U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                                      
                                   FORM 10-KSB
(Mark One)

          (X) ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (D) OF THE  SECURITIES
     EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996

                                       OR

          ( )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15  (D)  OF  THE
     SECURITIES EXCHANGE ACT OF 1934 - For the Transition period from to

                         Commission File Number: 0-21604
                                        
             Common Goal Health Care Pension and Income Fund L.P. II
        (Exact name of small business issuer as specified in its charter)

            Delaware                                                36-3644837 
            --------                                                ---------- 
   (State or other Jurisdiction                              (I.R.S. Employer   
of incorporation or organization)                         Identification Number)
                                215 Main Street
                               Penn Yan, New York                      14527  
                               ------------------                      -----  
                    (Address of principal executive offices)     (Zip Code)     

                                 (315) 536-5985
                           (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  None

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. YES _X_ NO__

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  Form,  and no  disclosure  will 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-KSB or any amendment to this Form 10-KSB. (X)

Isssuer's revenues for the fiscal year ended December 31, 1996 were $268,703.

     The aggregate sales price of the units of Limited Partnership Interest held
by  non-affiliates  of the Registrant as of March 31, 1997 was  $3,416,591  (413
investors).  As of March 31,  1997,  there was no market for these  Units and no
market is expected to develop.  The  aggregate  sales price is  accordingly  not
necessarily indicative of the price at which these Units would trade.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Prospectus of the  Registrant  dated February 20, 1987, and
filed  pursuant to Rule 424(b) and Rule 424(c) under the Securities Act of 1933,
as amended, are incorporated by reference into Part III of this Annual Report on
Form 10-KSB.

<PAGE>

                             TABLE OF CONTENTS



                                                                       Page
   PART I
       Item 1. Description of Business . . . . . . . . . . . . . . . . . .1
       Item 2. Description of Property . . . . . . . . . . . . . . . . . 13
       Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 13
       Item 4. Submission of Matters to a Vote of Security Holders . . . 13

   PART II
       Item 5. Market for Units of Limited Partnership Interest and 
               Related Security Holder Matters . . . . . . . . . . . . . 14
       Item 6. Managements Discussion and Analysis or Plan of Operation. 14
       Item 7. Financial Statements. . . . . . . . . . . . . . . . . . . 17
       Item 8. Changes in and Disagreements with Accountants on 
               Accounting and Financial Disclosure . . . . . . . . . . . 17

   PART III
       Item 9. Directors, Executive Officers, Promoters and Control Persons
               Compliance with Section 16(a) of the Exchange Act . . . . 18
       Item 10.     Executive Compensation . . . . . . . . . . . . . . . 20
       Item 11.     Security Ownership of Certain Beneficial
                    Owners and Management............................... 20
       Item 12.     Certain Relationships and Related Transactions . . . 20

   PART IV
       Item 13.     Exhibits and Reports on Form 8-K . . . . . . . . . . 22

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .F-1

SIGNATURES











                                    (i)

<PAGE>

                                     PART I

Item 1.       Description of Business.

General.
--------

     Common Goal Health Care Pension and Income Fund L.P. II (the "Partnership")
was organized on May 9, 1989 as a limited partnership under the Delaware Revised
Uniform Limited  Partnership Act. The Partnership's  general partners are Common
Goal Capital Group, Inc. II ("Common Goal II" or the "Managing General Partner")
and  Common  Goal  Limited  Partnership  II (the  "Associate  General  Partner")
(collectively,  the "General Partners"). With limited exceptions, Common Goal II
has exclusive control over the business of the Partnership,  including the right
to manage the Partnership's assets. The Partnership commenced operations on July
2, 1990 after having accepted  subscriptions  for more than the requisite number
of 117,650  units of limited  partnership  interest  (the  "Units")  in a public
offering  registered  with the Securities  and Exchange  Commission on Form S-11
(the "Public  Offering").  The Partnership  raised a total of $5,221,160 through
January 11, 1992 when the Public Offering terminated.

     The  Partnership's  primary business is to invest in or make mortgage loans
which to date have been secured by junior  mortgages or deeds of trust (and may,
in the future include first mortgages or deeds of trust,  but not wrap-around or
other liens which are more junior  than second  positions)  on fee or  leasehold
interests in health  care-related  real estate,  including  properties  owned or
acquired by affiliated  borrowers,  or other collateral,  including interests in
borrowers  satisfactory to the Managing General Partner (the "Mortgage  Loans").
To a lesser  extent,  the  Partnership  may make  Mortgage  Loans  through joint
ventures formed as general  partnerships  and may make Mortgage Loans secured by
interests  in  partnerships,   corporate  stock,  joint  ventures  or  leasehold
interests; provided, however, that the aggregate of such Mortgage Loans shall be
less  than  45%  of  the  aggregate  value  of  the  Partnership's  assets.  The
Partnership  may not make  Mortgage  Loans in  excess of  $4,000,000  to any one
entity. In addition, the Partnership will not make a Mortgage Loan if the amount
of the aggregate mortgage indebtedness exceeds 90% of the appraised value of the
property  underlying the Mortgage Loan. The Partnership  does not intend to make
Mortgage  Loans on  properties  with respect to which the debt service  coverage
ratio is less than 1.3 to 1,  unless  other  underwriting  criteria  support the
Mortgage Loan.  Underwriting  criteria which may be considered  include  whether
loan-to-value  ratios are less than 85%, whether there is additional  collateral
securing  the Mortgage  Loan,  whether  guarantees  of repayment or other credit
enhancements  have been provided and such other factors as the Managing  General
Partner may deem  appropriate.  Additionally,  the Partnership will require that
any Mortgage Loan to an Affiliate provide the following:

          (a) Inclusion of a provision  making the Mortgage Loan a full recourse
     obligation  of the  Affiliate  until the debt service  coverage is not less
     than 1.3 to 1 for at least 12 consecutive months; 

                                       1

<PAGE>

          (b) Subordination of management fees payable to facility managers;

          (c)  Subordination  of mortgage  servicing fees payable to Common Goal
     Mortgage Company;

          (d) With respect to Mortgage  Loans of which the proceeds will be used
     for  renovations,  approval by the applicable  state medical  reimbursement
     agency of the renovations prior to funding;

          (e)  Approval by a majority of the Board of  Directors of the Managing
     General Partner (including all Independent Directors);

          (f) Receipt of a fairness opinion from the Independent Advisor;

          (g) Inclusion of a yield maintenance provision for prepayments; and

          (h) Delivery by  independent  accountants  of a report to the Board of
     Directors evaluating certain parameters of the proposed Mortgage Loan.

     The  Partnership  has adhered to these  requirements in making its Mortgage
Loans.  Mortgage Loans which are deemed to have substantially the same risks and
potential  rewards  as  an  owner  of  an  underlying   property  by  virtue  of
characteristics  such as participation in expected residual profits or where the
lender provided all or substantially all necessary funds to acquire the property
(such that the  borrower  has little or no equity  therein),  must be treated as
investments in the underlying properties for financial accounting purposes.  All
Mortgage Loans previously  characterized as investments in underlying properties
were paid off in April 1995, and therefore, at December 31, 1996 and 1995, there
were no Mortgage  Loans treated as  investments  in underlying  properties.  The
Partnership  treats its Mortgage  Loans as mortgage loans for federal income tax
purposes. See "Item 7. Financial Statements".

     The existing  Mortgage Loans are, and future Mortgage Loans are expected to
be, secured by nursing homes (characterized as private institutions that provide
fundamental  health and  rehabilitation  services  for the aged and the infirm).
Mortgage   Loans   also  may  be  secured  by   intermediate   care   facilities
(characterized  as private  institutions that serve patients with lesser degrees
of disability).  For further  information  concerning the Partnership's  present
investments in Mortgage Loans, see "Existing Mortgage Loans" below.

     The  Partnership's  objectives in making  investments of the type described
above are:  (i) to  preserve  and  protect the  Partnership's  capital;  (ii) to
provide quarterly distributions from investment income; and (iii) to provide for
potential long-term  appreciation of its Mortgage Loan investments,  principally
through participations payable at maturity of the Mortgage Loan or upon the sale
or  refinancing  of the  underlying  property  (the  "Participations").  Because
Participations  in  facility  appreciation  are paid  only  upon  maturity  of a
Mortgage Loan or a sale of the underlying facility, increased cash distributions
as a result of such  Participations are not expected to commence for a period of
five years or more from the date that the related  Mortgage  Loan is made, if at
all. It is not an objective of the Partnership to provide tax-sheltered income.

     Funds held  pending  investment  in  Mortgage  Loans may be invested by the
Partnership,  at the direction of the Managing General Partner, in United States
government securities, certificates of deposit of United States banks with a net
worth of at least $20,000,000,  repurchase agreements covering the securities of
the United States  government or governmental  agencies,  bankers'  acceptances,
commercial paper rated A-1, Prime-1 or better by Standard and Poor's Corporation
or Moody's  Investors  Service,  Inc.,  respectively,  money market funds having
assets in excess of  $100,000,000,  interest-bearing  time deposits in banks and
thrift institutions or any combination of these investments.

     The  Partnership  is  conducting  and  intends to  continue  to conduct its
operations so that it will not become subject to regulation under the Investment
Company Act of 1940. Generally,  the term "investment company" might include the
Partnership if, after a one-year period,  the  Partnership,  among other things,
were to be  engaged  primarily,  or were to hold  itself  out as  being  engaged
primarily, or were to propose to engage primarily, in the business of investing,
reinvesting or trading in securities, or if it were to have more than 40% of its
total assets, excluding cash and government securities,  invested in "investment
securities" as that term is defined in the  Investment  Company Act of 1940. The
Partnership does not currently meet this test.

   Basic Policies for Mortgage Loan Investments.  
   -----------------------------------------------
     In making  Mortgage  Loans,  the Managing  General  Partner  considers such
relevant  factors as (1) the quality and experience of the management  operating
the  facility;  (2) the  geographic  area and type of facility  (nursing home or
intermediate  care or a mix of both); (3) the location,  construction,  quality,
condition and design of the facility;  (4) the current and anticipated cash flow
from the facility and its ability to sufficiently  cover debt service (including
the  Partnership's  Mortgage Loan), meet operational needs and generate revenues
sufficient to provide investors with significant Additional Interest, as defined
in the  Partnership's  prospectus,  and  potential  value  to the  Partnership's
Participation;  (5) the growth, tax and regulatory  environment of the community
in which a facility is located; (6) occupancy and demand for similar health care
facilities with which the facility would compete; and (7) the mix of private and
government  pay  patients.  As a general  rule,  the  Partnership  will not make
Mortgage  Loans on facilities  which are located in states which do not restrict
the issuance of certificates of need,  unless  supported by additional  factors,
such as borrower guarantees. Further, it is intended that Mortgage Loans will be
made  in  various   geographic   locations   in  order  to   achieve   portfolio
diversification,  thereby  minimizing  potential  effects  of  changes  in local
economic conditions and similar risks.

