FORM10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

(X) QUARTERLYREPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIESEXCHANGE ACT OF 1934

OR ( ) TRANSITION REPORT UNDERSECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF1934

For The Quarter Ended June 30, 2005

Commission File Number 0-50272

SALOMON SMITHBARNEY AAA ENERGY FUND L.P.II

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(Exact nameof registrant as specified in its charter)

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| NewYork |  | 03-0407557 |
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|                                                              |  |                                      |  |  |  |  |
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| (Stateor other jurisdiction of incorporation or organization |  | (I.R.S. Employer Identification No.) |
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c/oCitigroup Managed Futures LLC 399 Park Avenue. – 7thFl. New York, New York 10022

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(Address and ZipCode of principal executive offices)

(212) 559-2011

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(Registrant'stelephone number, including area code)

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

YesX        No    

Indicate bycheck mark whether the registrant is an accelerated filer (as definedin Rule 12b-2 of the Exchange Act).

YesX        No    

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SALOMON SMITHBARNEY AAA ENERGY FUND L.P. II

FORM10-Q

INDEX

|                                 |  |                                                                                                                             |  |                                       |  |  |  |  |  |  |
|---------------------------------|--|-----------------------------------------------------------------------------------------------------------------------------|--|---------------------------------------|--|--|--|--|--|--|
|                            |  |                                                                                                                        |  | PageNumber                            |
| PART I - FinancialInformation:  |  |
|                            |  |
|     Item1.  |  | FinancialStatements:                                                                                                        |  |
|                            |  | Statements of FinancialCondition at June 30, 2005 and December 31, 2004(unaudited)                                          |  | 3                                     |
|                            |  | Statements of Income and Expenses and Partners'Capital for the three and six months ended June 30, 2005 and 2004(unaudited) |  | 4                                     |
|                            |  | Statements of CashFlows for the three and six months ended June 30, 2005 and 2004(unaudited)                                |  | 5                                     |
|                            |  | Notes to FinancialStatements, including the Financial Statements of SB AAA Master FundLLC (unaudited)                       |  | 6 – 15                          |
|     Item2.  |  | Management's Discussion and Analysis of FinancialCondition and Results of Operations                                        |  |     16–  18 |
|     Item3.  |  | Quantitative and Qualitative Disclosures about MarketRisk                                                                   |  | 19                                    |
|     Item 4. |  | Controls andProcedures                                                                                                      |  | 20                                    |
| PARTII - OtherInformation       |  | 21                                                                                                                          |
|                                 |

2

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PART I

Item 1.Financial Statements

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

|                                                                                                                                         |  |             |             |                 |  |        |             |        |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------|--|-------------|-------------|-----------------|--|--------|-------------|--------|--|--|
|                                                                                                                                    |  | June30,2005 |             | December31,2004 |
| **Assets:**                                                                                                                             |  |        |        |            |  |   |        |   |
| Investmentin the Master, at fairvalue                                                                                                   |  | $           | 266,387,005 |            |  | $      | 120,251,909 |   |
| Cash                                                                                                                                    |  |        | 36,212      |            |  |   | 50,403      |   |
|                                                                                                                                    |  | $           | 266,423,217 |            |  | $      | 120,302,312 |   |
| **Liabilitiesand Partners'Capital:**                                                                                                    |  |        |        |            |  |   |        |   |
| Liabilities:                                                                                                                            |  |        |        |            |  |   |        |   |
| Accruedexpenses:                                                                                                                        |  |        |        |            |  |   |        |   |
| Managementfees                                                                                                                          |  | $           | 437,947     |            |  | $      | 203,734     |   |
| Administrativefees                                                                                                                      |  |        | 109,487     |            |  |   | 50,933      |   |
| Other                                                                                                                                   |  |        | 5,553       |            |  |   | 33,562      |   |
| Due to Special LimitedPartner                                                                                                           |  |        | 18,375,094  |            |  |   | —     |   |
| Redemptionspayable                                                                                                                      |  |        | 1,324,229   |            |  |   | 1,990,866   |   |
|                                                                                                                                    |  |        | 20,252,310  |            |  |   | 2,279,095   |   |
| Partners'Capital:                                                                                                                       |  |        |        |            |  |   |        |   |
| General Partner,2,501.2826 Unit equivalents outstanding in 2005 and2004                                                                 |  |        | 4,282,171   |            |  |   | 2,875,825   |   |
| SpecialLimited Partner, 1,486.3421 Redeemable Units of Limited PartnershipInterest outstanding in 2005 and 2004                         |  |        | 2,544,603   |            |  |   | 1,708,907   |   |
| LimitedPartners, 139,804.7673 and 98,664.8238 Redeemable Units of LimitedPartnership Interest outstanding in 2005 and 2004,respectively |  |        | 239,344,133 |            |  |   | 113,438,485 |   |
|                                                                                                                                    |  |        | 246,170,907 |            |  |   | 118,023,217 |   |
|                                                                                                                                    |  | $           | 266,423,217 |            |  | $      | 120,302,312 |   |
|                                                                                                                                         |

SeeAccompanying Notes to Financial Statements.

3

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

|                                                                                                                                       |  |                           |             |                         |  |        |            |         |  |        |             |         |  |        |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------|--|---------------------------|-------------|-------------------------|--|--------|------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                                                                                                                  |  | ThreeMonths EndedJune 30, |             | Six Months EndedJune30, |
|                                                                                                                                  |  | 2005                      |             | 2004                    |  | 2005   |            | 2004    |
| **Income:**                                                                                                                           |  |                      |        |                    |  |   |       |    |  |
| Realizedgains on closed positions allocated fromMaster                                                                                |  | $                         | 26,464,755  |                    |  | $      | 1,344,673  |    |  | $      | 38,321,754  |    |  | $      | 10,742,762  |    |
| Changein unrealized gains on open positions allocated fromMaster                                                                      |  |                      | 21,624,161  |                    |  |   | 3,021,287  |    |  |   | 58,858,551  |    |  |   | 2,525,904   |    |
| Incomeallocated from Master                                                                                                           |  |                      | 1,201,054   |                    |  |   | 179,639    |    |  |   | 1,976,053   |    |  |   | 348,990     |    |
| Expensesallocated from Master                                                                                                         |  |                      | (1,424,800  | )                  |  |   | (820,821   | )  |  |   | (2,658,335  | )  |  |   | (1,699,651  | )  |
|                                                                                                                                  |  |                      | 47,865,170  |                    |  |   | 3,724,778  |    |  |   | 96,498,023  |    |  |   | 11,918,005  |    |
| **Expenses:**                                                                                                                         |  |                      |        |                    |  |   |       |    |  |   |        |    |  |   |        |    |
| Managementfee                                                                                                                         |  |                      | 1,197,712   |                    |  |   | 477,650    |    |  |   | 2,057,664   |    |  |   | 957,636     |    |
| Administrativefee                                                                                                                     |  |                      | 299,428     |                    |  |   | 119,412    |    |  |   | 514,415     |    |  |   | 239,409     |    |
| Otherexpenses                                                                                                                         |  |                      | 38,140      |                    |  |   | 35,011     |    |  |   | 74,421      |    |  |   | 62,803      |    |
|                                                                                                                                  |  |                      | 1,535,280   |                    |  |   | 632,073    |    |  |   | 2,646,500   |    |  |   | 1,259,848   |    |
| Netincome before allocation to Special LimitedPartner                                                                                 |  |                      | 46,329,890  |                    |  |   | 3,092,705  |    |  |   | 93,851,523  |    |  |   | 10,658,157  |    |
| Allocationto Special LimitedPartner                                                                                                   |  |                      | (9,025,767  | )                  |  |   | —    |    |  |   | (18,375,094 | )  |  |   | —     |    |
| Netincome after allocation to Special LimitedPartner                                                                                  |  |                      | 37,304,123  |                    |  |   | 3,092,705  |    |  |   | 75,476,429  |    |  |   | 10,658,157  |    |
| Additions– LimitedPartners                                                                                                      |  |                      | 26,852,000  |                    |  |   | —    |    |  |   | 63,727,000  |    |  |   | —     |    |
| Redemptions– LimitedPartners                                                                                                    |  |                      | (7,114,311  | )                  |  |   | (4,535,997 | )  |  |   | (11,055,739 | )  |  |   | (13,411,888 | )  |
| Netincrease (decrease) in Partners'capital                                                                                            |  |                      | 57,041,812  |                    |  |   | (1,443,292 | )  |  |   | 128,147,690 |    |  |   | (2,753,731  | )  |
| Partners'capital, beginning ofperiod                                                                                                  |  |                      | 189,129,095 |                    |  |   | 95,292,473 |    |  |   | 118,023,217 |    |  |   | 96,602,912  |    |
|                                                                                                                                  |  |                      |        |                    |  |   |       |    |  |   |        |    |  |   |        |    |
| Partners'capital, end ofperiod                                                                                                        |  | $                         | 246,170,907 |                    |  | $      | 93,849,181 |    |  | $      | 246,170,907 |    |  | $      | 93,849,181  |    |
| Netasset value per Redeemable Unit (143,792.3920 and 106,265.6315Redeemable Units outstanding at June 30, 2005 and 2004,respectively) |  | $                         | 1,711.99    |                    |  | $      | 883.16     |    |  | $      | 1,711.99    |    |  | $      | 883.16      |    |
| Netincome per Redeemable Unit of Limited Partnership Interest and GeneralPartner Unitequivalent                                       |  | $                         | 261.85      |                    |  | $      | 27.97      |    |  | $      | 562.25      |    |  | $      | 93.77       |    |
|                                                                                                                                       |

