10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A
Amendment No. 1 to Form 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2008

OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 000-51282

CITIGROUP FAIRFIELD FUTURES FUND L.P. II

(Exact name of registrant as specified in its charter)


New York		56-2421596


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

c/o Citigroup Managed Futures LLC

55 East 59^th Street — 10^th Floor

New York, New York 10022

(Address of principal executive offices) (Zip Code)

(212) 559-2011

(Registrant’s telephone number, including area code)

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

Yes X No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definitions of “large accelerated filer” and “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer		Accelerated filer		Non-accelerated filer X

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

Yes No X

As of October 31, 2008, 57,828.6742 Limited Partnership Redeemable Units were outstanding.

PART I

Item 1. Financial Statements

Citigroup Fairfield Futures Fund L.P. II
Statements of Financial Condition
(Unaudited)


	September 30,		December 31,
	2008		2007

Assets:

Investment in Master, at fair value	$	61,928,115	$	69,459,132
Cash		208,378		165,627
Distribution receivable		44,261		136,665

Total assets	$	62,180,754	$	69,761,424

Liabilities and Partners’ Capital:

Liabilities:
Accrued expenses:
Brokerage commissions	$	233,178	$	261,605
Management fees		103,039		115,696
Administrative fees		25,760		28,924
Other		124,066		82,074
Redemptions payable		3,145,550		1,316,737

Total liabilities		3,631,593		1,805,036

Partners’ Capital:
General Partner, 1,250.2679 and 724.0407 Unit equivalents outstanding in 2008 and 2007, respectively		1,187,129		636,359
Special Limited Partner, 614.6964 and 100.0000 Redeemable Units of Limited Partnership Interest outstanding in 2008 and 2007, respectively		583,654		87,890
Limited Partners, 59,798.4495 and 76,495.9137 Redeemable Units of Limited Partnership Interest outstanding in 2008 and 2007, respectively		56,778,378		67,232,139

Total partners’ capital		58,549,161		67,956,388

Total liabilities and partners’ capital	$	62,180,754	$	69,761,424

See accompanying notes to financial statements.

Citigroup Fairfield Futures Fund L.P. II
Statements of Income and Expenses and Partners’ Capital
(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Income:
Net realized gains (losses) on closed positions allocated from Master	$	1,196,824		$	(1,830,805	)	$	11,582,700		$	6,814,586
Change in net unrealized gains (losses) on open positions allocated from Master		(3,891,584	)		550,383			(2,241,817	)		176,971
Interest income allocated from Master		187,302			623,822			670,006			1,793,704
Expenses allocated from Master		(77,861	)		(75,006	)		(282,623	)		(206,615	)

Total income (loss)		(2,585,319	)		(731,606	)		9,728,266			8,578,646

Expenses:
Brokerage commissions		707,884			799,244			2,279,496			2,200,449
Management fees		312,843			353,544			1,007,481			972,676
Administrative fees		78,212			88,386			251,872			243,168
Other		50,065			49,181			146,054			145,499

Total expenses		1,149,004			1,290,355			3,684,903			3,561,792

Net income (loss) before allocation to Special Limited Partner		(3,734,323	)		(2,021,961	)		6,043,363			5,016,854
Allocation to Special Limited Partner		—			—			(517,496	)		—

Net income (loss) after allocation to Special Limited Partner		(3,734,323	)		(2,021,961	)		5,525,867			5,016,854
Additions — Limited Partners		1,145,000			8,504,000			4,079,000			14,195,000
Additions — General Partner		500,000			—			500,000			—
Additions — Special Limited Partner		—			—			517,496			—
Redemptions — Limited Partners		(5,573,095	)		(1,150,674	)		(20,029,590	)		(8,728,809	)

Net increase (decrease) in Partners’ Capital		(7,662,418	)		5,331,365			(9,407,227	)		10,483,045
Partners’ Capital, beginning of period		66,211,579			66,683,121			67,956,388			61,531,441

Partners’ Capital, end of period	$	58,549,161		$	72,014,486		$	58,549,161		$	72,014,486

Net asset Value per Unit (61,663.4138 and 83,782.1510 Units outstanding at September 30, 2008 and 2007, respectively)	$	949.50		$	859.54		$	949.50		$	859.54

Net income (loss) per Redeemable Unit of Limited Partnership Interest and General Partner Unit equivalent	$	(55.94	)	$	(24.88	)	$	70.60		$	66.02

See accompanying notes to financial statements.

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)


1.	General:

Citigroup Fairfield Futures Fund L.P. II (the “Partnership”) is a limited partnership which was organized on December 18, 2003 under the partnership laws of the State of New York to engage in the speculative trading of a diversified portfolio of commodity interests including futures contracts, options, swaps and forward contracts. The commodity interests that are traded by the Partnership are volatile and involve a high degree of market risk.

During the initial offering period (January 12, 2004 through March 12, 2004), the Partnership sold 28,601 Redeemable Units of Limited Partnership Interest (“Redeemable Units”) and 285 Units of General Partnership Interest. The Partnership commenced trading on March 15, 2004.

