-------------
                                 SILVER SCREEN
                                 -------------

                 [THE ROMAN NUMERAL III SUPERIMPOSED DIAGONALLY
                  OVER THE WORDS SILVER SCREEN IN A RECTANGLE]












                               Annual Report 1995



                                      F-1
<PAGE>




Silver Screen Management

(c)1996 Silver Screen Management, Inc. Design: Pentagram


Officers:                                             Directors:

Roland W. Betts                                       Paul Bagley
President and Chief Executive Officer                 New York, New York

Tom A. Bernstein                                      Tom A. Bernstein
Executive Vice President                              New York, New York

Barbara Stubenrauch                                   Roland W. Betts
Senior Vice President                                 New York, New York

Richard S. Kasof                                      John Tommasini
First Vice President                                  New York, New York

Dana Thayer                                           William Turchyn, Jr.
First Vice President                                  New York, New York

Liz A. Brevetti
Vice President

Keith C. Champagne
Vice President

Evelyn Halley
Vice President

Stuart A. Sheinbaum
Director of Investor Relations

Conchetta S. Mayfield
Director of Operations

Paul Rindone
Director of Operations


                                      F-2
<PAGE>


To Our Limited Partners

     Silver Screen  Partners III  distributed  approximately  $4 million for the
four quarters of 1995,  bringing  total  distributions  since the  Partnership's
inception in 1987 to $426  million.  Of the $426 million,  approximately  60% is
return of capital and 40% is income.


     During 1995,  the majority of  Partnership  revenue was generated  from the
foreign free television  market for "Shoot to Kill," "Honey, I Shrunk the Kids,"
and "Adventures in Babysitting."  "Roger Rabbit" generated  Partnership  revenue
from the U.S. network television market during the year.

     As reported in our  November 6, 1995  letter to  investors,  Silver  Screen
Partners  III and  The  Walt  Disney  Company  have  agreed  on the  sale of the
Partnership's  interest in the  Disney-Silver  Screen III Joint Venture.  Disney
agreed to purchase the Silver  Screen  Partners  III interest for $125  million.
This  payment is  scheduled to occur on the closing of the purchase on September
30, 1997.

     Normal  revenues will continue to be distributed to investors until closing
of the purchase,  although we expect that  Partnership  revenue  during the next
year  will be  minimal,  and  that  there  will  be  upcoming  quarters  when no
distributions will be paid.

     Tax  information  for preparing your 1995 income tax returns will be mailed
to you by March  15. In the  meantime,  our  Investor  Relations  Department  is
available to assist you with any questions you may have.

Sincerely,



/s/ Roland W. Betts

Roland W. Betts
President



/s/ Tom A. Bernstein

Tom A. Bernstein
Executive Vice President
January 24, 1996



                                      F-3
<PAGE>


[GRAPHIC OMITTED] Report Of Independent Auditors



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

     We have audited the  accompanying  balance sheets of Silver Screen Partners
III,  L.P. (a limited  partnership)  as of December  31, 1995 and 1994,  and the
related  statements of operations,  partners' equity, and cash flows for each of
the  three  years  in the  period  ended  December  31,  1995.  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 Silver Screen Partners III,
L.P. (a limited  partnership)  at December 31, 1995 and 1994, and the results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December  31,  1995 in  conformity  with  generally  accepted  accounting
principles. New York, New York January 24, 1996


                                              /s/ Ernst & Young LLP


New York, New York
January 24, 1996



                                      F-4
<PAGE>

[GRAPHIC OMITTED] BALANCE SHEETS




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

ASSETS

Current assets:

Cash .................................................   $  247,033   $  103,007

Temporary investments (at cost plus accrued interest,
  which approximates market) (Note 3) ................    3,244,285    5,939,989
                                                         ----------   ----------
Total current assets .................................    3,491,318    6,042,996

Investment in Joint Venture (Note 4) .................    2,862,545      893,266
                                                         ----------   ----------
                                                         $6,353,863   $6,936,262
                                                         ==========   ==========

LIABILITIES AND PARTNERS' EQUITY 

Current liabilities:

Due to managing general partner ......................   $   47,150   $   38,496
                                                         ----------   ----------
Total current liabilities ............................       47,150       38,496
Other liabilities ....................................      106,790      106,790
                                                         ----------   ----------
Total liabilities ....................................      153,940      145,286
                                                         ----------   ----------
Partners' equity:

General partners (Note 1) ............................         --           --

Limited partners .....................................    6,199,923    6,790,976
                                                         ----------   ----------
Total partners' equity ...............................    6,199,923    6,790,976
                                                         ----------   ----------
                                                         $6,353,863   $6,936,262
                                                         ==========   ==========


See notes to financial statements.



