the Advisor correctly makes such forecasts, the Partnership (and the Master) expects to increase capital through operations.

Brokerage commissions are based on the number of trades executed by the Advisor and the Partnership’s ownership percentage. Brokerage commissions and fees for the three months ended March 31, 2008 increased by $200,433 as compared to the corresponding period in 2007. The increase in commissions and fees is primarily due to an increase in the number of trades during the three months ended March 31, 2008 as compared to the corresponding period in 2007.

Interest income on 80% of the Partnership’s average daily equity allocated to it by the Master was earned at a 30-day U.S. Treasury bill rate determined weekly by CGM based on the average non-competitive yield on 3-month U.S. Treasury bills maturing in 30 days. CGM may continue to maintain the Master’s assets in cash and/or place all of the Master’s assets in 90-day Treasury bills and pay the Partnership its allocated share of 80% of the interest earned on the Treasury bills purchased. CGM will retain 20% of any interest earned on Treasury bills purchased. Interest income allocated from the Master for the three months ended March 31, 2008 decreased by $2,845,831, as compared to the corresponding period in 2007. The decrease in interest income is primarily due to lower average net assets as well as

21

---



lower U.S. Treasury Bill rates for the Partnership during the three months ended March 31, 2008 as compared to the corresponding period in 2007.

Management fees are calculated as a percentage of the Partnership’s net asset value as of the end of each month and are affected by trading performance and redemptions. Management fees for the three months ended March 31, 2008 decreased by $177,048 as compared to the corresponding period in 2007. The decrease in management fees is due to a decrease in average net assets during the three months ended March 31, 2008 as compared to the corresponding period in 2007.

Administrative fees are calculated as a percentage of the Partnership’s net asset value as of the end of each month and are affected by trading performance and redemptions. Administrative fees for the three months ended March 31, 2008 decreased by $44,262 as compared to the corresponding period in 2007. The decrease in administrative fees is due to a decrease in net assets during the three months ended March 31, 2008 as compared to the corresponding period in 2007.

Special Limited Partner profit share allocations (incentive fees) are based on the new trading profits generated by the Advisor at the end of the quarter, as defined in the advisory agreements between the Partnership, the General Partner and the Advisor. The profit share allocation accrued for the three months ended March 31, 2008 and 2007 was $2,410,743 and $0, respectively.

22

---



Item 3.    Quantitative and Qualitative Disclosures about Market Risk

All of the Partnership’s assets are subject to the risk of trading loss through its investment in the Master. The Master is a speculative commodity pool. The market sensitive instruments held by the Master are acquired for speculative trading purposes, and all or substantially all of the Partnership’s capital is subject to the risk of trading loss through its investment in the Master. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Master’s and the Partnership’s main line of business.

Market movements result in frequent changes in the fair value of the Master’s open positions and, consequently, in its earnings and cash flow. The Master’s and 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 value of financial instruments and contracts, the diversification results among the Master’s open positions and the liquidity of the markets in which the Master trades.

The Master rapidly acquires and liquidates both long and short positions in a range of different markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Master’s past performance is not necessarily indicative of its future results.

Value at Risk is a measure of the maximum amount which the Master could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Master’s speculative trading and the recurrence in the markets traded by the Master of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Master’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 Master’s losses in any market sector will be limited to Value at Risk or by the Master’s attempts to manage its market risk.

Exchange maintenance margin requirements have been used by the Master 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 interval. 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.

The following table indicates the trading Value at Risk associated with the Master’s open positions by market category as of March 31, 2008 and the highest, lowest and average value during the three months ended March 31, 2008. All open position trading risk exposures of the Master have been included in calculating the figures set forth below. As of March 31, 2008, the Master’s total capital was $995,956,377. There has been no material change in the trading Value at Risk information previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2007.

March 31, 2008
(Unaudited)

Three Months Ended March 31, 2008Market Sector


Value at Risk


% of Total
Capital


High
Value at Risk


Low
Value at Risk


Average
Value at Risk*Energy



$
107,744,930





10.82
%



$
128,699,033




$
86,922,706




$
108,482,788Energy Swaps




1,620,046





0.16
%




1,620,046





1,620,046





1,620,046Grains




112,896





0.01
%




206,814





76,446





121,914Total



$
109,477,872





10.99
%


|* Average monthly Values at Risk
|--------------------------------

23

---



Item 4T.    Controls and Procedures

The Partnership’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the General Partner, to allow for timely decisions regarding required disclosure and appropriate SEC filings.

Management is responsible for ensuring that there is an adequate and effective process for establishing, maintaining and evaluating disclosure controls and procedures for the Partnership’s external disclosures.

The General Partner’s CEO and CFO have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2008 and, based on that evaluation, the CEO and CFO have concluded that at that date the Partnership’s disclosure controls and procedures were effective.