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

On June 1, 2006, the Partnership allocated substantially all of its capital to the CMF Graham Capital Master Fund L.P. (the “Master”), a limited partnership organized under the partnership laws of the State of New York. The Partnership purchased 74,569.3761 Units of the Master with cash of $75,688,021. The Master was formed in order to permit accounts managed then or in the future by Graham Capital Management L.P. (“Graham” or the “Advisor”) using the Multi-Trend Program at 125% Leverage, to invest together in one trading vehicle. The General Partner of the Partnership is the general partner of the Master. In addition, the Advisor is a Special Limited Partner of the Partnership. Individual and pooled accounts currently managed by the Advisor, including the Partnership, are permitted to be limited partners of the Master. The Master’s commodity broker is CGM. The General Partner and the Advisor believe that trading through this master-feeder structure promotes efficiency and economy in the trading process. Expenses to investors as a result of the investment in the Master are approximately the same and redemption rights are not affected.

At September 30, 2008, the Partnership owned approximately 30.2% of the Master. At December 31, 2007, the Partnership owned approximately 32.5% of the Master. It is the Partnership’s intention to continue to invest substantially all of its assets in the Master. The performance of the Partnership is directly affected by the performance of the Master. The Masters’ Statement of Financial Condition, Schedules of Investments and Statements of Income and Expenses and Partner’s Capital, are included herein.

The accompanying financial statements are unaudited but, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Partnership’s financial condition at September 30, 2008 and December 31, 2007 and the results of its operations and changes in partners’ capital for the three and nine months ended September 30, 2008 and 2007. These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. These financial statements should be read together with the financial statements and notes included in the Partnership’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2007.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from these estimates.

The Partnership has elected not to provide a Statement of Cash Flows as permitted by Statement of Financial Accounting Standards No. 102 “Statement of Cash Flows-Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale” (“FAS 102”).

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

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

The Master’s Statements of Financial Condition and Schedules of Investments as of September 30, 2008 and December 31, 2007 and Statements of Income and Expenses and Partners’ Capital for the three and nine months ended September 30, 2008 and 2007 are presented below:

CMF Graham Capital Master Fund L.P.
Statement of Financial Condition
(Unaudited)


	September 30,		December 31,
	2008		2007

Assets:
Equity in commodity futures trading account:
Cash	$	190,959,244	$	191,110,075
Cash margin		21,816,249		24,672,137
Net unrealized appreciation on open futures contracts		992,782		278,888
Unrealized appreciation on open forward contracts		18,525,964		6,792,116

		232,294,239		222,853,216
Interest receivable		146,458		424,676

Total assets	$	232,440,697	$	223,277,892

Liabilities and Partners’ Capital:
Liabilities:
Unrealized depreciation on open forward contracts	$	27,355,146	$	7,439,350
Accrued expenses:
Professional fees		23,786		24,122
Distribution payable		146,458		424,676
Redemptions payable		—		1,795,357

Total liabilities		27,525,390		9,683,505

Partners’ Capital:
Limited Partners’ Capital, 156,990.7273 and 186,334.8221 Redeemable Units of Limited Partnership Interest outstanding in 2008 and 2007, respectively		204,915,307		213,594,387

Total liabilities and partners’ capital	$	232,440,697	$	223,277,892

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

CMF Graham Capital Master Fund L.P.
Schedule of Investments
September 30, 2008
(Unaudited)


				% of Partners’
	Fair Value			Capital

Futures Contracts Purchased
Currencies	$	(9,820	)		(0.01	)%
Energy		(157,847	)		(0.08	)
Grains		(42,675	)		(0.02	)
Indices		92,025			0.05
Interest Rates Non U.S.		(224,059	)		(0.11	)
Interest Rates U.S		(189,369	)		(0.09	)
Softs		(58,225	)		(0.03	)

Total futures contracts purchased		(589,970	)		(0.29	)

Futures Contracts Sold
Currencies		5,088			0.00	*
Energy		67,578			0.03
Grains		376,032			0.18
Indices		635,245			0.31
Interest Rates Non-U.S.		(88,277	)		(0.04	)
Livestock		24,546			0.01
Metals		(3,773	)		(0.00	)*
Softs		566,313			0.28

Total futures contracts sold		1,582,752			0.77

Net unrealized appreciation on open futures contracts		992,782			0.48

Unrealized Appreciation on Open Forward Contracts
Currencies		17,330,085			8.46
Metals		1,195,879			0.58

Total unrealized appreciation on open forward contracts		18,525,964			9.04

Unrealized Depreciation on Open Forward Contracts
Currencies		(26,650,865	)		(13.00	)
Metals		(704,281	)		(0.34	)

Total unrealized depreciation on open forward contracts		(27,355,146	)		(13.34	)

Total fair value	$	(7,836,400	)		(3.82	)%


*		Due to rounding.