                                      F-5
<PAGE>


[GRAPHIC OMITTED] STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>


Years ended December 31, 1995, 1994 and 1993             1995         1994          1993
                                                    ----------   ----------   ----------
<S>                                                 <C>          <C>          <C>       

Revenues:

Income from Joint Venture (Note 4) ..............   $4,515,810   $3,444,814   $5,096,264

Interest income .................................      256,654      255,443      389,132
                                                    ----------   ----------   ----------
                                                     4,772,464    3,700,257    5,485,396
Costs and expenses:

General and administrative expenses (Note 5) ....    1,013,517      826,356    1,218,472
                                                    ----------   ----------   ----------
Net income ......................................   $3,758,947   $2,873,901   $4,266,924
                                                    ==========   ==========   ==========
Net income allocated to:

General partners ................................   $   37,589   $   28,739   $   42,669

Limited partners ................................    3,721,358    2,845,162    4,224,255
                                                    ----------   ----------   ----------
                                                    $3,758,947   $2,873,901   $4,266,924
                                                    ==========   ==========   ==========
Net income per $500 limited partnership unit
  (based on 600,000 units outstanding) ..........   $     6.20   $     4.74   $     7.04
                                                    ==========   ==========   ==========
Cash distribution per $500 limited
  partnership unit ..............................   $     5.80   $     3.70   $    43.95
                                                    ==========   ==========   ==========

</TABLE>

See notes to financial statements.



[GRAPHIC OMITTED] STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>


                                                General        Limited
Years ended December 31, 1995, 1994 and 1993    Partners       Partners           Total
                                              -----------    ------------    ------------ 

<S>                                           <C>            <C>             <C>         
Partners' equity, January 1, 1993 ........                                              $
                                                     --      $ 35,037,651    $ 35,037,651
Net income, 1993 .........................         42,669       4,224,255       4,266,924
Allocation under Treasury Regulation
Section
1.704-1(b) (Note 1) ......................      6,199,831      (6,199,831)           --
Distributions, 1993 ......................     (6,242,500)    (26,370,000)    (32,612,500)
                                              -----------    ------------    ------------ 
Partners' equity, December 31, 1993 ......           --         6,692,075       6,692,075
Net income, 1994 .........................         28,739       2,845,162       2,873,901
Allocation under Treasury Regulation
Section
1.704-1(b) (Note 1) ......................        526,261        (526,261)           --
Distributions, 1994 ......................       (555,000)     (2,220,000)     (2,775,000)
                                              -----------    ------------    ------------ 
Partners' equity, December 31, 1994 ......           --         6,790,976       6,790,976
Net income, 1995 .........................         37,589       3,721,358       3,758,947
Allocation under Treasury Regulation
Section
1.704-1(b) (Note 1) ......................        832,411        (832,411)           --
Distributions, 1995 ......................       (870,000)     (3,480,000)     (4,350,000)
                                              -----------    ------------    ------------ 

Partners' equity, December 31, 1995 ......    $    --        $  6,199,923    $  6,199,923
                                              ===========    ============    ============ 

</TABLE>

See notes to financial statements.



                                      F-6
<PAGE>


[GRAPHIC OMITTED] STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>


 Years ended December 31, 1995, 1994 and 1993              1995          1994            1993
                                                       -----------   -----------    ------------
<S>                                                   <C>             <C>             <C>         

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income ........................................   $  3,758,947    $  2,873,901    $  4,266,924

Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:

Charge on overhead fee payable ....................           --           138,414         450,819

Decrease (increase) in accrued interest receivable          27,341         (28,200)         67,927

Net change in operating assets and liabilities:

  Increase (decrease) in due to managing general
    partner .......................................          8,654         (24,810)          9,050

  Increase in overhead fee payable ................           --              --             7,504

  Drawing on overhead fee .........................           --        (3,142,873)     (5,350,000)
                                                      ------------    ------------    ------------

Net cash provided by (used in) operating activities      3,794,942        (183,568)       (547,776)
                                                      ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:

Distributions received from Joint Venture
  (less than) in excess of equity in income .......     (1,969,279)      2,333,529      25,920,458

Investments in Joint Venture ......................           --              --           (11,814)

Net sales of temporary investments ................      2,668,363         528,889       6,371,394
                                                      ------------    ------------    ------------
Net cash provided by investing activities .........        699,084       2,862,418      32,280,038
                                                      ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Distributions to partners .........................     (4,350,000)     (2,775,000)    (32,612,500)
                                                      ------------    ------------    ------------
Net increase (decrease) in cash ...................        144,026         (96,150)       (880,238)

Cash, beginning of year ...........................        103,007         199,157       1,079,395
                                                      ------------    ------------    ------------
Cash, end of year .................................   $    247,033    $    103,007    $    199,157
                                                      ============    ============    ============

</TABLE>

See notes to financial statements.