SeeAccompanying Notes to Financial Statements.

4

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

|                                                                                           |  |                           |             |                         |  |        |            |         |  |        |              |         |  |        |             |         |  |  |
|-------------------------------------------------------------------------------------------|--|---------------------------|-------------|-------------------------|--|--------|------------|---------|--|--------|--------------|---------|--|--------|-------------|---------|--|--|
|                                                                                      |  | ThreeMonths EndedJune 30, |             | Six Months EndedJune30, |
|                                                                                      |  | 2005                      |             | 2004                    |  | 2005   |            | 2004    |
| Cashflows from operatingactivities:                                                       |  |                      |        |                    |  |   |       |    |  |
| Netincome                                                                                 |  | $                         | 37,304,123  |                    |  | $      | 3,092,705  |    |  | $      | 75,476,429   |    |  | $      | 10,658,157  |    |
| Adjustmentsto reconcile net income to net cash provided by (used in) operatingactivities: |  |                      |        |                    |  |   |       |    |  |
| Changesin operating assets andliabilities:                                                |  |                      |        |                    |  |   |       |    |  |
| (Increase)decrease in investment in Master, at fairvalue                                  |  |                      | (65,628,958 | )                  |  |   | 3,032,893  |    |  |   | (146,135,096 | )  |  |   | 3,888,125   |    |
| Accruedexpenses:                                                                          |  |                      |        |                    |  |   |       |    |  |   |         |    |  |   |        |    |
| Increase(decrease) in managementfees                                                      |  |                      | 96,878      |                    |  |   | (10,336    | )  |  |   | 234,213      |    |  |   | (12,194     | )  |
| Increase(decrease) in administrativefees                                                  |  |                      | 24,220      |                    |  |   | (2,584     | )  |  |   | 58,554       |    |  |   | (3,049      | )  |
| Increase(decrease) inother                                                                |  |                      | (64,289     | )                  |  |   | (44,314    | )  |  |   | (28,009      | )  |  |   | (22,523     | )  |
| Increase(decrease) in due to Special LimitedPartner                                       |  |                      | 9,025,767   |                    |  |   | —    |    |  |   | 18,375,094   |    |  |   | —     |    |
| Netcash provided by (used in) operatingactivities                                         |  |                      | (19,242,259 | )                  |  |   | 6,068,364  |    |  |   | (52,018,815  | )  |  |   | 14,508,516  |    |
| Cashflows from financingactivities:                                                       |  |                      |        |                    |  |   |       |    |  |
| Proceeds fromadditions – LimitedPartners                                            |  |                      | 26,852,000  |                    |  |   | —    |    |  |   | 63,727,000   |    |  |   | —     |    |
| Paymentsfor redemptions – LimitedPartners                                           |  |                      | (7,675,889  | )                  |  |   | (6,112,732 | )  |  |   | (11,722,376  | )  |  |   | (14,501,304 | )  |
| Netcash provided by (used in) financingactivities                                         |  |                      | 19,176,111  |                    |  |   | (6,112,732 | )  |  |   | 52,004,624   |    |  |   | (14,501,304 | )  |
| Netchange incash                                                                          |  |                      | (66,148     | )                  |  |   | (44,368    | )  |  |   | (14,191      | )  |  |   | 7,212       |    |
| Cash,at beginning ofperiod                                                                |  |                      | 102,360     |                    |  |   | 94,212     |    |  |   | 50,403       |    |  |   | 42,632      |    |
| Cash,at end ofperiod                                                                      |  | $                         | 36,212      |                    |  | $      | 49,844     |    |  | $      | 36,212       |    |  | $      | 49,844      |    |
|                                                                                           |

SeeAccompanying Notes to FinancialStatements.

5

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

1.    General:

Salomon Smith Barney AAA Energy Fund L.P. II (the"Partnership") is a limited partnershiporganized on March 25, 2002 under the partnership laws of the State ofNew York to engage, directly or indirectly, in the speculative tradingof a diversified portfolio of commodity interests, including commodityoptions and commodity futures contracts on United States exchanges andcertain foreign exchanges. The Partnership may trade commodity futuresand options contracts of any kind but currently trades solely energyand energy-related products. In addition, the Partnership may enterinto swap contracts on energy-related products. The commodity intereststhat are traded by the Partnership are volatile and involve a highdegree of market risk. During the initial offering period (May 31, 2002through July 1, 2002), the Partnership sold 93,975 redeemable units ofLimited Partnership Interest ("RedeemableUnits"). The Partnership commenced trading on July 1,2002.

Citigroup Managed Futures LLC acts as the General Partner(the "General Partner") of the Partnershipand the managing member of the Master, as defined below. ThePartnership's/Master's commodity broker is Citigroup GlobalMarkets Inc. ("CGM"). CGM is an affiliate ofthe General Partner. The General Partner is wholly owned by CitigroupGlobal Markets Holdings Inc. ("CGMHI"), whichis the sole owner of CGM. CGMHI is a wholly owned subsidiary ofCitigroup Inc. ("Citigroup").

Effective July 1, 2002, the Partnership allocated all of its capitalto SB AAA Master Fund LLC, a New York limited liability company (the"Master"). With this cash, the Partnershippurchased 64,945.0387 Units of the Master with a fair value of$94,925,000. The Master was formed in order to permit commodity poolsmanaged by AAA Capital Management, Inc. (the"Advisor") using the Energy with SwapsProgram, the Advisor's proprietary trading program, to investtogether in one trading vehicle. In addition, the Advisor is a SpecialLimited Partner of the Partnership, an employee of CGM and a relatedparty. Individual and pooled accounts currently managed by the Advisor,including the Partnership (collectively, the "FeederFunds"), are permitted to be non-managing members of theMaster. The General Partner and the Advisor believe that tradingthrough this master/feeder structure should promote efficiency andeconomy in the trading process. Expenses to investors as a result ofthe investment in the Master are approximately the same and redemptionrights are not affected.

As of June 30, 2005, the Partnershipowned approximately 46.2% of the Master. It is thePartnership's intention to continue to invest substantially allof its assets in the Master. The performance of the Partnership isdirectly affected by the performance of the Master. The Master'sStatements of Financial Condition, Statements of Income and Expensesand Members' Capital, Condensed Schedules of Investments andStatements of Cash Flows are included herein.

The accompanyingfinancial statements are unaudited but, in the opinion of management,include all adjustments, consisting only of normal recurringadjustments, necessary for a fair presentation of thePartnership's financial condition at June 30, 2005 and December31, 2004 and the results of its operations and cash flows for the threeand six months ended June 30, 2005 and 2004. These financial statementspresent the results of interim periods and do not include alldisclosures normally provided in annual financial statements. Youshould read these financial statements together with the financialstatements and notes included in the Partnership's Annual Reporton Form 10-K filed with the Securities and Exchange Commission for theyear ended December 31, 2004.