   Types of Mortgage Loans.  
   --------------------------
     The Partnership  makes Mortgage Loans on fee interests (or other beneficial
interest essentially equivalent to a mortgage on real property). All real estate
underlying Mortgage Loans is used in the health care industry, particularly real
estate used as nursing home and intermediate  care  facilities.  The Partnership
will not make  construction  loans  except  in  connection  with  renovation  or
additions to existing  facilities.  The Partnership may also make Mortgage Loans
to enable  borrowers to acquire newly  constructed  properties and may commit to
invest in or make Mortgage Loans with respect to properties  under  construction
or  prior  to   construction,   provided  any  such  commitment  is  subject  to
satisfactory  completion of construction (and licensure by regulatory  agencies,
as applicable) by a specified date.  However, in no event will such construction
loans,  other than those made in  connection  with  renovations  or additions to
existing facilities, in the aggregate, exceed 20% of the gross proceeds received
from  the  Public  Offering.  As with  the  Mortgage  Loans  made to  date,  the
Partnership  expects that any future  Mortgage Loans will have terms of not less
than three nor more than ten years.  Mortgage Loans of five years or less may be
subject to one or more  extensions,  which  together with the original loan term
will not exceed ten years in duration, with all principal and deferred interest,
if any,  payable upon maturity of the Mortgage  Loans.  The General  Partners do
not,  however,  generally  intend to  structure  Mortgage  Loans to provide  for
deferred  interest  except  when it is  payable in lieu of  additional  interest
and/or participations.

   Federal Income Taxes.  
   -----------------------
     The Partnership is not subject to federal income taxes as the liability for
such taxes is that of the partners rather than the Partnership.

   Other Operating and Investment Policies. 
   -----------------------------------------
     Affiliates  of the  General  Partners  (including  partners,  officers  and
directors  investing  for their own account or that of others) have formed,  and
may in the future form,  limited  partnerships  or other  entities with the same
investment  objectives and policies as the  Partnership,  which may compete with
the  Partnership  for  investments.   The  Partnership's  amended  and  restated
agreement of limited partnership  provides that neither the General Partners nor
their  Affiliates  have any  obligation  to present  any  particular  investment
opportunity to the Partnership, subject to certain limitations set forth below.

     The General  Partners believe that conflicts of interest will arise only if
the Partnership is seeking  investments at a time when an Affiliate with similar
investment  objectives is seeking to make Mortgage  Loans.  In such an event, if
affiliated  entities have similar  investment  objectives  and policies and have
funds  available  at the same  time as the  Partnership,  the  Managing  General
Partner  will review the  investment  portfolio of each entity and will make the
investment on the basis of such factors,  among others,  as size of  investment,
anticipated cash flow, yield,  portfolio  diversification,  type and location of
the property on which the Mortgage Loan will be made,  proposed loan terms,  the
amount of funds  available  and the length of time the funds of each entity have
been available, as further described below.

     The  Managing  General  Partner  will  attempt to resolve any  conflicts of
interest  between  the  Partnership  and  others by  exercising  the good  faith
required of fiduciaries. The Managing General Partner believes that generally it
will be able to resolve  conflicts on an equitable  basis and will adhere to the
following  criteria in determining  whether the  Partnership or one of the other
entities with which it or its  Affiliates  have a  relationship  or  obligation,
should seek to make a particular  Mortgage  Loan:  (i) whether the cash required
for the  particular  Mortgage Loan is more or less than the amount that would be
appropriate for that entity to commit to an investment;  (ii) whether the nature
of the potential cash flow to be derived from the particular  Mortgage Loan will
conform with that  entity's  investment  objectives;  (iii)  whether that entity
already has  Mortgage  Loans with the same  borrower;  (iv) whether the Mortgage
Loan would satisfy that entity's  objective of geographic  diversification;  (v)
whether the Mortgage  Loan can be  structured  to meet that  entity's  principal
investment  objectives;  (vi) whether the Mortgage  Loan is being  acquired in a
transaction  together with other Mortgage Loans not suitable for  acquisition by
that  entity;  (vii) the  estimated  income tax  effects,  if any, on the entity
resulting  from the  proposed  structure of the  Mortgage  Loan;  and (viii) the
length of time since  that  entity has made a  Mortgage  Loan  investment.  Such
conflicts will be resolved in the best judgment of the Managing General Partner.
If, based on the foregoing  criteria,  the Managing  General Partner  determines
that the making of a particular  Mortgage Loan is equally  appropriate  for more
than one entity  affiliated  with the General  Partners,  then the Mortgage Loan
will be made by the  entity  which was  formed  first or which has had its funds
available  for  investment  for the longest  period as determined by the General
Partners in their  discretion.  The principal  purpose of these provisions is to
enable the General Partners and their Affiliates, while arranging the investment
portfolios of the  Partnership  and any affiliated  entities which might then be
seeking suitable  Mortgage Loans and other  investments,  to select the Mortgage
Loan or other  investment  which they believe is most suitable for investment by
the Partnership or by any such other affiliated entity. The foregoing provisions
are not intended to relieve the General Partners of their fiduciary  obligations
to the  Partnership.  The General  Partners and their  Affiliates  will have the
right to make an investment  after the  Partnership  has declined an investment,
even if the Partnership still has uncommitted funds available.

     In connection  therewith,  Common Goal Health Care  Participating  Mortgage
Fund L.P. ("Common Goal I"), an affiliated, publicly-offered limited partnership
with  investment  objectives  that are  substantially  identical to those of the
Partnership,  has  substantially  completed  acquisition of its initial mortgage
loan  portfolio.  Should  Common Goal I determine  to make funds  available  for
reinvestment  in additional  Mortgage  Loans,  Common Goal I could have priority
over the  Partnership  in  acquiring  or making the next  Mortgage  Loan  deemed
suitable  for its  investment  objectives,  subject to the  conflict  resolution
policies  set  forth  above.  In the  event  that  Common  Goal I is  unable  to
consummate  additional mortgage loans, the Partnership will have the opportunity
to make those loans.

Existing Mortgage Loans.
------------------------
<TABLE>
<CAPTION>

     The principal  balances  outstanding  for mortgage loan  receivables  as of
December 31, 1996 were as follows:

<S>                                               <C>    
   Joint Venture Loan                             $50,590
   St. Catherine's of Tiffin                       51,500
   St. Catherine's of Bloomville                   36,000
   St. Catherine's of Fostoria                    102,000
   St. Catherine's of Findlay                     142,500
   St. Catherine's of Washington Court House       68,000
                                                   ------
                                                 $450,590
                                                 ========
</TABLE>

   Joint Venture Loan.  
   ---------------------
     In 1989, the Partnership entered into a joint venture agreement with Common
Goal Health Care  Participating  Mortgage Fund, L.P.  ("CGI") to make a mortgage
loan  (the  "Joint  Venture  Loan")  to  two  unaffiliated   Tennessee   limited
partnerships (the  "Borrowers").  The Joint Venture Loan was funded on August 1,
1990, in the original principal amount of $3,430,114 ($3,400,114 at December 31,
1991) with Common Goal I  contributing  100% of such amount to the joint venture
at that time. Although the Partnership had the right to, and originally expected
to,  contribute up to 50% of the amount of the Joint Venture Loan  ($1,715,057),
sales of Partnership  Units occurred at a lower rate than originally  projected.
Accordingly,  through December 31, 1993, the Partnership had contributed $95,600
to the joint venture.  The Joint Venture Loan requires payment of Basic Interest
at a rate of 13.7% per  annum.  The loan also  requires  payment  of  additional
interest at a rate of 1.95% of gross revenues from the  collateral  securing the
Joint Venture Loan in excess of $1,694,000 per annum. The loan also provides for
payment of a participation  equal to 30% of the first  $1,000,000 of increase in
the fair market value (or gross sales price) of the  Facilities  over  aggregate
secured  indebtedness  (including  the  Joint  Venture  Loan)  as of the date of
funding of the Joint  Venture Loan and 17% of the balance of any such  increase.
The participation  would be payable upon sale,  refinancing of a senior mortgage
loan or at maturity of the Joint  Venture Loan with the fair market values to be
determined at that time. The Joint Venture Loan is secured by a second  mortgage
on a  100-bed  skilled  and  intermediate  care  facility  owned  by  one of the
Borrowers as well as a collateral  assignment  of 100% of the general  partners'
and limited partners' interest in each Borrower. The security interest was taken
in the Borrowers  insofar as the  retirement and assisted care facility owned by
the other  Borrower is subject to a HUD  regulatory  agreement  which  prohibits
junior  encumbrances.  On  November  3,  1993,  the  Borrower  paid a  total  of
$1,746,790  in a  restructuring  of the  Joint  Venture  Loan.  Of  the  $52,314
allocated to the  Partnership,  $45,010 was applied to  principal  and $4,501 to
Prepayment  Penalty.  The amount  allocated  includes  $2,250 from a  negotiated
refinance fee and Gross Revenue,  Basic  Interest and Additional  Interest which
were taken as set forth in the loan  documents.  The CGI  balance  has also been
paid down to  $1,567,664.  In connection  with the  repayment of principal,  the
Partnerships agreed to release the mortgage on the skilled care and intermediate
care facility.  The Partnership's  principal balance as of December 31, 1996 was
$50,590.  The entire principal balance is due at the maturity date of January 1,
2000.

     At  December  31,  1996,  the loan was current as to regular  interest  and
annual gross revenue interest.

   St. Catherine's Loan.  
   -----------------------

<PAGE>

     The Partnership made and funded three mortgage loans to affiliated entities
(the "St. Catherine Loans").  The Partnership's  affiliation with these entities
is a result of the President and Chief Executive Officer of the Managing General
Partner also serving as the President of the entities  receiving the loans. As a
result of the  refinancing  of the senior  debt  secured by the  St.Catherine's,
Court House and Findlay facilities,  the Partnership's  mortgage loans for these
same facilities were refinanced on April 13, 1995 and the outstanding  principal
and  Additional  Interest were  subsequently  paid off. The  refinancing  of the
senior debt did not provide sufficient  proceeds to allow payment in cash of the
participations  owing under the St.  Catherine's,  Court House and Findlay Loans
(the "SC  Participations") in the total amount of $840,500.  The St. Catherine's
borrowers  paid the SC  Participations  through (i) the issuance of notes in the
total  amount of  $400,000  bearing  an  interest  rate of 11.00%  per annum (a)
maturing on the earlier of the sale or  refinancing  of the Tiffin,  Bloomville,
Fostoria, Washington Court House and Findlay Facilities (the "SC Facilities") or
the   maturity  of  the   refinanced   senior  debt   (August,   2000)  and  (b)
cross-collateralized by second mortgage liens on the SC Facilities; and (ii) the
issuance of a contingent payment obligation by St Catherine's of Seneca, Inc. in
the amount of $202,500 and a contingent  payment  obligation  by St  Catherine's
Care  Centers of  Fostoria,  Inc. in the amount of $238,000  (collectively,  the
"CPOs").

