Silver Screen Management, Inc.
Chelsea Piers-Pier 62
Suite 300
New York, NY 10011
(212) 336-6700


                                       8
<PAGE>


                                  Silver Screen

                                   Partners II

                              Third Quarter Report

                                      1996o




                                       9
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DEAR LIMITED PARTNER:

     As you know,  Silver Screen  Partners II, L.P. has distributed the proceeds
of the  sale of the  Partnership's  interest  in the  Joint  Venture.  From  its
inception to date, the Partnership  has distributed a total of $276 million,  or
$717 per $500 unit for  investors  who were part of the  first  closing  in June
1985.

     At this  time,  we  expect to  dissolve  the  Partnership  and have a final
distribution by year-end.  The 1996 Annual Report and tax information are likely
to be the final  mailings you will receive from the  Partnership.  These will be
mailed to you by March 15.

     If you need any  assistance  in the meantime,  please  contact our Investor
Relations  Department at our new telephone number and address listed on the back
of this report.

     Once again,  Tom  Bernstein  and I wish to thank you for the  privilege  of
serving each of you.

Sincerely,



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



                                       10
<PAGE>


BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
                                                        Sept. 30, 1996   December 31, 1995
                                                        --------------   -----------------
ASSETS
<S>                                                       <C>               <C>       
Current assets:
Cash ................................................     $    13,762       $  818,642
Temporary investments (at cost plus accrued interest,   
  which approximates market) (Note 2) ...............      10,389,025        3,493,817
                                                          -----------       ----------
                                                        
Total current assets ................................      10,402,787        4,312,459
Investment in Joint Venture (Note 3) ................            --            591,842
                                                          -----------       ----------
                                                          $10,402,787       $4,904,301
                                                          ===========       ==========
                                                        
LIABILITIES AND PARTNERS' EQUITY                        
                                                        
Current liabilities:                                    
Due to managing general partner .....................     $    12,027       $   30,896
                                                          -----------       ----------
                                                        
Total current liabilities ...........................          12,027           30,896
Other liabilities ...................................            --            100,000
                                                          -----------       ----------
                                                        
Total liabilities ...................................          12,027          130,896
                                                          -----------       ----------
                                                        
Partners' equity:                                       
General partners ....................................        (116,195)        (958,843)
Limited partners ....................................      10,506,955        5,732,248
                                                          -----------       ----------
                                                        
Total partners' equity ..............................      10,390,760        4,773,405
                                                          -----------       ----------
                                                        
                                                          $10,402,787       $4,904,301
                                                          ===========       ==========
</TABLE>
                                                           
                       See notes to financial statements.




                                       11
<PAGE>





STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Three Months       Nine Months     Three Months      Nine Months
                                                            Ended             Ended            Ended            Ended
                                                   Sept. 30, 1996    Sept. 30, 1996   Sept. 30, 1995   Sept. 30, 1995
                                                   --------------    --------------   --------------   --------------
<S>                                                  <C>               <C>                <C>             <C>       
REVENUES:
Income from Joint Venture (Note 3) .............          --           $43,186,462        $657,145        $3,450,089
Interest income ................................     $ 146,871             734,055          41,967           113,146
                                                     ---------         -----------        --------        ----------
                                                       146,871          43,920,517         699,112         3,563,235
COSTS AND EXPENSES:                                                                                    
General and administrative expenses ............        81,621             482,562         155,656           515,242
                                                     ---------         -----------        --------        ----------
                                                                                                       
Income before tax ..............................        65,250          43,437,955         543,456         3,047,993
Unincorporated business tax (Note 4) ...........       320,300             320,300            --                --
                                                     ---------         -----------        --------        ----------
                                                                                                       
Net (loss) income ..............................     $(255,050)        $43,117,655        $543,456        $3,047,993
                                                     =========         ===========        ========        ==========
                                                                                                       
NET (LOSS) INCOME ALLOCATED TO:                                                                        
General partners ...............................     $ (38,258)        $ 6,467,648        $ 81,518        $  457,199
Limited partners ...............................      (216,792)         36,650,007         461,938         2,590,794
                                                     ---------         -----------        --------        ----------
                                                     $(255,050)        $43,117,655        $543,456        $3,047,993
                                                     =========         ===========        ========        ==========
                                                                                                       
Net (loss) income per a $500 limited partnership                                                       
 unit (based on 385,200 units outstanding) .....     $   (0.56)        $     95.15        $   1.20        $     6.73
                                                     =========         ===========        ========        ==========
</TABLE>

                       See notes to financial statements.