                                      F-7
<PAGE>


[GRAPHIC OMITTED]  NOTES TO FINANCIAL STATEMENTS 

1.   ORGANIZATION

Silver Screen Partners III, L.P. ("the Partnership") was formed on September 17,
1986 as a Delaware limited partnership and began operations on January 29, 1987.
The Partnership  formed a Joint Venture with The Walt Disney Company  ("Disney")
for the purpose of financing (in whole or in part), producing and exploiting all
feature-length  theatrical  motion  pictures  selected for  production by Disney
until the  Partnership's  funds were fully committed.  The Partnership  provided
substantially all the financing for the Joint Venture's films,  while Disney was
responsible  for the  development  and  production or  acquisition  decisions on
behalf of the Joint Venture in connection with the films.

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

     The Partnership Agreement provides that all Partnership profits, losses and
distributable cash ("Proceeds") are allocated 99% to the limited partners and 1%
to the general  partners  until the  Partnership  has satisfied  certain  tests.
Thereafter,  all Proceeds will be allocated 90% to the limited  partners and 10%
to the general partners until additional tests have been satisfied.  Thereafter,
all  Proceeds  will be  allocated  80% to the  limited  partners  and 20% to the
general  partners.  During the year ended  December  31,  1993,  the  allocation
percentages with regard to  distributable  cash changed from 90% for the limited
partners  and 10% for the general  partners to 80% and 20%,  respectively.  Cash
generated  by net gain from  sale,  as  defined,  will be  allocated  85% to the
limited  partners and 15% to the general partners once the general partners have
received an aggregate of 15% of the total cash  generated by net gain from sale.
The  Partnership  Agreement  provides for the special  allocation  of income and
gain, in accordance with Treasury  Regulation Section  1.704-1(b),  to eliminate
any capital account deficit  created through cash  distributions  to the general
partners.  This special  allocation in 1995, 1994 and 1993 amounted to $832,411,
$526,261,  and $6,199,831,  respectively,  which  represents  $1.39,  $0.88, and
$10.33 per $500 limited  partnership unit,  respectively.  Cash distributions to
the limited partners are allocated pro-rata according to the capital accounts of
the respective limited partners.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Income  taxes:

     No  provision  has been made for income  taxes since  income or loss of the
Partnership  is  required to be  reported  by the  respective  partners on their
income tax returns.

3.   TEMPORARY INVESTMENTS

     Temporary investments consisted of the following:


                                                            1995          1994
                                                        ----------    ----------
Commercial paper ....................................   $3,244,285    $5,939,989
                                                        ==========    ==========


All commercial paper is rated by Standard & Poor's A1 or A1+.

1995 commercial paper matured on January 11, 1996 and had interest rates ranging
from 5.75% to 5.79%.

1994  commercial  paper matured  between  January 5 and January 12, 1995 and had
interest rates ranging from 5.75% to 6.00%.

4.   INVESTMENT IN JOINT VENTURE

The  investment  in the  Disney-Silver  Screen  III Joint  Venture  (the  "Joint
Venture")  is accounted  for using the equity  method of  accounting.  Under the
equity method,  the investment is initially  recorded at cost, and is thereafter
increased by additional investments,  adjusted by the Partnership's share of the
Joint Venture's  results of operations,  and reduced by  distributions  received
from the Joint Venture. The Joint Venture's fiscal year ends September 30, while
the  Partnership's  fiscal  year  ends  December  31.  The  1995,  1994 and 1993
statements of operations  reflect the Joint Venture's  results of operations for
its fiscal years ended September 30, 1995, 1994 and 1993.



                                      F-8
<PAGE>


At the end of  1995,  the  Partnership  entered  into a  buyout  agreement  (the
"Agreement")  with Disney (see Note 5).  Under the terms of the  Agreement,  the
Partnership's  influence over the Joint Venture has been reduced, and the amount
of future revenues to be received from the Joint Venture has been  approximately
determined.  As a result,  the Partnership  will account  prospectively  for its
investment in the Joint Venture using the cost method of accounting.  Under this
method,  distributions  to be received  will be recognized as income except that
the  investment  will be reduced in the  proportion  that  actual  distributions
received bear to ultimate revenues expected to be received.

The investment in the Joint Venture at December 31, 1995 and 1994 is as follows:

<TABLE>
<CAPTION>
                                                                          1995           1994
                                                                   -----------    -----------
<S>                                                                <C>            <C>        
Balance, January 1 .............................................   $   893,266    $ 3,226,795

Investments, January 1 to December 31 ..........................          --             --

Income from Joint Venture for the fiscal year ended September 30     4,515,810      3,444,814

Distributions received, January 1 to December 31 ...............    (2,546,531)    (5,778,343)
                                                                   -----------    -----------
Balance, December 31 ...........................................   $ 2,862,545    $   893,266
                                                                   ===========    ===========
</TABLE>