Due to the nature of commoditytrading, the results of operations for the interim periods presentedshould not be considered indicative of the results that may be expectedfor the entire year.

The Master's Statements of FinancialCondition and Condensed Schedules of Investments as of June  30,2005 and December 31, 2004 and Statements of Income and Expenses andMembers' Capital and Statements of Cash Flows for the three andsix months ended June 30, 2005 and 2004 are presented below:

6

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

SB AAA Master Fund LLCStatements ofFinancialCondition(Unaudited)

|                                                                                                      |  |             |             |                 |  |        |             |        |  |  |
|------------------------------------------------------------------------------------------------------|--|-------------|-------------|-----------------|--|--------|-------------|--------|--|--|
|                                                                                                 |  | June30,2005 |             | December31,2004 |
| **Assets:**                                                                                          |  |
| Equityin commodity futures tradingaccount:                                                           |  |
| Cash (restricted$4,846,704 and $29,327,275,respectively)                                             |  | $           | 392,802,010 |            |  | $      | 302,866,457 |   |
| Netunrealized appreciation on open futurespositions                                                  |  |        | 116,789,122 |            |  |   | 33,027,068  |   |
| Unrealizedappreciation on open swapspositions                                                        |  |        | 203,478,964 |            |  |   | 93,606,729  |   |
| Commodityoptions owned, at fair value (cost $88,869,306 and $39,565,244,respectively)                |  |        | 115,904,017 |            |  |   | 51,017,766  |   |
|                                                                                                 |  |        | 828,974,113 |            |  |   | 480,518,020 |   |
|                                                                                                 |  |        |        |            |  |   |        |   |
| Duefrombrokers                                                                                       |  |        | 10,054,265  |            |  |   | 2,425,135   |   |
| Interestreceivable                                                                                   |  |        | 920,148     |            |  |   | 459,835     |   |
|                                                                                                 |  | $           | 839,948,526 |            |  | $      | 483,402,990 |   |
| **Liabilitiesand Members'Capital:**                                                                  |  |
| Liabilities:                                                                                         |  |        |        |            |  |   |        |   |
| Unrealizeddepreciation on open swappositions                                                         |  | $           | 183,958,350 |            |  | $      | 89,659,294  |   |
| Commodityoptions written, at market value (premium received $92,027,929 and$54,943,984,respectively) |  |        | 68,801,302  |            |  |   | 52,353,395  |   |
| Accruedexpenses:                                                                                     |  |        |        |            |  |   |        |   |
| Commissions                                                                                          |  |        | 2,586,372   |            |  |   | 1,662,591   |   |
| Professionalfees                                                                                     |  |        | 8,254       |            |  |   | 2,000       |   |
| Due tobrokers                                                                                        |  |        | 7,675,292   |            |  |   | 2,753,610   |   |
| DuetoCGM                                                                                             |  |        | —     |            |  |   | 22,978      |   |
| Distributionpayable                                                                                  |  |        | 911,756     |            |  |   | 453,587     |   |
|                                                                                                 |  |        | 263,941,326 |            |  |   | 146,907,455 |   |
| Members'Capital:                                                                                     |  |        |        |            |  |   |        |   |
| Members'Capital, 196,355.4097 and 185,364.2361 Units outstanding in 2005 and2004,respectively        |  |        | 576,007,200 |            |  |   | 336,495,535 |   |
|                                                                                                 |  | $           | 839,948,526 |            |  | $      | 483,402,990 |   |
|                                                                                                      |

7

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

SB AAA Master Fund LLCCondensedSchedule of InvestmentsJune 30, 2005(Unaudited)

|        |  |                               |        |          |             |                                                      |  |        |              |         |  |  |  |  |
|--------|--|-------------------------------|--------|----------|-------------|------------------------------------------------------|--|--------|--------------|---------|--|--|--|--|
| Sector |  | NumberofContracts             |        | Contract |             | FairValue                                            |
| Energy |  |                          |   |     |             |                                                 |  |
|   |  |                          |   |     |             | Futurescontracts purchased29.20%                     |  |   |         |    |
|   |  |                          | 6,920  |     |             | NYMEX Henry Hub Gas Swap Oct. 05 - Dec. 095.34%      |  | $      | 30,755,128   |    |
|   |  |                          | 4,875  |     |             | NYMEX Natural Gas Dec. 05 - Dec. 0912.82%            |  |   | 73,838,702   |    |
|   |  |                          |   |     |             | Other11.04%                                          |  |   | 63,609,101   |    |
|   |  |                          |   |     |             |                                                 |  |   | 168,202,931  |    |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  |                          |   |     |             | Futurescontracts sold(8.93)%                         |  |   | (51,413,809  | )  |
|   |  |                          |   |     |             | Total futures contracts20.27%                        |  |   | 116,789,122  |    |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  |                          |   |     |             | Optionsowned 20.12%                                  |  |   |         |    |
|   |  |                          | 5,476  |     |             | NYMEX Crude Aug. 05 - Dec. 079.66%                   |  |   | 55,651,440   |    |
|   |  |                          |   |     |             | Other10.46%                                          |  |   | 60,252,577   |    |
|   |  |                          |   |     |             |                                                 |  |   | 115,904,017  |    |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  |                          |   |     |             | Optionswritten(11.94)%                               |  |   | (68,801,302  | )  |
|   |  |                          |   |     |             | Total options8.18%                                   |  |   | 47,102,715   |    |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  |                          |   |     |             | Unrealizedappreciation on Swaps contracts35.33%      |  |   |         |    |
|   |  |                          | 2,625  |     |             | Gulf Coast Unleaded Gas Calendar 2005 - 200612.83%   |  |   | 73,905,361   |    |
|   |  |                          | 2,005  |     |             | NYMEX Heating Oil Calendar 2005 - 20069.44%          |  |   | 54,371,458   |    |
|   |  |                          |   |     |             | Other13.06%                                          |  |   | 75,202,145   |    |
|   |  |                          |   |     |             |                                                 |  |   | 203,478,964  |    |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  |                          |   |     |             | Unrealizeddepreciation on Swaps contracts(31.94)%    |  |   |         |    |
|   |  |                          | 2,450  |     |             | Gulf Coast Unleaded Gas Calendar 2005 - 2006(12.24)% |  |   | (70,472,066  | )  |
|   |  |                          | 1,050  |     |             | NYMEX Heating Oil Calendar 2005 - 2006(5.97)%        |  |   | (34,392,305  | )  |
|   |  |                          |   |     |             | Other(13.73)%                                        |  |   | (79,093,979  | )  |
|   |  |                          |   |     |             |                                                 |  |   | (183,958,350 | )  |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|   |  | TotalEnergy Fair Value 31.84% |        | $        | 183,412,451 |                                                 |
|   |  |                          |   |     |             |                                                 |  |   |         |    |
|        |

|                    |  |                          |             |                              |  |        |        |         |  |  |
|--------------------|--|--------------------------|-------------|------------------------------|--|--------|--------|---------|--|--|
| CountryComposition |  | Investments atFair Value |             | % ofInvestments atFair Value |
| UnitedKingdom      |  | $                        | 10,798,457  |                         |  |   | 5.89   | %  |
| UnitedStates       |  |                     | 172,613,994 |                         |  |   | 94.11  |    |
|               |  | $                        | 183,412,451 |                         |  |   | 100.00 | %  |
|                    |

Percentages arebased on Members' Capital unless otherwiseindicated.