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

CMF Graham Capital Master Fund L.P.
Schedule of Investments
December 31, 2007
(Unaudited)


				% of Partners’
	Fair Value			Capital

Futures Contracts Purchased
Energy	$	184,162			0.09	%
Grains		219,977			0.10
Indices		8,906			0.00	*
Interest Rates U.S		(2,712	)		(0.00	)*
Interest Rates Non-U.S		98,371			0.05
Metals		68,690			0.03
Softs		(18,009	)		(0.01	)

Total futures contracts purchased		559,385			0.26

Futures Contracts Sold
Energy		(76,360	)		(0.04	)
Indices		31,940			0.02
Interest Rates U.S		(67,681	)		(0.03	)
Interest Rates Non-U.S		(163,383	)		(0.08	)
Livestock		11,482			0.01
Softs		(16,495	)		(0.01	)

Total futures contracts sold		(280,497	)		(0.13	)

Net unrealized appreciation on open futures contracts		278,888			0.13

Unrealized Appreciation on Open Forward Contracts
Currencies		6,327,560			2.96
Metals		464,556			0.22

Total unrealized appreciation on open forward contracts		6,792,116			3.18

Unrealized Depreciation on Open Forward Contracts
Currencies		(6,976,160	)		(3.26	)
Metals		(463,190	)		(0.22	)

Total unrealized depreciation on open forward contracts		(7,439,350	)		(3.48	)

Total fair value	$	(368,346	)		(0.17	)%


*		Due to rounding

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

CMF Graham Capital Master Fund L.P.
Statements of Income and Expenses and Partners’ Capital
(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Income:
Net gains (losses) on trading of commodity interests:
Net realized gains (losses) on closed positions	$	3,975,482		$	(5,538,875	)	$	36,571,783		$	22,938,740
Change in net unrealized appreciation (depreciation) on open positions		(12,809,411	)		1,402,654			(7,468,054	)		(644,433	)

Gain (loss) from trading, net		(8,833,929	)		(4,136,221	)		29,103,729			22,294,307
Interest income		617,423			1,947,985			2,132,568			5,946,883

Total income (loss)		(8,216,506	)		(2,188,236	)		31,236,297			28,241,190

Expenses:
Brokerage commissions, including clearing fees of $66,881, $64,711, $183,743 and $195,098, respectively		250,384			225,707			880,058			651,936
Professional fees		6,591			9,784			23,465			29,824

Total expenses		256,975			235,491			903,523			681,760

Net income (loss)		(8,473,481	)		(2,423,727	)		30,332,774			27,559,430
Additions – Limited Partners		2,162,496			8,504,000			5,096,496			20,404,811
Redemptions – Limited Partners		(12,542,154	)		(6,606,544	)		(41,975,782	)		(46,878,249	)
Distribution of interest income to feeder funds		(617,423	)		(1,947,985	)		(2,132,568	)		(5,946,883	)

Net increase (decrease) in Partners’ Capital		(19,470,562	)		(2,474,256	)		(8,679,080	)		(4,860,891	)
Partners’ Capital, beginning of period		224,385,869			224,286,881			213,594,387			226,673,516

Partners’ Capital, end of period	$	204,915,307		$	221,812,625		$	204,915,307		$	221,812,625

Net Asset Value per Redeemable Unit of Limited Partnership Interest (156,990.7273 and 200,136.2088 Redeemable Units outstanding at September 30, 2008 and 2007, respectively)	$	1,305.27		$	1,108.31		$	1,305.27		$	1,108.31

Net income (loss) per Redeemable Unit of Limited Partnership Interest	$	(52.04	)	$	(11.73	)	$	171.49		$	141.39

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)


2.	Financial Highlights:

Changes in Net Asset Value per Redeemable Unit of Limited Partnership Interest for the three and nine months ended September 30, 2008 and 2007 were as follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Net realized and unrealized gains (losses) allocated from Master*	$	(52.05	)	$	(26.45	)	$	88.82		$	60.70
Interest income allocated from Master		2.84			7.54			9.39			22.50
Expenses**		(6.73	)		(5.97	)		(27.61	)		(17.18	)

Increase (decrease) for the period		(55.94	)		(24.88	)		70.60			66.02
Net Asset Value per Redeemable Unit, beginning of period		1,005.44			884.42			878.90			793.52

Net Asset Value per Redeemable Unit, end of period	$	949.50		$	859.54		$	949.50		$	859.54


* Includes Partnership brokerage commissions and expenses allocated from Master.
** Excludes Partnership brokerage commissions and expenses allocated from Master.