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

The  condensed  balance  sheets for the Joint  Venture at September 30, 1995 and
1994 are as follows.
<TABLE>
<CAPTION>
                                                                1995           1994
                                                            -----------   -----------
<S>                                                         <C>           <C>        
ASSETS

Receivable from Buena Vista Pictures Distribution, Inc. .   $ 9,601,275   $ 7,656,313

Prepaid distributions to Silver Screen Partners III, L.P.          --       1,462,750

Film production costs, net of accumulated amortization
  of $209,457,749 and $289,956,694 ......................     6,057,023     6,558,078
                                                            -----------   -----------
                                                            $15,658,298   $15,677,141
                                                            ===========   ===========
LIABILITIES AND VENTURERS' CAPITAL

Accounts and distributions payable to:

  The Walt Disney Company ...............................   $ 7,071,310   $ 7,079,481

  Silver Screen Partners III, L.P. ......................     1,773,157          --

Deferred revenue ........................................       756,809     2,039,582

Venturers' capital:

  The Walt Disney Company ...............................     3,589,389     4,356,252

  Silver Screen Partners III, L.P. ......................     2,467,633     2,201,826
                                                            -----------   -----------
                                                            $15,658,298   $15,677,141
                                                            ===========   ===========
</TABLE>

                                      F-9
<PAGE>


The  condensed  statements  of income for the Joint  Venture for the years ended
September 30, 1995, 1994, and 1993 are as follows:
<TABLE>
<CAPTION>
                                             1995           1994            1993
                                        ------------    ------------    ------------
<S>                                     <C>             <C>             <C>         
Revenues ............................   $  9,127,690    $ 12,978,791    $ 35,551,109

Amortization of film production costs       (501,055)     (2,940,665)    (20,364,516)

Participation expense ...............     (1,759,597)     (5,482,403)     (1,234,110)
                                        ------------    ------------    ------------
Net income ..........................   $  6,867,038    $  4,555,723    $ 13,952,483
                                        ============    ============    ============
</TABLE>


The Partnership's  share of the September 30, 1995, 1994 and 1993 net income was
$4,515,810, $3,444,814, and $5,096,264, respectively.

     Film  costs  include  production  costs,  a 17.5%  overhead  charge  on the
budgeted  film  cost  (payable  13.5%  to  Disney  and  4% to  the  MGP),  and a
development  fee of  $500,000  for  primarily  all films  payable to Disney.  In
December  1988,  an under budget bonus of  $6,024,240  was paid to Disney by the
Partnership  pursuant  to  the  Joint  Venture  Agreement.   Upon  revision,  an
additional  under budget  bonus of $528,585 was paid in August 1990.  Film costs
are  charged  to  earnings  on an  individual  film  basis in the ratio that the
current  year's  revenues  bear to Joint  Venture  management's  estimate of the
ultimate  revenues to be received  from all sources.  See Note 7 with respect to
the Joint Venture's distribution agreement.

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

     All of the Joint  Venture's  motion  pictures are  completed  and have been
released and are  currently in secondary  markets (home video,  pay  television,
free television, and syndication).  Based on Joint Venture management's ultimate
revenue  estimates at September 30, 1995, all unamortized  film production costs
will be amortized during the next two years.

     Participations  represent  a  participant's  share  of a  motion  picture's
profits  as  contractually   defined.  An  ultimate   participation  expense  is
determined for each motion picture using ultimate  revenues.  Revenue  forecasts
for all motion pictures are continually reviewed by Joint Venture management and
ultimate participation expense is revised when warranted. Ultimate participation
expense is charged to  earnings  on an  individual  film basis in the ratio that
current  year's  revenues  bear to Joint  Venture  management's  estimate of the
ultimate revenues to be received from all sources.

5.   DISNEY BUYOUT OF THE PARTNERSHIP

The  Partnership  has entered into an agreement  (the  "Agreement")  with Disney
providing  for the sale to Disney of all of the  Partnership's  interest  in the
Joint Venture.  The Agreement  provides for the payment of the purchase price of
$125,000,000  in cash (subject to certain  adjustments  with respect to revenues
received by the Partnership  from the  exploitation of the film "Oliver & Co.").
Closing will be on September  30, 1997. In addition to the purchase  price,  the
Agreement provides that Buena Vista Pictures Distribution, Inc. ("Buena Vista"),
a wholly  owned  subsidiary  of Disney,  will  continue  to account for and make
payments to the Joint Venture as required by the distribution agreement (defined
in Note 7) for all revenues received by Buena Vista through August 31, 1997.

6.   OVERHEAD FEES PAYABLE

The  Partnership   Agreement   provides  that  overhead  fees  received  by  the
Partnership  for the benefit of the MGP (see Note 4) will remain on account with
the Partnership with the  understanding  that the MGP may draw from such account
from time to time in order to cover its actual operating expenses not reimbursed
from other  sources.  Pursuant to the  Partnership  Agreement,  the  overhead on
account was paid to the MGP on June 14,  1994.  Whenever  the MGP drew from such
account,  it was entitled at that time to receive from the Partnership an amount
equal to 10% per  annum on the  amounts  not yet paid to the MGP.  This  amount,
included in general and administrative  expenses,  was $138,414, and $450,819 in
1994 and 1993, respectively.