8

----

SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

SB AAA Master Fund LLCCondensedSchedule of InvestmentsDecember 31,2004

|                              |  |                   |            |                                                    |  |           |             |         |  |  |  |  |  |  |
|------------------------------|--|-------------------|------------|----------------------------------------------------|--|-----------|-------------|---------|--|--|--|--|--|--|
| Sector                       |  | NumberofContracts |            | Contract                                           |  | FairValue |
| Energy                       |  |              |            |                                               |  |
|                         |  |              |            | Futurescontracts purchased0.37%                    |  | $         | 1,240,430   |    |
|                         |  |              |            | Futurescontracts sold9.45%                         |  |      |        |    |
|                         |  | 2,626             |            | NYMEXNatural Gas Feb. 05 – May 096.77%       |  |      | 22,776,795  |    |
|                         |  |              |            | Other2.68%                                         |  |      | 9,009,843   |    |
|                         |  |              |            |                                               |  |      | 31,786,638  |    |
|                         |  |              |            | Totalfutures contracts9.82%                        |  |      | 33,027,068  |    |
|                         |  |              |            |                                               |  |
|                         |  |              |            | Optionsowned15.16%                                 |  |      | 51,017,766  |    |
|                         |  |
|                         |  |              |            | Optionswritten (15.56)%                            |  |
|                         |  | 6,992             |            | NYMEXNatural Gas Feb. 05 – Jan 06(7.67)%     |  |      | (25,794,540 | )  |
|                         |  |              |            | Other(7.89)%                                       |  |      | (26,558,855 | )  |
|                         |  |              |            |                                               |  |      | (52,353,395 | )  |
|                         |  |
|                         |  |              |            | Unrealizedappreciation on Swaps contracts27.82%    |  |      |        |    |
|                         |  | 1,450             |            | GulfCoast Unleaded Gas Calendar 20066.50%          |  |      | 21,867,545  |    |
|                         |  | 1,080             |            | NYMEXUnleaded Gas Calendar 2005 6.98%              |  |      | 23,491,972  |    |
|                         |  |              |            | Other14.34%                                        |  |      | 48,247,212  |    |
|                         |  |              |            |                                               |  |      | 93,606,729  |    |
|                         |  |              |            | Unrealized depreciation on Swaps contracts(26.65)% |  |      |        |    |
|                         |  | 1,450             |            | GulfCoast Unleaded Gas Calendar 2006(5.60)%        |  |      | (18,846,201 | )  |
|                         |  | 820               |            | NYMEXUnleaded Gas Calendar 2005(6.29)%             |  |      | (21,159,503 | )  |
|                         |  |              |            | Other(14.76)%                                      |  |      | (49,653,590 | )  |
|                         |  |              |            |                                               |  |      | (89,659,294 | )  |
| TotalEnergy Fair Value10.59% |  | $                 | 35,638,874 |                                               |
|                              |

|                    |  |                          |            |                              |  |        |        |         |  |  |
|--------------------|--|--------------------------|------------|------------------------------|--|--------|--------|---------|--|--|
| CountryComposition |  | Investments atFair Value |            | % ofInvestments atFair Value |
| UnitedKingdom      |  | $                        | 1,752,837  |                         |  |   | 4.92   | %  |
| UnitedStates       |  |                     | 33,886,037 |                         |  |   | 95.08  |    |
|               |  | $                        | 35,638,874 |                         |  |   | 100.00 | %  |
|                    |

Percentagesare based on Members' Capital unless otherwiseindicated.

9

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

SB AAA Master Fund LLC Statements ofIncome and Expenses and Members' Capital(Unaudited)

|                                                                                                                 |  |                           |             |                         |  |        |             |         |  |        |             |         |  |        |             |         |  |  |
|-----------------------------------------------------------------------------------------------------------------|--|---------------------------|-------------|-------------------------|--|--------|-------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                                                                                            |  | ThreeMonths EndedJune 30, |             | Six Months EndedJune30, |
|                                                                                                            |  | 2005                      |             | 2004                    |  | 2005   |             | 2004    |
| **Income:**                                                                                                     |  |
| Netgains (losses) on trading of commodityinterests:                                                             |  |
| Realized gains on closedpositions                                                                               |  | $                         | 59,813,219  |                    |  | $      | 3,978,261   |    |  | $      | 89,629,447  |    |  | $      | 28,569,544  |    |
| Changein unrealized gains (losses) on openpositions                                                             |  |                      | 45,857,753  |                    |  |   | 7,896,158   |    |  |   | 135,553,460 |    |  |   | 6,856,964   |    |
|                                                                                                            |  |                      | 105,670,972 |                    |  |   | 11,874,419  |    |  |   | 225,182,907 |    |  |   | 35,426,508  |    |
| Interestincome                                                                                                  |  |                      | 2,724,168   |                    |  |   | 506,446     |    |  |   | 4,664,278   |    |  |   | 965,959     |    |
|                                                                                                            |  |                      | 108,395,140 |                    |  |   | 12,380,865  |    |  |   | 229,847,185 |    |  |   | 36,392,467  |    |
| **Expenses:**                                                                                                   |  |
| Brokeragecommissions including clearing fees of $410,082, $321,424, $727,286 and$591,163,respectively           |  |                      | 3,098,850   |                    |  |   | 2,183,710   |    |  |   | 6,040,508   |    |  |   | 4,511,007   |    |
| Professionalfees                                                                                                |  |                      | 67,862      |                    |  |   | 15,689      |    |  |   | 122,386     |    |  |   | 27,429      |    |
|                                                                                                            |  |                      | 3,166,712   |                    |  |   | 2,199,399   |    |  |   | 6,162,894   |    |  |   | 4,538,436   |    |
| **Netincome**                                                                                                   |  |                      | 105,228,428 |                    |  |   | 10,181,466  |    |  |   | 223,684,291 |    |  |   | 31,854,031  |    |
| Additions                                                                                                       |  |                      | 32,264,517  |                    |  |   | 4,371,518   |    |  |   | 75,289,996  |    |  |   | 5,911,026   |    |
| Redemptions                                                                                                     |  |                      | (36,649,976 | )                  |  |   | (13,073,006 | )  |  |   | (54,873,321 | )  |  |   | (30,355,980 | )  |
| Distributionof interest to feederfunds                                                                          |  |                      | (2,692,662  | )                  |  |   | (498,827    | )  |  |   | (4,589,301  | )  |  |   | (948,785    | )  |
| Netincrease in Members'capital                                                                                  |  |                      | 98,150,307  |                    |  |   | 981,151     |    |  |   | 239,511,665 |    |  |   | 6,460,292   |    |
| Members'capital, beginning ofperiod                                                                             |  |                      | 477,856,893 |                    |  |   | 260,536,778 |    |  |   | 336,495,535 |    |  |   | 255,057,637 |    |
| Members'capital, end ofperiod                                                                                   |  | $                         | 576,007,200 |                    |  | $      | 261,517,929 |    |  | $      | 576,007,200 |    |  | $      | 261,517,929 |    |
| Netasset value per Unit (196,355.4097 and 191,545.8749 Units outstandingat June 30, 2005 and 2004,respectively) |  | $                         | 2,933.49    |                    |  | $      | 1,365.30    |    |  | $      | 2,933.49    |    |  | $      | 1,365.30    |    |
| Netincome per Unit of MemberInterest                                                                            |  | $                         | 535.54      |                    |  | $      | 52.27       |    |  | $      | 1,141.57    |    |  | $      | 161.43      |    |
|                                                                                                                 |

10

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

SB AAA Master Fund LLC Statements ofCash Flows(Unaudited)