     The CPOs bear interest at an annual rate of 11.00%, which is due quarterly,
and mature on the earlier of the sale or refinancing of the SC Facilities or the
maturity of the senior debt with South Trust  (August,  2000).  The CPOs provide
that  interest  is payable on a current  basis  provided  that the debt  service
coverage  ratios on each of the SC  Facilities is 1.2 to 1.0. In the event these
debt service coverage ratios are not maintained, the interest shall accrue until
the debt service  coverage  ratio is at least 1.2 to 1.0 or  maturity.  The CPOs
further  provide that principal is payable only to the extent that upon a resale
or refinancing of the SC Facilities,  there are sufficient proceeds to repay the
senior debt and the amounts owing under the CPOs.  The CPOs are being assumed by
an  affiliated  entity,  Will Care of Ohio,  Inc.,  and will be secured,  to the
extent  they become  payable  and are not paid,  by a pledge of 30 shares of St.
Catherine's of Seneca, Inc. common stock.

     In  accordance  with FASB  Statement of Standards No. 66,  "Accounting  for
Sales of Real Estate", the $840,500 participation cannot be recognized as income
at this time. The Partnership has recorded $400,000 of the participation amount,
related to the mortgage loan receivable,  as Deferred Revenue,  and the interest
thereon will be recognized as it is earned.  Due to the contingent nature of the
$440,500 in  participation  income due to the Partnership  related to the CPO'S,
such  amount  has not  been  recorded  as an asset  of the  Partnership  and the
participation  income and interest  earned on the CPO's will be recognized  only
when received.





















<PAGE>

<TABLE>
<CAPTION>
     The following chart provides  certain summary  information  with respect to
the Partnership's Mortgage Loans.

                          Common Goal II Mortgage Loans

                                                                                         St. Catherine's
                Joint Venture       St. Catherine's   St. Catherine's  St. Catherine's    of Washington  St. Catherine's
                Loan (1)              of Tiffin        of Bloomville     of Fostoria       Court House     of Findlay
                --------              ---------        -------------     -----------       -----------     ----------
<S>            <C>                  <C>              <C>               <C>               <C>              <C>        
Date of Loan   August 1, 1990       April 13, 1995   April 13, 1995    April 13, 1995    April 13, 1995   April 13, 1995
Agreement

Type of Loan   Collateral Assign-    Second Mort-    Second Mort-      Second Mort-      Second Mort-     Second Mort-
               ment of Interest in   gage on one     gage on one       gage on one       gage on one      gage on two
               one Facility (2)      facility        facility          facility          facility         facilities

Maximum Note
Amount         $1,618,254 (1)        $51,500         $36,000           $102,000          $68,000          $142,500

Current 
Principal
Amount 
Outstanding
as of 
Dec. 31, 1996     $50,590            $51,500         $36,000           $102,000          $68,000          $142,500          

Interest Rate       13.70% (3)         11.00%(4)        11.0%(4)           11.0%(4)         11.0%(4)          11.0%(4)

Maturity        January 1, 2000      April 30, 2000  April 30, 2000    April 30, 2000    April 30, 2000    April 30, 2000

Type of 
Property/       100-bed skilled care  44-bed nursing  30-bed nursing   102-bed nurs-     50-bed nursing    40-bed and 60-
Location of     and intermediate      home in Tiffin, home in          ing home in       home in Wash-     bed nursing
Property        care facility in      OH              Bloomville,OH    Fostoria, OH      ington Court      home in
Securing Loan   Honeybrook, PA (2)                                                       House, OH         Findlay, OH
              
Origination Fee
Paid to an
Affiliate
(Paid by 
Borrower)       $101,900 (1)          None             None             None               None             None

Relationship to
Partnership     Non-Affiliate        Affiliate         Affiliate        Affiliate          Affiliate        Affiliate


__________________________                                  
<FN>

               (1) Pursuant to the terms of the Joint Venture,  the  Partnership
          originally contributed $95,600 to the Joint Venture in connection with
          a loan in the original  principal amount of $3,430,114.  The remaining
          portion  of  the  note  was  funded  by  Common   Goal   Health   Care
          Participating  Mortgage  Fund L.P.  ("CGI").  On March 29,  1993,  CGI
          received a principal paydown in the amount of $70,000.  On November 3,
          1993,  both CGI and the  Partnership  received  principal  paydowns in
          conjunction with a restructuring of the Loan. The balance of the Joint
          Venture Loan  attributable  to the Partnership as of December 31, 1996
          was $50,590. .

               (2)  The  Joint  Venture  Loan  is  also  secured  by  collateral
          assignments  of 100% of the general  partners  and  limited  partners'
          interest in each  Borrower.  The  security  interest  was taken in the
          Borrowers  insofar as a retirement and assisted care facility owned by
          the Borrowers is subject to a HUD regulatory agreement which prohibits
          junior encumbrances on the facility.

               (3) In addition to Basic  Interest of 13.7%,  this loan  requires
          payment of  additional  interest at a rate of 1.95% of the increase in
          gross  revenues  from the  collateral  securing the Joint Venture loan
          over the sum of  $1,694,000  per annum  payable in full within 45 days
          after the end of such fiscal year.  The loan also requires  additional
          interest in an amount equal to 30% of the first $1,000,000 of increase
          in the fair market value of the collateral  securing the Joint Venture
          Loan over its aggregate secured indebtedness and 17% of the balance of
          any such  increase  in the fair  market  value of such  facilities  in
          excess of $1,000,000 over the aggregate secured indebtedness.

               (4) Interest on the affiliated St. Catherine's  Mortgage Loans is
          at a rate of 11% per  annum,  calculated  on a  365-day  year  for the
          actual number of days lapsed, and paid quarterly.
</FN>
</TABLE>

<PAGE>

Partnership Allocation of Income and Loss and Distribution.
-----------------------------------------------------------
   
   Net Income and Net Loss.  
   --------------------------
     Net income  (except with  respect to a  "Disposition",  which  includes any
Partnership  transaction not in the ordinary course of its business,  including,
without  limitation,  collections of principal  payments,  equity  participation
payments, prepayments,  prepayment penalties, sales, exchanges,  foreclosures or
other  dispositions  of Mortgage  Loans held by the  Partnership,  recoveries of
damage awards and insurance  proceeds  (other than the receipt of  subscriptions
for Units, all forms of interest payments when due on Mortgage Loans or business
or rental interruption  insurance  proceeds)) and net loss of the Partnership is
allocated 97.5% to Limited Partners and 2.5% to the General Partners. Net income
arising from a Disposition  is allocated  97.5% to Limited  Partners and 2.5% to
the  General  Partners  to the extent of any  negative  balances  in the capital
accounts of the Limited Partners, and then 100% to Limited Partners in an amount
necessary to bring the Limited  Partners' capital accounts up to an amount equal
to their Original Contributions,  which means the amount of $10.00 for each Unit
less the return of any amount of uninvested  funds  returned,  as defined in the
prospectus,  plus the 11.5% preferred  cumulative  return thereon (less previous
distributions to the Limited Partners in payment of such amounts). The remainder
of such net  income is  allocated  85% to the  Limited  Partners  and 15% to the
General Partners.

   Distributions of Cash From Operations.  
   ----------------------------------------
     Distributions of Adjusted Cash From Operations,  defined as all receipts of
interest  payments on Mortgage  Loans less cash  receipts  used to pay operating
expenses and to  repurchase  any Units (Cash Flow) less any amount set aside for
the restoration or creation of working capital  reserves,  are distributed 97.5%
to the Limited  Partners and 2.5% to the General  Partners,  and are apportioned
quarterly among Limited Partners of record as of the record date declared within
30  days  after  the  end of  each  quarter  and  will  be  paid  quarterly.  No
distributions of Adjusted Cash From Operations with respect to any calendar year
are made to the General Partners until the following occurs:

          First,  distributions  to the Limited  Partners equal to the 9% annual
     cumulative  return on their  Adjusted  Contributions,  defined as  Original
     Contributions  attributable  to a  Unit,  reduced  by  the  total  of  cash
     distributed  from Disposition  Proceeds and from working capital  reserves,
     for such year (plus any amounts accrued from prior years) have been made to
     the Limited Partners; and
   
          Second,  payment of all previously  subordinated  management  fees, if
     any, have been made.

     Thereafter,  all  previously  subordinated  amounts  payable to the General
Partners  with  respect  to their 2.5%  interest  are paid in full to the extent
funds  are  available,  and if not  available,  are  deferred  and  paid  out of
Disposition  Proceeds,  defined as  receipts  from  Dispositions  net of related
expenses,  amounts  necessary  for the payment of debts and  obligations  of the
Partnership  and  any  amount  set  aside  for  working  capital  reserves.  The
Partnership has been making  distributions  to the Limited Partners in excess of
the 9% annual cumulative return on Adjusted Contributions, with the exception of
the four  distributions  made  during the  period  October 5, 1994 to October 5,
1995,  when the annual  cumulative  return was reduced to 7.25% as  discussed in
"Item 6. Management's Discussion and Analysis or Plan of Operation."

   Distributions of Disposition Proceeds.  
   ----------------------------------------
     The Managing  General  Partner has the right to reinvest or distribute  all
Disposition  Proceeds  received  through  the  second  anniversary  of the final
closing date and may reinvest  disposition  proceeds as necessary  thereafter to
avoid  classification as an investment  company under the Investment Company Act
of 1940. Non- liquidating  distributions of Disposition Proceeds are distributed
in the following order of priority, except as otherwise required by law:
   
          First,  100% to the Limited  Partners until the Limited  Partners have
     received an amount which, when added to prior  distributions of Disposition
     Proceeds and cash from reserves attributable  thereto,  equals the Original
     Contributions of the Limited Partners;

          Second,  100% to the Limited  Partners until each Limited  Partner has
     received an amount which, when added to all prior  distributions to Limited
     Partners from all sources (including prior distributions in satisfaction of
     the 9% annual  cumulative  return but excluding  distributions  pursuant to
     above),  equals the 11.5% per annum  preferred  cumulative  return on their
     Adjusted  Contributions,  (calculated  from the first  day of the  calendar
     quarter   succeeding  the  quarter  in  which  Capital   Contributions  are
     received);

          Third,  100% to the General Partners until they have been paid 100% of
     the  subordinated  portion,  if any, of (a) the management fee, if any, and
     then (b) their 2.5% interest in Adjusted Cash From Operations; and

          Fourth,  the  remainder,  85% to the Limited  Partners  and 15% to the
     General Partners.

Dissolution.
------------

     Since it is the intention of the Managing  General Partner to liquidate the
Partnership's  assets  between  the tenth and  fifteenth  years  after the final
closing date (the "Final Closing Date"), the Managing General Partner will adopt
the  following  procedures to provide for an orderly  liquidation:  the Managing
General Partner intends to confine the  Partnership's  investment  activities to
Mortgage  Loans with terms ending prior to the end of the tenth  anniversary  of
the Final  Closing Date and will try to sell any property  the  Partnership  has
acquired by  foreclosure or otherwise in an orderly  fashion.  Any such sales to
affiliates  of the  Partnership  or the General  Partners  ("Affiliates")  would
require the  approval of a majority of the  independent  members of the Board of
Directors of the Managing General Partner. To the extent that any Mortgage Loans
will not mature by their  terms prior to the end of such tenth  anniversary,  it
may become necessary to sell such investments.  It can be reasonably anticipated
that the  Partnership  may be  required to sell such  investments  for less than
their  outstanding  principal  balances as of the date of sale. The  Partnership
intends to reinvest  loan  proceeds  received  only as and if necessary to avoid
classification  as an  investment  company under the  Investment  Company Act of
1940.  See "Item 6.  Management's  Discussion and Analysis or Plan of Operation"
regarding possible reinvestment of mortgage loan proceeds.