                                      F-10
<PAGE>

7.   AGREEMENT WITH RELATED PARTIES

The Joint  Venture has entered into a  distribution  agreement  with Buena Vista
whereby the Joint Venture has granted  Buena Vista a license to  distribute  all
the Joint Venture's films, in all media  throughout the world through  September
30, 1997. The distribution  agreement  provides that if the revenues received by
the Joint  Venture for  primarily  all Joint Venture films are less than 100% of
the film's budgeted film cost, as defined,  actually  expended,  then five years
after the release of that film (or, if earlier, seven years after the release of
the first  Joint  Venture  film),  Buena  Vista,  to the extent it has  retained
revenues from that film,  will pay the Joint  Venture an additional  amount (the
"Revenue  Shortfall  Payment")  sufficient  to  return  the  budgeted  film cost
actually expended.  Buena Vista will be entitled to recoup any Revenue Shortfall
Payments from the Joint Venture's share of film revenue from such film after the
date of such payment.  The Partnership  received no Revenue  Shortfall  Payments
during 1995 and $1.4 million during 1994.  Disney has  guaranteed  Buena Vista's
obligation to make Revenue Shortfall Payments.

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

VALUE PER UNIT BASED ON ANNUAL APPRAISAL

The  appraised  value per unit based on  projected  cash flow as of December 31,
1995 is $184. The amount does not consider the time value of money.

CASH DISTRIBUTIONS

The Partnership made two distributions in 1995 totalling $6 or 1% per $500 unit.
Cumulative  distributions  through  December 31, 1995  totalled $707 or 141% per
unit.

AVAILABILITY OF FORM 10-K

A copy  of the  Partnership's  Annual  Report  to the SEC on  Form  10-K  may be
obtained  without  charge by  writing  to the  Partnership,  c/o  Silver  Screen
Management, 936 Broadway, New York, N.Y. 10010.






                                      F-11
<PAGE>


Silver Screen Management, Inc.
936 Broadway
New York, NY 10010

                                  Bulk Rate
                                U. S. Postage
                                     PAID
                                  Permit #9
                                  Boston, MA






                                      F-12
<PAGE>


                     DISNEY-SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)

                              Financial Statements

                           September 30, 1995 and 1994





                                      F-13
<PAGE>


Price Waterhouse LLP


                        Report of Independent Accountants
                        ---------------------------------


December 20, 1995

To the Joint Venturers of
Disney-Silver Screen III Joint Venture

In our opinion,  the  accompanying  balance sheet and the related  statements of
income, of Venturers'  capital and of cash flows present fairly, in all material
respects,  the financial  position of Disney-Silver  Screen III Joint Venture (a
California Joint Venture) at September 30, 1995 and 1994, and the results of its
operations  and its cash flows for each of the three  years in the period  ended
September 30, 1995, in conformity with generally accepted accounting principles.
These  financial  statements  are  the  responsibility  of the  Joint  Venture's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with generally accepted auditing standards which 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,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion  expressed
above.

                                                    /s/Price Waterhouse LLP





                                      F-14
<PAGE>




                    DISNEY - SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)


                                  Balance Sheet


                                                   September 30,   September 30,
                                                        1995           1994
                                                   -----------     -----------
                                 Assets
                                 ------

Receivable from Buena Vista
  Pictures Distribution, Inc. ...............     $ 9,601,275     $ 7,656,313

Prepaid distributions
  Silver Screen Partners III, L.P. ..........            --         1,462,750

Film production costs, less accumulated
  amortization of $290,457,749 and
  $289,956,694 at September 30, 1995 and
  September 30, 1994, respectively ..........       6,057,023       6,558,078
                                                  -----------     -----------

                                                  $15,658,298     $15,677,141
                                                  ===========     ===========


                       Liabilities and Venturers' Capital
                       ----------------------------------


Accounts and distributions payable
  The Walt Disney Company ..................       $ 7,071,310       $ 7,079,481
  Silver Screen Partners III, L.P. .........         1,773,157              --

Deferred revenue ...........................           756,809         2,039,582

Venturers' capital
  Silver Screen Partners III, L.P. .........         2,467,633         2,201,826
  The Walt Disney Company ..................         3,589,389         4,356,252
                                                   -----------       -----------

                                                     6,057,021         6,558,078
                                                   -----------       -----------


                                                   $15,658,298       $15,677,141
                                                   ===========       ===========


See accompanying notes to financial statements.






