SILVER SCREEN
                                   PARTNERS II

                                 ...............

                                  ANNUAL REPORT
                                      1996


                                       21
<PAGE>

Silver Screen Management


Officers:
---------

Roland W. Betts
President and Chief Executive Officer

Tom A. Bernstein
Executive Vice President

Barbara Stubenrauch
Senior Vice President

Richard S. Kasof
First Vice President

Dana Thayer
First Vice President

Liz A. Brevetti
Vice President

Keith C. Champagne
Vice President

Evelyn Halley
Vice President

Stuart A. Sheinbaum
Director of Investor Relations

Conchetta S. Mayfield
Director of Operations

Paul Rindone
Director of Operations


Directors:
----------

Paul Bagley
New York, New York

Tom A. Bernstein
New York, New York

Roland W. Betts
New York, New York

John Tommasini
New York, New York

William Turchyn, Jr.
New York, New York

(c)1997 Silver Screen Management, Inc. Design: Pentagram



                                       22
<PAGE>



                              LETTER TO INVESTORS

To Our Limited Partners

     Silver Screen  Partners II distributed  approximately  $40 million in 1996,
bringing total distributions  since the Partnership's  inception in 1985 to over
$284 million.  This represents total distributions of $739.58 per $500 unit from
the inception of the Partnership  through its  dissolution.  Of the $284 million
distributed, approximately 68% is return of capital and 32% is income.

     During 1996, the Partnership  distributed the proceeds from the sale of the
Partnership's  interest in the Disney-Silver  Screen II Joint Venture. The final
distribution  was  paid  in  late  December  and the  Partnership  was  formally
dissolved by December 31, 1996.

     Tax  information  for preparing your 1996 income tax returns will be mailed
to you by March 15 and will  constitute the final mailing from the  Partnership.
In the meantime,  our Investor  Relations  Department is available to assist you
with any  questions  you may have.  Please  note our new  telephone  number  and
address listed on the back of this report.

     Tom  Bernstein  and I wish to  reiterate  our thanks for the  privilege  of
serving each of you.


Sincerely,


/s/ Roland W. Betts
--------------------
Roland W. Betts
President


January 24, 1997



                                       23
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

FINANCIAL STATEMENTS

To the Partners
Silver Screen Partners II, L.P.

     We have audited the  accompanying  balance sheets of Silver Screen Partners
II,  L.P. (a limited  partnership)  as of  December  31, 1996 and 1995,  and the
related  statements of operations,  partners' equity, and cash flows for each of
the  three  years  in the  period  ended  December  31,  1996.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material  respects,  the financial position of Silver Screen Partners II,
L.P. (a limited  partnership)  at December 31, 1996 and 1995, and the results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December  31,  1996 in  conformity  with  generally  accepted  accounting
principles.


                                      /s/ Ernst & Young LLP



New York, New York
January 24, 1997



                                       24
<PAGE>


                                 BALANCE SHEETS

December 31, 1996 and 1995                                  1996           1995
--------------------------                           -----------    -----------

ASSETS

Current assets:
Cash ............................................    $      --      $   818,642
Temporary investments (at cost plus accrued
  interest, which approximates market) ..........           --        3,493,817
                                                     -----------    -----------
Total current assets ............................           --        4,312,459
Investment in Joint Venture .....................           --          591,842
                                                     -----------    -----------
                                                     $      --      $ 4,904,301
                                                     ===========    ===========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Due to managing general partner .................    $      --      $    30,896
                                                     -----------    -----------
Total current liabilities .......................           --           30,896
Other liabilities ...............................           --          100,000
                                                     -----------    -----------
Total liabilities ...............................           --          130,896
                                                     -----------    -----------
Partners' Equity:
General partners ................................           --         (958,843)
Limited partners ................................           --        5,732,248
                                                     -----------    -----------
Total partners' equity ..........................           --        4,773,405
                                                     -----------    -----------
                                                     $      --      $ 4,904,301
                                                     ===========    ===========

                       See notes to financial statements.




