<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                   For the Fiscal Year Ended DECEMBER 31, 2000

                             Commission File Number
                                     0-09782

                        REAL ESTATE ASSOCIATES LIMITED II

                        A CALIFORNIA LIMITED PARTNERSHIP

                  I.R.S. Employer Identification No. 95-3547609

         9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211

        Registrant's Telephone Number, Including Area Code (310) 278-2191


      Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:

                                      NONE

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

                               Yes [X]  No [ ]

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


<PAGE>   2

PART I.

ITEM 1. BUSINESS:

Real Estate Associates Limited II ("REAL II" or the "Partnership") is a limited
partnership which was formed under the laws of the State of California on
December 4, 1979. On March 17, 1980, REAL II offered 3,000 units consisting of
6,000 Limited Partnership Interests and Warrants to purchase a maximum of 6,000
Additional Limited Partnership Interests through a public offering managed by
E.F. Hutton Inc.

The general partners of REAL II are National Partnership Investments Corp.
("NAPICO"), a California Corporation (the "Corporate General Partner") and
National Partnership Investments Associates ("NAPIA"). NAPIA is a California
limited partnership and consists of Messrs. Nicholas G. Ciriello, an unrelated
individual, as general partner and Charles H. Boxenbaum as limited partner. The
business of REAL II is conducted primarily by NAPICO.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.

REAL II holds limited partnership interests in 13 local limited partnerships as
of December 31, 2000, after selling its interest in 7 local limited
partnerships, in December 1998, to the Operating Partnership. Each of the local
partnerships owns a low income housing project which is subsidized and/or have a
mortgage note payable to or insured by agencies of the federal or local
government.

In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of REAL II to vary its portfolio in response
to changing economic, financial and investment conditions. Such investments are
also subject to changes in local economic circumstances and housing patterns, as
well as rising operating costs, vacancies, rent collection difficulties, energy
shortages and other factors which have an impact on real estate values.

These projects also require greater management expertise and may have higher
operating expenses than conventional housing projects.

Under recently adopted law and policy, the United States Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts may not be
in an amount that would provide sufficient cash flow to permit owners of
properties subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD ("FHA")
unless such mortgage loans are restructured. In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was
adopted in October 1997, provides for the restructuring of mortgage loans
insured by the FHA with respect to properties subject to the Section 8 program.
Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first
mortgage loan which will be amortized on a current basis and a low interest
second mortgage loan payable to FHA which will only be payable on maturity of
the first mortgage loan. This restructuring results in a reduction in annual
debt service payable by the owner of the FHA-insured mortgage


<PAGE>   3

loan and is expected to result in an insurance payment from FHA to the holder of
the FHA-insured loan due to the reduction in the principal amount. MAHRAA also
phases out project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies to a
tenant-based subsidy.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

The partnerships in which REAL II has invested were, at least initially,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. REAL II became the
principal limited partner in these local limited partnerships pursuant to
arm's-length negotiations with these developers, or others, who act as general
partners. As a limited partner, REAL II's liability for obligations of the local
limited partnership is limited to its investment. The local general partner of
the local limited partnership retains responsibility for developing,
constructing, maintaining, operating and managing the Project. Under certain
circumstances of default, REAL II has the right to replace the general partner
of the local limited partnerships, but otherwise does not have control of sale
or refinancing, etc.

Although each of the partnerships in which REAL II has invested owns a project
which must compete in the market place for tenants, interest subsidies and rent
supplements from governmental agencies make it possible to offer these dwelling
units to eligible "low income" tenants at a cost significantly below the market
rate for comparable conventionally financed dwelling units in the area.



<PAGE>   4

During 2000, the projects in which REAL II had invested were substantially
rented. The following is a schedule of the status as of December 31, 2000, of
the projects owned by local limited partnerships in which REAL II is a limited
partner.


            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2000



<TABLE>
<CAPTION>
                                             Units Authorized
                                                For Rental
                                             Assistance Under
                                               Section 8 or
                                                Other Rent                             Percentage of
                                No. of          Supplement               Units          Total Units
Name and Location                Units            Program              Occupied          Occupied
------------                    ------       -----------------         --------        -------------
<S>                              <C>              <C>                   <C>               <C>
Azalea Court                       48               0/ 0                  42                88%
Theodore, AL

Branford Elderly                   38               38/ 0                 37                97%
Branford, CT

Cherrywood Apts                    40               40/ 0                 40               100%
Twin Falls, ID

Clearfield Manor                   40               40/ 0                 39                97%
Clearfield, KY

Crystal Springs                    28               0/ 28                 28               100%
Crystal Springs, MS

Lakeside Apts                      48               48/ 0                 46                96%
Mishawaka, IN

Landmark Towers                    40               40/ 0                 40               100%
Nampa, ID

Magnolia State                     60               0/ 24                 57                95%
Gulfport, MS

Redfern Grove Apts                 72               72/ 0                 72               100%
E. Providence, RI

Saturn Apts                        38               38/0                  38               100%
Idaho Falls, ID

Sugar River Mills                 162               162/ 0               148                91%
Claremont, NH
</TABLE>


<PAGE>   5


            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                       IN WHICH REAL II HAS AN INVESTMENT
                                DECEMBER 31, 2000
                                   (CONTINUED)



<TABLE>
<CAPTION>
                                             Units Authorized
                                                For Rental
                                             Assistance Under
                                               Section 8 or
                                                Other Rent                             Percentage of
                                No. of          Supplement               Units          Total Units
Name and Location                Units            Program              Occupied          Occupied
------------                    ------       -----------------         --------        -------------
<S>                              <C>              <C>                   <C>               <C>
Valebrook                         151               100/  0              150                99%
Lawrence, MA

Westward Ho Apts                  290               290/  0              276                95%
Phoenix, AZ

Willow Wick Apts                   24                 0/  5               12                50%
Centre, AL                      -----            ----------            -----               ---
TOTALS                          1,079               868/ 57            1,025                95%
                                =====            ==========            =====               ===
</TABLE>


<PAGE>   6


ITEM 2. PROPERTIES:

The local limited partnerships in which REAL II holds interests own various
multi-family rental properties. See Item 1 for information pertaining to these
properties.

ITEM 3. LEGAL PROCEEDINGS:

On August 27, 1998, two investors holding an aggregate of eight units of limited
partnership interests in Real Estate Associates Limited III (an affiliated
partnership in which NAPICO is the managing general partner) and two investors
holding an aggregate of five units of limited partnership interest in Real
Estate Associates Limited VI (another affiliated partnership in which NAPICO is
the managing general partner) commenced an action in the United States District
Court for the Central District of California against the Partnership, NAPICO and
certain other affiliated entities. The complaint alleges that the defendants
breached their fiduciary duty to the limited partners of certain NAPICO managed
partnerships and made materially false and misleading statements in the consent
solicitation statements sent to the limited partners of such partnerships
relating to approval of the transfer of partnership interests in limited
partnerships, owning certain of the properties, to the Operating Partnership
organized by an affiliate of NAPICO. The plaintiffs seek equitable relief, as
well as compensatory damages and litigation related costs. On August 4, 1999,
one investor holding one unit of limited partnership interest in Housing
Programs Limited (another affiliated partnership in which NAPICO is the managing
general partner) commenced a virtually identical action in the United States
District Court for the Central District of California against the Partnership,
NAPICO and certain other affiliated entities. The second action has been
subsumed in the first action, which has been certified as a class action. The
managing general partner of such NAPICO managed partnerships and the other
defendants believe that the plaintiffs' claims are without merit and intend to
contest the actions vigorously.