                                      F-15
<PAGE>



                    DISNEY - SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)


                                Statement of Income


                                                    Year Ended
                                                  September 30,
                                                  -------------

                                       1995            1994            1993
                                   ------------    ------------    ------------

Revenues .......................   $  9,127,690    $ 12,978,791    $ 35,551,109

Costs and expenses

   Amortization of film
    production costs ...........       (501,055)     (2,940,665)    (20,364,516)

   Participation expense .......     (1,759,597)     (5,482,403)     (1,234,110)
                                   ------------    ------------    ------------


Net income .....................   $  6,867,038    $  4,555,723    $ 13,952,483
                                   ============    ============    ============



See accompanying notes to financial statements.







                                      F-16
<PAGE>


                    DISNEY - SILVER SCREEN III JOINT VENTURE

                          (A California Joint Venture)


                         Statement of Venturers' Capital


                  Years Ended September 30, 1995, 1994 and 1993

<TABLE>
<CAPTION>


                                            Silver Screen    The Walt
                                               Partners       Disney
                                              III, L.P.       Company           Total
                                            ------------    ------------    ------------

<S>                                         <C>             <C>             <C>         
Balance at September 30, 1992 ...........     26,679,997       3,190,204      29,870,201

   Capital distributions ................         (3,018)         (3,924)         (6,942)

   Net income ...........................      5,096,264       8,856,219      13,952,483

   Distributions ........................    (27,326,844)     (6,990,155)    (34,316,999)
                                            ------------    ------------    ------------

Balance at September 30, 1993 ...........      4,446,399       5,052,344       9,498,743

   Net income ...........................      3,444,814       1,110,909       4,555,723

   Distributions ........................     (5,689,387)     (1,807,001)     (7,496,388)
                                            ------------    ------------    ------------

Balance at September  30, 1994 ..........      2,201,826       4,356,252       6,558,078

   Net income ...........................      4,515,810       2,351,228       6,867,038

   Distributions ........................     (4,250,003)     (3,118,091)     (7,368,095)
                                            ------------    ------------    ------------

Balance at September 30, 1995 (unaudited)   $  2,467,633    $  3,589,389    $  6,057,021
                                            ============    ============    ============

</TABLE>

See accompanying notes to financial statements.







                                      F-17
<PAGE>


                    DISNEY - SILVER SCREEN III JOINT VENTURE

                          (A California Joint Venture)

                             Statement of Cash Flows
<TABLE>
<CAPTION>

                                                                          Year Ended
                                                                        September 30,
                                                                        -------------
                                                            1995             1994           1993
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>       
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income ........................................   $  6,867,038    $  4,555,723    $ 13,952,483

     Adjustments  to  reconcile  net income
     to net cash  provided  by  operating
     activities:

  Charges to income not requiring cash outlays
    Amortization of film production costs ...........        501,055       2,940,665      20,364,516

  Change in assets and liabilities
    (Increase) decrease in receivable from
      Buena Vista Pictures Distribution, Inc. .......     (1,944,962)      3,619,052      13,156,805

    (Decrease) increase in participations payable
      to The Walt Disney Company ....................     (1,584,208)      2,285,426      (2,753,682)

    Decrease in deferred revenue ....................     (1,282,773)     (3,814,107)       (311,167)
                                                        ------------    ------------    ------------

  Total adjustments .................................     (4,310,888)      5,031,036      30,456,472
                                                        ------------    ------------    ------------

Net cash provided by operating activities ...........      2,556,150       9,586,759      44,408,955
                                                        ------------    ------------    ------------

Cash flows from financing activities:

  Capital contributions (distributions)
    Silver Screen Partners III, L.P. ................           --              --            11,814
    The Walt Disney Company .........................           --              --            (3,924)

  Distributions
    Silver Screen Partners III, L.P. ................     (1,014,096)     (6,267,347)    (33,520,511)
    The Walt Disney Company .........................     (1,542,054)     (3,319,412)    (10,888,444)
                                                        ------------    ------------    ------------

Net cash used by financing activities ...............     (2,556,150)     (9,586,759)    (44,401,065)
                                                        ------------    ------------    ------------

Cash flows from investing activities:

  Film production costs additions ...................           --              --            (7,890)
                                                        ------------    ------------    ------------

Net change in cash, and cash at end of period .......   $       --      $       --      $       --
                                                        ============    ============    ============
</TABLE>

See accompanying notes to financial statements






                                      F-18
<PAGE>




                     DISNEY-SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)
                          Notes to Financial Statements
                               September 30, 1995

(1)  ORGANIZATION AND SIGNIFICANT AGREEMENTS

Organization
------------

The Disney-Silver  Screen III Joint Venture (Joint Venture) was formed under the
laws of the State of  California  on  September  25,  1986  pursuant  to a Joint
Venture  agreement (JV Agreement)  between the Walt Disney Company  (Disney) and
Silver  Screen  III,  L.P.  (Silver  Screen),  collectively  referred  to as the
Venturers.  The Joint Venture was formed to finance, produce and exploit feature
length  live  action  and  animated  theatrical  motion  pictures  selected  for
production by Disney. Silver Screen was capitalized through a public offering of
limited partnership units and has provided approximately $266 million of funding
to the Joint Venture.