     Proceeds  from the  liquidation  will be  applied  and  distributed  in the
following order:
   
          First,  to the payment of creditors of the  Partnership  but excluding
     secured   creditors  whose   obligations   will  be  assumed  or  otherwise
     transferred on the liquidation of Partnership assets; and

          Second,  after  allowance  for the  expenses  of  liquidation  and the
     setting up of any reserves  for  contingencies  which the Managing  General
     Partner considers  necessary,  to the General Partners and Limited Partners
     in  proportion  to and to the  extent  of the  positive  balances  in their
     capital  accounts,  after net income or loss arising from a Disposition has
     been  allocated,  with any excess being  distributed in accordance with the
     order of priority for non-liquidating distributions.

     Notwithstanding  anything to the contrary, the Managing General Partner has
the  right to defer  liquidation  if, in the  opinion  of the  Managing  General
Partner,  the sale of  Partnership  assets  in  liquidation  would  result  in a
material underrealization on the Partnership's assets.









<PAGE>

Item 2.       Description of Property.

The Partnership did not own any real property as of December 31, 1996.  

Item 3.   Legal Proceedings.

The Partnership is not a party to any material legal proceedings.

Item 4.       Submission of Matters to a Vote of Security Holders.

     No matters  were  submitted to a vote of security  holders  during the last
quarter of 1996.

<PAGE>

                                     PART II

     Item 5.  Market  for Units of  Limited  Partnership  Interest  and  Related
              Security Holder Matters.

     The units of limited  partnership  interest  (the  "Units") are not readily
transferable.  There is no public  market for the Units and it is not  currently
expected that any will develop.  There are restrictions upon the transferability
of Units,  including the requirement  that the General  Partners  consent to any
transferee  becoming a substituted  Unit holder (which consent may be granted or
withheld  at  the  sole  discretion  of  the  General  Partners).  In  addition,
restrictions on transfer may be imposed under state securities laws.

     The  Revenue  Act of 1987  contains  provisions  which may have an  adverse
impact  on  investors  in  certain   "publicly  traded   partnerships."  If  the
Partnership  were to be classified as a "publicly  traded  partnership,"  income
attributable  to the Units would be  characterized  as portfolio  income and the
gross  income  attributable  to Units  acquired  by  tax-exempt  entities  after
December 17, 1987 would be unrelated  business income,  with the result that the
Units could be less marketable.  The General  Partners will, if necessary,  take
appropriate  steps to ensure that the Partnership will not be deemed a "publicly
traded partnership."

     At March 31, 1997,  522,116  Units were  outstanding,  and were held by 413
holders of record.

     The Partnership made  distributions to Limited Partners of $482,515 or $.92
per Unit during 1996,  $403,747 or $.77 per Unit during  1995,  $456,637 or $.87
per Unit during 1994,  $495,681 or $.95 per Unit during  1993,  $482,561 or $.93
per Unit during 1992, $270,586 or $.76 per Unit during 1991, and $62,856 or $.33
per Unit during 1990.

Item 6.   Management's Discussion and Analysis or Plan of Operation.

Liquidity and Capital Resources.
--------------------------------

     Common Goal Health Care Pension and Income Fund L.P. II, a Delaware limited
partnership (the "Partnership"),  was formed to make mortgage loans secured by a
mix of first and junior liens on health care-related properties. The Partnership
commenced its offering of Units to the public on January 12, 1990, authorized to
sell up to 1,000,000 Units at $10 per Unit. Total gross offering proceeds raised
were  $5,221,160.  The  Partnership  commenced  operations on July 2, 1990 after
having sold the Minimum Number of Units. The offering  terminated on January 11,
1992. As of December 31, 1996,  all  available  Net Offering  Proceeds have been
invested in Mortgage  Loans and/or  short-term  investments  in accordance  with
Partnership  guidelines.   The  General  Partner  is  currently  evaluating  the
possibilities of additional investment opportunities.

     As of December  31,  1996,  the  Partnership  had made six  Mortgage  Loans
directly  or  through a joint  venture.  The  three  Mortgage  Loans  previously
characterized  as  investments  in  the  underlying   properties  for  financial
accounting  purposes  were paid off in April 1995 and  replaced by five  smaller
Mortgage   Loans  to  various  St.   Catherine's   Facilities,   which  are  not
characterized  as  investments  in  the  underlying   properties  for  financial
accounting purposes.

     The  placement  of  available  Net  Offering   Proceeds  in  Mortgage  Loan
investments  should  result  in higher  returns  than are  earned  on  temporary
investments.  The Mortgage  Loans pay Basic  Interest which is payable at higher
rates than are being earned on temporary investments and provide for payments of
Additional Interest and  Participations.  The interest derived from the Mortgage
Loans  and  repayments  of  Mortgage  Loans  contribute  to  the   Partnership's
liquidity.  These  funds  are used to make  cash  distributions  to the  Limited
Partners,  to pay normal  operating  expenses  as they arise and, in the case of
repayment  proceeds,  may,  subject  to  certain  exceptions,  be  used  to make
additional  Mortgage  Loans.  The  movement  of  funds  from  Mortgage  Loans to
short-term  investments has increased the Partnership's  overall liquidity,  but
has lowered  expected  interest  income.  The  Partnership  has  structured  its
Mortgage  Loans to provide for  payment of  quarterly  distributions  to Limited
Partners from investment income.

     The Partnership  intends to maintain  initial  working capital  reserves of
approximately  2% of gross proceeds of the offering  (approximately  $104,423 at
December 31, 1996),  an amount which is  anticipated to be sufficient to satisfy
liquidity   requirements.   The  Managing  General  Partner,  in  its  continued
monitoring of the level of working capital reserves, had reduced the rate of the
quarterly  distributions to 7.25% per annum for the four quarterly distributions
beginning  October 5, 1994, but returned to 9.25% beginning October 5, 1995. See
"Item  1.  Business"  and the  Notes to the  Financial  Statements  for  further
information regarding the Partnership's Mortgage Loans.

     On April 13, 1995, the St. Catherine's, Court House, and Findlay facilities
refinanced  their  senior  debt  and  the  Partnership's   mortgage  loans.  The
outstanding principal and Additional Interest were subsequently paid off.

     The refinancing of the senior debt did not provide  sufficient  proceeds to
allow repayment of the Participations owing under the St. Catherine's Washington
Court House and Findlay Loans (the "SC  Participations")  in the total amount of
$840,500.  The SC  Borrowers  repaid  the SC  Participations  through:  (i)  the
issuance of notes in the total  amount of $400,000  bearing an interest  rate of
11.00% per annum (a) maturing on the earlier of the sale of  refinancing  of the
Tiffin, Bloomville, Fostoria, Washington Court House and Findlay Facilities (the
"SC  Facilities")  or the maturity of the senior debt with South Trust  (August,
2000)  and  (b)  cross-  collateralized  by  second  mortgage  liens  on  the SC
Facilities;  and (ii) the issuance of a  contingent  payment  obligation  by St.
Catherine's of Seneca,  Inc. in the amount of $202,500 and a contingent  payment
obligation by St.  Catherine's  Care Centers of Fostoria,  Inc. in the amount of
$238,000 (collectively, the "CPOs").

     In  accordance  with FASB  Statement of Standards No. 66,  "Accounting  for
Sales of Real Estate", the $840,500 participation cannot be recognized as income
at this time. The Partnership has recorded $400,000 of the participation amount,
related to the mortgage loan receivable,  as Deferred Revenue,  and the interest
thereon will be recognized as it is earned.  Due to the contingent nature of the
$440,500 in  participation  income due to the partnership  related to the CPO'S,
such  amount  has not  been  recorded  as an asset  of the  Partnership  and the
participation  income and interest  earned on the CPO's will be recognized  only
when received.

     The Partnership's balance of cash and cash equivalents at December 31, 1996
and  December  31,  1995 was  $3,464,102  and  $3,774,001,  respectively,  which
consisted of operating cash and working capital  reserves.  The decrease in cash
and cash  equivalents  from  December  31, 1995 to December 31, 1996 of $309,899
resulted from cash provided by operating activities, $172,616, and net cash used
in financing activities, $482,515. This decrease was partially caused by the net
cash distributed as dividends to the limited partners, $482,515 ($.92 per Unit),
which   included   $300,947   ($.59  per  Unit)  return  of  capital.   Dividend
distributions  noted as a return of capital represent those  distributions which
are in excess of current year  earnings.  Part of the expenses for 1995 included
$116,094 paid out in mortgage  placement  fees  authorized by the  Partnership's
Partnership  Agreement.  The  Agreement  authorized  payment  of a  3%  mortgage
placement  fee to Common Goal  Mortgage  Company  ("CGMC"),  an affiliate of the
General Partners,  in connection with the original  placement of the Partnership
mortgage loans with the various St. Catherine's entities.  CGMC elected to defer
the  decision of whether to take such fees until  repayment  of such  loans.  An
aggregate of $4,248,841 of loans were funded, with their principal amounts fully
repaid in April 1995, for which CGMC was entitled to a mortgage placement fee of
up to $127,468.  As consideration  for immediate cash payment,  CGMC agreed to a
fee of $116,094 by the Partnership at the time of such refinancing, representing
payment in full of its deferred  mortgage  placement  fee. The decrease in Total
Assets is a direct result of net cash  distributed  as a dividend to the limited
partners.

     The  Partnership  is  required  to  maintain  working  capital  reserves of
approximately 2% of gross proceeds of the offering (approximately $104,423), but
presently has a balance of  $3,464,102  at December 31, 1996.  The proceeds from
the repayments are being retained in working capital pending future  investment.
These  additional  funds are being  invested  per  partnership  guidelines.  The
General  Partner  is  currently   evaluating  the  possibilities  of  additional
investment opportunities.

Results of Operations.
----------------------

     The  Partnership  commenced  operations  July 2, 1990, and funded its first
Mortgage  Loan in  November  of 1990 (see  "Item 1.  Description  of  Business -
Existing  Mortgage  Loans").  As of June 30, 1991, the Partnership had completed
its portfolio of Mortgage Loans.  Accordingly,  the General  Partners expect the
Partnership's earnings to remain relatively constant.

     During the years ended December 31, 1996,  1995, and 1994, the  Partnership
reported net income (loss) of $181,568, $1,639,617 and $(107,184) based on total
revenues of $268,703,  $1,894,333,  and $12,670,  and total expenses of $87,135,
$254,716,  and $119,854,  respectively.  The Partnership's net income (loss) per
Limited  Partner  Unit was $.34 per Unit in 1996,  $3.06  per Unit in 1995,  and
$(.20) per Unit in 1994.  The increase in net  income  (loss) per Unit between
1994 and 1995 was primarily due to interest and gain on sale of  investments  in
operating properties received in April 1995 when the properties refinanced their
debt. The Partnership's  distributions to Limited Partners were $.92 per Unit in
1996,  $.77  per Unit in 1995,  and  $.87  per Unit in 1994.  The 1996  dividend
distributions to Limited Partners included a return of capital of $.59 per Unit.
The 1995 dividend  distributions to Limited Partners did not include a return of
capital.  The entire 1994 dividend  distribution to Limited Partners of $.87 per
Unit  represented  a return of  capital.  Also,  all  interest  received  on the
Mortgage Loans is currently being recognized as interest income.