                                       25
<PAGE>


                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31, 1996, 1995 and 1994                    1996          1995          1994
--------------------------------------------             -----------   -----------   -----------

<S>                                                      <C>           <C>           <C>        
REVENUES:
Income from Joint Venture ............................   $43,186,462   $ 5,332,543   $ 3,523,841
Interest income ......................................       870,595       162,096       118,603
                                                         -----------   -----------   -----------
                                                          44,057,057     5,494,639     3,642,444
COSTS AND EXPENSES:
General and administrative ...........................     1,034,392       666,949       473,094
                                                         -----------   -----------   -----------
Income before income taxes ...........................    43,022,665     4,827,690     3,169,350
Unincorporated business tax ..........................       393,864          --            --
                                                         -----------   -----------   -----------
Net income ...........................................   $42,628,801   $ 4,827,690   $ 3,169,350
                                                         ===========   ===========   ===========
Net income allocated to:
General partners .....................................   $ 6,394,320   $   724,154   $   317,903
Limited partners .....................................    36,234,481     4,103,536     2,851,447
                                                         -----------   -----------   -----------
                                                         $42,628,801   $ 4,827,690   $ 3,169,350
                                                         ===========   ===========   ===========
Net income per $500 limited partnership unit
 (based on 385,200 units outstanding) ................   $     94.07   $     10.65   $      7.40
                                                         ===========   ===========   ===========
Cash distribution per $500 limited partnership unit ..   $    104.60   $      2.50   $      7.60
                                                         ===========   ===========   ===========
</TABLE>

                       See notes to financial statements.


                         STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
                                                       General          Limited
Years ended December 31, 1996, 1995 and 1994           Partners        Partners           Total
--------------------------------------------       ------------    ------------    ------------
<S>                                    <C>         <C>             <C>             <C>         
Partners' (deficiency) equity, January 1, 1994 .   $ (1,721,281)   $  2,667,785    $    946,504
Net income, 1994 ...............................        317,903       2,851,447       3,169,350
Distributions, 1994 ............................       (109,678)     (2,927,520)     (3,037,198)
                                                   ------------    ------------    ------------
Partners' (deficiency) equity, December 31, 1994     (1,513,056)      2,591,712       1,078,656
Net income, 1995 ...............................        724,154       4,103,536       4,827,690
Distributions, 1995 ............................       (169,941)       (963,000)     (1,132,941)
                                                   ------------    ------------    ------------
Partners' (deficiency) equity, December 31, 1995       (958,843)      5,732,248       4,773,405
Net income, 1996 ...............................      6,394,320      36,234,481      42,628,801
Distributions, 1996 ............................     (7,110,286)    (40,291,920)    (47,402,206)
Adjustment .....................................      1,674,809      (1,674,809)           --
                                                   ------------    ------------    ------------
Partners' equity December 31, 1996 .............   $       --      $       --      $       --
                                                   ============    ============    ============
</TABLE>

                       See notes to financial statements.


                                       26
<PAGE>


                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31, 1996, 1995 and 1994                 1996           1995           1994
-----------------------------------------------------------------------------------------------------
<S>                                                         <C>            <C>            <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .............................................   $ 42,628,801    $  4,827,690    $  3,169,350
Adjustments to reconcile net income to net
  cash provided by operating activities:
Gain on sale of Joint Venture ..........................    (43,186,462)           --              --
Decrease (increase) in accrued interest receivable .....         48,072           1,692          (9,215)
Net change in operating assets and liabilities:
  (Decrease) increase in due to managing general partner        (30,896)        (46,034)         38,533
  Decrease in other liabilities ........................       (100,000)           --              --
                                                           ------------    ------------    ------------
Net cash (used in) provided by operating activities ....       (640,485)      4,783,348       3,198,668
                                                           ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from Joint Venture
  (less than) equity in income .........................           --        (1,845,879)     (1,210,182)
Proceeds from sale of Joint Venture ....................     43,778,304            --              --
Sales (purchases) of temporary investments with
  maturities of three months or less, net ..............      3,445,745      (1,049,555)      1,060,551
                                                           ------------    ------------    ------------
Net cash provided by (used in) investing activities ....     47,224,049      (2,895,434)       (149,631)
                                                           ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners ..............................    (47,402,206)     (1,132,941)     (3,037,198)
                                                           ------------    ------------    ------------
Net (decrease) increase in cash ........................       (818,642)        754,973          11,839
Cash, beginning of year ................................        818,642          63,669          51,830
                                                           ------------    ------------    ------------
Cash, end of year ......................................   $       --      $    818,642    $     63,669
                                                           ============    ============    ============
</TABLE>


                       See notes to financial statements.


                                       27
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS


1.  ORGANIZATION

Silver Screen Partners II, L.P. ("the Partnership") was formed on April 16, 1985
as a Delaware limited partnership.  The Partnership entered into a Joint Venture
Agreement with The Walt Disney  Company  ("Disney") for the purpose of financing
(in whole or in part),  producing and exploiting all  feature-length  theatrical
motion pictures selected for production by Disney until the Partnership's  funds
were fully committed.  The Partnership provided  substantially all the financing
for the Joint Venture's films,  while Disney was responsible for the development
and  production  or  acquisition  decisions  on behalf of the Joint  Venture  in
connection with the films.