Joint Venture Agreement
-----------------------

The JV  Agreement  sets  forth the  rights  and  obligations  of the  Venturers,
including their capital  contribution  requirements  and sharing of net proceeds
and  tax  attributes.  The  JV  Agreement  requires  Silver  Screen  to  provide
substantially  all the financing for the Joint Venture's films,  while Disney is
required to finance all necessary  costs in excess of Silver Screen's limits and
is solely  responsible  for all  decisions  incidental  to the  development  and
production  or  acquisition  of motion  pictures for the Joint  Venture.  Silver
Screen's  financing  contribution  is  limited  to  100%  of the  budgeted  film
production costs (BFC), as contractually  defined. At its option,  Silver Screen
may limit its contribution to $20 million per film.  Special  provisions pertain
to Silver Screen's contribution limit on the film "Who Framed Roger Rabbit?" The
Joint Venture is managed by Disney.

Revenues  received by the Joint Venture from each film are distributed  first to
Silver  Screen until it has received an amount  equal to its  investment  in the
film's BFC. Thereafter, revenues are distributed to Disney until it has received
an amount  equal to its  investment  in film  production  costs in excess of the
film's BFC.  Thereafter,  all remaining  revenues,  net of  participations,  are
distributed  75% to Silver Screen and 25% to Disney,  as adjusted for any Disney
investment in the film's BFC. Special  provisions pertain to the distribution of
revenues on the film "Who Framed Roger Rabbit?"

On September 29, 1995,  Disney  entered into an agreement  (Purchase  Agreement)
with Silver Screen to purchase all of Silver Screen's rights and interest in, to
and under the JV Agreement and the  distribution  agreement (as defined  below).
The Purchase  Agreement  provides for the payment of the purchase price (subject
to certain adjustments with respect to animated films) on September 30, 1997 (or
such later date as mutually  agreed to by the parties) and requires  Buena Vista





                                      F-19
<PAGE>


                     DISNEY-SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)
                          Notes to Financial Statements
                               September 30, 1995


Pictures Distribution,  Inc. (Buena Vista), a wholly owned subsidiary of Disney,
to continue  accounting for and making payments to the Joint Venture as required
by the distribution agreement for all revenues received through August 31, 1997.
After the payment of the purchase  price,  the Joint  Venture will be dissolved.
Until such time,  the Joint  Venture  financial  statements  will be prepared in
accordance with the accounting policies described below.

Distribution Agreement
----------------------

Concurrent  with its  formation,  the Joint Venture  entered into a distribution
agreement with Buena Vista,  for the  distribution  of all films produced by the
Joint Venture in all media throughout the world. From the revenues received from
the distribution of the Joint Venture films net of certain contractually defined
costs, Buena Vista retains a distribution fee, as contractually  defined, and an
amount to recoup  residuals it has paid,  and remits the balance of the revenues
to the Joint Venture. The receivable from Buena Vista relates to receivables due
to Buena Vista from exhibitors and distributors of motion picture products.

If the total revenues received by the Joint Venture five years after the release
of each film are less than 100% of the Joint Venture's  investment in the BFC of
that film, Buena Vista is required to pay the Joint Venture an additional amount
(the "Revenue  Shortfall  Payment") to the extent it has retained  revenues from
the film. Buena Vista will be entitled to recoup any Revenue  Shortfall  Payment
from the Joint  Venture's share of revenues from the film after the date of such
payment.  Disney  has  guaranteed  Buena  Vista's  obligation  to  make  Revenue
Shortfall Payments, if any.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition
-------------------

All of the Joint  Venture's  motion  pictures have been produced for  theatrical
release as its primary market.  Revenues from theatrical  distribution of motion
pictures are recognized when revenues are reported by  distributors.  Television
licensing  revenues are  recognized  when the motion  picture is  available  for
telecasting by the licensee and when certain other conditions are met.  Revenues
from the sale of home video  cassettes are  recognized,  net of an allowance for
estimated  returns,  on the date that they are made widely available for sale by
retailers.

Generally,  motion  pictures  are first  made  available  for six  months  after
theatrical  release for home video,  one year after  theatrical  release for pay
television,  two to three  years  after  theatrical  release  for  initial  free
television,  and approximately  three to five years after theatrical release for
syndication.




                                      F-20
<PAGE>




                     DISNEY-SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)
                          Notes to Financial Statements
                               September 30, 1995

Revenues  are  presented  net of the amount  Buena Vista  retains,  as described
above.  Certain changes were made to residual  estimates during the three months
ended December 31, 1994 to better reflect actual payment history.  The impact of
these  changes was to increase net income for the year ended  September 30, 1995
by $84,523.