     Most of the cash  received as interest  payments in previous  years was not
recognized  as interest  income,  rather it was  recorded as a reduction  of the
related  investments.  Therefore,  when the Partnership received the pay offs on
the  properties,  the  reduction of the related  investment  balances,  caused a
greater amount of the proceeds to be recorded as income in 1995.

     Expenses  decreased in 1996 by $167,581  primarily  because of the $116,094
mortgage  placement  fee in 1995 (See  Liquidity and Capital  Resources.)  and a
decrease of $30,528 in professional  fees. In addition,  there was a decrease of
$15,962 in management  fees and a decrease in mortgage  servicing fees of $2,894
caused by drop in mortgage balances being serviced.  Other expenses decreased by
$2,103 from 1995 to 1996.

     Additionally,  under terms of the Partnership agreement, the Partnership is
required to  reimburse  the  Managing  General  Partner  for  certain  operating
expenses.  In an  effort to  maintain  the yield to the  Limited  Partners,  the
Managing  General  Partner  did not charge  the  Partnership  for such  expenses
through December 31, 1990. In 1996, 1995 and 1994, the Manageing General Partner
was reimbursed by the  Partnership  for $38,656,  $29,615,  and $31,543 of these
expenses,  respectively. The Managing General Partner believes that such charges
have not adversely affected the current yield to Limited Partners.

     The  Partnership's  success  and the  resultant  rate of return to  Limited
Partners  will be  dependent  upon,  among other  things,  (a) the result of the
Refinancing and the terms of the repayment of the St.  Catherine's,  Court House
and Findlay Loans,  (b) the ability of the Managing  General Partner to identify
suitable  opportunities  for the  Partnership to reinvest its assets and (c) the
ability of the borrowers to pay the current  interest,  additional  interest and
principal of the Mortgage Loans.


<PAGE>

Item 7.   Financial Statements.




                          Independent Auditors' Report


The Partners
Common Goal Health Care
     Pension and Income Fund L.P. II:

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

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the 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 that our audits provide a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  financial  position of Common Goal Health Care
Pension  and Income  Fund L.P.  II as of  December  31,  1996 and 1995,  and the
results  of its  operations  and its cash  flows  for  each of the  years in the
three-year period ended December 31, 1996, in conformity with generally accepted
accounting principles.


                                            /s/ KPMG Peat Marwick
                                                ---------------------
Denver, Colorado                                KPMG Peat Marwick LLP
March 31, 1997, except as to 
paragraph 3 of Note 5,
which is as of April 4, 1997






                                       F-1

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)
<TABLE>
<CAPTION>

Balance Sheets

December 31, 1996 and 1995
--------------------------------------------------------------------------------
                                                                           
                                                                           
                                                           1996           1995          
                                                           ----           ----          
<S>                                                    <C>            <C>    
Assets

Cash and cash equivalents ........................     $3,464,102      3,774,001
Accrued interest receivable ......................         11,088         12,254
Due from affiliates ..............................          2,205           --
Mortgage loans receivable (notes 2 and 3) .......        450,590        450,590
                                  -     -                 -------        -------

                                                       $3,927,985      4,236,845
                                                       ==========      =========

Liabilities and Partners' Capital

Accrued expenses .................................     $     --            7,422

Due to affiliates ................................           --              491
Deferred revenue (note 3) ........................        400,000        400,000
                       -                                  -------        -------
    Total liabilities ............................        400,000        407,913

Partners' capital (note 5):
  General partners ...............................         34,838         30,299
  Limited partners ...............................      3,493,147      3,798,633
                                                        ---------      ---------
    Total partners' capital ......................      3,527,985      3,828,932
                                                        ---------      ---------
Commitments and contingencies (note 3)

                                                       $3,927,985      4,236,845
                                                       ==========      =========
</TABLE>


See accompanying notes to financial statements.



                                       F-2



<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)
<TABLE>
<CAPTION>

Statements of Operations

Years ended December 31, 1996, 1995 and 1994
--------------------------------------------------------------------------------
                                                                           
                                                                           
                                                          1996         1995          1994   
                                                          ----         ----          ----   
<S>                                                  <C>          <C>             <C> 
Revenues:
  Interest income ................................   $  268,703      261,614        12,670

  Gain on sale of investments in
operating properties .............................         --      1,632,719          --   
                                                        -------    ---------       -------        

                                                        268,703    1,894,333        12,670
Expenses:
  Professional fees ..............................       20,705       51,233        13,691
  Fees to affiliates:
    Management ...................................       36,250       52,212        52,212
    Mortgage servicing ...........................        1,126        4,020         9,828
    Mortgage placement fee .......................         --        116,094          --   
  Other ..........................................       29,054       31,157        44,123
                                                         ------       ------        ------
                                                         87,135      254,716       119,854
                                                         ------      -------       -------

        Net income (loss) ........................   $  181,568    1,639,617      (107,184)
                                                     ==========    =========      ======== 

        Net income allocated to general partners .   $    4,539       40,990        (2,680)
        Net income allocated to limited partners .      177,029    1,598,627      (104,504)
                                                        -------    ---------      -------- 
                                                     $  181,568    1,639,617      (107,184)
                                                     ==========    =========      ======== 


        Net income (loss) per limited partner unit   $      .34         3.06         (0.20)
                                                     ==========         ====         ===== 

        Weighted average limited partner units
            outstanding ..........................      522,116      522,116       522,116
                                                        =======      =======       =======
</TABLE>

  See accompanying notes to financial statements.













                                       F-3

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II
(a limited partnership)
<TABLE>
<CAPTION>

Statements of Partners' Capital

Years ended December 31, 1996, 1995 and 1994
--------------------------------------------------------------------------------
                                                                           


                                                          Total    
                                             General     Limited       Partners'  
                                            partners     partners       capital   
                                            --------     --------       -------   

<S>                                      <C>           <C>           <C> 
Balance at December 31, 1993 .........   $    1,989     3,164,894     3,166,883

Net loss .............................       (2,680)     (104,504)     (107,184)

Distributions to limited partners
  ($.87 per unit) ....................         --        (456,637)     (456,637)
                                             -------     --------      -------- 

Balance at December 31, 1994 .........         (691)    2,603,753     2,603,062

Net income ...........................       40,990     1,598,627     1,639,617

Distributions to limited partners
  ($.77 per unit) ....................         --        (403,747)     (403,747)

Distributions to general partners ....      (10,000)         --         (10,000)
                                            -------      --------       ------- 

Balance at December 31, 1995 .........       30,299     3,798,633     3,828,932

Net income ...........................        4,539       177,029       181,568

Distributions to limited partners
  ($.92 per unit) ....................         --        (482,515)     (482,515)
                                          ---------      --------      -------- 

Balance at December 31, 1996 .........   $   34,838     3,493,147     3,527,985
                    === ====             ==========     =========     =========
</TABLE>

See accompanying notes to financial statements.









                                       F-4

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)
<TABLE>
<CAPTION>

Statements of Cash Flows

Years ended December 31, 1996, 1995 and 1994
--------------------------------------------------------------------------------
                                                                           

                                                                           
                                                              1996          1995            1994  
                                                              ----          ----            ----  

<S>                                                     <C>             <C>              <C>  
Cash flows from operating activities:
  Net income (loss) .................................   $   181,568      1,639,617       (107,184)
  Adjustments to reconcile net income
    (loss) to net cash provided by (used in)
    operating activities:
       Gain on sale of investment in operating
          properties ................................          --       (1,632,719)          --
       Decrease (increase) in accrued
          interest receivable .......................         1,166         (8,589)          (925)
       Increase (decrease) in accrued expenses ......        (7,422)         2,682        (69,760)
       Increase (decrease) in due to/from affiliates         (2,696)          --            6,348
       Decrease in deferred revenue .................          --             --           (5,334)
                                                            -------      ---------         ------ 
            Net cash provided by (used in)
                operating activities ................       172,616            991       (176,855)
                                                            -------            ---       -------- 

Cash flows from investing activities:
  Return of investment from operating properties ....          --             --           11,107
  Distributions received from operating properties ..          --           67,646        532,684
  Proceeds from sale of investment in operating
    properties ......................................          --        4,005,914           --   
                                                                         ---------                
            Net cash provided by investing activities          --        4,073,560        543,791
                                                           --------      ---------        -------

Cash flows from financing activities:
  Distributions to partners .........................      (482,515)      (413,747)      (456,637)
                                                           --------       --------       -------- 
            Net cash used in financing activities ...      (482,515)      (413,747)      (456,637)
                                                           --------       --------       -------- 

Net increase (decrease) in cash and cash equivalents       (309,899)     3,660,804        (89,701)

Cash and cash equivalents, beginning of year ........     3,774,001        113,197        202,898
                                                          ---------        -------        -------
Cash and cash equivalents, end of year ..............   $ 3,464,102      3,774,001        113,197
                                                        ===========      =========        =======
</TABLE>

See accompanying notes to financial statements.





                                       F-5

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements

December 31, 1996, 1995 and 1994
--------------------------------------------------------------------------------
                                                                           

(1)   Organization and Summary of Significant Accounting Policies

     (a) Organization
   
          Common  Goal  Health  Care  Pension  and  Income  Fund  L.P.  II  (the
     Partnership),  a Delaware Limited Partnership, was formed on May 9, 1989 to
     invest in and make mortgage loans to third-parties and affiliates  involved
     in health care.  Having  previously sold more than the specified minimum of
     117,650 units ($1,176,500), the Partnership commenced operations on July 2,
     1990. The Partnership's  offering  terminated on January 11, 1992, with the
     partnership  having sold  522,116  units  ($5,221,160).  There is no active
     public trading market for the units.  At December 31, 1996,  there were 413
     unit holders.

          The General  Partners  are Common Goal  Capital  Group,  Inc.  II, the
     Managing  General  Partner,  and Common Goal  Limited  Partnership  II, the
     Associate  General Partner.  Under the terms of the Partnership  agreement,
     the  General  Partners  are not  required  to make any  additional  capital
     contributions  except under certain limited  circumstances upon termination
     of the Partnership.

          Under  the  terms  of  the  Partnership  agreement,   the  Partnership
     reimbursed  the General  Partners for certain  offering and  organizational
     expenses  incurred in connection with the issuance and  distribution of the
     units in an amount fixed at 5% of gross offering  proceeds.  These offering
     and organizational  expenses excluded broker/dealer selling commissions and
     included  accountable  due diligence  expense  reimbursements.  Health Care
     Securities,  Inc. (HCS), an affiliate acting as managing  dealer,  received
     selling  commissions of 8% of the gross offering proceeds on all units sold
     directly  by HCS.  Additionally,  HCS  received a  non-accountable  expense
     allowance of 2% of gross proceeds for expenses  incurred in connection with
     the sale of Units,  and also received  reimbursement  of up to .5% of gross
     proceeds for accountable due diligence expenses.  Offering and organization
     expenses were recorded as a reduction of partners' capital.