On December 30, 1998, the Operating Partnership acquired, for value, title to
New Haven Plaza Associates' property in Far Rockaway, New York. Thereafter,
NAPICO commenced an action for a declaratory judgment that NAPICO had the
authority to transfer the property and that the value paid by the Operating
Partnership for the property was fair. Defendants have pled counterclaims
alleging that inter alia, NAPICO was not authorized to transfer the property and
breached its fiduciary duties to the limited partners. Defendants also seek an
accounting and distributions of surplus cash. The parties are in the process of
conducting discovery.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests, held for investment by the Partnership, by the Operating
Partnership, together with certain amendments to the Partnership Agreement and
other disclosures of various conflicts of interest in connection with the
proposed transaction. Prior to the sale of the partnership interests in 1998,
the consents of the limited partners to the sale and amendments to the
Partnership Agreement were obtained.


<PAGE>   7

PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
        HOLDER MATTERS:

The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by E.F. Hutton Inc. It is not anticipated
that any public market will develop for the purchase and sale of any Partnership
interest. Limited Partnership Interests may be transferred only if certain
requirements are satisfied. At December 31, 2000 there were 1,591 registered
holders of units in REAL II. The Partnership has invested in certain government
assisted projects under programs which in many instances restrict the cash
return available to project owners. The Partnership was not designed to provide
cash distributions to investors in circumstances other than refinancing or
disposition of its investments in limited partnerships. In March 1999, the
Partnership made distributions of $4,950,000 to the limited partners and $50,000
to the general partners, using proceeds from the sale of the partnership
interests. No other distributions have been made since the inception of the
Partnership.


<PAGE>   8

ITEM 6. SELECTED FINANCIAL DATA:


<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                    ---------------------------------------------------------------------------------------
                                       2000                1999               1998               1997               1996
                                    -----------        -----------        -----------        -----------        -----------
<S>                                 <C>                <C>                <C>                <C>                <C>
Loss from operations                $  (312,667)       $  (373,134)       $  (846,393)       $  (666,499)       $  (449,123)

Gain on Sale of Limited
   Partnership Interests                     --                 --          4,002,592                 --                 --

Distributions from
   Limited Partnerships
   Recognized as Income                 101,059             96,547            224,996            244,281            113,203

Equity in (Loss) Income of
   Limited Partnerships
   and Amortization of
   Acquisition Costs                         --                 --         (2,562,191)           820,899          1,154,755
                                    -----------        -----------        -----------        -----------        -----------
Net (Loss) Income                   $  (211,608)       $  (276,587)       $   819,004        $   398,681        $   818,835
                                    ===========        ===========        ===========        ===========        ===========

Net (Loss) Income per limited
   Partnership Interest             $       (20)       $       (26)       $        76        $        37        $        76
                                    ===========        ===========        ===========        ===========        ===========

Total assets                        $   343,527        $   543,027        $ 5,946,785        $ 5,095,968        $ 4,630,145
                                    ===========        ===========        ===========        ===========        ===========

Investments in Limited
   Partnerships                     $        --        $        --        $        --        $ 3,493,251        $ 2,808,190
                                    ===========        ===========        ===========        ===========        ===========
</TABLE>



<PAGE>   9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS:


LIQUIDITY

The Partnership's primary sources of funds include interest income on money
market investments and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that any
of the local limited partnerships in which the Partnership has invested will
generate cash flow sufficient to provide for distributions to the Partnership's
limited partners in any material amount. The Partnership made a cash
distribution to investors in March 1999, using proceeds from the disposition of
its investments in certain limited partnerships.

CAPITAL RESOURCES

REAL II received $13,365,000 in subscriptions for units of Limited Partnership
Interests (at $5,000 per unit) during the period March 17, 1979 to September 15,
1980, pursuant to a registration statement on Form S-11. As of December 31, 1981
REAL II had received an additional $13,365,000 in subscriptions pursuant to the
exercise of warrants and the sale of Additional Limited Partnership Interests.

RESULTS OF OPERATIONS

The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which REAL II has invested could produce tax losses for more than 20 years from
the date of investment. Tax benefits will decline over time as the advantages of
accelerated depreciation are greatest in the earlier years, as deductions for
interest expense decrease as mortgage principal is amortized, and as the Tax
Reform Act of 1986 limits the deductions available.

At December 31, 2000, the Partnership has investments in 13 limited
partnerships, all of which own housing projects that were substantially all
rented. The Partnership sold its interests in 7 local partnerships in December
1998. The Partnership, as a limited partner, is entitled to 94% to 99% of the
profits and losses of the local limited partnerships. The Partnership accounts
for its investments in the local limited partnerships on the equity method,
thereby adjusting its investment balance by its proportionate share of the
income or loss of the local limited partnerships. Equity in losses of limited
partnerships is recognized in the financial statements until the limited
partnership investment account are reduced to a zero balance. Losses incurred
after the limited partnership investment account is reduced to zero are not
recognized. Limited partners are not liable for losses beyond their contributed
capital. At December 31, 2000 and 1999, the Partnership does not have any
positive investment balance.

Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.

The total income from the local limited partnerships that was allocated to the
Partnership was $450,000, $535,000 and $609,000 for the years ended December 31,
2000, 1999 and 1998, respectively. However, because losses incurred after the
investment account is reduced to a zero balance are not recognized and
subsequent income is not recognized until the investment account becomes
positive again, the Partnership recognized equity in income of limited
partnerships, substantially all from the partnerships with a positive investment
balance of $0, $0 and $754,611 for the years ended December 31, 2000, 1999 and
1998, respectively. The loss recorded by the Partnership in 1998 includes
impairment losses of $3,317,000 recognized to the carrying values of certain
investments in local limited partnerships. The cumulative amount of the
unrecognized equity in losses of certain limited partnerships was approximately
$7,693,000 and $8,176,000 as of December 31, 2000 and 1999, respectively.


<PAGE>   10
Distributions from the local limited partnerships in which the Partnership did
not have a positive investment balance were $101,059, $96,547 and $224,996 for
the years ended December 31, 2000, 1999 and 1998, respectively. These amounts
were recognized as income on the accompanying statements of operations, in
accordance with the equity method of accounting. Distributions decreased in 2000
and 1999 as a result of the sale of certain partnership interests in 1998.

As of December 31, 2000, 1999 and 1998, the Partnership has cash and cash
equivalents of $343,527, $468,311 and $696,785, respectively. Substantially all
of these amounts are on deposit primarily with high credit quality financial
institutions, earning interest. This resulted in the Partnership earning
$22,017, $29,870 and $66,041 in interest income for the years ended December 31,
2000, 1999 and 1998, respectively. The amount of interest income varies with
market rates available on deposits and with the amount of funds available for
investment. Cash equivalents can be converted to cash to meet obligations of the
Partnership as they arise. The Partnership intends to continue investing
available funds in this manner.

A recurring partnership expense is the annual management fee. The fee is payable
to the Corporate General Partner of the Partnership and is calculated at .4
percent of the Partnership's original remaining invested assets. The management
fee is paid to the Corporate General Partner for its continuing management of
partnership affairs. The fee is payable beginning with the month following the
Partnership's initial investment in a local limited partnership. Because of the
decrease invested assets at the end of 1998 as a result of the sale of
partnership interests, management fees have decreased from $397,680 for 1998 to
$175,792 for 2000 and 1999.