Accounting for Film Production Costs
------------------------------------

Film production costs include  production costs, a 17.5% overhead charge payable
13.5% to Disney and 4% to Silver Screen,  a development fee of $500,000 for each
film payable to Disney,  an underbudget  bonus of $372,809 for each film payable
to Disney, and interest on development costs, as contractually defined,  payable
to Disney.  These costs are expected to benefit future periods.  Film production
costs are charged to earnings on an individual  film basis in the ratio that the
current year's revenues bear to management's  estimate of ultimate revenues from
all sources.

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

All of the Joint  Venture's  motion  pictures are completed,  released,  and are
currently in secondary markets (home video, pay television, free television, and
syndication).  Based on management's ultimate revenue estimates at September 30,
1995,  approximately 100% of unamortized film production costs will be amortized
during the next three years.

Participation Expense
---------------------

Participations  represent a participant's  share of motion picture's  profits as
contractually  defined. An ultimate participation expense is determined for each
motion  picture  using  ultimate  revenues.  Revenue  forecasts  for all  motion
pictures are  continually  reviewed by  management  and  ultimate  participation
expense is revised when warranted.  Certain  changes were made to  participation
estimates  during the three  months ended  December  31, 1994 to better  reflect
actual payment  history.  The impact of these changes was to increase net income
for the year  ended  September  30,  1995 by  $359,914.  Ultimate  participation
expense is charged to earnings on an individual film basis in the ratio that the
current year's revenues bear to management's  estimate of ultimate revenues from
all sources.




                                      F-21
<PAGE>


                     DISNEY-SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)
                          Notes to Financial Statements
                               September 30, 1995

Revenue Shortfall Payment
-------------------------

The Revenue Shortfall Payment (as defined above) is recognized when earned.  The
revenue  is earned  five  years  after  the  release  date of the film.  Revenue
Shortfall  Payments made to the Joint Venture for the years ended  September 30,
1995, 1994, and 1993 totaled $0, $1,391,142, and $20,912,861 respectively.

Income Taxes
------------

The Joint Venture is treated as a  partnership  for Federal and State income tax
purposes.  Accordingly,  no  provision  for  income  taxes  has been made in the
accompanying   financial   statements  since  the  Joint  Venture's  results  of
operations are reported in the income tax returns of the Venturers.


(3)  PREPAID DISTRIBUTIONS

Prepaid  distributions  to the  Venturers  are fully  realizable  as future  and
deferred  revenues are recognized,  and accrued  participations  are paid by the
Joint Venture.  Prepaid distributions are presented net of distributions payable
to the Venturers.

(4)  ACCOUNTS AND DISTRIBUTION PAYABLE

                                                 September 30,   September 30,
                                                     1995            1994
                                                 -------------   -------------

Due to Silver Screen Partners III, L.P.:

   Distributions payable, net .................   $1,773,157      $     --
                                                  ----------      ----------

Due to The Walt Disney Company:

   Participations payable .....................   $3,687,682     $ 5,271,890
   Distributions payable, net .................    3,383,628       1,807,591
                                                  ----------      ----------

                                                  $7,071,310      $7,079,481
                                                  ==========      ==========




                                      F-22
<PAGE>

                    DISNEY - SILVER SCREEN III JOINT VENTURE
                          (A California Joint Venture)

                           Quarterly Financial Summary

                                   (Unaudited)
<TABLE>
<CAPTION>

                                                        Three Months Ended Ended
                                          ---------------------------------------------------------
                                          December 31      March 31        June 30     September 30
                                          -----------    -----------    -----------    ------------
<S>                                       <C>            <C>            <C>            <C>        
Fiscal 1995
-----------

Revenues ..............................   $ 1,313,182    $ 3,251,771    $ 1,391,296      3,171,441

Costs and expenses:

  Amortization of film production costs      (103,909)      (204,023)       (32,384)      (160,739)

  Participation expense ...............       244,663     (1,204,263)      (349,955)      (450,042)
                                          -----------    -----------    -----------    -----------

Net income ............................   $ 1,453,936    $ 1,843,485    $ 1,008,957    $ 2,560,660
                                          ===========    ===========    ===========    ===========

Fiscal 1994
-----------

Revenues ..............................   $ 2,999,833    $ 4,167,850    $ 3,670,069    $ 2,141,039

Costs and expenses:

  Amortization of film production costs      (742,388)      (726,651)       (93,423)    (1,378,203)

  Participation expense ...............    (2,171,389)    (1,799,462)      (794,537)      (717,015)
                                          -----------    -----------    -----------    -----------

Net income ............................   $    86,056    $ 1,641,737    $ 2,782,109    $    45,821
                                          ===========    ===========    ===========    ===========
</TABLE>





                                      F-23
<PAGE>