     (b) Use of Estimates

          The  preparation of financial  statements in conformity with generally
     accepted  accounting  principles  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 the  reported  amounts of revenue  and  expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

                                    F-6                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------

                                                                           

     (b) Continued

          For entities  investing in and making  mortgage loans to businesses in
     the  health  care  industry,   certain  inherent  risks  may  increase  the
     possibility of actual results differing from management's estimates.  These
     inherent risks include, among other things, the following:

          Substantial  dependence on revenues derived from  reimbursement by the
     Federal Medicare and state Medicaid programs;

          Government  regulation,  government budgetary constraints and proposed
     legislative and regulatory changes; and

          Lawsuits alleging malpractice and related claims.

     (c) Partnership Management Fees and Operating Expenses

          Under the  terms of the  Partnership  agreement,  the  Partnership  is
     required to pay a quarterly  management fee to the Managing General Partner
     equal to 1% per annum of adjusted contributions,  as defined. Additionally,
     a  mortgage  and  investment  servicing  fee equal to .25% per annum of the
     Partnership's  outstanding  mortgage loan receivable and investment amounts
     are to be paid to Common Goal Mortgage Company (CGMC),  an affiliate of the
     General Partners.

          Additionally,  under  the  terms  of the  Partnership  agreement,  the
     Partnership  is required to  reimburse  the  Managing  General  Partner for
     certain  operating  expenses.  In an  effort to  maintain  the yield to the
     Limited  Partners,   the  Managing  General  Partner  did  not  charge  the
     Partnership for such expenses  through December 31, 1990. In 1996, 1995 and
     1994, the Managing  General  Partner  charged the  Partnership for $38,656,
     $29,615, and $31,543 of these expenses,  respectively. The Managing General
     Partner believes that such charges have not adversely  affected the current
     yield to Limited Partners.

          Mortgage loans that have virtually the same risk and potential rewards
     as joint  ventures are  accounted  for and  classified  as  investments  in
     operating properties. The Partnership agreement authorized the payment of a
     3% mortgage placement fee to CGMC in connection with the original placement
     of these mortgage loans. CGMC elected to defer the receipt of the fee until
     the  repayment  of the  mortgage  loans.  CGMC was  entitled  to a mortgage
     placement fee of up to $127,468 at the time of repayment in



                                    F-7                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------

                                                                           

   (c) Continued

          April 1995, however, as consideration for immediate cash payment, CGMC
     agreed to a fee of $116,094,  representing  payment in full.  Cash received
     related to  investments  in operating  properties is recognized as interest
     income  to the  extent  that such  properties  have  earnings  prior to the
     recognition of the distribution of cash to the Partnership; otherwise, such
     cash is recorded as a reduction of the related investments.

   (d)  Partnership Allocation of Income and Loss and Distribution
   
      Net Income and Net Loss  
      -------------------------

          Net income  (except with respect to a Disposition,  as defined,  which
     includes any  Partnership  transaction  not in the  ordinary  course of its
     business, including, without limitation, collections of principal payments,
     equity participation payments,  prepayments,  prepayment penalties,  sales,
     exchanges, foreclosures or other dispositions of Mortgage Loans held by the
     Partnership, recoveries of damage awards and insurance proceeds (other than
     the receipt of subscriptions for Units, all forms of interest payments when
     due  on  Mortgage  Loans  or  business  or  rental  interruption  insurance
     proceeds)) and net loss of the  Partnership  is allocated  97.5% to Limited
     Partners  and 2.5% to the  General  Partners.  Net  income  arising  from a
     Disposition is allocated 97.5% to Limited  Partners and 2.5% to the General
     Partners to the extent of any negative  balances in the capital accounts of
     the  Limited  Partners,  and then  100% to  Limited  Partners  in an amount
     necessary to bring the Limited  Partners'  capital accounts up to an amount
     equal to their Original  Contributions,  as defined, which means the amount
     of $10.00 for each Unit less the return of any amount of  uninvested  funds
     returned,  as defined,  plus the 11.5% preferred  cumulative return thereon
     (less  previous  distributions  to the Limited  Partners in payment of such
     amounts). Remaining net income is allocated 85% to the Limited Partners and
     15% to the General Partners.

          Net income  (loss) per limited  partner unit is computed  based on the
     weighted  average  limited  partner units  outstanding for the year divided
     into the net income (loss) applicable to the Limited Partners.

      Distributions of Cash From Operations
      -------------------------------------

          Distributions  of  Adjusted  Cash  From  Operations,  defined  as  all
     receipts of interest  payments on Mortgage Loans less cash receipts used to
     pay  operating  expenses and to  repurchase  any Units (Cash Flow) less any
     amount set aside for the restoration or


                                    F-8                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements


                                                                           

   (d)  Continued

          creation of working capital  reserves,  are  distributed  97.5% to the
     Limited  Partners  and 2.5% to the General  Partners,  and are  apportioned
     quarterly  among Limited  Partners of record as of the record date declared
     within 30 days after the end of each quarter and will be paid quarterly. No
     distributions of Adjusted Cash From Operations with respect to any calendar
     year are made to the General Partners until the following occurs:

               First,  distributions  to the  Limited  Partners  equal to the 9%
          annual cumulative return on their Adjusted  Contributions,  defined as
          Original Contributions attributable to a Unit, reduced by the total of
          cash distributed  from  Disposition  Proceeds and from working capital
          reserves,  for such year (plus any amounts  accrued  from prior years)
          have been made to the Limited Partners; and
  
               Second, payment of all previously  subordinated  management fees,
          if any, have been made.

          Thereafter, all previously subordinated amounts payable to the General
     Partners with respect to their 2.5% interest are paid in full to the extent
     funds are  available,  and if not  available,  are deferred and paid out of
     Disposition Proceeds,  defined as receipts from Dispositions net of related
     expenses, amounts necessary for the payment of debts and obligations of the
     Partnership  and any amount set aside for  working  capital  reserves.  The
     Partnership has been making distributions to the Limited Partners in excess
     of the 9% annual  cumulative  return on  Adjusted  Contributions,  with the
     exception of the four  distributions made during the period October 5, 1994
     to October 5, 1995, when the annual cumulative return was reduced to 7.25%.

     Distributions of Disposition Proceeds
     -------------------------------------

          The Managing  General  Partner has the right to reinvest or distribute
     all Disposition  Proceeds  received  through the second  anniversary of the
     final  closing  date and may  reinvest  disposition  proceeds as  necessary
     thereafter  to avoid  classification  as an  investment  company  under the
     Investment   Company  Act  of  1940.   Non-liquidating   distributions   of
     Disposition  Proceeds are  distributed in the following  order of priority,
     except as otherwise required by law:
  





                                    F-9                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------

                                                                           

   (d)  Continued

               First,  100% to the Limited  Partners until the Limited  Partners
          have received an amount which,  when added to prior  distributions  of
          Disposition  Proceeds  and cash from  reserves  attributable  thereto,
          equals the Original Contributions of the Limited Partners;

               Second,  100% to the Limited  Partners until each Limited Partner
          has received an amount which, when added to all prior distributions to
          Limited Partners from all sources  (including  prior  distributions in
          satisfaction  of  the  9%  annual   cumulative  return  but  excluding
          distributions pursuant to above), equals the 11.5% per annum preferred
          cumulative  return on their Adjusted  Contributions,  (calculated from
          the first day of the calendar quarter  succeeding the quarter in which
          capital contributions are received);

               Third,  100% to the  General  Partners  until they have been paid
          100% of the subordinated  portion,  if any, of (a) the management fee,
          if any,  and then (b)  their  2.5%  interest  in  Adjusted  Cash  From
          Operations; and

               Fourth, the remainder, 85% to the Limited Partners and 15% to the
          General Partners.

          Distribution  of liquidation  proceeds  (defined as the Disposition of
     the last  one-third in principal  amount of Mortgage  Loans existing on the
     first day of the sixteenth  anniversary of the date of the Prospectus) will
     be made in accordance with Partners'  positive  capital  account  balances,
     with any excess being  distributed in accordance with the order of priority
     for non-liquidating distributions.

      Dissolution
      -----------

          Since it is the intention of the Managing General Partner to liquidate
     the  Partnership's  assets between the tenth and fifteenth  years after the
     final closing date (the "Final Closing Date"), the Managing General Partner
     will adopt the following  procedures to provide for an orderly liquidation:
     the  Managing   General  Partner  intends  to  confine  the   Partnership's
     investment  activities to Mortgage Loans with terms ending prior to the end
     of the tenth anniversary of the final closing date and will try to sell any
     property the  Partnership  has acquired by  foreclosure  or otherwise in an
     orderly  fashion.  Any such sales to affiliates of the  Partnership  or the
     General Partners would require the




                                   F-10                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------

                                                                           

   (d)  Continued

          approval  of a  majority  of the  independent  members of the Board of
     Directors of the Managing General Partner.  To the extent that any Mortgage
     Loans  will not  mature  by  their  terms  prior  to the end of such  tenth
     anniversary,  it may become necessary to sell such  investments.  It can be
     reasonably  anticipated  that the  Partnership may be required to sell such
     investments for less than their  outstanding  principal  balances as of the
     date of sale. The  Partnership  intends to reinvest loan proceeds  received
     only as and if necessary to avoid  classification as an investment  company
     under the Investment Company Act of 1940.

          Proceeds from the  liquidation  will be applied and distributed in the
     following order:
   
               First,  to  the  payment  of  creditors  of the  Partnership  but
          excluding  secured  creditors  whose  obligations  will be  assumed or
          otherwise transferred on the liquidation of Partnership assets; and

               Second,  after  allowance for the expenses of liquidation and the
          setting  up of any  reserves  for  contingencies  which  the  Managing
          General  Partner  considers  necessary,  to the General  Partners  and
          Limited  Partners in  proportion  to and to the extent of the positive
          balances in their capital  accounts,  after net income or loss arising
          from  a  Disposition  has  been  allocated,   with  any  excess  being
          distributed   in   accordance   with  the   order  of   priority   for
          non-liquidating distributions.

          Notwithstanding anything to the contrary, the Managing General Partner
     has the right to defer  liquidation  if,  in the  opinion  of the  Managing
     General Partner, the sale of Partnership assets in liquidation would result
     in a material underrealization on the Partnership's assets.

   (e)  Allowance for Losses

          An allowance  for loan losses is provided,  if  necessary,  at a level
     which  the  Partnership's  management  considers  adequate  based  upon  an
     evaluation of known and inherent risks in the loan portfolio.  There was no
     allowance for losses necessary at December 31, 1996 and 1995.






                                   F-11                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------

                                                                           

(1) Continued

  (f)   Federal Income Taxes

          No  provision  for  federal  income  taxes  has been  recorded  as the
     liability  for  such  taxes  is  that  of  the  partners  rather  than  the
     Partnership.

  (g)   Cash and Cash Equivalents

          The Partnership  classifies all short-term investments with maturities
     of three  months or less at the date of  purchase as cash  equivalents.  At
     December 31, 1996 and 1995,  cash  equivalents  primarily  consist of money
     market securities.

  (h)   Reclassifications

          Certain 1995 and 1994 amounts have been  reclassified  to conform with
     the 1996 presentation.