     Silver Screen  Management,  Inc., a Delaware  corporation,  is the managing
general partner ("MGP") of the Partnership and has exclusive  responsibility for
the  management  of the business and the affairs of the  Partnership.  Roland W.
Betts,  the President and principal  shareholder  of the MGP, is the  individual
general partner of the Partnership.

     The Partnership  Agreement provides that all Partnership income, losses and
distributable  cash ("Proceeds") are distributed 99% to the limited partners and
1% to the general  partners until the Partnership  has satisfied  certain tests.
Thereafter,  all Proceeds will be allocated 85% to the limited  partners and 15%
to the general partners. At the end of the first quarter of 1994, the allocation
percentages  with regard to Proceeds  changed from 99% for the limited  partners
and 1% for the general  partners to 85% and 15%,  respectively.  The Proceeds to
the limited  partners were allocated pro rata according to the capital  accounts
of the respective limited partners.

     On  December  31,  1996,  the   Partnership   terminated  and   accordingly
distributed all of its remaining assets, net of liabilities, to the partners.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Income taxes:
    -------------

     No provision has been made for income taxes except for the City of New York
unincorporated  business  tax since the  income  or loss of the  Partnership  is
required to be reported by the  respective  partners on their income tax returns
(see Note 6).


3.  TEMPORARY INVESTMENTS

Temporary  investments as of December 31, 1995 consisted of commercial  paper of
$3,493,817, which was rated by Standard & Poor's A1 or A1+. The commercial paper
matured on January 11, 1996 and had interest rates ranging from 5.75% to 5.79%.


4.  INVESTMENT IN JOINT VENTURE

The Partnership  entered into a Letter  Agreement (the "Buyout  Agreement") with
Disney  dated  September  11, 1995,  providing  the sale to Disney of all of the
Partnership's  interest  in the Joint  Venture.  In  accordance  with the Buyout
Agreement,  the  closing  of the sale  occurred  on  January 2, 1996 and the net
proceeds  received  by  the  Partnership  were  $43,186,462  in  cash  after  an
adjustment for certain film revenues totaling $321,696 received in 1995.

     The  investment  in the  Disney-Silver  Screen II Joint Venture (the "Joint
Venture") was accounted  for using the equity  method of  accounting.  Under the
equity method, the investment was initially recorded at cost, and was thereafter
increased by additional investments,  adjusted by the Partnership's share of the
Joint Venture's results of operations and reduced by distributions received from
the Joint Venture. The Joint Venture's fiscal year ended September 30, while the
Partnership's fiscal year ended December 31.

     The investment in Joint Venture at December 31, 1995 was as follows:

                                                                           1995
                                                                    -----------
Balance, January 1 ..............................................   $(1,254,037)
Income from Joint Venture for the fiscal year ended September 30      5,332,543
Distributions received, January 1 to December 31 ................    (3,486,664)
                                                                    -----------
Balance, December 31 ............................................   $   591,842
                                                                    ===========




                                       28
<PAGE>



     For each Joint  Venture  film,  all revenues  received by the Joint Venture
were allocated and distributed first to the Partnership and Disney in proportion
to their  respective  investments  in the budgeted  cost of each film until each
recovered its  investment;  second,  net of  participations,  to Disney until it
recovered  any  amounts  paid  for  cost  overruns;   and  thereafter,   net  of
participations,  75% to the  Partnership  and 25% to  Disney  (adjusted  for any
Disney investment in the film other than cost overruns).

     The condensed balance sheet for the Joint Venture at September 30, 1995 was
as follows:


ASSETS
Receivable from Buena Vista Pictures Distribution, Inc. .........     $3,044,632
Film production costs, net of accumulated amortization of
  $145,677,986 ..................................................         11,824
                                                                      ----------
                                                                      $3,056,456
                                                                      ==========
LIABILITIES AND VENTURERS' CAPITAL
Accounts payable to:
 Silver Screen Partners II, L.P. ................................     $1,892,293
 The Walt Disney Company ........................................      1,152,258
Venturers' capital:
 Silver Screen Partners II, L.P. ................................          8,876
 The Walt Disney Company ........................................          3,029
                                                                      ----------
                                                                      $3,056,456
                                                                      ==========

     The condensed  income  statements for the Joint Venture for the years ended
September 30, 1995, and 1994 were as follows:

                                                          1995             1994
                                                   -----------      -----------
Revenues .....................................     $ 7,339,413      $ 7,064,964
Amortization of film production costs ........        (208,006)        (621,990)
Participation expense ........................         (21,351)      (1,744,516)
                                                   -----------      -----------
Net income ...................................     $ 7,110,056      $ 4,698,458
                                                   ===========      ===========

     The  Partnership's  share of the September 30, 1995 and 1994 net income was
$5,332,543 and $3,523,841, respectively.