Under recently adopted law and policy, the United States Department of Housing
and Urban Development ("HUD") has determined not to renew the Housing Assistance
Payment ("HAP") Contracts on a long term basis on the existing terms. In
connection with renewals of the HAP Contracts under such new law and policy, the
amount of rental assistance payments under renewed HAP Contracts will be based
on market rentals instead of above market rentals, which may be the case under
existing HAP Contracts. The payments under the renewed HAP Contracts may not be
in an amount that would provide sufficient cash flow to permit owners of
properties subject to HAP Contracts to meet the debt service requirements of
existing loans insured by the Federal Housing Administration of HUD ("FHA")
unless such mortgage loans are restructured. In order to address the reduction
in payments under HAP Contracts as a result of this new policy, the Multi-family
Assisted Housing Reform and Affordability Act of 1997 ("MAHRAA"), which was
adopted in October 1997, provides for the restructuring of mortgage loans
insured by the FHA with respect to properties subject to the Section 8 program.
Under MAHRAA, an FHA-insured mortgage loan can be restructured into a first
mortgage loan which will be amortized on a current basis and a low interest
second mortgage loan payable to FHA which will only be payable on maturity of
the first mortgage loan. This restructuring results in a reduction in annual
debt service payable by the owner of the FHA-insured mortgage loan and is
expected to result in an insurance payment from FHA to the holder of the
FHA-insured loan due to the reduction in the principal amount. MAHRAA also
phases out project-based subsidies on selected properties serving families not
located in rental markets with limited supply, converting such subsidies to a
tenant-based subsidy.

When the HAP Contracts are subject to renewal, there can be no assurance that
the local limited partnerships in which the Partnership has an investment will
be permitted to restructure its mortgage indebtedness under MAHRAA. In addition,
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA is uncertain.

As a result of the foregoing, the Partnership in 1997 commenced an extensive
review of disposition, refinancing or re-engineering alternatives for the
properties in which the limited partnerships have invested and are subject to
HUD mortgage and rental subsidy programs. The Partnership has incurred expenses
in connection with this review by various third party professionals, including
accounting, legal, valuation,


<PAGE>   11

structural and engineering costs, which amounted to $72,627 and $260,952 for the
years ended December 31, 1999 and 1998, respectively, and are included in
administrative expenses.

On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships, with a total carrying value of $1,007,181 to the
Operating Partnership. The sale resulted in net cash proceeds to the Partnership
of $5,250,000 and a net gain of $4,002,592, after deducting selling costs. The
cash proceeds were held in escrow at December 31, 1998 and were collected in
1999. In March 1999, the Partnership made cash distributions of $4,950,000 to
the limited partners and $50,000 to the general partners, using proceeds from
the sale of the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (ii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by the Partnership.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.

Operating expenses, other than management fees, consist of legal and accounting
fees for services rendered to the Partnership and administrative expenses. Legal
and accounting fees were $98,417, $88,568 and $163,991 for the years ended
December 31, 2000, 1999 and 1998, respectively. Legal and accounting fees were
higher in 1998 as a result of $59,000 in legal fees that were incurred in
connection with the Partnership attempting to replace the unrelated general
partner of one of the local partnerships. Administrative expenses were $60,475,
$138,644 and $350,763 for the years ended December 31, 2000, 1999 and 1998,
respectively. Included in administrative expenses are reimbursements to NAPICO
for certain expenses, which totaled $14,962, $23,340 and $35,195 for the years
ended December 31, 2000, 1999 and 1998, respectively. Also included in
administrative expenses for 1999 and 1998 is $72,627 and $260,952, respectively,
related to the aforementioned third-party review of the properties owned by the
local partnerships. Accounts payable at December 31, 1998 includes $118,267 of
such costs.

Revenues and expenses of the local limited partnerships decreased during the
year ended December 31, 2000 as compared to 1998, as a result of the sale of 7
partnership interests on December 30, 1998.

Total revenue for the local partnerships has decreased from $23,097,000 for the
year ended December 31, 1998, to $9,880,000 and $9,793,000 for the years ended
December 31, 2000 and 1999, respectively.

Total expenses for the local partnerships decreased from $22,403,000 for the
year ended December 31, 1998, to $9,411,000 and $9,236,000 for the
years ended December 31, 2000 and 1999, respectively.

The total net income for the local partnerships for 2000, 1999 and 1998
aggregated $469,000, $556,000, and $694,000, respectively. The net income
allocated to the Partnership was $450,000, $535,000 and $609,000 for 2000, 1999
and 1998, respectively.

The Partnership, as a Limited Partner in the local limited partnerships in which
it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and, accordingly, the
status of the national economy, including substantial unemployment, concurrent
inflation and changing legislation which


<PAGE>   12


could increase vacancy levels, rental payment defaults, and operating expenses,
which in turn, could substantially increase the risk of operating losses for the
projects.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

The Financial Statements and Supplementary Data are listed under Item 14.

ITEM 9. CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE:

Not applicable.


<PAGE>   13

                        REAL ESTATE ASSOCIATES LIMITED II
                       (A California limited partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                   AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
                                DECEMBER 31, 2000




<PAGE>   14

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
Real Estate Associates Limited II
(A California limited partnership)

We have audited the accompanying balance sheets of Real Estate Associates
Limited II (a California limited partnership) as of December 31, 2000 and 1999,
and the related statements of operations, partners' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 2000. Our
audits also included the financial statement schedules listed in the index in
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
equity in loss of these limited partnerships represents 9 percent of the total
net income of the Partnership for the year ended December 31, 1998, and these
limited partnerships represent a substantial portion of the investee information
in Note 2 and the financial statement schedules. The financial statements of
these limited partnerships were audited by other auditors. Their reports have
been furnished to us and our opinion, insofar as it relates to the amounts
included for these limited partnerships, is based solely on the reports of the
other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Real Estate Associates Limited II as of December 31,
2000 and 1999, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America. Also,
in our opinion, based on our audits and the reports of other auditors, such
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.



DELOITTE & TOUCHE LLP

Los Angeles, California
March 28, 2001



<PAGE>   15

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                                 BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999

                                     ASSETS



<TABLE>
<CAPTION>
                                                          2000             1999
                                                     ---------        ---------
<S>                                                  <C>              <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2)         $      --        $      --

CASH AND CASH EQUIVALENTS                              343,527          468,311

DUE FROM NAPICO (Note 3)                                    --           74,716
                                                     ---------        ---------

        TOTAL ASSETS                                 $ 343,527        $ 543,027
                                                     =========        =========


LIABILITIES AND PARTNERS' EQUITY (DEFICIENCY)

LIABILITIES:

    Accounts payable                                 $  15,704        $   3,596
                                                     ---------        ---------

COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)

PARTNERS' EQUITY (DEFICIENCY):

    General partners                                  (214,817)        (212,701)
    Limited partners                                   542,640          752,132
                                                     ---------        ---------

                                                       327,823          539,431
                                                     ---------        ---------

        TOTAL LIABILITIES AND PARTNERS' EQUITY       $ 343,527        $ 543,027
                                                     =========        =========
</TABLE>



     The accompanying notes are integral part of these financial statements.


<PAGE>   16

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



<TABLE>
<CAPTION>
                                                           2000               1999               1998
                                                       -----------        -----------        -----------
<S>                                                    <C>                <C>                <C>
INTEREST INCOME                                        $    22,017        $    29,870        $    66,041
                                                       -----------        -----------        -----------

OPERATING EXPENSES:
      Legal and accounting                                  98,417             88,568            163,991
      Management fees - general partner (Note 3)           175,792            175,792            397,680
      Administrative  (Note 3)                              60,475            138,644            350,763
                                                       -----------        -----------        -----------

TOTAL OPERATING EXPENSES                                   334,684            403,004            912,434
                                                       -----------        -----------        -----------

LOSS FROM OPERATIONS                                      (312,667)          (373,134)          (846,393)

GAIN ON SALE OF LIMITED PARTNERSHIP

      INTERESTS (Note 2)                                        --                 --          4,002,592

DISTRIBUTIONS FROM LIMITED
      PARTNERSHIPS RECOGNIZED AS

      INCOME (Note 2)                                      101,059             96,547            224,996

EQUITY IN LOSS OF LIMITED PARTNERSHIPS
      AND AMORTIZATION OF ACQUISITION

      COSTS (Note 2)                                            --                 --         (2,562,191)
                                                       -----------        -----------        -----------

NET (LOSS) INCOME                                      $  (211,608)       $  (276,587)       $   819,004
                                                       ===========        ===========        ===========

NET (LOSS) INCOME PER LIMITED PARTNERSHIP
      INTEREST (Note 1)                                $       (20)       $       (26)       $        76
                                                       ===========        ===========        ===========
</TABLE>


    The accompanying notes are integral part of these financial statements.