STATEMENTS OF PARTNERS' EQUITY (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    Year Ended December 31, 1995
                                                            and Nine Months Ended Sept. 30, 1996
                                          ======================================================
                                          General Partners     Limited Partners         Total
                                          ----------------     ----------------         -----
<S>                                        <C>                <C>                <C>         
Balance, January 1, 1995 ............      $ (1,513,056)      $  2,591,712       $  1,078,656
Net income, 1995 ....................           724,154          4,103,536          4,827,690
Distributions, 1995 .................          (169,941)          (963,000)        (1,132,941)
                                           ------------       ------------       ------------

Balance, December 31, 1995 ..........          (958,843)         5,732,248          4,773,405
NET INCOME, NINE MONTHS 1996 ........         6,467,648         36,650,007         43,117,655
DISTRIBUTIONS DURING NINE MONTHS 1996        (5,625,000)       (31,875,300)       (37,500,300)
                                           ------------       ------------       ------------

                                           $   (116,195)      $ 10,506,955       $ 10,390,760
                                           ============       ============       ============
</TABLE>

                       See notes to financial statements.




                                       12
<PAGE>




STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Nine Months Ended   Nine Months Ended
                                                          Sept. 30, 1996      Sept. 30, 1995
                                                        ----------------   ----------------
<S>                                                        <C>              <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:                                      
Net income ....................................            $ 43,117,655     $  3,047,993
Adjustments to reconcile net income to net cash                            
  provided by operating activities:                                        
  Increase in accrued interest receivable .....                 (60,097)          (8,173)
Net change in operating assets and liabilities:                            
  Decrease in other liabilities ...............                (100,000)            --
  Decrease in due to managing general partner .                 (18,869)         (46,306)
                                                           ------------     ------------
                                                                           
Net cash provided by operating activities .....              42,938,689        2,993,514
                                                           ------------     ------------
                                                                           
CASH FLOWS FROM INVESTING ACTIVITIES:                                      
Income received from Joint Venture                                         
  in excess of distribution ...................                    --         (1,190,201)
Decrease in investment in Joint Venture .......                 591,842             --
Purchase of temporary investments, net ........              (6,835,111)        (690,337)
                                                           ------------     ------------
                                                                           
Net cash used in investing activities .........              (6,243,269)      (1,880,538)
                                                           ------------     ------------
                                                                           
CASH FLOWS FROM FINANCING ACTIVITIES:                                      
Distributions to partners .....................             (37,500,300)      (1,132,941)
                                                           ------------     ------------
                                                                           
Net cash used in financing activities .........             (37,500,300)      (1,132,941)
                                                           ------------     ------------
                                                                           
Net decrease in cash ..........................                (804,880)         (19,965)
Cash, beginning of year .......................                 818,642           63,669
                                                           ------------     ------------
                                                                           
Cash at end of nine months ....................            $     13,762     $     43,704
                                                           ============     ============
</TABLE>                                                                   
                                                                           
                       See notes to financial statements.                 



                                       13
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NOTES TO FINANCIAL STATEMENTS




1.   PARTNERSHIP PROCEEDS

The  Partnership  Agreement  provides that all  Partnership  income,  losses and
distributable  cash ("Proceeds") are distributed 99% to the limited partners and
1% to the general  partners until the Partnership  has satisfied  certain tests.
Thereafter,  all Proceeds will be allocated 85% to the limited  partners and 15%
to the general  partners.  These tests were  satisfied  in the first  quarter of
1994.  Therefore,  all  proceeds  beginning  with the second  quarter  have been
allocated 85% to the limited partners and 15% to the general partners.


2.  TEMPORARY INVESTMENTS

Temporary investments represent investments in commercial paper.


3. INVESTMENT IN JOINT VENTURE

The investment in the Joint Venture was accounted for using the equity method of
accounting.  Under the equity method,  the investment was initially  recorded at
cost, and was thereafter  increased by additional  investments,  adjusted by the
Partnership's share of the Joint Venture's results of operations, and reduced by
distributions  received from the Joint Venture.  The Joint Venture's fiscal year
ends  September  30, while the  Partnership's  fiscal year ends  December 31. On
January  1,  1996  the  investment  in  the  Joint  Venture  was  $591,842.

The Partnership  entered into a Letter  Agreement (the "Buyout  Agreement") with
Disney dated September 11, 1995,  providing for the sale to Disney of all of the
Partnership's  interest  in the Joint  Venture.  In  accordance  with the Buyout
Agreement,  the closing of the sale occurred on January 2, 1996 and the purchase
price paid to the  Partnership  was  $44,678,304 in cash after an adjustment for
certain film revenues totaling $321,696 received in 1995.


4. UNINCORPORATED BUSINESS TAX

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

After distribution of cash to the partners, the Partnership expects to terminate
by the end of 1996.




                                       14
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