(2)  Mortgage Loans Receivable

     At December  31, 1996 and 1995,  the  mortgage  loans  receivable  included
$50,590,  representing the  Partnership's  participation in a $1,618,254  second
mortgage  loan made by an affiliated  limited  partnership.  The loan,  which is
secured by two nursing home facilities in Pennsylvania, bears interest at a rate
of 13.7% per annum and provides for the payment of participation  interest based
on the increase in the fair value of the properties at maturity or redemption of
the loan or pursuant to any sale of the facilities.  Participation interests are
recorded  as  revenue  when they are  determinable,  generally  at  maturity  or
redemption of the loan or pursuant to any sale of the facilities.  The loan also
provides for the payment of additional interest based upon the gross revenues of
the  facilities.  The entire  principal  balance is due at the maturity  date of
January 1, 2000.

     The repayment  terms of the mortgage loans  accounted for as investments in
affiliated  operating  properties (note 3) resulted in new second mortgage loans
on the St.  Catherine's  Facilities  totaling  $400,000 at December 31, 1996 and
1995. These new second mortgage loans are  appropriately  classified as mortgage
loan  receivables  as they do not contain  virtually the same risk and potential
rewards as joint ventures.





                                   F-12                         (Continued)


<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------
                                                                           

(2)  Continued
<TABLE>
<CAPTION>

  A summary of mortgage loan receivable activity for the years ended December 31, 1996,
  1995 and 1994 is as follows:
<S>                                          <C> 
  Balance at December 31, 1993               $  50,590
     Repayments during 1994                          -     
                                                ------                                
                                                                
                                                                
  Balance at December 31, 1994                  50,590
     Mortgage loans made during 1995           400,000
                                ----           -------
  Balance at December 31, 1995 and 1996       $450,590
                                              ========
</TABLE>

  There were no mortgage loans made or repayments received during the year ended
  December 31, 1996.


          The fair value of the Partnership's mortgage loans receivable differed
     from the carrying value of the mortgage loans receivable as follows:
<TABLE>
<CAPTION>

                                    Carrying        Fair   
                                     Value          Value  
                                     -----          -----  

<S>                                <C>            <C>      
  December 31, 1996             $  450,590        454,859
  December 31, 1995                450,590        456,010
</TABLE>

         The  Partnership  estimates  the  fair  value  of its  mortgage  loans
     receivable by discounting  future cash flows using an appropriate  interest
     rate.

          The  carrying  amounts at December 31, 1996 and 1995 for cash and cash
     equivalents,  accrued interest receivable,  due from and to affiliates, and
     accrued expenses  approximated  their fair values due to the short maturity
     of these instruments.


(3)  Investments in Operating Properties

          The  Partnership  made and funded three  mortgage  loans to affiliated
     entities (the "St. Catherines Loans").  The Partnership's  affiliation with
     these entities is a result of the President and Chief Executive  Officer of
     the Managing  General Partner also serving as the President of the entities
     receiving the loans.  The  Partnership's  mortgage  loans to the affiliated
     entities were related to the operating facilities and were accounted for as
     investments  in operating  properties.  These mortgage loans were repaid on
     April 13, 1995 upon  refinancing by the owners of their senior debt with an
     unrelated  lender. In connection with the repayment of these mortgage loans
     the  Partnership  recognized  a gain  on sale of  investment  in  operating
     properties of $1,632,719 in the  accompanying  statement of operations  for
     1995.  The  refinancing  of the  senior  debt  did not  provide  sufficient
     proceeds  to allow  repayment  of the  participations  owing  under the St.
     Catherine's   Washington   Court   House  and   Findlay   Loans  (the  "SCC
     Participations")  in the total  amount  of  $840,500.  The St.  Catherine's
     Washington Court Borrowers repaid the SCC Participations through:

     (i) the issuance of notes in the total amount of $400,000 

          (a)  bearing  an  interest  rate of  11.00%  per  annum,  which is due
     quarterly

          (b) maturing on the earlier of the sale or  refinancing of the Tiffin,
     Bloomville,   Fostoria,   Court  House  and  Findlay  Facilities  (the  "SC
     Facilities")  or the maturity of the senior debt with South Trust  (August,
     2000) and








                                   F-13                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------
                                                                           
  
(3)  Continued

               (c)  cross-collateralized  by  second  mortgage  liens  on the SC
          Facilities; and
  
          (ii)  the  issuance  of  a  contingent   payment   obligation  by  St.
     Catherine's  of Seneca,  Inc.  in the amount of $202,500  and a  contingent
     payment obligation by St.Catherine's Care Centers of Fostoria,  Inc. in the
     amount of $238,000 (collectively,  the "CPOs") 

               (a)  bearing  an  interest  rate of 11% per  annum,  which is due
          quarterly

               (b) maturing on the earlier of the sale or  refinancing of the SC
          Facilities  or the  maturity  of the  senior  debt  with  South  Trust
          (August, 2000).

     The CPOs provide that interest is payable on a current basis  provided that
the debt service  coverage ratios on each of the SC Facilities is 1.2 to 1.0. In
the event these debt service  coverage ratios are not  maintained,  the interest
shall  accrue until the debt  service  coverage  ratio is at least 1.2 to 1.0 or
maturity.  The CPOs further provide that principal is payable only to the extent
that upon a resale or  refinancing  of the SC  Facilities,  there are sufficient
proceeds to repay the senior debt and the amounts owing under the CPOs. The CPOs
are being assumed by an affiliated entity,  Will Care of Ohio, Inc., and will be
secured,  to the extent they become  payable and are not paid, by a pledge of 30
shares of St. Catherine's of Seneca, Inc. common stock.

     In  accordance  with FASB  Statement of Standards No. 66,  "Accounting  for
Sales of Real Estate," the $840,500  participation  was not recognized as income
during 1995. The Partnership has recorded $400,000 of the participation  amount,
related to the mortgage loan receivable,  as deferred revenue,  and the interest
thereon will be recognized as it is earned.  Due to the contingent nature of the
$440,500 due to the  Partnership  related to the CPOs,  such amount has not been
recorded  as an  asset  of the  Partnership  and the  participation  income  and
interest  earned on the CPOs will be  recognized  only when  received.  Interest
received by the Partnership relating to the CPOs amounted to $48,455 and $22,609
for the years ended December 31, 1996 and 1995.






                                   F-14                         (Continued)

<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------
                                                                           

(3)  Continued
<TABLE>
<CAPTION>

     A summary of activity in investments in operating  properties for the years
ended December 31, 1996, 1995 and 1994 is as follows:

<S>                                               <C> 
  Balance at December 31, 1993                            $ 2,984,632 
     Additional investments in operating properties           (11,107)
     Distributions from operating properties                 (532,684)
                                                             -------- 
  Balance at December 31, 1994                              2,440,841 
     Distributions from operating properties               (2,440,841)
                                                           ---------- 
  Balance at December 31, 1995 and 1996                   $         - 
                                                           ==========  
</TABLE>

     There were no additional  investments  in or  distributions  from operating
properties during the year ended December 31, 1996 and 1995.

(4)  Federal Income Tax Information (Unaudited)
<TABLE>
<CAPTION>

     The following reconciles net income (loss) for financial reporting purposes
to net  income  (loss)  for  federal  income tax  purposes  for the years  ended
December 31,:

                                                            1996         1995          1994   
                                                            ----         ----          ----   
<S>                                                    <C>          <C>            <C>      
  Net income (loss) per financial statements .......   $  181,568    1,639,617      (107,184)
  Differences due to income (expense) recognized for
    federal income tax purposes but not for
    financial statement purposes ...................         --       (681,212)      935,150
                                                         --------     ---------      --------            

Net income (loss) for
    federal income tax purposes ....................   $  181,568      958,405       827,966   
                                                       ==========      =======       =========
</TABLE>

  



                                   F-15                                    


<PAGE>

COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II 
(a limited partnership)

Notes to Financial Statements
--------------------------------------------------------------------------------
                                                                           

(5) Subsequent Events

     On January 8, 1997, the  Partnership  declared and paid a  distribution  of
$121,399  ($.23 per unit) to Limited  Partner  unitholders of record at December
15, 1996.

     On  March  13,  1997  the  Managing  General  Partner  approved  a loan  of
approximately  $400,000  to St.  Catherine's  Care Center of Tiffin,  Inc.,  St.
Catherine's  Care Center of  Bloomville,  Inc., St.  Catherine's  Care Center of
Washington Court House, Inc., St. Catherine's Care Center of Fostoria,  Inc. and
St. Catherine's Care Center of Findlay, Inc., affiliates of the Managing General
Partner. It is estimated that the loan will bear interest at the rate of 13% per
annum and will mature five years after the date of the loan. The Partnership has
not yet funded this loan.
                                     
     On April 4, 1997,  the  Partnership  declared  and paid a  distribution  of
$119,085 ($.23 per unit) to Limited  Partner  unitholders of record at March 15,
1997.  Additionally,  a return of principal to the Limited  Partners of $250,000
($.48 per unit) was also declared and paid by the Partnership on April 4, 1997.



























                                   F-16



<PAGE>

     Item 8. Changes in and  Disagreements  with  Accountants  on Accounting and
             Financial Disclosure. None.
<PAGE>
                                    PART III

     Item 9.  Directors,  Executive  Officers,  Promoters  and Control  Persons,
              Compliance with Section 16(a) of the Exchange Act.

     The  Partnership  does not have  directors or officers.  The following is a
list of the officers and directors of the Managing  General  Partner as of March
31, 1997:

   Name                            Age       Position

   Albert E. Jenkins III           50        Chairman of the Board, Chief Exec-
                                             utive Officer, President and 
                                             Director

   Richard R. Wood                 74        Secretary and Treasurer

   William E. Jasper               81        Director

   Rev. Terry A. Steinhauer Sr.    40        Director

   Linda Robison                   50        Director

     Albert E. Jenkins III is the President and Chief  Executive  Officer of the
Managing  General  Partner and Common Goal Mortgage  Company.  Mr.  Jenkins also
serves on the boards of  directors  of the  above-referenced  corporations.  Mr.
Jenkins is a  co-general  partner of Common  Goal  Limited  Partnership  II, the
Associate  General  Partner,  and Common Goal Management  Company.  In 1986, Mr.
Jenkins formed Common Goal Capital Group,  Inc. to act as the corporate  general
partner of Common Goal I. That partnership  successfully raised $19,129,110 from
1,533  investors  and  placed  seven  mortgages  in  six  states  secured  by 13
facilities.  Mr.  Jenkins  is also  President,  Chief  Executive  Officer  and a
director  of St  Catherine's  of Seneca,  Inc.,  St  Catherine's  Care Center of
Tiffin, Inc., St Catherine's Care Center of Bloomville, Inc. and St. Catherine's
Care  Centers of  Fostoria,  Inc. In addition,  Mr.  Jenkins is President  and a
director of St. Catherine's  Health Care Management,  Inc., St. Catherine's Care
Center of  Washington  Court  House,  Inc.  and St  Catherine's  Care  Center of
Findlay,  Inc.  He is also  president  and  sole  director  and  shareholder  of
HealthCare  Securities,  Inc.  which  served  as the  Managing  Dealer  for  the
distribution  of limited  partner  interests.  Mr.  Jenkins  has been a licensed
securities  salesman since 1971 and an investment  advisor  registered under the
Investment Advisers Act of 1940 since 1978.