Ratios to average net assets:***
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Net investment income (loss) before allocation to Special Limited Partner****		(6.7	)%		(4.3	)%		(6.7	)%		(4.2	)%

Operating expenses		7.8	%		7.8	%		8.1	%		7.9	%
Allocation to Special Limited Partner		—	%		—	%		0.8	%		—	%

Total expenses and allocation to Special Limited Partner		7.8	%		7.8	%		8.9	%		7.9	%

Total return:
Total return before allocation to Special Limited Partner		(5.6	)%		(2.8	)%		9.0	%		8.3	%
Allocation to Special Limited Partner		—	%		—	%		(1.0	)%		—	%

Total return after allocation to Special Limited Partner		(5.6	)%		(2.8	)%		8.0	%		8.3	%


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

****		Interest income allocated from Master less total expenses.

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

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)


2.	Financial Highlights (continued):

Financial Highlights of the Master:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Net realized and unrealized gains (losses)*	$	(55.87	)	$	(21.37	)	$	159.11		$	112.85
Interest income		3.87			9.69			12.51			28.69
Expenses**		(0.04	)		(0.05	)		(0.13	)		(0.15	)

Increase (decrease) for the period		(52.04	)		(11.73	)		171.49			141.39
Distribution of interest income to feeder funds		(3.87	)		(9.69	)		(12.51	)		(28.69	)
Net Asset Value per Redeemable Unit, beginning of period		1,361.18			1,129.73			1,146.29			995.61

Net Asset Value per Redeemable Unit, end of period	$	1,305.27		$	1,108.31		$	1,305.27		$	1,108.31

* Includes brokerage commissions.
** Excludes brokerage commissions.
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008			2007			2008			2007

Ratios to average net assets:***
Net investment income (loss) ****		0.7	%		3.1	%		0.8	%		3.3	%

Operating expenses		0.5	%		0.4	%		0.6	%		0.4	%

Total return		(3.8	)%		(1.0	)%		15.0	%		14.2	%


***		Annualized.

****		Interest income less total expenses.

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


3.	Trading Activities:

The Partnership was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity instruments. The Partnership invests substantially all of its assets through a “master/feeder” structure. The results of the Partnership’s investment in the Master are shown in the Statements of Income and Expenses and Partners’ Capital.

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

All of the commodity interests owned by the Master for the nine months ended September 30, 2008 are held for trading purposes. The average fair value during the nine months ended September 30, 2008 and the year ended December 31, 2007 were $1,630,445 and $4,235,297, respectively. The fair values of these commodity interests, including options thereon, if applicable, at September 30, 2008 and December 31, 2007 were $(7,836,400) and $(368,346), respectively. Fair values for exchange traded commodity futures and options are based on quoted market prices for those futures and options. Fair values for all other financial instruments for which market quotations are not readily available are based on other measures of fair value deemed appropriate by the General Partner.

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

Brokerage commissions are calculated as a percentage of the Partnership’s adjusted net asset value on the last day of each month and are affected by trading performance, additions and redemptions.


4.	Fair Value Measurement:

Investments. The Partnership values its investment in the Master at its net asset value per unit as calculated by the Master. The Master values its investments as described in note 2 of the Master’s notes to the annual financial statements as of December 31, 2007.

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

The Partnership values investments in master partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership based on the end of the day net asset value of the Master (Level 2). The value of the Partnership’s investment in the Master reflects its proportional interest in the Master. As of September 30, 2008, the Partnership did not directly hold any derivative instruments that are based on quoted prices in active markets for identical assets (Level 1) or unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).


			Quoted Prices in				Significant
			Active Markets		Significant Other		Unobservable
			for Identical		Observable Inputs		Inputs
	9/30/2008		Assets (Level 1)		(Level 2)		(Level 3)

Assets
Investment in Master	$	61,928,115	$	—	$	61,928,115	$	—

Total fair value	$	61,928,115	$	—	$	61,928,115	$	—

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

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

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

apply the deferral allowed by FASB Staff Positions No. FAS 157-2, Effective Date of FASB Statement No. 157, for nonfinancial assets and liabilities measured at fair value on a nonrecurring basis.

The Master considers prices for exchange traded commodity futures and options contracts to be based on quoted prices in active markets for identical assets (Level 1). The values of forwards, swaps and certain options contracts for which market quotations are not readily available are priced by broker-dealers who derive fair values for those assets from observable inputs (Level 2). Investments in partnerships (other commodity pools) where there are no other rights or obligations inherent within the ownership interest held by the Partnership are priced based on the end of the day net asset value (Level 2). As of September 30, 2008, the Master did not hold any derivative instruments that are priced at fair value using unobservable inputs through the application of management’s assumptions and internal valuation pricing models (Level 3).


				Quoted Prices in
				Active Markets		Significant Other			Significant
				for Identical		Observable Inputs			Unobservable
	9/30/2008			Assets (Level 1)		(Level 2)			Inputs (Level 3)

Assets
Forwards	$	18,525,964		$	—	$	18,525,964		$	—

Futures		992,782			992,782		—			—

Total assets		19,518,746			992,782		18,525,964			—


Liabilities
Forwards	$	27,355,146		$	—	$	27,355,146		$	—

Total liabilities		27,355,146			—		27,355,146			—

Total fair value	$	(7,836,400	)	$	992,782	$	(8,829,182	)	$	—


5.	Financial Instrument Risks:

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

Market risk is the potential for changes in the value of the financial instruments traded by the Master due to market changes, including interest and foreign exchange rate movements and fluctuations in commodity or security prices. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded by the Master. The Partnership is exposed to a market risk equal to the value of futures and forward contracts purchased and unlimited liability on such contracts sold short.

Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. Credit risk with respect to exchange traded instruments is reduced to the extent that an

Citigroup Fairfield Futures Fund L.P. II
Notes to Financial Statements
September 30, 2008
(Unaudited)

exchange or clearing organization acts as a counterparty to the transactions. The Master’s risk of loss in the event of counterparty default is typically limited to the amounts recognized in the Statements of Financial Condition and not represented by the contract or notional amounts of the instruments. The Partnership, through its investment in the Master, has credit risk and concentration risk because the sole counterparty or broker with respect to the Master’s assets is CGM.

As both a buyer and seller of options, the Partnership pays or receives a premium at the outset and then bears the risk of unfavorable changes in the price of the contract underlying the option. Written options expose the Partnership to potentially unlimited liability; for purchased options the risk of loss is limited to the premiums paid. Certain written put options permit cash settlement and do not require the option holder to own the reference asset. The Partnership does not consider these contracts to be guarantees as described in FASB Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees” (“FIN 45”).

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

The majority of these instruments mature within one year of the inception date. However, due to the nature of the Partnership’s/Master’s business, these instruments may not be held to maturity.


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

Liquidity and Capital Resources

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

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

For the nine months ended September 30, 2008, Partnership’s capital decreased 13.8% from $67,956,388 to $58,549,161. This decrease was attributable to the redemption of 20,994.6725 Redeemable Units of Limited Partnership Interest totaling $20,029,590, which was partially offset by the net income from operations of $5,525,867, coupled with additional sales of 4,297.2083 Redeemable Units of Limited Partnership Interest totaling $4,079,000, 526.2272 General Partner Unit equivalents totaling $500,000, and 514.6964 Redeemable Units of Special Limited Partnership Interest totaling $517,496. Future redemptions can impact the amount of funds available for investment in the Master in subsequent periods.

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

For the nine months ended September 30, 2008 the Master’s capital decreased 4.1% from $213,594,387 to $204,915,307. This decrease was attributable to the redemption of 33,342.2758 Redeemable Units of Limited Partnership Interest totaling $41,975,782, coupled with distribution of interest income to the feeder funds of $2,132,568, which was partially offset by the net income from operations of $30,332,774, coupled with additional sales of 3,998.1810 Redeemable Units of Limited Partnership Interest totaling $5,096,496. Future redemptions can impact the amount of funds available for investments in commodity contract positions in subsequent periods.

Critical Accounting Policies

Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. Actual results could differ from these estimates.

Fair Value Measurements. For disclosures related to fair value measurements pursuant to SFAS 157, refer to note 4 in the notes to financial statements.

Income and Expenses Recognition. All of the income and expenses and unrealized and realized gains and losses from the commodity transactions of the Master are allocated pro rata among the investors at the time of such determination. The Master’s income and expense recognition is discussed in note 2 of the Master’s notes to the annual financial statements as of December 31, 2007.

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

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

In 2007, the Partnership adopted FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. FIN 48 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the partnership level not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. The General Partner has concluded that the adoption of FIN 48 had no impact on the operations of the Partnership for the nine months ended September 30, 2008 and that no provision for income tax is required in the Partnership's financial statements.

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

Recent Accounting Pronouncements. On March 19, 2008, Financial Accounting Standards Board released Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”). FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The application of FAS 161 is required for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The standard expands the disclosure requirements for derivatives and hedged items and has no impact on how the Partnership accounts for derivatives (the Partnership does not have hedged items). Management is evaluating the enhanced disclosure requirements and does not believe that there will be any material impact on the financial statement disclosures.

Results of Operations

During the Partnership’s third quarter of 2008, the Net Asset Value per Redeemable Unit decreased 5.6% from $1,005.44 to $949.50 as compared to a decrease of 2.8% in the third quarter of 2007. The Partnership experienced a net trading loss before brokerage commissions and related fees allocated from the Master in the third quarter of 2008 of $2,694,760. Losses were primarily attributable to the Master’s trading of commodity futures in currencies, energy, grains, non-U.S. interest rates, metals and softs and were partially offset by gains in U.S. interest rates, livestock and indices. The Partnership experience a net trading loss before brokerage commissions and related fees allocated from the Master in the third quarter of 2007 of $1,280,422. Losses were primarily attributable to the Master’s trading of commodity futures in currencies, U.S. and non-U.S. interest rates, livestock and softs and were partially offset by gains in energy, grains, metals and indices.

The third quarter of 2008 presented an extremely volatile trading environment as the credit crisis deepened. Counterparty risk took the center stage as some of the biggest broker-dealers teetered on the edge of bankruptcy. Managed futures, as an asset class, outperformed since counterparty risk is eliminated through exchange cleared trading. The crisis affected various asset classes in different ways. The U.S. Dollar strengthened against most developed country currencies. The fixed income sector experienced tremendous volatility as yield curves rapidly sloped upwards, indicating a strong preference for shorter maturity, less risky government treasuries. Crude oil set the highest exchange listed price of $147 while also dipping below $100 in the quarter. The agricultural sector also reflected a similar sentiment as prices of grains reached record levels earlier in the quarter while dipping to lowest levels for the year as the quarter came to a close. Perhaps, the most visible sentiment of the market was reflected through stock index futures as most indices dropped precipitously. The Partnership was profitable in U.S. fixed income and stock indices while losses were seen in non-U.S. fixed income, currencies, metals, grains, energy and agricultural softs.