|                                                                                           |  |                           |             |                         |  |        |             |         |  |        |              |         |  |        |             |         |  |  |
|-------------------------------------------------------------------------------------------|--|---------------------------|-------------|-------------------------|--|--------|-------------|---------|--|--------|--------------|---------|--|--------|-------------|---------|--|--|
|                                                                                      |  | ThreeMonths EndedJune 30, |             | Six Months EndedJune30, |
|                                                                                      |  | 2005                      |             | 2004                    |  | 2005   |             | 2004    |
| Cashflows from operating activities:                                                      |  |
| Netincome                                                                                 |  | $                         | 105,228,428 |                    |  | $      | 10,181,466  |    |  | $      | 223,684,291  |    |  | $      | 31,854,031  |    |
| Adjustmentsto reconcile net income to net cash provided by (used in) operatingactivities: |  |                      |        |                    |  |
| Changes inoperating assets and liabilities:                                               |  |
| (Increase)decrease in restrictedcash                                                      |  |                      | (1,546,704  | )                  |  |   | (1,125,055  | )  |  |   | 24,480,571   |    |  |   | 15,923,186  |    |
| (Increase)decrease in net unrealized appreciation/depreciation on open futurespositions   |  |                      | (39,138,657 | )                  |  |   | (7,201,122  | )  |  |   | (83,762,054  | )  |  |   | (6,465,052  | )  |
| (Increase)decrease in unrealized appreciation on open swapscontracts                      |  |                      | 15,515,826  |                    |  |   | (16,763,737 | )  |  |   | (109,872,235 | )  |  |   | (6,832,480  | )  |
| (Increase)decrease in commodity options owned, at fairvalue                               |  |                      | (9,150,792  | )                  |  |   | 2,576,851   |    |  |   | (64,886,251  | )  |  |   | 9,089,088   |    |
| (Increase)decrease in due frombrokers                                                     |  |                      | (2,746,802  | )                  |  |   | (3,830,615  | )  |  |   | (7,629,130   | )  |  |   | (2,693,224  | )  |
| (Increase)decrease in interestreceivable                                                  |  |                      | (84,412     | )                  |  |   | (13,763     | )  |  |   | (460,313     | )  |  |   | (25,061     | )  |
| Increase(decrease) in unrealized depreciation on open swapscontracts                      |  |                      | (14,851,315 | )                  |  |   | 25,262,360  |    |  |   | 94,299,056   |    |  |   | 34,600,832  |    |
| Increase(decrease) in commodity options written, at fairvalue                             |  |                      | 9,148,623   |                    |  |   | (7,144,971  | )  |  |   | 16,447,907   |    |  |   | (19,623,957 | )  |
| Accruedexpenses:                                                                          |  |
| Increase (decrease) incommissions                                                         |  |                      | (52,074     | )                  |  |   | (58,429     | )  |  |   | 923,781      |    |  |   | 4,394       |    |
| Increase(decrease) in professionalfees                                                    |  |                      | (48,270     | )                  |  |   | (8,525      | )  |  |   | 6,254        |    |  |   | (17,085     | )  |
| Increase(decrease) in due tobrokers                                                       |  |                      | 688,143     |                    |  |   | 2,034,138   |    |  |   | 4,921,682    |    |  |   | 555,998     |    |
| Increase(decrease) in due toCGM                                                           |  |                      | —     |                    |  |   | —     |    |  |   | (22,978      | )  |  |   | —     |    |
| Netcash provided by (used in) operatingactivities                                         |  |                      | 62,961,994  |                    |  |   | 3,908,598   |    |  |   | 98,130,581   |    |  |   | 56,370,670  |    |
| Cashflows from financing activities:                                                      |  |
| Proceedsfromadditions                                                                     |  |                      | 32,264,517  |                    |  |   | 4,371,518   |    |  |   | 75,289,996   |    |  |   | 5,911,026   |    |
| Paymentsforredemptions                                                                    |  |                      | (36,649,976 | )                  |  |   | (13,073,006 | )  |  |   | (54,873,321  | )  |  |   | (30,355,980 | )  |
| Distributionof interest to feederfunds                                                    |  |                      | (2,609,144  | )                  |  |   | (483,946    | )  |  |   | (4,131,132   | )  |  |   | (919,883    | )  |
| Netcash provided by (used in) financingactivities                                         |  |                      | (6,994,603  | )                  |  |   | (9,185,434  | )  |  |   | 16,285,543   |    |  |   | (25,364,837 | )  |
| Netchange incash                                                                          |  |                      | 55,967,391  |                    |  |   | (5,276,836  | )  |  |   | 114,416,124  |    |  |   | 31,005,833  |    |
| Unrestrictedcash, at beginning ofperiod                                                   |  |                      | 331,987,915 |                    |  |   | 219,171,775 |    |  |   | 273,539,182  |    |  |   | 182,889,106 |    |
| Unrestrictedcash, at end ofperiod                                                         |  | $                         | 387,955,306 |                    |  | $      | 213,894,939 |    |  | $      | 387,955,306  |    |  | $      | 213,894,939 |    |
|                                                                                           |

11

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

2.    Financial Highlights:

Changes in Net Asset Value per Redeemable Unit for the three and sixmonths ended June 30, 2005 and 2004 were as follows:

|                                                                       |  |                           |          |                         |  |        |        |         |  |        |          |         |  |        |        |         |  |  |
|-----------------------------------------------------------------------|--|---------------------------|----------|-------------------------|--|--------|--------|---------|--|--------|----------|---------|--|--------|--------|---------|--|--|
|                                                                  |  | ThreeMonths EndedJune 30, |          | Six Months EndedJune30, |
|                                                                  |  | 2005                      |          | 2004                    |  | 2005   |        | 2004    |
| Netrealized and unrealized gains*                                     |  | $                         | 327.76   |                    |  | $      | 32.14  |    |  | $      | 704.60   |    |  | $      | 101.86 |    |
| Interestincome                                                        |  |                      | 8.49     |                    |  |   | 1.64   |    |  |   | 14.59    |    |  |   | 3.07   |    |
| Expensesand allocation to Special Limited Partner**                   |  |                      | (74.40   | )                  |  |   | (5.81  | )  |  |   | (156.94  | )  |  |   | (11.16 | )  |
| Increasefor theperiod                                                 |  |                      | 261.85   |                    |  |   | 27.97  |    |  |   | 562.25   |    |  |   | 93.77  |    |
| NetAsset Value per Redeemable Unit, beginning ofperiod                |  |                      | 1,450.14 |                    |  |   | 855.19 |    |  |   | 1,149.74 |    |  |   | 789.39 |    |
| NetAsset Value per Redeemable Unit, end ofperiod                      |  | $                         | 1,711.99 |                    |  | $      | 883.16 |    |  | $      | 1,711.99 |    |  | $      | 883.16 |    |
| *  Includesbrokerage commissions allocated from theMaster.  |  |
| **  Excludesbrokerage commissions allocated from theMaster. |  |
|                                                                       |

|                                                       |  |        |        |          |  |        |         |          |  |        |       |          |  |        |         |          |  |  |
|-------------------------------------------------------|--|--------|--------|----------|--|--------|---------|----------|--|--------|-------|----------|--|--------|---------|----------|--|--|
| Ratiosto average netassets:***                        |  |   |   |     |  |   |    |     |  |
| Net investmentloss before incentive feeallocation**** |  |   | (3.3   | )%  |  |   | (5.4    | )%  |  |   | (3.7  | )%  |  |   | (5.5    | )%  |
| Operatingexpense                                      |  |   | 5.5    | %   |  |   | 6.2     | %   |  |   | 5.8   | %   |  |   | 6.3     | %   |
| Incentive feeallocation                               |  |   | 4.2    | %   |  |   | — |     |  |   | 10.0  | %   |  |   | — |     |
| Total expenses and incentive feeallocation            |  |   | 9.7    | %   |  |   | 6.2     | %   |  |   | 15.8  | %   |  |   | 6.3     | %   |
| Totalreturn:                                          |  |   |   |     |  |   |    |     |  |
| Total return beforeincentive feeallocation            |  |   | 22.4   | %   |  |   | 3.3     | %   |  |   | 60.0  | %   |  |   | 11.9    | %   |
| Incentive feeallocation                               |  |   | (4.3   | )%  |  |   | — |     |  |   | (11.1 | )%  |  |   | — |     |
| Total return after incentive feeallocation            |  |   | 18.1   | %   |  |   | 3.3     | %   |  |   | 48.9  | %   |  |   | 11.9    | %   |
|                                                       |

|     |                                                 |
|-----|-------------------------------------------------|
| *** | Annualized(except for incentive fee allocation) |

|      |                                                                            |
|------|----------------------------------------------------------------------------|
| **** | Interest income less total expenses(exclusive of incentive fee allocation) |

The aboveratios may vary for individual investors based on the timing of capitaltransactions during the year. Additionally, these ratios are calculatedfor the Limited Partner class using the Limited Partners' shareof income, expenses and average net assets.