<PAGE>   17

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                   STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



<TABLE>
<CAPTION>
                              General           Limited
                             Partners           Partners             Total
                            -----------        -----------        -----------
<S>                         <C>                <C>                <C>
EQUITY (DEFICIENCY),

    January 1, 1998         $  (168,125)       $ 5,165,139        $ 4,997,014

    Net loss for 1998             8,190            810,814            819,004
                            -----------        -----------        -----------

EQUITY (DEFICIENCY),

    December 31, 1998          (159,935)         5,975,953          5,816,018

    Distributions               (50,000)        (4,950,000)        (5,000,000)

    Net loss for 1999            (2,766)          (273,821)          (276,587)
                            -----------        -----------        -----------

EQUITY (DEFICIENCY),

    December 31, 1999          (212,701)           752,132            539,431

    Net loss for 2000            (2,116)          (209,492)          (211,608)
                            -----------        -----------        -----------

EQUITY (DEFICIENCY),

    December 31, 2000       $  (214,817)       $   542,640        $   327,823
                            ===========        ===========        ===========
</TABLE>



    The accompanying notes are integral part of these financial statements.


<PAGE>   18

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                            STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



<TABLE>
<CAPTION>
                                                                       2000               1999               1998
                                                                    -----------        -----------        -----------
<S>                                                                 <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income                                              $  (211,608)       $  (276,587)       $   819,004
     Adjustments to reconcile net (loss) income to net cash
      used in operating activities:
       Gain on sale of limited partnership interests                         --                 --         (4,002,592)
       Equity in loss of limited partnerships
        and amortization of acquisition costs                                --                 --          2,562,191
       Decrease (increase) in due from NAPICO                            74,716            (74,716)                --
       Increase (decrease) in accounts payable                           12,108           (127,171)            31,813
                                                                    -----------        -----------        -----------
          Net cash used in operating activities                        (124,784)          (478,474)          (589,584)
                                                                    -----------        -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Costs related to sale of partnership interests                          --                 --           (240,227)
     Capital contributions                                                   --                 --           (134,900)
     Distributions from limited partnerships
       recognized as return of capital                                       --                 --             58,779
     Proceed from the sale of limited
       partnership interests                                                 --          5,250,000
                                                                    -----------        -----------        -----------

          Net cash provided by (used in) investing activities                --          5,250,000           (316,348)
                                                                    -----------        -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Distributions to partners                                               --         (5,000,000)                --
                                                                    -----------        -----------        -----------

NET  DECREASE  IN CASH
     AND CASH EQUIVALENTS                                              (124,784)          (228,474)          (905,932)

CASH AND CASH EQUIVALENTS,
     BEGINNING OF YEAR                                                  468,311            696,785          1,602,717
                                                                    -----------        -----------        -----------

CASH AND CASH EQUIVALENTS,
     END OF YEAR                                                    $   343,527        $   468,311        $   696,785
                                                                    ===========        ===========        ===========
</TABLE>



     The accompanying notes are integral part of these financial statements.



<PAGE>   19

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 2000



1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        Organization

        Real Estate Associates Limited II (the Partnership) was formed under the
        California Limited Partnership Act on December 4, 1979. The Partnership
        was formed to invest in other limited partnerships which own and operate
        primarily federal, state or local government-assisted housing projects.
        The general partners are Coast Housing Investment Associates ("CHIA"), a
        limited partnership, and National Partnership Investments Corp.
        ("NAPICO"), the corporate general partner. The limited partner of CHIA
        is an officer of NAPICO. The business of the Partnership is conducted
        primarily by NAPICO.

        Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of
        Casden Investment Corporation ("CIC"), which is wholly owned by Alan I.
        Casden. On December 30, 1998, Casden Properties Operating Partnership,
        L.P. (the "Operating Partnership"), a majority owned subsidiary of
        Casden Properties Inc., a real estate investment trust organized by Alan
        I. Casden, purchased a 95.25% economic interest in NAPICO. The remaining
        economic interest, including a majority of the voting common stock,
        continues to be owned by CIC.

        The Partnership offered 3,000 units and issued 2,673 units of limited
        partner interests through a public offering. Each unit was comprised of
        two limited partner interests and a warrant granting an investor the
        right to purchase two additional limited partner interests. An
        additional 5,346 interests were issued from the exercise of the warrants
        and the sale of interests associated with warrants not exercised. The
        general partners have a 1 percent interest in the profits and losses of
        the Partnership. The limited partners have the remaining 99 percent
        interest in proportion to their respective investments.

        The Partnership shall be dissolved only upon the expiration of 52
        complete calendar years (December 31, 2031) from the date of the
        formation of the Partnership or the occurrence of various other events
        as specified in the terms of the Partnership agreement.

        Upon total or partial liquidation of the Partnership or the disposition
        or partial disposition of a project or project interest and distribution
        of the proceeds, the general partners will be entitled to a liquidation
        fee as stipulated in the Partnership agreement. The limited partners
        will have a priority return equal to their invested capital attributable
        to the project(s) or project interest(s) sold and shall receive from the
        sale of the project(s) or project interest(s) an amount sufficient to
        pay state and federal income taxes, if any, calculated at the maximum
        rate then in effect. The general partners' liquidation fee may accrue
        but shall not be paid




<PAGE>   20

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        until the limited partners have received distributions equal to 100
        percent of their capital contributions.

        On December 30, 1998, the Partnership sold its interests in 7 local
        limited partnerships for $5,250,000 to the Operating Partnership.

        Basis of Presentation

        The accompanying financial statements have been prepared in conformity
        with accounting principles generally accepted in the United States of
        America.

        Use of Estimates

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

        Method of Accounting for Investments in Limited Partnerships

        The investments in limited partnerships are accounted for on the equity
        method. Acquisition, selection and other costs related to the
        acquisition of the projects were capitalized as part of the investment
        account and are being amortized on a straight line basis over the
        estimated lives of the underlying assets, which is generally 30 years.

        Net (Loss) Income Per Limited Partnership Interest

        Net (loss) income per limited partnership interest was computed by
        dividing the limited partners' share of net income by the number of
        limited partnership interests outstanding during the year. The number of
        limited partnership interests was 10,693 for all years presented.




<PAGE>   21

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        Cash and Cash Equivalents

        Cash and cash equivalents consist of cash and bank certificates of
        deposit with an original maturity date of three months or less. The
        Partnership has its cash and cash equivalents on

        deposit primarily with two high credit quality financial institutions.
        Such cash and cash equivalents are in excess of the FDIC insurance
        limit.

        Impairment of Long-Lived Assets

        The Partnership reviews long-lived assets to determine if there has been
        any permanent impairment whenever events or changes in circumstances
        indicate that the carrying amount of the asset may not be recoverable.
        If the sum of the expected future cash flows is less than the carrying
        amount of the assets, the Partnership recognizes an impairment loss.
        During 1998, the Partnership recognized impairment losses of $3,316,802,
        related to certain investments in local limited partnerships, which has
        been included in equity in loss of limited partnerships.