In the U.S. fixed income sector, profits were realized as the focus of the U.S. Federal Reserve shifted from inflation to the credit crisis. The Partnership profited from short positions in global stock indices, which cratered to lowest levels in a few years.

In the non-U.S. fixed income sector, the Partnership recorded losses as international interest rates rapidly changed their course as the negative risk to the economies increased dramatically. In the currencies sector, the Partnership realized losses, as the U.S. Dollar grew strong against some of the other developed country currencies. Losses were also seen in emerging market currency trading as some of the emerging economies tipped over from growth regime into inflationary regime and then into a potential recession regime. In the energy sector, long-term bullish trend in crude oil reversed, just as a new exchange listed record price of $147 was set. The Partnership recorded losses in the energy sector due to this sharp reversal, which reflected across the petroleum complex, including natural gas. In the grains sector, losses were registered as prices reversed from record levels at the beginning of the quarter before recovering later. Increased correlation between corn and crude oil prices has been notable in the recent past. Losses were registered in the metals sector as gold prices dropped sharply to the lowest level in the year. Industrial metals also exhibited a sharp reversal. Small losses were seen in the agricultural softs, primarily from cocoa.

During the Partnership’s nine months ended September 30, 2008, the Net Asset Value per Redeemable Unit increased 8.0% from $878.90 to $949.50 as compared to an increase of 8.3% for the nine months ended September 30, 2007. The Partnership experienced a net trading gain before brokerage commissions and related fees allocated from the Master for the nine months ended September 30, 2008 of $9,340,883. Gains were primarily attributable to the Master’s trading of commodity futures in currencies, energy, grains, U.S. interest rates, livestock, softs and indices and primarily offset by losses in non-U.S. interest rates and metals. The Partnership experienced a net trading gain before brokerage commissions and related fees allocated from the Master in the nine months ended September 30, 2007 of $6,991,557. Gains were primarily attributable to the Master’s trading of commodity futures in currencies, grains, U.S. and non-U.S. interest rates and indices and were partially offset by losses in energy, livestock, metals and softs.

Commodity futures markets are highly volatile. The potential for broad and rapid price fluctuations increases the risks involved in commodity trading, but also increases the possibility of profit. The profitability of the Partnership (and the Master) depends on the existence of major price trends and the ability of the Advisor to correctly identify those price trends. Price trends are influenced by, among other things, changing supply and demand relationships, weather, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and changes in interest rates. To the extent that market trends exist and the Advisor is able to identify them, the Partnership/Master expects to increase capital through operations.

Interest income on 80% of the Partnership’s daily average equity allocated to it by the Master, was earned at a 30-day U.S. Treasury bill rate determined weekly by CGM based on the average non-competitive yield on 3-month U.S. Treasury bills maturing in 30 days. CGM may continue to maintain the Master’s assets in cash and/or place all of the Master’s assets in 90-day Treasury bills and pay the Partnership its allocated share of 80% of the interest earned on the Treasury bills purchased. CGM will retain 20% of any interest earned on Treasury bills. Interest income allocated from the Master for the three and nine months ended September 30, 2008 decreased by $436,520 and

$1,123,698, respectively as compared to the corresponding periods in 2007. The decrease in interest income is primarily due to lower U.S. Treasury bill rates during the three and nine months ended September 30, 2008 as compared to the corresponding periods in 2007.

Brokerage commissions are calculated as a percentage of the Partnership’s adjusted net asset value on the last day of each month and are affected by trading performance, additions and redemptions. Accordingly, they must be analyzed in relation to the fluctuations in the monthly net asset values. Brokerage commissions for the three months ended September 30, 2008 decreased by $91,360 as compared to the corresponding period in 2007. The decrease in brokerage commissions is due to lower average net assets as compared to the corresponding period in 2007. Brokerage commissions for the nine months ended September 30, 2008 increased by $79,047 as compared to the corresponding period in 2007. The increase in brokerage commissions is due to higher average adjusted net assets as compared to the corresponding period in 2007.

Management fees are calculated as a percentage of the Partnership’s adjusted net asset value as of the end of each month and are affected by trading performance, additions and redemptions. Management fees for the three months ended September 30, 2008 decreased by $40,701 as compared to the corresponding period in 2007. The decrease in management fees is due to lower average net assets as compared to the corresponding period in 2007. Management fees for the nine months ended September 30, 2008 increased by $34,805 as compared to the corresponding period in 2007. The increase in management fees is due to higher average adjusted net assets as compared to the corresponding period in 2007.