12

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

Financial Highlights of theMaster:

|                                             |  |                           |          |                         |  |        |          |         |  |        |          |         |  |        |          |         |  |  |
|---------------------------------------------|--|---------------------------|----------|-------------------------|--|--------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                        |  | ThreeMonths EndedJune 30, |          | Six Months EndedJune30, |
|                                        |  | 2005                      |          | 2004                    |  | 2005   |          | 2004    |
| Netrealized and unrealized gains*           |  | $                         | 522.04   |                    |  | $      | 49.73    |    |  | $      | 1,118.42 |    |  | $      | 156.69   |    |
| InterestIncome                              |  |                      | 13.85    |                    |  |   | 2.61     |    |  |   | 23.78    |    |  |   | 4.89     |    |
| Expenses**                                  |  |                      | (0.35    | )                  |  |   | (0.07    | )  |  |   | (0.63    | )  |  |   | (0.15    | )  |
| Increasefor theperiod                       |  |                      | 535.54   |                    |  |   | 52.27    |    |  |   | 1,141.57 |    |  |   | 161.43   |    |
| Distributions                               |  |                      | (13.69   | )                  |  |   | (2.58    | )  |  |   | (23.40   | )  |  |   | (4.80    | )  |
| NetAsset Value per Unit, beginning ofperiod |  |                      | 2,411.64 |                    |  |   | 1,315.61 |    |  |   | 1,815.32 |    |  |   | 1,208.67 |    |
| NetAsset Value per Unit, end ofperiod       |  | $                         | 2,933.49 |                    |  | $      | 1,365.30 |    |  | $      | 2,933.49 |    |  | $      | 1,365.30 |    |
|                                             |

|   |                               |
|---|-------------------------------|
| * | Includesbrokerage commissions |

|    |                               |
|----|-------------------------------|
| ** | Excludes brokeragecommissions |

|                                 |  |        |      |          |  |        |      |          |  |        |      |          |  |        |      |          |  |  |
|---------------------------------|--|--------|------|----------|--|--------|------|----------|--|--------|------|----------|--|--------|------|----------|--|--|
| Ratios to average netassets:*** |  |
| Net investmentloss****          |  |   | (0.3 | )%  |  |   | (2.6 | )%  |  |   | (0.7 | )%  |  |   | (2.7 | )%  |
| Operatingexpense                |  |   | 2.5  | %   |  |   | 3.4  | %   |  |   | 2.7  | %   |  |   | 3.6  | %   |
| Totalreturn                     |  |   | 22.2 | %   |  |   | 4.0  | %   |  |   | 62.9 | %   |  |   | 13.4 | %   |
|                                 |

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

|      |                                    |
|------|------------------------------------|
| **** | Interestincome less total expenses |

The above ratiosmay vary for individual investors based on the timing of capitaltransactions during the  year.

13

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SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

3.    Trading Activities:

ThePartnership was formed for the purpose of trading contracts in avariety of commodity interests, including derivative financialinstruments and derivative commodity instruments. The Partnershipinvests the majority of its assets through a "masterfund/feeder fund" structure. The results of thePartnership's investment in the Master are shown in theStatements of Income and Expenses and Partners' Capital and arediscussed in Item 2, Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

The respectiveCustomer Agreements between the Partnership and CGM and the Master andCGM give the Partnership and the Master, respectively, the legal rightto net unrealized gains and losses.

All of the commodityinterests owned by the Master are held for trading purposes. Theaverage fair values of these interests during the six and twelve monthsended June 30, 2005 and December 31, 2004, based on a monthlycalculation, were $108,011,613 and $37,750,006, respectively. The fairvalues of these commodity interests, including options and swapsthereon, if applicable, at June 30, 2005 and December 31, 2004 were$183,412,451 and $35,638,874, respectively. Fair values for exchangetraded commodity futures and options are based on quoted market pricesfor those futures and options. Fair values for all other financialinstruments for which market quotations are not readily available arebased on calculations approved by the General Partner.

4.    Financial Instrument Risks:

In the normal course ofits business, the Partnership, through its investment in the Master, isparty to financial instruments with off-balance sheet risk, includingderivative financial instruments and derivative commodity instruments.These financial instruments may include forwards, futures, options andswaps, whose values are based upon an underlying asset, index, orreference rate, and generally represent future commitments to exchangecurrencies or cash flows, to purchase or sell other financialinstruments at specific terms at specified future dates, or, in thecase of derivative commodity instruments, to have a reasonablepossibility to be settled in cash, through physical delivery or withanother financial instrument. These instruments may be traded on anexchange or over-the-counter ("OTC").Exchange-traded instruments are standardized and include futures andcertain option contracts. OTC contracts are negotiated betweencontracting parties and include forwards and certain options. Each ofthese instruments is subject to various risks similar to those relatedto the underlying financial instruments including market and creditrisk. In general, the risks associated with OTC contracts are greaterthan those associated with exchange-traded instruments because of thegreater risk of default by the counterparty to an OTC contract. TheMaster's swaps contracts are OTC contracts.

Market risk isthe potential for changes in the value of the financial instrumentstraded by the Master due to market changes, including interest andforeign exchange rate movements and fluctuations in commodity orsecurity prices. Market risk is directly impacted by the volatility andliquidity in the markets in which the related underlying assets aretraded.

Credit risk is the possibility that a loss may occur dueto the failure of a counterparty to perform according to the terms of acontract. Credit risk with respect to exchange-traded instruments isreduced to the extent that an exchange or clearing organization acts asa counterparty to the transactions. ThePartnership's/Master's risk of loss in the event ofcounterparty default is typically limited to the amounts recognized inthe statements of financial condition and not represented by thecontract or notional amounts of the instruments. The Partnership,through its investment in the Master, has concentration risk becausethe sole counterparty or broker with respect to the Master'sassets is CGM.

The General Partner monitors and controls thePartnership's/Master's risk exposure on a daily basisthrough financial, credit and risk management monitoring systems, andaccordingly believes that it has 

14

----

SalomonSmith Barney AAA Energy Fund L.P. II Notes to FinancialStatements June 30, 2005(Unaudited)

effective procedures for evaluating andlimiting the credit and market risks to which the Partnership/Master issubject. These monitoring systems allow the General Partner tostatistically analyze actual trading results with risk adjustedperformance indicators and correlation statistics. In addition, on-linemonitoring systems provide account analysis of futures, forwards andoptions positions by sector, margin requirements, gain and losstransactions and collateral positions.

The majority of theseinstruments mature within one year of June 30, 2005. However, due tothe nature of the Partnership's/Master's business, theseinstruments may not be held tomaturity.

15

----

Item2.    Management's Discussion and Analysis of FinancialCondition and Results of Operations.

Liquidity andCapital Resources

The Partnership does not engage inthe sale of goods or services. Its only assets are its investment inthe Master and cash. The Master does not engage in the sale of goods orservices. Because of the low margin deposits normally required incommodity futures trading, relatively small price movements may resultin substantial losses to the Partnership. While substantial lossescould lead to a decrease in liquidity, no such losses occurred duringthe second quarter of 2005.

The Partnership's capitalconsists of the capital contributions of the partners as increased ordecreased by its investment in the Master, expenses, interest income,redemptions of Redeemable Units and distributions of profits, ifany.

For the six months ended June 30, 2005, Partnership capitalincreased 108.6% from $118,023,217 to $246,170,907. Thisincrease was attributable to net income from operations of $75,476,429coupled with the addition of 48,549.4300 Redeemable Units totaling$63,727,000, partially offset by the redemption of 7,409.4865Redeemable Units totaling $11,055,739. Future redemptions can impactthe amount of funds available for investment in the Master insubsequent periods.

The Master's capital consists of thecapital contributions of the members as increased or decreased byrealized and/or unrealized gains or losses on commodity futurestrading, expenses, interest income, redemptions of Units anddistributions of profits, if any.

For the six months ended June30, 2005, the Master's capital increased 71.2% from$336,495,535 to $576,007,200. This increase was attributable to netincome from operations of $223,684,291, coupled with the addition of35,296.0105 Units totaling $75,289,996 which was partially offset bythe redemption of 24,304.8373 Units totaling $54,873,321 anddistributions of interest totaling $4,589,301 to the non-managingmembers of the Master. Future redemptions can impact the amount offunds available for investments in commodity contract positions insubsequent periods.

Critical AccountingPolicies

The preparation of financial statements inconformity with accounting principles generally accepted in the UnitedStates of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities, anddisclosures of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from theseestimates.