2.      INVESTMENTS IN LIMITED PARTNERSHIPS

        The Partnership holds limited partnership interests in 13 limited
        partnerships as of December 31, 2000 and 1999, after selling its
        interests in 7 limited partnerships in 1998. The limited partnerships
        own residential low income rental projects consisting of 1,079 apartment
        units. The mortgage loans of these projects are payable to or insured by
        various governmental agencies.

        The Partnership, as a limited partner, is entitled to between 85 percent
        and 99 percent of the profits and losses of the limited partnerships.

        Equity in losses of limited partnerships is recognized in the financial
        statements until the limited partnership investment account is reduced
        to a zero balance. Losses incurred after the limited partnership
        investment account is reduced to zero are not recognized. The cumulative
        amount of the unrecognized equity in losses of certain limited
        partnerships was in the aggregate approximately $7,693,000 and
        $8,176,000 as of December 31, 2000 and 1999, respectively.




<PAGE>   22

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

        Distributions from limited partnerships are accounted for as a return of
        capital until the investment balance is reduced to zero. Subsequent
        distributions received are recognized as income.

        The Partnership has no carrying value in investments in limited
        partnerships as of December 31, 2000 and 1999.

        The difference between the investment per the accompanying balance
        sheets at December 31, 2000 and 1999, and the deficiency per the limited
        partnerships' combined financial statements is due primarily to
        cumulative unrecognized equity in losses of certain limited
        partnerships, costs capitalized to the investment account cumulative
        distributions recognized as income and recognition of impairment losses.

        Selected financial information from combining the financial statements
        of the limited partnerships at December 31, 2000 and 1999 and for each
        of three years in the period ended December 31, 2000 is as follows:



<TABLE>
<CAPTION>
                                 Balance Sheets
                                                                2000            1999
                                                              --------        --------
                                                                   (in thousands)
<S>                                                           <C>             <C>
        Land and buildings, net                               $ 16,736        $ 17,662
                                                              ========        ========

        Total assets                                          $ 26,683        $ 27,319
                                                              ========        ========

        Mortgages payable                                     $ 33,696        $ 34,638
                                                              ========        ========

        Total liabilities                                     $ 35,142        $ 36,135
                                                              ========        ========

        Deficiency of Real Estate Associates Limited II       $ (6,692)       $ (7,074)
                                                              ========        ========

        Deficiency of other partners                          $ (1,767)       $ (1,742)
                                                              ========        ========
</TABLE>




<PAGE>   23

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)


                            Statements of Operations



<TABLE>
<CAPTION>
                                                       2000           1999          1998
                                                      -------       -------       -------
                                                                (in thousands)
<S>                                                   <C>           <C>           <C>
        Total revenue                                 $ 9,880       $ 9,793       $23,097
                                                      =======       =======       =======

        Interest expense                              $ 2,770       $ 2,878       $ 6,451
                                                      =======       =======       =======

        Depreciation                                  $ 1,389       $ 1,415       $ 3,204
                                                      =======       =======       =======

        Total expenses                                $ 9,411       $ 9,236       $22,403
                                                      =======       =======       =======

        Net income                                    $   469       $   556       $   694
                                                      =======       =======       =======

        Net income allocable to the Partnership       $   450       $   535       $   609
                                                      =======       =======       =======
</TABLE>

        An affiliate of NAPICO was the general partner in three of the limited
        partnerships in which the partnership interests were sold on December
        30, 1998, and another affiliate received property management fees of
        approximately 5% of their revenue. The affiliate received property
        management fees of $311,489 in 1998.

        Under recently adopted law and policy, the United States Department of
        Housing and Urban Development ("HUD") has determined not to renew the
        Housing Assistance Payment ("HAP") Contracts on a long term basis on the
        existing terms. In connection with renewals of the HAP Contracts under
        such new law and policy, the amount of rental assistance payments under
        renewed HAP Contracts will be based on market rentals instead of above
        market rentals, which may not be the case under existing HAP Contracts.
        The payments under the renewed HAP Contracts may not be in an amount
        that would provide sufficient cash flow to permit owners of properties
        subject to HAP Contracts to meet the debt service requirements of
        existing loans insured by the Federal Housing Administration of HUD
        ("FHA") unless such mortgage loans are restructured. In order to address
        the reduction in payments under HAP Contracts as a result of this new
        policy, the Multi-family Assisted Housing Reform and Affordability Act
        of 1997 ("MAHRAA"), which was adopted in October 1997, provides for the
        restructuring of mortgage loans insured by the FHA with respect to
        properties subject to the Section 8 program. Under MAHRAA, an
        FHA-insured




<PAGE>   24

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

        mortgage loan can be restructured into a first mortgage loan which will
        be amortized on a current basis and a low interest second mortgage loan
        payable to FHA which will only be payable on maturity of the first
        mortgage loan. This restructuring results in a reduction in annual debt
        service payable by the owner of the FHA-insured mortgage loan and is
        expected to result in an insurance payment from FHA to the holder of the
        FHA-insured loan due to the reduction in the principal amount. MAHRAA
        also phases out project-based subsidies on selected properties serving
        families not located in rental markets with limited supply, converting
        such subsidies to a tenant-based subsidy.

        When the HAP Contracts are subject to renewal, there can be no assurance
        that the local limited partnerships in which the Partnership has an
        investment will be permitted to restructure its mortgage indebtedness
        under MAHRAA. In addition, the economic impact on the Partnership of the
        combination of the reduced payments under the HAP Contracts and the
        restructuring of the existing FHA-insured mortgage loans under MAHRAA is
        uncertain.

        As a result of the foregoing, the Partnership in 1997 commenced an
        extensive review of disposition, refinancing or re-engineering
        alternatives for the properties in which the limited partnerships have
        invested and are subject to HUD mortgage and rental subsidy programs.
        The Partnership has incurred expenses in connection with this review by
        various third party professionals, including accounting, legal,
        valuation, structural and engineering costs, which amounted to $72,627
        and $260,952 for the years ended December 31, 1999 and 1998,
        respectively, and are included in administrative expenses. Accounts
        payable at December 31, 1998 includes $118,267 of such costs.

        On December 30, 1998, the Partnership sold its limited partnership
        interests in 7 local limited partnerships, with a total carrying value
        of $1,007,181, to the Operating Partnership. The sale resulted in cash
        proceeds to the Partnership of $5,250,000 and a net gain of $4,002,592
        after deducting the selling costs. The cash proceeds were held in escrow
        at December 31, 1998 and were collected in 1999. In March 1999, the
        Partnership made a cash distribution of $4,950,000 to the limited
        partners and $50,000 to the general partners, using proceeds from the
        sale of the partnership interests.




<PAGE>   25

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

        The Operating Partnership purchased such limited partner interests for
        cash, which it raised in connection with a private placement of its
        equity securities. The purchase was subject to, among other things, (i)
        the purchase of the general partner interests in the local limited
        partnerships by the Operating Partnership; (ii) the approval of HUD and
        certain state housing finance agencies; and (iii) the consent of the
        limited partners to the sale of the local limited partnership interests
        held for investment by the Partnership.

        In August 1998, a consent solicitation statement was sent to the limited
        partners setting forth the terms and conditions of the purchase of the
        limited partners' interests held for investment by the Partnership,
        together with certain amendments to the Partnership Agreement and other
        disclosures of various conflicts of interest in connection with the
        proposed transaction. Prior to the sale of the partnership interests,
        the consents of the limited partners to the sale and amendments to the
        Partnership Agreement were obtained.