Administrative fees are paid to the General Partner for administering the business and affairs of the Partnership. These fees are calculated as a percentage of the Partnership’s adjusted net asset value as of the end of each month and are affected by trading performance, additions and redemptions. Administrative fees for the three months ended September 30, 2008 decreased by $10,174 as compared to the corresponding period in 2007. The decrease in administrative fees is due to lower average net assets as compared to the corresponding period in 2007. Administrative fees for the nine months ended September 30, 2008 increased by $8,704 as compared to the corresponding period in 2007. The increase in administrative fees is due to higher average adjusted net assets as compared to the corresponding period in 2007.

Special Limited Partner profit share allocations are based on the new trading profits generated by the Advisor at the end of the quarter, as defined in the advisory agreement between the Partnership, the General Partner and the Advisor. There was no profit share allocation earned for the three months ended September 30, 2008. The profit share allocation earned for the nine months ended September 30, 2008 was $517,496. There were no profit share allocations earned for the three and nine months ended September 30, 2007.


Item 3.	Quantitative and Qualitative Disclosures about Market Risk

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

Market movements result in frequent changes in the fair market value of the Master’s open positions and, consequently, its earnings and cash flow. The Master’s market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Master’s open positions and the liquidity of the markets in which it trades.

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

Value at Risk is a measure of the maximum amount which the Master could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Master’s speculative trading and the recurrence in the markets traded by the Master of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Master’s experience to date (i.e., “risk of ruin”). In light of the foregoing, as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification in this section should not be considered to constitute any assurance or representation that the Master’s losses in any market sector will be limited to Value at Risk or by the Master’s attempts to manage its market risk.

Exchange maintenance margin requirements have been used by the Master as the measure of its Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%-99% of any one-day interval. Maintenance margin has been used rather than the more generally available initial margin, because initial margin includes a credit risk component, which is not relevant to Value at Risk.

The following table indicates the trading Value at Risk associated with the Master’s open positions by market category as of September 30, 2008, and the highest, lowest and average values during the three months ended September 30, 2008. All open position trading risk exposures of the Master have been included in calculating the figures set forth below. As of September 30, 2008, the Master’s total capital was $204,915,307. There has been no material change in the trading Value at Risk information previously disclosed in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2007.

September 30, 2008
(Unaudited)


						Three Months Ended September 30, 2008
			% of Total			High		Low		Average
Market Sector	Value at Risk		Capital			Value at Risk		Value at Risk		Value at Risk*

Currencies:
– Exchange Traded Contracts	$	18,000		0.01	%	$	34,000	$	4,400	$	18,000
– OTC Contracts		9,276,313		4.53	%		27,527,348		7,928,147		19,253,186
Energy		1,418,960		0.69	%		2,825,275		335,875		1,013,172
Grains		657,800		0.32	%		1,045,500		66,550		361,157
Interest Rates U.S		320,600		0.16	%		2,381,150		24,412		691,367
Interest Rates Non-U.S		1,150,706		0.56	%		3,767,848		461,503		1,814,976
Livestock		21,600		0.01	%		21,600		800		10,500
Metals:
– Exchange Traded Contracts		285,250		0.14	%		656,500		92,000		245,197
– OTC Contracts		641,670		0.31	%		1,415,425		374,315		536,684
Softs		551,663		0.27	%		596,579		293,730		480,354
Indices		1,980,731		0.97	%		5,270,747		1,227,969		2,934,659

Total	$	16,323,293		7.97	%


*		Average month end Values at Risk.


Item 4T.	Controls and Procedures

The Partnership’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934 (the “Exchange Act”) is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the General Partner, to allow for timely decisions regarding required disclosure and appropriate SEC filings.

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

The General Partner’s CEO and CFO have evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2008 and, based on that evaluation, the CEO and CFO have concluded that at that date the Partnership’s disclosure controls and procedures were effective.

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


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

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

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

There were no changes in the Partnership’s internal control over financial reporting during the fiscal quarter ended September 30, 2008 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

The following information supplements and amends our discussion set forth under Part I, Item 3 “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as updated by our Quarterly Report on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008.

Research Analyst Litigation

On September 30, 2008, the Court of Appeals for the Second Circuit vacated the District Court’s order granting class certification in the matter IN RE SALOMON ANALYST METROMEDIA. Thereafter, on October 1, 2008, the parties reached a settlement pursuant to which Citigroup will pay $35 million to members of the settlement class that purchased or otherwise acquired MFN securities during the class period. The settlement is subject of judicial approval. The proposed settlement amount is covered by existing litigation reserves.

Subprime-Mortgage-Related Litigation

Citigroup Inc., Citigroup Global Markets Inc. and several current and former officers and directors, and numerous other financial institutions, have been named as defendants in a class action lawsuit filed on September 30, 2008, alleging violations of Sections 11, 12 and 15 of the Securities Act of 1933 arising out of offerings of Citigroup securities issued in 2006 and 2007. This action, LOUISIANA SHERIFFS’ PENSION AND RELIEF FUND v. CITIGROUP INC., et al., is currently pending in New York state court.