     Film  costs  included  production  costs,  a 17.5%  overhead  charge on the
budgeted film cost (payable  13.5% to Disney and 4% to the MGP), and interest on
development costs, as contractually defined,  payable to Disney. Film production
costs were charged to earnings on an individual film basis in the ratio that the
current  year's  revenues  bore to Joint  Venture  management's  estimate of the
ultimate revenues to be received from all sources.

     Film costs were  stated at the lower of cost or  estimated  net  realizable
value on an individual  film basis.  Revenue  forecasts for all motion  pictures
were continually reviewed by Joint Venture management and revised when warranted
by changing  conditions.  When  estimates  of  ultimate  revenues to be received
indicated  that a motion  picture would result in an ultimate  loss,  additional
amortization was provided to reduce the film to its net realizable value.

     All of the Joint Venture's motion pictures are completed and released.

     Participations  represented  a  participant's  share of a motion  picture's
profits  as  contractually   defined.  An  ultimate  participation  expense  was
determined for each motion picture using ultimate  revenues.  Revenue  forecasts
for all motion pictures were  continually  reviewed by Joint Venture  management
and  ultimate  participation  expense  was  revised  when  warranted.   Ultimate
participation expense was charged to earnings on an individual film basis in the
ratio that current year's revenues bore to Joint Venture  management's  estimate
of the ultimate  revenues to be received  from all sources.  During fiscal years
1995 and 1994, certain charges were made to residual estimates to better reflect
actual payment history. The impact of these changes was to increase fiscal years
1995 and 1994 net income by approximately $300,000 and $1,000,000, respectively.



                                       29
<PAGE>


5.  AGREEMENT WITH RELATED PARTIES

The Joint  Venture had entered into a  distribution  agreement  with Buena Vista
Distribution Co., Inc. ("Buena Vista"), a wholly owned subsidiary of Disney. The
agreement  provided  that the Joint  Venture  grant  Buena  Vista a  license  to
distribute  all the Joint  Venture's  films,  in all media  throughout the world
through March 31, 1996. The distribution agreement provided that if the revenues
received by the Joint  Venture for a Joint  Venture  film were less than 100% of
the film's budgeted film cost, as defined,  actually  expended,  then five years
after the release of that film (or, if earlier, seven years after the release of
the first  Joint  Venture  film),  Buena  Vista,  to the extent it had  retained
revenues from that film,  would pay the Joint Venture an additional  amount (the
"Revenue  Shortfall  Payment")  sufficient  to  return  the  budgeted  film cost
actually  expended.  Buena Vista was  entitled  to recoup any Revenue  Shortfall
Payments from the Joint Venture's share of film revenue from such film after the
date  of  such  payment.   During  1992,  the  Partnership   received   $400,000
representing the last Revenue Shortfall Payment. Revenue Shortfall Payments were
due on the fifth anniversary of each affected film's U.S. theatrical release.


6.  UNINCORPORATED BUSINESS TAX

On September 30, 1996, the Partnership received an assessment from New York City
regarding  unincorporated  business  tax  covering  all periods  from  inception
through December 31, 1995 of $420,300 (including  interest).  This liability was
paid on the date of assessment. The Unincorporated Business Tax Expense reflects
the  excess  of  this  payment  over  an  amount  previously  established  as  a
contingency reserve plus a provision for 1996.


7.  STATEMENT OF PARTNERS' EQUITY

The Partnership  Agreement  provides that the General  Partners  receive no less
than 1% of all  distributions.  The  adjustment  of  $1,674,809  ($4.35 per $500
limited  partner  unit)  eliminates a deficit in the General  Partners'  capital
account.


--------------------------------------------------------------------------------
                                                                     (unaudited)


Value per unit based on annual appraisal
----------------------------------------

The appraised value per unit as of December 31, 1996 was $0.


Cash distributions
------------------

The Partnership made two  distributions  during 1996 totalling  $104.60 or 20.9%
per $500 unit.  Cumulative  distributions  through  December  31, 1996  totalled
$739.58 or 148% per unit.


Availability of Form 10-K
-------------------------

A copy  of the  Partnership's  Annual  Report  to the SEC on  Form  10-K  may be
obtained  without  charge by  writing  to the  Partnership,  c/o  Silver  Screen
Management, Inc., Chelsea Piers-Pier 62, Suite 300, New York, N.Y. 10011.



                                       30
<PAGE>



Silver Screen Management, Inc.                       Bulk Rate
Chelsea Piers-Pier 62                              U. S. Postage
Suite 300                                               PAID
New York, N.Y. 10011                                 Permit #9
(212) 336-6700                                       Boston, MA