All commodity interests (including derivativefinancial instruments and derivative commodity instruments) are usedfor trading purposes. The commodity interests are recorded on tradedate and open contracts are recorded in the statement of financialcondition at fair value on the last business day of the period, whichrepresents market value for those commodity interests for which marketquotations are readily available or other measures of fair value deemedappropriate by management of the General Partner for those commodityinterests and foreign currencies for which market quotations are notreadily available, including dealer quotes for swaps and certain optioncontracts. Investments in commodity interests denominated in foreigncurrencies are translated into U.S. dollars at the exchange ratesprevailing on the last business day of the period. Realized gains(losses) and changes in unrealized values on commodity interests andforeign currencies are recognized in the period in which the contractis closed or the changes occur and are included in net gains (losses)on trading of commodity interests.

The value of thePartnership's investment in the Master reflects thePartnership's proportional interest in the members' capitalof the Master. All of the income and expenses and unrealized andrealized gains and losses from the commodity transactions of the Masterare allocated pro rata among the investors at the time of suchdetermination.

Foreign currency contracts are those contractswhere the Partnership agrees to receive or deliver a fixed quantity offoreign currency for an agreed-upon price on an agreed future date.Foreign currency contracts are valued daily, and thePartnership's net equity therein, representing unrealized gain orloss 

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on the contracts as measured by thedifference between the forward foreign exchange rates at the dates ofentry 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 values on foreign currency contractsare recognized in the period in which the contract is closed or thechanges occur and are included in the statements of income and expensesand partners' capital.

Results ofOperations

During the Partnership's secondquarter of 2005, the Net Asset Value per Redeemable Unit increased18.1% from $1,450.14 to $1,711.99 as compared to an increase of3.3% in the second quarter of 2004. The Partnership experienceda net trading gain before brokerage commissions and related fees in thesecond quarter of 2005 of $48,088,916. Gains were primarilyattributable to the Master's trading of commodity futures inNYMEX Crude Oil, NYMEX Gasoline, NYMEX Heating Oil, IPE Natural Gas,NYMEX Natural Gas, NYMEX Unleaded Gas, and OTC Energy Swaps and werepartially offset by losses in IPE Crude Oil, NYMEX Energy Swaps and IPEGas Oil. The Partnership experienced a net trading gain beforebrokerage commissions and related fees in the second quarter of 2004 of$4,365,960. Gains were primarily attributable to the Master'strading of commodity futures in NYMEX Heating Oil, and NYMEX Naturalgas and were partially offset by losses in energy swaps, IPE Gas Oil,NYMEX Unleaded Gas and NYMEX Crude Oil.

The second quarter of2005 trading results reflected continued vitality in the global energymarkets with positive performance each month. While the first quartersaw strong one direction moves in price across all sectors, the secondquarter witnessed the development of a more two-sided market and theaccentuation of price disequilibrium over the time horizon for forwardcontracts. The discretionary and non-directional trading style of thePartnership's Advisor generated an 18.1% return for thequarter.

Receiving the most public attention has been the highand now volatile price of crude oil. The near term contract experienceda $15.00 a barrel range in price during the quarter. But morerelevantly to the Advisor's trading this occurred in severalphases and more than once. In April, crude had a range of $8.00 abarrel, swung $12.00 from April's high to May's low of$46.20 a barrel and back to the low $60s in June. Options trading andspread positions were profitable during this period. Trading in heatingoil and gasoline was also profitable as the market reflected seasonalusage speculation and led to volatile market conditions.

Tradingin natural gas was also profitable with successful spread trading beingshort the near months while maintaining a bullish position on the longdated contracts. Natural gas started to reflect some of the dynamics ofthe deferred crude contracts showing over bought conditions on the nearmonths not justified by long-term production and supplyexpectations.

During the six months ended June 30, 2005, the NetAsset Value per Redeemable Unit increased 48.9% from $1,149.74to $1,711.99 as compared to an increase of 11.9% in the sameperiod of 2004. The Partnership experienced a net trading gain beforebrokerage commissions and related fees in the six months ended June 30,2005 of $97,180,305. Gains were primarily attributable to theMaster's trading of commodity futures in NYMEX Crude Oil, NYMEXGasoline, NYMEX Heating Oil, IPE Natural Gas, NYMEX Natural Gas, NYMEXUnleaded Gas, and OTC Energy Swaps and were partially offset by lossesin IPE Crude Oil, NYMEX Energy Swaps and IPE Gas Oil. The Partnershipexperienced a net trading gain before brokerage commissions and relatedfees in the six months ended June 30, 2004 of $13,268,666. Gains wereprimarily attributable to the Master's trading of commodityfutures in NYMEX Crude Oil, NYMEX Heating Oil, and NYMEX Natural Gasand NYMEX Unleaded Gas and were partially offset by losses in IPE BrentCrude Oil.

Commodity futures markets are highly volatile. Thepotential for broad and rapid price fluctuations increases the risksinvolved in commodity trading, but also increases the possibility ofprofit. The profitability of the Partnership (and the Master) dependson the Advisor's ability to forecast price changes in energy andenergy-related commodities. Such price changes are influenced by, amongother things, changing supply and demand relationships, weather,governmental, agricultural, commercial and trade programs and policies,national and international political and economic events and changes ininterest rates. To the extent that the Advisor correctly makes suchforecasts, the Partnership (and the Master) expects to increase capitalthrough operations.

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Interest income on 80% ofthe Partnership's average daily equity allocated to it by theMaster was earned at a 30 -day U.S. Treasury bill rate determinedweekly by CGM based on the average non-competitive yield on3- month U.S. Treasury bills maturing in 30 days. CGM maycontinue to maintain the Master's assets in cash and/or place allof the Master's assets in 90-day Treasury bills and pay thePartnership its allocated share of 80% of the interest earned onthe Treasury bills purchased. CGM will retain 20% of anyinterest earned on Treasury bills purchased. Interest income allocatedfrom Master for the three and six months ended June 30, 2005 increasedby $1,021,415 and $1,627,063, as compared to the corresponding periodsin 2004. The increase in interest income is primarily due to greaterassets and an increase in interest rates during the three and sixmonths ended June 30, 2005 as compared to 2004.

Management feesare calculated as a percentage of the Partnership's net assetvalue as of the end of each month and are affected by tradingperformance and redemptions. Management fees for the three and sixmonths ended June 30, 2005 increased by $720,062 and $1,100,028, ascompared to the corresponding periods in 2004. The increase inmanagement fees is due to an increase in net assets during the threeand six months ended June  30, 2005 as compared to 2004.

Administrative fees are calculated as a percentage of thePartnership's net asset value as of the end of each month and areaffected by trading performance and redemptions. Administrative feesfor the three and six months ended June 30, 2005 increased by $180,016and $275,006, as compared to the corresponding periods in 2004. Theincrease in administrative fees is due to an increase in net assetsduring the three and six months ended June 30, 2005 as compared to2004.

Special limited partner profit share allocations(incentive fees) are based on the new trading profits generated by theAdvisor at the end of the year, as defined in the advisory agreementsbetween the Partnership, the General Partner and the Advisor. Theprofit share allocation accrued for the three and six months endedJune  30, 2005 was $9,025,767 and $18,375,094. There was noallocation accrued for the three and six months ended June 30,2004.

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Item 3.    Quantitative and QualitativeDisclosures about Market Risk

All of the Partnership'sassets are subject to the risk of trading loss through its investmentin the Master. The Master is a speculative commodity pool. The marketsensitive instruments held by it are acquired for speculative tradingpurposes, and all or substantially all of the Master's assets aresubject to the risk of trading loss. Unlike an operating company, therisk of market sensitive instruments is integral, not incidental, tothe Master's main line of business.

Market movementsresult in frequent changes in the fair value of the Master's openpositions and, consequently, in its earnings and cash flow. TheMaster'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 effects of the Master's open positions andthe liquidity of the markets in which it trades.

The Masterrapidly acquires and liquidates both long and short positions in arange of different markets. Consequently, it is not possible to predicthow a particular future market scenario will affect performance, andthe Master's past performance is not necessarily indicative ofits future results.

Value at Risk is a measure of the maximumamount which the Master could reasonably be expected to lose in a givenmarket sector. However, the inherent uncertainty of the Master'sspeculative trading and the recurrence in the markets traded by theMaster of market movements far exceeding expectations could result inactual trading or non-trading losses far beyond the indicated Value atRisk or the Master's experience to date (i.e., "riskof ruin"). In light of the foregoing as well as the risksand uncertainties intrinsic to all future projections, the inclusion ofthe quantification in this section should not be considered toconstitute any assurance or representation that the Master'slosses in any market sector will be limited to Value at Risk or by theMaster's attempts to manage its market risk.