Citigroup Global Markets Inc., along with numerous other firms, has been named as a defendant in several lawsuits by shareholders of Ambac Financial Group, Inc. for which CGMI underwrote securities offerings. These actions assert that CGMI violated Sections 11 and 12 of the Securities Act of 1933 arising out of allegedly false and misleading statements contained in the registration statements and prospectuses issued in connection with those offerings. Several of these actions have been consolidated under the caption IN RE AMBAC FINANCIAL GROUP, INC. SECURITIES LITIGATION, pending in the United States District Court for the Southern District of New York, and in which a consolidated amended class action complaint was filed on August 22, 2008.

On September 12, 2008, defendants, including Citigroup Inc. and Citigroup Global Markets Inc., moved to dismiss the complaint in IN RE AMERICAN HOME MORTGAGE SECURITIES LITIGATION.

Auction Rate Securities-Related Litigation

On September 19, 2008, MILLER v. CALAMOS GLOBAL DYNAMIC INCOME FUND, et al., which had been pending in the United States District Court for the Southern District of New York and in which Citigroup Global Markets Inc. had been named as a defendant, was voluntarily dismissed.

On August 25, 2008, Lead Plaintiffs in IN RE CITIGROUP AUCTION RATE SECURITIES LITIGATION, pending in the United States District Court for the Southern District of New York, filed an amended consolidated class action complaint.

Citigroup Inc. and Citigroup Global Markets Inc., along with numerous other financial institutions, have been named as defendants in several lawsuits alleging that defendants artificially restrained trade in the market for auction rate securities in violation of the Sherman Act. These actions are (1) MAYOR AND CITY COUNCIL OF BALTIMORE, MARYLAND v. CITIGROUP INC., et al., and (2) MAYFIELD v. CITIGROUP INC., et al., and both are pending in the United States District Court for the Southern District of New York.

On August 7, 2008, Citigroup reached a settlement with the New York Attorney General, the Securities and Exchange Commission, and other state regulatory agencies, pursuant to which Citigroup agreed to offer to purchase at par ARS that are not auctioning from all Citigroup individual investors, small institutions (as defined by the terms of the settlement), and charities that purchased ARS from Citigroup prior to February 11, 2008. In addition, Citigroup agreed to pay a $50 million fine to the State of New York and a $50 million fine to the other state regulatory agencies.

A consolidated amended class action complaint was filed in IN RE MAT FIVE SECURITIES LITIGATION on October 2, 2008.

On July 21, 2008, the Court approved the voluntary dismissal without prejudice of FERGUSON FAMILY TRUST v. FALCON STRATEGIES TWO LLC, et al.

Citigroup and its administration and investment committees filed a motion to dismiss the purported class action complaint in LEBER v. CITIGROUP, INC., et al., on August 29, 2008. The motion is currently pending.


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

For the three months ended September 30, 2008 there were additional sales of 1,142.1253 Redeemable Units of Limited Partnership Interest totaling $1,145,000. The Redeemable Units were issued in reliance upon applicable exemptions from registration under section 4(2) of the Securities Act of 1933, as amended and section 506 of Regulation D promulgated thereunder. These units were purchased by accredited investors as defined in Regulation D.

Proceeds from the sale of additional Redeemable Units are used in the trading of commodity interests including futures contracts, options and forwards contracts at the Master level.

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

(d) Maximum Number

(or Approximate

(c) Total Number

Dollar Value) of

(b) Average

of Redeemable Units

Redeemable Units that

(a) Total Number

Price Paid

Purchased as Part

May Yet Be

of Redeemable

per Redeemable

of Publicly Announced

Purchased Under the

Period

Units Purchased*

Unit*

Plans or Programs

July 1, 2008 –
July 31, 2008

1,727.2384

963.39

N/A

August 1, 2008 –
August 31, 2008

818.2399

933.15

N/A

September 1, 2008 –
September 30, 2008

3,312.8491

949.50

N/A

5,858.3274

951.31

N/A

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

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


Item 3.	Defaults Upon Senior Securities – None.


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


Item 5.	Other Information – None.


PART I - Financial Information:			Page Number


	Item 1.	Financial Statements:

		Statements of Financial Condition at September 30, 2008 and December 31, 2007 (unaudited)	3

		Statements of Income and Expenses and Partners’ Capital for the three and nine months ended September 30, 2008 and 2007 (unaudited)	4

		Notes to Financial Statements, including the Financial Statements of CMF Graham Master Fund L.P. (unaudited)	5 – 14

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15 – 18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19

	Item 4T.	Controls and Procedures	20
PART II - Other Information			21 – 24


By:		Citigroup Managed Futures LLC
		(General Partner)

By:		/s/ Jerry Pascucci
		Jerry Pascucci President and Director


By:		/s/ Jennifer Magro
		Jennifer Magro Chief Financial Officer and Director


1.	I have reviewed this quarterly report on Form 10-Q of Citigroup Fairfield Futures Fund L.P. II (the “registrant”);

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

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

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


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

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Item 1A.	Risk Factors


Item 6.	Exhibits