     William E. Jasper,  Jr. is a director of Common Goal Capital Group, Inc. II
and has been a member  of the  Board of  Directors  of  Madison  Square  Federal
Savings Bank since 1964.  Prior to 1980, when Mr. Jasper retired,  he had served
as president of a multi-line  insurance  agency and  brokerage.  Mr. Jasper is a
Deputy Regional  Director for a fraternal  organization that is dedicated to the
Maryland  Special Olympics which provides  health-care  training and specialized
sports for the mentally handicapped.  Mr. Jasper attended Baltimore City College
and has taken  numerous  extended  courses at Loyola  College and Johns  Hopkins
University  in  real  estate,  appraisals,   inspections,   financial  planning,
mortgages and management.

     Richard R. Wood, is a general partner of Common Goal Limited Partnership II
and a former director and officer of the Managing General  Partner.  Mr. Wood is
also a director of Common Goal  Capital  Group,  Inc.  and a general  partner of
Common Goal Limited  Partnership I, which is a general partner of Common Goal I,
a publicly-held  limited  partnership with investment  objectives  substantially
identical  to those of the  Partnership,  each of which was formed in 1986.  Mr.
Wood is president,  a director and owner, along with his brother R. Norman Wood,
of Renwood  Properties,  Inc. Mr. Wood has, either individually or together with
or through  Renwood,  sponsored  thirty-one  prior private limited  partnerships
which have acquired real estate.  These  partnerships have raised  approximately
$30,762,525,   with   approximately   81%  of  the  properties   acquired  being
government-subsidized  low income housing  projects for families and the elderly
and  handicapped.  In addition,  Mr. Wood is also a controlling  shareholder  of
Renwood,  Inc.  and several of the Renwood  companies,  which act as  co-general
partners of certain of the  above-referenced  syndications.  Mr. Wood received a
B.A.  from Harvard  University in 1943 and attended  Massachusetts  Institute of
Technology from 1947-1948.

     Rev.  Terry A.  Steinhauer  Sr. is a director of Common Goal Capital Group,
Inc. II. He is the founder and Senior  Pastor of Fostoria  New  Covenant  Church
Inc. an independent  congregation established in 1984. He is a duly ordained and
licensed minister with the State of Ohio. Rev.  Steinhauer is also the president
of the board of directors for the Fostoria Bureau of Concern,  a referral agency
affiliated  with the Red Cross,  United Way, Senior  Citizens  Center,  Meals on
Wheels,  Sharing Kitchen and Habitat for Humanity. He is also a board member for
Bettsville Local School District where he serves as the Legislative  Liaison for
the Ohio School Boards  Association,  in addition to the Technology and Strategy
Planning  Committees.  Rev. Steinhauer is also a member and former editor of the
Northwest Ohio Christian  Writer's  Group.  He is also presently a member of the
Advisory  Board  of St.  Catherine's  of  Fostoria  where  is  has  consistently
ministered  for the last 19 years.  He is a member of the  Fostoria  Chamber  of
Commerce  and  has  been  actively  involved  with  the  Gideons,  the  Fostoria
Ministerial  Association,  Habitat for Humanity,  and the Fostoria Framework for
Progress Committee.

     Linda  Robison,  is a director of Common Goal Capital  Group,  Inc. II. Ms.
Robison  is an  attorney  and  practices  primarily  in the  areas of  corporate
transactions,  corporate  finance,  tax,  estate  planning and real estate.  She
represents such industries as manufacturing,  health care, construction, retail,
distribution, and computer software. Ms. Robison has been admitted to the Bar in
Massachusetts,  Illinois,  and  Florida.  She is a member  of the  American  Bar
Association,  and the U.S. Tax Court,  and past chair of the ABA Small  Business
Committee's  subcommittee  on corporate  tax. She has published  articles in the
Practical   Tax   Lawyer,   Securities   &   Commodities   Regulation,   Smith's
Review-Federal,  Estate and Gift Taxation,  Taxation for Lawyers,  and a Matthew
Bender treatise on real estate transactions. She earned her undergraduate degree
from the  University  of Georgia  where she  attained a B.S. in  psychology  and
graduated  cum laude and Phi Beta Kappa.  Ms.  Robison has a L.L.M.  in taxation
from Boston  University.  She is a co-founder  and  director of a wholesaler  of
sportswear, and a co-founder and director of a firm which finishes plastic parts
for the computer and automotive industries.  From 1983 to 1990 she was a Partner
and Board  Member of the  Chicago  based firm of  Sachnoff & Weaver.  She is the
immediate  Past-President and Chairman of U.S. Committee for  UNICEF/Chicago;  a
past  President  and  Board  Member of the  Chicago  Finance  Exchange;  and the
Treasurer and Board Member of Chicago Midwest  Women's  Center.  In addition she
has served on the Advisory Board of YMCA;  Board Member of Women in Management
and a member of Business and Professional Women's Board.


<PAGE>

Item 10.  Executive Compensation.

     The Partnership has no executive officers or directors.  The Partnership is
not  required to pay the  officers  and  directors  of the General  Partners any
current  nor  any  proposed  compensation  in  such  capacities.   However,  the
Partnership is required to pay certain fees, make  distributions  and allocate a
share of the profits or losses of the  Partnership  to the  General  Partners as
described under the caption  "Management  Compensation" on pages 8 through 11 of
the  Partnership's  Prospectus,  which  description  is  incorporated  herein by
reference.  Set forth below are the fees,  compensation and other reimbursements
paid or accrued to the Managing  General Partner and its Affiliates for the year
ended December 31, 1996.
<TABLE>
<CAPTION>

                                    Capacities in
                                  Which Compensation
Name of Affiliate                   was Received         Remuneration
-----------------                   ------------         ------------
<S>                                <C>                    <C>  
Managing General Partner           Management fee         $36,250          
   
Common Goal Mortgage               Mortgage loan          $ 1,126
Company                            servicing fees
</TABLE>
                           

No form of non-cash remuneration was paid by the Partnership.

     For  further  information  on  compensation  paid to  Common  Goal  and its
Affiliates, see "Management Compensation" on pages 8-11 of the Prospectus.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The Partnership, as an entity, does not have any directors or officers. The
following is information concerning Unit ownership as of March 31, 1997.

     To the best  knowledge of the  Partnership,  no person owns more than 5% of
the  outstanding  Units.  Messrs.  Jenkins and Wood each own less than 1% of the
total  outstanding  Units and all officers and directors of the Managing General
Partner,  as a group, own less than 1% of the total outstanding  Units. No other
officer or director of the Managing General Partner owns any Units.

Item 12.  Certain Relationships and Related Transactions.

     The Partnership  made and funded three Mortgage Loans (the St.  Catherine's
Loan,  the Court House Loan and the Findlay  Loan) to  affiliated  entities.  In
connection with these Mortgage Loans, the Partnership obtained the opinion of an
independent  third party that the terms and conditions of the  respective  loans
were  fair  and at  least  as  favorable  to  the  Partnership  as a loan  to an
unaffiliated party in similar  circumstances.  See "Management's  Discussion and
Analysis or Plan of Operation" for further  information  regarding the repayment
and refinancing of these Mortgage Loans.  The Partnership has made an additional
loan to an  unaffiliated  party  through a joint  venture with Common Goal I, an
affiliated,   publicly-offered   limited  partnership  with  similar  investment
objectives (the Joint Venture Loan).  For further  information  concerning those
Mortgage Loans, see "Item 1. Description of Business."

     The Partnership  engages the services of Common Goal Mortgage  Company,  an
affiliate of the General Partners,  in connection with servicing  Mortgage Loans
for which Common Goal Mortgage Company  generally is paid a fee by the borrower.
See "Item 10. Executive Compensation," for the information concerning such fees.










<PAGE>

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K.

   (a) (1)     Financial Statements

          The  response to this  portion of Item 13 is  submitted  as a separate
     section of this report, commencing on page F-1.

       (2)     Financial Statement Schedules

       Not applicable.

       (3)     Exhibits

       See response to Item (c), below.

   (b) Reports on Form 8-K

          The  Partnership  did not file any  reports  on Form  8-K  during  the
     quarter ended December 31, 1996.

   (c) Exhibits

   The following exhibits are included herein or incorporated by reference:

   Number
   ------

   3           (a)  Amended  and  Restated  Limited  Partnership   Agreement  of
          Registrant  dated as of December 6, 1989  (incorporated  by  reference
          from  Exhibit 3.1,  included in  Registrant's  Form S-11  Registration
          Statement S.E.C. File No. 33-31358).

   3          (b) Pages 8-11 of the Registrant's final Prospectus dated January
          12,  1990,  as  filed  with the  Securities  and  Exchange  Commission
          pursuant to Rule 424(b) under the Securities Act of 1933, as amended.

   (d) Financial Statement Schedules

       Not applicable.

<PAGE>

                                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.

                              COMMON GOAL HEALTH CARE PENSION AND
                              INCOME FUND L.P. II

                              By:  Common Goal Capital Group, Inc., II, 
                                   General Partner

                              By:  /s/ Albert E. Jenkins
                                   --------------------------
                                   Albert E. Jenkins III
                                   Chairman and Chief Executive Officer
Date: April 14, 1997

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

   Name                       Position       Date

/s/ Albert E. Jenkins         Chairman (Principal      April 14, 1997
Albert E. Jenkins III         Executive Officer),
                              President, Principal
                              Financial and
                              Accounting Officer
                              and Director of
                              Managing General
                              Partner

/s/ William E. Jasper, Jr.    Director of Managing     April 14, 1997
---------------------------
William E. Jasper, Jr.        General Partner

/s/ Richard R. Wood           Director of Managing     April 14, 1997
--------------------------
Richard R. Wood               General Partner

/s/ Terry Steinhauer          Director of Managing     April 14, 1997
--------------------------
Terry Steinhauer              General Partner

/s/ Linda Robison             Director of Managing     April 14, 1997
--------------------------
Linda Robison                 General Partner
     (A Majority of the Board of Directors of the Managing General Partner)

<PAGE>

                                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.

                              COMMON GOAL HEALTH CARE PENSION AND
                              INCOME FUND L.P. II

                              By:  Common Goal Capital Group, Inc., II, 
                                   General Partner

                              By:  
                                   --------------------------
                                   Albert E. Jenkins III
                                   Chairman and Chief Executive Officer
Date: April 14, 1997

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

   Name                       Position       Date

_____________________         Chairman (Principal      April 14, 1997
Albert E. Jenkins III         Executive Officer),
                              President, Principal
                              Financial and
                              Accounting Officer
                              and Director of
                              Managing General
                              Partner

                              Director of Managing     April 14, 1997
---------------------------
William E. Jasper, Jr.        General Partner

                              Director of Managing     April 14, 1997
--------------------------
Richard R. Wood               General Partner

                              Director of Managing     April 14, 1997
--------------------------
Terry Steinhauer              General Partner

                              Director of Managing     April 14, 1997
--------------------------
Linda Robison                 General Partner
     (A Majority of the Board of Directors of the Managing General Partner)

<PAGE>