The Partnership’sinternal control over financial reportingis a process under the supervision of the General Partner’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles. These controls include policies and procedures that:

| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Partnership;

| |   |                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | provide reasonable assurance that (i) transactions are recorded as necessary to permitpreparationof financial statements in accordance with U.S. generally accepted accounting principles, and (ii) the Partnership’s receipts are handled and expenditures are made only pursuant to authorizations of the General Partner; and

| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition,use or disposition of the Partnership’s assets that could have a material effect on the financial statements.

There were no changes in the Partnership’s internal control over financial reporting during the fiscal quarter ended March 31, 2008 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

24

---



PART II. OTHER INFORMATION

Item 1.    Legal Proceedings

The following information supplements and amends our discussion set forth under Part I, Item 3 ‘‘Legal Proceedings’’ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Enron Corp.

On April 4, 2008, Citigroup announced an agreement to settle actions filed by Enron in its Chapter 11 bankruptcy proceedings seeking to recover payments to Citigroup as alleged preferences or fraudulent conveyances, to disallow or equitably subordinate claims of Citigroup and Citigroup transferees on the basis of alleged fraud, and to recover damages from Citigroup for allegedly aiding and abetting breaches of fiduciary duty. Under the terms of the settlement (which was approved by the Bankruptcy Court for the Southern District of New York on April 24, 2008), Citigroup will make a pretax payment of $1.66 billion to Enron, and will waive certain claims against Enron’s estate. Enron also will allow specified Citigroup-related claims in the bankruptcy proceeding, including all of the bankruptcy claims of parties holding approximately $2.4 billion of Enron credit-linked notes (‘‘CLNs’’), and will release all claims against Citigroup. Citigroup separately agreed to settle an action brought by certain trusts that issued the CLNs in question, by the related indenture trustee and by certain holders of those securities. The amounts of both settlements are fully covered by Citigroup’s existing litigation reserves.

On February 14, 2008, Citigroup agreed to settleConnecticut Resources Recovery Authorityv.Lay, et al., an action brought by the Attorney General of Connecticut in connection with an Enron-related transaction; subsequently, the District Court dismissed the case on March 5, 2008. The amount paid to settle this action was covered by existing Citigroup litigation reserves.

Item 1A.    Risk Factors

There are no material changes from the risk factors set forth under Part I, Item 1A. ‘‘Risk Factors’’ in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

The following chart sets forth the purchases of Redeemable Units by the Partnership.

The Redeemable Units were issued in reliance upon applicable exemptions from registration under Section 4(2) of the Securities Act of 1933, as amended and Section 506 of Regulation D promulgated thereunder.

These units were purchased by accredited investors as defined in Regulation D.

Period


(a) Total Number
of Redeemable
Units Purchased*


(b) Average
Price Paid per
Redeemable Unit**


(c) Total Number
of Redeemable Units
Purchased as Part
of Publicly Announced
Plans or Programs


(d) Maximum Number
(or Approximate
Dollar Value) of
Redeemable Units
that May Yet Be
Purchased Under the
Plans or ProgramsJanuary 1, 2008 –
January 31, 2008




1,770.9292



$2,827.30




N/A





N/AFebruary 1, 2008 –
February 29, 2008




7,493.9299



$2,884.98




N/A





N/AMarch 1, 2008 –
March 31, 2008




4,545.1194



$2,924.06




N/A





N/A13,809.9785



$2,890.45




N/A





N/A


|* Generally, Limited Partners are permitted to redeem their Redeemable Units as of the end of each month on 10 days’ notice to the General Partner. Under certain circumstances, the General Partner can compel redemption but to date, the General Partner has not exercised this right. Purchases of Redeemable Units by the Partnership reflected in the chart above were made in the ordinary course of the Partnership’s business in connection with effecting redemptions for Limited Partners.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** Redemptions of Redeemable Units are effected as of the last day of each month at the Net Asset Value per Redeemable Unit as of that day.
|-------------------------------------------------------------------------------------------------------------------------------------------

25

---



Item 3.    Defaults Upon Senior Securities – None

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

Item 5.    Other Information – None

Item 6.    Exhibits

| |                                                                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The exhibits required to be filed by Item 601 of Regulation S-K are incorporated herein by reference to the exhibit index of the Partnership’s Annual Report on Form 10-K for the period ended December 31, 2007.

Exhibit – 31.1 – Rule 13a-14(a)/15d-14(a) Certification (Certification of President and Director).

Exhibit – 31.2 – Rule 13a-14(a)/15d-14(a) Certification (Certification of Chief Financial Officer and Director).

Exhibit – 32.1 – Section 1350 Certification (Certification of President and Director).

Exhibit – 32.2 – Section 1350 Certifications (Certification of Chief Financial Officer and Director).

26

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SALOMON SMITH BARNEY AAA ENERGY FUND L.P. II

By:


Citigroup Managed Futures LLC(General Partner)By:


/s/ Jerry PascucciJerry Pascucci
President and DirectorDate:


May 15, 2008By:


/s/ Jennifer MagroJennifer Magro
Chief Financial Officer and
DirectorDate:


May 15, 2008


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