3.      FEES AND EXPENSES DUE TO GENERAL PARTNER

        Under the terms of the Restated Certificate and Agreement of Limited
        Partners, the Partnership is liable to NAPICO for an annual management
        fee equal to .4 percent of the original invested assets of the remaining
        limited partnerships. Invested assets is defined as the costs of
        acquiring project interests, including the proportionate amount of the
        mortgage loans related to the Partnership's interest in the capital
        accounts of the respective partnerships.

        The Partnership reimburses NAPICO for certain expenses. The
        reimbursement to NAPICO was $14,962, $23,340 and $35,195 in 2000, 1999
        and 1998, respectively, and is included in administrative expenses.

4.      CONTINGENCIES

        On August 27, 1998, two investors holding an aggregate of eight units of
        limited partnership interests in Real Estate Associates Limited III (an
        affiliated partnership in which NAPICO is the managing general partner)
        and two investors holding an aggregate of five units of limited
        partnership interest in Real Estate Associates Limited VI (another
        affiliated partnership in which NAPICO is the managing general partner)
        commenced an action in the United States District Court for the Central
        District of California against the Partnership, NAPICO and certain other
        affiliated entities. The complaint alleges that the defendants breached
        their fiduciary duty to the limited partners of certain NAPICO managed
        partner-




<PAGE>   26

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



4.      CONTINGENCIES (CONTINUED)

        ships and made materially false and misleading statements in the consent
        solicitation statements sent to the limited partners of such
        partnerships relating to approval of the transfer of partnership
        interests in limited partnerships, owning certain of the properties, to
        the Operating Partnership organized by an affiliate of NAPICO. The
        plaintiffs seek equitable relief, as well as compensatory damages and
        litigation related costs. On August 4, 1999, one investor holding one
        unit of limited partnership interest in Housing Programs Limited
        (another affiliated partnership in which NAPICO is the managing general
        partner) commenced a virtually identical action in the United States
        District Court for the Central District of California against the
        Partnership, NAPICO and certain other affiliated entities. The second
        action has been subsumed in the first action, which has been certified
        as a class action. The managing general partner of such NAPICO managed
        partnerships and the other defendants believe that the plaintiffs'
        claims are without merit and intend to contest the actions vigorously.

        On December 30, 1998, the Operating Partnership acquired, for value,
        title to New Haven Plaza Associates' property in Far Rockaway, New York.
        Thereafter, NAPICO commenced an action for a declaratory judgment that
        NAPICO had the authority to transfer the property and that the value
        paid by the Operating Partnership for the property was fair. Defendants
        have pled counterclaims alleging that inter alia, NAPICO was not
        authorized to transfer the property and breached its fiduciary duties to
        the limited partners. Defendants also seek an accounting and
        distributions of surplus cash. The parties are in the process of
        conducting discovery. Thereafter, plaintiff will move for partial
        judgment on the pleadings to dismiss all of defendants' affirmative
        defenses and counterclaims, other than for an accounting.

5.      INCOME TAXES

        No provision has been made for income taxes in the accompanying
        financial statements since such taxes, if any, are the liability of the
        individual partners. The major differences in tax and financial
        reporting result from the use of different bases and depreciation
        methods for the properties held by the limited partnerships. Differences
        in tax and financial losses also arise as losses are not recognized for
        financial reporting purposes when the investment balance has been
        reduced to zero.




<PAGE>   27

                        REAL ESTATE ASSOCIATES LIMITED II
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 2000



6.      FAIR VALUE OF FINANCIAL INSTRUMENTS

        Statement of Financial Accounting Standards No. 107, "Disclosure about
        Fair Value of Financial Instruments," requires disclosure of fair value
        information about financial instruments. The carrying amount of assets
        and liabilities reported on the balance sheets that require such
        disclosure approximates fair value due to their short-term maturity.

7.      FOURTH-QUARTER ADJUSTMENT

        The Partnership's policy is to record its equity in loss of limited
        partnerships on a quarterly basis, using estimated financial information
        furnished by the various local operating general partners. The equity in
        loss of limited partnerships reflected in the accompanying annual
        financial statements is based primarily upon audited financial
        statements of the investee limited partnerships.




<PAGE>   28

                                                                       SCHEDULE



                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



<TABLE>
<CAPTION>
                                                               Year Ended December 31, 2000
                                       --------------------------------------------------------------------------------
                                                                            Cash
                                       Balance                             Distri-            Equity           Balance
                                       January           Capital           butions              in             December
Limited Partnerships                   1, 2000        Contributions        Received           Income           31, 2000
-----------------------------          -------        -------------        --------           -------          --------
<S>                                     <C>               <C>               <C>               <C>               <C>
Azalea Court Apartments                 $                 $                 $                 $                 $

Branford Elderly Housing

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

Lakeside Apartments

Landmark Towers

Magnolia State Apts

Redfern Grove Apartments

Sugar River Mills

Valebrook

Westward Ho Apartments
                                        ------            ------            ------            ------            ------
Willow Wick Apartments                  $                 $                 $                 $                 $
                                        ======            ======            ======            ======            ======
</TABLE>



<PAGE>   29

                                                                        SCHEDULE
                                                                     (CONTINUED)


                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



<TABLE>
<CAPTION>
                                                               Year Ended December 31, 1999
                                       --------------------------------------------------------------------------------
                                                                            Cash
                                       Balance                             Distri-            Equity           Balance
                                       January           Capital           butions              in             December
Limited Partnerships                   1, 1999        Contributions        Received           Income           31, 1999
-----------------------------          -------        -------------        --------           -------          --------
<S>                                     <C>               <C>               <C>               <C>               <C>
Azalea Court Apartments                 $                 $                 $                 $                 $

Branford Elderly Housing

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

Lakeside Apartments

Landmark Towers

Magnolia State Apts.

Redfern Grove Apartments

Sugar River Mills

Valebrook

Westward Ho Apartments
                                        ------            ------            ------            ------            ------
Willow Wick Apartments                  $                 $                 $                 $                 $
                                        ======            ======            ======            ======            ======
</TABLE>


<PAGE>   30

                                                                        SCHEDULE
                                                                     (CONTINUED)



                        REAL ESTATE ASSOCIATES LIMITED II
                       INVESTMENTS IN LIMITED PARTNERSHIPS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997




<TABLE>
<CAPTION>
                                                               Year Ended December 31, 1998
                                 -------------------------------------------------------------------------------------------
                                                                     Cash
                                   Balance                           Distri-         Equity                         Balance
                                   January        Capital           butions            in                           December
Limited Partnerships               1, 1998      Contributions       Received         Income             Sale        31, 2000
-----------------------------    -----------    -------------     -----------      -----------      -----------     --------
<S>                              <C>             <C>               <C>               <C>               <C>
Azalea Court Apartments          $               $                $                $                $                $

Berger Apartments  *                 726,715                                          280,466        (1,007,181)          --

Biltmore  *                                         134,900                          (134,900)                            --

Branford Elderly Housing             367,174                                         (367,174)                            --

Castlewood Apartments  *

Cherrywood/Saturn Apartments

Clearfield Manor

Crystal Springs

East Farm Village  *

Grant Park/Ormewood Park  *

Lakeside Apartments

Landmark Towers

Magnolia State Apts

New Haven Plaza  *

Pennbrook Apartments  *

Redfern Grove Apartments             533,440                         (31,862)        (501,578)                            --

Sugar River Mills

Valebrook                          1,865,922                         (26,917)      (1,839,005)                            --

Westward Ho Apartments

Willow Wick Apartments
                                 -----------     -----------      -----------      -----------      -----------      ------

                                 $ 3,493,251     $   134,900      $   (58,779)     $(2,562,191)     $(1,007,181)     $   --
                                 ===========     ===========      ===========      ===========      ===========      ======
</TABLE>

* Sold to the Operating Partnership in 1998




<PAGE>   31

                                                                        SCHEDULE
                                                                     (CONTINUED)


                        REAL ESTATE ASSOCIATES LIMITED II
               INVESTMENTS IN, EQUITY IN EARNINGS OF AND DIVIDENDS
                   RECEIVED FROM AFFILIATES AND OTHER PERSONS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998



NOTES:     1.        Equity in losses of the limited partnership represents the
                     Partnership's allocable share of the net loss from the
                     limited partnerships for the year. Equity in losses of the
                     limited partnerships will be recognized until the
                     investment balance is reduced to zero or a negative balance
                     equal to further commitments by the Partnership.