Exchangemaintenance margin requirements have been used by the Master as themeasure of its Value at Risk. Maintenance margin requirements are setby exchanges to equal or exceed the maximum losses reasonably expectedto be incurred in the fair value of any given contract in95%-99% of any one-day interval. Maintenance margin hasbeen used rather than the more generally available initial margin,because initial margin includes a credit risk component, which is notrelevant to Value at Risk.

The following table indicates thetrading Value at Risk associated with the Master's open positionsby market category as of June 30, 2005 and the highest, lowest andaverage value during the three months ended June 30, 2005. All openposition trading risk exposures of the Master have been included incalculating the figures set forth below. As of June 30, 2005, theMaster's total capitalization was $576,007,200. There has been nomaterial change in the trading Value at Risk information previouslydisclosed in the Partnership's Annual Report on Form 10-K for theyear ended December 31, 2004.

June 30,2005

|              |  |               |            |                         |  |                                |      |                   |  |                      |            |        |  |   |            |        |  |   |            |        |  |  |
|--------------|--|---------------|------------|-------------------------|--|--------------------------------|------|-------------------|--|----------------------|------------|--------|--|---|------------|--------|--|---|------------|--------|--|--|
|         |  |          |            |                    |  | ThreeMonths Ended June 30,2005 |
| MarketSector |  | Value at Risk |            | % ofTotalCapitalization |  | High Value atRisk              |      | Low Value at Risk |  | Average Value*atRisk |
| Energy       |  | $             | 38,464,932 |                    |  |                           | 6.68 | %            |  | $                    | 45,410,038 |   |  | $ | 22,733,165 |   |  | $ | 37,913,492 |   |
| EnergySwaps  |  |          | 3,710,046  |                    |  |                           | 0.64 | %            |  | $                    | 3,710,046  |   |  | $ | 3,300,000  |   |  | $ | 3,436,682  |   |
| Total        |  | $             | 42,174,978 |                    |  |                           | 7.32 | %            |  |
|              |

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

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Item 4.    Controls and Procedures

The General Partner of the Partnership, with the participation ofthe General Partner's Chief Executive Officer and the ChiefFinancial Officer, has evaluated the effectiveness of the design andoperation of its disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) of the Exchange Act) with respect to thePartnership within 90 days of the filing date of this quarterly report,and, based on this evaluation, has concluded that these disclosurecontrols and procedures are effective. Additionally, there were nosignificant changes in the Partnership's internal controls or inother factors that could significantly affect these controls subsequentto the date of this evaluation, including any corrective actions withregard to significant deficiencies and materialweaknesses.

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PART II. OTHERINFORMATION

Item 1.    Legal Proceedings

Thefollowing information supplements and amends our discussion set forthunder Item, 3 "Legal Proceedings" in thePartnership's Annual Report on Form 10-K for the year endedDecember 31, 2004 and under Part II, Item 1, "LegalProceedings" in the Partnership's Quarterly Reporton Form 10-Q for the quarter ended March 31, 2005.

Enron-Related Civil Actions

On June 13, 2005, Citigroupannounced a settlement of the Enron class action litigation (Newby, etal. v. Enron Corp., et al.) currently pending in the United StatesDistrict Court for the Southern District of Texas, Houston Division.This settlement resolves all claims against Citigroup brought on behalfof the class of purchasers of publicly traded equity and debtsecurities issued by Enron and Enron-related entities between September9, 1997 and December 2, 2001. The settlement, which involves a pre-taxpayment of $2.0 billion to the settlement class, is fully covered byCitigroup's existing litigation reserves. It is subject toapproval by the Board of Regents of the University of California (thelead plaintiff), the Citigroup Board and the District Court inTexas.

Mutual Funds

On May 31, 2005, Citigroupannounced that Smith Barney Fund Management LLC and Citigroup GlobalMarkets completed a settlement with the SEC resolving an investigationby the SEC into matters relating to arrangements between certain SmithBarney mutual funds, an affiliated transfer agent and an unaffiliatedsub-transfer agent. Under the terms of the settlement, Citigroup agreedto pay fines totaling $208.1 million. The settlement, in whichCitigroup neither admitted nor denied any wrongdoing or liability,includes allegations of willful misconduct by Smith Barney FundManagement LLC and Citigroup Global Markets in failing to discloseaspects of the transfer agent arrangements to certain mutual fundinvestors.

Item 2.    Unregistered Sales of Equity Securitiesand Use of Proceeds

For the three months ended June30, 2005 there were additional sales of 17,852.0392 Redeemable Unitstotaling $26,852,000. The Redeemable Units were issued in reliance uponapplicable exemptions from registration under Section 4(2) of theSecurities Act of 1933, as amended, and Section 506 of Regulation Dpromulgated thereunder.

Proceeds from the sale ofadditional Redeemable Units are used in the trading of commodityinterests including futures contracts, options, forwards and swapcontracts.

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

|                             |  |                                                 |            |                                             |  |                                                                                               |  |                                                                                                                          |     |        |  |        |     |        |  |  |  |  |
|-----------------------------|--|-------------------------------------------------|------------|---------------------------------------------|--|-----------------------------------------------------------------------------------------------|--|--------------------------------------------------------------------------------------------------------------------------|-----|--------|--|--------|-----|--------|--|--|--|--|
| Period                      |  | (a)Total Number of Shares (or Units) Purchased* |            | (b)Average Price Paid per Share (or Unit)** |  | (c) TotalNumber of Shares (or Units) Purchased as Part of PubliclyAnnounced Plans or Programs |  | (d) Maximum Number (orApproximate Dollar Value) of Shares (or Units) that May YetBe Purchased Under the Plans orPrograms |
| April 1, 2005 -April30,2005 |  |                                            | 408.4380   |                                        |  | $1,502.01                                                                                     |  |                                                                                                                     | N/A |   |  |   | N/A |   |
| May1, 2005 -May 31,2005     |  |                                            | 3,299.2381 |                                        |  | $1,569.03                                                                                     |  |                                                                                                                     | N/A |   |  |   | N/A |   |
| June1, 2005 -June 30,2005   |  |                                            | 773.5027   |                                        |  | $1,711.99                                                                                     |  |                                                                                                                     | N/A |   |  |   | N/A |   |
| Total                       |  |                                            | 4,481.1788 |                                        |  | $1,594.34                                                                                     |  |                                                                                                                     | N/A |   |  |   | N/A |   |
|                             |

|  |                                                                                                                                                                                                       |
|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | *Generally, Limited Partners are permitted to redeem their RedeemableUnits as of the end of each month on 10 days' notice to theGeneral Partner. Under certain circumstances, the General Partner can |

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|  |                                                                                                                                                                                                                                                                                          |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | compel redemption but to date, the GeneralPartner has not exercised this right. Purchases of Redeemable Units bythe Partnership reflected in the chart above were made in the ordinarycourse of the Partnership's business in connection with effectingredemptions for Limited Partners. |

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

Item3.    Defaults Upon Senior Securities – None

Item4.    Submission of Matters to a Vote of Security Holders –None

Item 5.    Other Information – None

Item6.    Exhibits

|        |                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The exhibits required tobe filed by Item 601 of Regulation S-K are incorporated herein byreference to the exhibit index of the Partnership's Annual Reporton Form 10-K for the period ended December  31, 2004. |

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 andDirector).

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

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

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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 behalfby the undersigned, thereunto duly authorized.

SALOMON SMITH BARNEY AAA ENERGY FUND L.P.II

|        |  |                                                              |  |  |  |  |
|--------|--|--------------------------------------------------------------|--|--|--|--|
| By:    |  | CitigroupManaged Futures LLC                                 |
|   |  | (General Partner)                                            |
| By:    |  | /s/David J. Vogel                                            |
|   |  | David J. Vogel Presidentand Director                         |
| Date:  |  | August9, 2005                                                |
| By:    |  | /s/Daniel R. McAuliffe, Jr.                                  |
|   |  | Daniel R. McAuliffe, Jr.Chief Financial Officer and Director |
| Date:  |  | August9, 2005                                                |
|        |

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