           2.        Cash distributions from the limited partnerships are
                     treated as a return on the investment and reduce the
                     investment balance until such time as the investment is
                     reduced to zero or a negative balance equal to further
                     commitments by the Partnership. Distributions subsequently
                     received will be recognized as income.



<PAGE>   32

                                                                   SCHEDULE III


                        REAL ESTATE ASSOCIATES LIMITED II
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                        IN WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2000



<TABLE>
<CAPTION>
                                                                     Buildings,
                                                                   Furnishings and
                                                                     Equipment -
                                                                      Initial
                                                                       Cost to
                                                                     Partnership
                                                                     and Amount
                                           Outstanding                 Carried
                                   Number    Mortage                  at Close                   Accumulated    Construction
Partnership/Location             of Units     Loan         Land       of Period        Total     Depreciation      Period
----------------------------     -------- ------------  ----------- --------------  -----------  ------------   ------------
<S>                                 <C>   <C>           <C>           <C>           <C>           <C>            <C>
Azalea Court Apts                    48   $   985,471   $    62,500   $ 1,288,693   $ 1,351,193   $   866,094    10/80-3/81
  Theodore, AL
Branford Elderly Hsng                38       873,291       138,000     1,575,329     1,713,329       698,143     6/80-4/81
  Branford, Connecticut
Cherrywood/Saturn Apartments         78     3,019,614       146,186     2,605,041     2,751,227     1,924,451     9/79-4/80
  Twin Falls/Idaho Falls,
  Idaho
Clearfield Manor                     40     1,076,764        50,000     1,271,490     1,321,490       898,145   10/80-10/81
  Clearfield, KY
Crystal Springs Apts                 28       617,309        35,835       795,434       831,269       607,643     7/80-3/81
  Crystal Springs, MS
Lakeside Apartments                  48     1,585,000       115,366     1,579,455     1,694,821     1,534,015    10/80-6/81
  Mishawaka, IN
Landmark Towers                      40       794,936        38,700     1,617,151     1,655,851     1,403,546    4/79-10/80
  Nampa, Idaho
Magnolia State Apts                  60     1,194,328        57,165     1,613,888     1,671,053     1,059,844     3/80-8/80
  Gulfport, MS
Redfern Grove Apts                   72     1,292,875       245,502     2,773,202     3,018,704     2,021,411     7/80-7/81
  E. Providence, RI
Sugar River Mills                   162     6,974,435       301,007     9,374,895     9,675,902     5,603,249     2/81-4/82
  Claremon, NH
Valebrook Assoc                     151     3,163,725        88,886     5,014,390     5,103,276     4,052,166     2/79-7/80
  Lawrence, Massachusetts
Westward Ho Apartments              290    11,692,091     1,040,000    15,024,553    16,064,553     9,595,078    4/80-12/81
  Phoenix, Arizona
Willow Wick Apts                     24       425,909        21,675       622,317       643,992       496,871     9/80-5/81
  Centre, AL
                                   ----   -----------   -----------   -----------   -----------   -----------

TOTAL                              1079   $33,695,748   $ 2,340,822   $45,155,838   $47,496,660   $30,760,656
                                   ====   ===========   ===========   ===========   ===========   ===========
</TABLE>


<PAGE>   33

                                                                    SCHEDULE III
                                                                     (CONTINUED)


                        REAL ESTATE ASSOCIATES LIMITED II
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                      HELD BY LOCAL LIMITED PARTNERSHIPS IN
                          WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2000



NOTES:     1.       Each local limited partnership has developed, owns and
                    operates the housing project. Substantially all project
                    costs, including construction period interest expense, were
                    capitalized by the limited partnerships.

           2.       Depreciation is provided for by various methods over the
                    estimated useful lives of the projects. The estimated
                    composite useful lives of the buildings are generally from
                    25 to 40 years.

           3.       Investments in property and equipment:


<TABLE>
<CAPTION>
                                                                      Buildings,
                                                                     Furnishings
                                                                         And
                                               Land                   Equipment                   Total
                                          -------------             -------------             -------------
<S>                                       <C>                       <C>                       <C>
Balance at December 31, 1997              $   5,420,488             $ 104,027,096             $ 109,447,584

Net additions during 1998                       777,120                (1,883,647)               (1,106,527)

Sale of properties during 1998               (3,856,786)              (57,610,693)              (61,467,479)
                                          -------------             -------------             -------------

Balance at December 31, 1998                  2,340,822             $  44,532,756             $  46,873,578

Net additions during 1999                            --                   252,970                   252,970
                                          -------------             -------------             -------------

Balance, December 31, 1999                    2,340,822                44,785,726                47,126,548

Net additions during 2000                            --                   370,112                   370,112
                                          -------------             -------------             -------------

Balance, December 31, 2000                $   2,340,822             $  45,155,838             $  47,496,660
                                          =============             =============             =============
</TABLE>


<PAGE>   34

                                                                    SCHEDULE III
                                                                     (Continued)



                        REAL ESTATE ASSOCIATES LIMITED II
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                      HELD BY LOCAL LIMITED PARTNERSHIPS IN
                          WHICH REAL II HAS INVESTMENTS
                                DECEMBER 31, 2000



<TABLE>
<CAPTION>
                                                      Buildings,
                                                      Furnishings
                                                         And
                                                      Equipment
                                                    ------------
<S>                                                 <C>
Accumulated Depreciation:
-------------------------

Balance at January 1, 1998                          $ 60,655,478

Net additions during 1998                              1,242,752

Sale of properties during 1998                       (33,751,348)
                                                    ------------

Balance at December 31, 1998                          28,146,882

Net additions during 1999                              1,317,651
                                                    ------------

Balance at December 31, 1999                          29,464,533

Net additions during 2000                              1,296,123
                                                    ------------

Balance at December 31, 2000                        $ 30,760,656
                                                    ============
</TABLE>

<PAGE>   35

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

REAL ESTATE ASSOCIATES LIMITED II (the "Partnership") has no directors or
executive officers of its own. Partner.

Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P., (the
"Operating Partnership") a majority owned subsidiary of Casden Properties Inc.,
a real estate investment trust organized by Alan I. Casden, purchased a 95.25%
economic interest in NAPICO. The following biographical information is presented
for the directors and executive officers of NAPICO with principal responsibility
for the Partnership's affairs.

CHARLES H. BOXENBAUM, 71, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company. Mr.
Boxenbaum has been a member of the Board of Directors of Casden Properties Inc.
since 1998.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
He is one of the founders and a past director of the First Los Angeles Bank,
organized in November 1974. Since March 1995, Mr. Boxenbaum has served on the
Board of Directors of the National Housing Council. Mr. Boxenbaum received his
Bachelor of Arts degree from the University of Chicago.

BRUCE E. NELSON, 49, President, Chief Operating Officer and a director of
NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments. Mr.
Nelson is a member of the Board of Directors of Casden Properties Inc.

and is a Director of the Affordable Housing Tax Credit Coalition.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.

ALAN I. CASDEN, 55, Chairman of the Board of Directors and Chief Executive
Officer of Casden Properties Inc., a director and member of the audit committee
of NAPICO, and chairman of the Executive Committee of NAPICO.

Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.



<PAGE>   36

Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, the President's Council of the California
Building Industry Association and the Urban Land Institute. He also serves on
the Board of Trustees of the University of Southern California.

He holds a Bachelor of Science degree and a Masters in Business Administration
degree from the University of Southern California.

BRIAN H. SHUMAN, 38, Vice President and Chief Financial Officer.

Mr. Shuman joined NAPICO in 2000, and is responsible for the financial affairs
of NAPICO, as well as the limited partnerships sponsored by it. From 1996 until
joining NAPICO in August 2000, Mr. Shuman was Vice President - Finance for
Preferred Health Management Inc., the largest provider of worker compensation
diagnostic imaging services in California formed in 1996, and was responsible
for establishing and managing the accounting, billing, collection , treasury and
financial reporting departments. From 1994 to 1996, he was the Controller for
DVI Business Credit Corporation, which provides asset based lending to a wide
range of health concerns. From 1985 to 1994, Mr. Shuman served in senior
management positions, as a director or manager of finance, a portfolio tax
analyst, and a senior accountant/tax consultant. He holds a Bachelor of Arts
degree in economics and accounting from the University of Maryland.

Mr. Shuman is a Certified Public Accountant and is a member of American
Institute of Certified Public Accountants and the California Society of Public
Accountants.

PATRICIA W. TOY, 71, Senior Vice President - Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

JEFFREY H. SUSSMAN, 34, Senior Vice President, General Counsel and Secretary.

Mr. Sussman joined NAPICO in 1998, and is responsible for the legal affairs of
NAPICO and its affiliates. He is also the President of NPEI and a member of the
preliminary investment committee. Prior to joining NAPICO in April 1998, Mr.
Sussman was an associate with the law firm of Rus, Miliband, Williams & Smith in
Irvine, California. His practice emphasized real estate finance and insolvency
law and included the representation of borrowers, lenders, and court-appointed
trustees in matters involving apartment complexes, retail centers and hotels.
Mr. Sussman received a Bachelor of Arts degree from the University of
California, Berkeley and Juris Doctor and Master in Business Administration
degrees from the University of Southern California. He is a member of the State
Bar of California, and holds Series 22, 39 and 63 licenses issued by the
National Association of Securities Dealers, Inc.

NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.


<PAGE>   37

ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS:

Real Estate Associates Limited II has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to .4
percent of the invested assets, including the Partnership's allocable share of
the mortgages related to real estate properties held by local limited
partnerships. The fee is earned beginning in the month the Partnership makes its
initial contribution to the limited partnership. In addition, the Partnership
reimburses the Corporate General Partner for certain expenses.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

(a)     Security Ownership of Certain Beneficial Owners

        The general partners own all of the outstanding general partnership
        interests of REAL II; no person is known to own beneficially in excess
        of 5% of the outstanding Limited Partnership Interests.

(b)     At December 31, 2000, security ownership of management is as listed:


<TABLE>
<CAPTION>
                                                                                                 Percentage of
                                                                                                  Outstanding
                                                                           Amount and               Limited
                                    Name of                                 Nature of             Partnership
Title of Class                       Owner                              Beneficial Owner           Interests
--------------                      -------                             ----------------         -------------
<S>                                <C>                                      <C>                        <C>
Limited                       Charles H. Boxenbaum                          $ 30,000                   *
Partnership                   780 Latimer Road
Interest                      Santa Monica, CA 90402

Initial
Limited                       Patricia W. Toy                                  4,550                   *
Partnership                   4020 Berryman Avenue
Interest                      Los Angeles, CA 90066
</TABLE>


*       Cumulative Limited Partnership Interest owned by corporate officers is
        less than 1% of outstanding Limited Partnership Interests.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Partnership has no officers, directors or employees of its own. All of its
affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The Partnership is obligated to NAPICO for an annual
management fee equal to .4 percent of the original invested assets of the
remaining limited partnerships. Invested assets is defined as the costs of
acquiring project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interest in the capital accounts of the
respective partnerships. The management fee was $175,792, $175,792 and $397,680
for the years ended December 31, 2000, 1999 and 1998, respectively.

The Partnership reimburses NAPICO for certain expenses. The reimbursement to
NAPICO was $14,962, $23,340 and $35,195 in 2000, 1999 and 1998, respectively,
and is included in operating expenses.



<PAGE>   38

An affiliate of NAPICO was the general partner in three of the limited
partnerships in which the partnership interests were sold on December 30, 1998,
and another affiliate received property management fees of approximately 5
percent of their revenue. The affiliate received property management fees of
$311,489 in 1998.

On December 30, 1998, the Partnership sold its limited partnership interests in
7 local limited partnerships to the Operating Partnership. The sale resulted in
net cash proceeds to the Partnership of $5,250,000 and a net gain of $4,002,592
The cash proceeds were held in escrow at December 31, 1998 and were collected
subsequent to year-end. In March 1999, the Partnership made cash distributions
of $4,950,000 to the limited partners and $50,000 to the general partners, using
proceeds from the sale of the partnership interests.

The Operating Partnership purchased such limited partner interests for cash,
which it raised in connection with a private placement of its equity securities.
The purchase was subject to, among other things, (i) the purchase of the general
partner interests in the local limited partnerships by the Operating
Partnership; (ii) the approval of HUD and certain state housing finance
agencies; and (iii) the consent of the limited partners to the sale of the local
limited partnership interests held for investment by REAL II.

In August 1998, a consent solicitation statement was sent to the limited
partners setting forth the terms and conditions of the purchase of the limited
partners' interests held for investment by the Partnership, together with
certain amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the proposed transaction. Prior to the
sale of the partnership interests, the consents of the limited partners to the
sale and amendments to the Partnership Agreement were obtained.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

FINANCIAL STATEMENTS

Reports of Independent Public Accountants.

Balance Sheets as of December 31, 2000 and 1999.

Statements of Operations for the years ended December 31, 2000, 1999 and 1998.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
2000, 1999 and 1998.

Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998.

Notes to Financial Statements.


FINANCIAL STATEMENT SCHEDULES

APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED II AND TO THE LIMITED PARTNERSHIPS
IN WHICH REAL ESTATE ASSOCIATES LIMITED II HAS INVESTMENTS:

Schedule - Investments in Limited Partnerships, December 31, 2000, 1999 and
1998.

Schedule III - Real Estate and Accumulated Depreciation, December 31, 2000, 1999
and 1998.

The remaining schedules are omitted because the required information is included
in the financial statements and notes thereto, or they are not applicable or not
required.


<PAGE>   39


EXHIBITS

(3)     Articles of incorporation and bylaws: The registrant is not
        incorporated. The Partnership Agreement was filed with Form S-11 #266171
        incorporated herein by reference.

(10)    Material contracts: The registrant is not party to any material
        contracts, other than the Restated Certificate and Agreement of Limited
        Partnership dated December 4, 1979, and the twenty-one contracts
        representing the Partnership investment in Local Limited Partnerships as
        previously filed at the Securities and Exchange Commission, File
        #266171, which is hereby incorporated by reference.

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the year ended December 31, 2000.


<PAGE>   40

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California.



REAL ESTATE ASSOCIATES LIMITED II



By:   NATIONAL PARTNERSHIP INVESTMENTS CORP.
      General Partner



/S/ Charles H. Boxenbaum
--------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer


/s/ Bruce E. Nelson
--------------------------------------
Bruce E. Nelson
Director and President


/s/ Alan I. Casden
--------------------------------------
Alan I. Casden
Director



/s/ Brian H. Shuman
--------------------------------------
Brian H. Shuman
Chief Financial Officer