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: 0-17600
                            
                                        
            Common Goal Health Care Participating Mortgage Fund L.P.
       (Exact name of small business issuer as specified in its charter)

            Delaware                                               52-1475268  
            --------                                               ----------  
   (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:  Limited
Partnership Interests

     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)

Issuer's revenues for the fiscal year ended December 31, 1996 were $1,072,159.

     The aggregate sales price of the units of Limited Partnership Interest held
by  non-affiliates  of the Registrant as of March 31, 1997 was $3,343,626 (1,559
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. . . . . . . . . . . . . . . . . . . . 14
  Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 14
  Item 4. Submission of Matters to a Vote of Security Holders. . . . . . 14

PART II
  Item 5. Market for Units of Limited Partnership Interest and Related
          Security Holder Matters. . . . . . . . . . . . . . . . . . . . 15
  Item 6. Management's Discussion and Analysis or Plan of Operation. . . 15
  Item 7. Financial Statements . . . . . . . . . . . . . . . . . . . . . 19
  Item 8. Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure . . . . . . . . . . . . . . . . . . . 19

PART III
  Item 9. Directors, Executive Officers, Promoters and Control Persons,
          Compliance With Section 16(a) of the Exchange Act. . . . . . . 20
  Item 10.     Executive Compensation. . . . . . . . . . . . . . . . . . 21
  Item 11.     Security Ownership of Certain Beneficial Owners 
               and Management .......................................... 22
  Item 12.     Certain Relationships and Related Transactions. . . . . . 22
  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   Participating   Mortgage   Fund  L.P.   (the
"Partnership")  was organized on August 20, 1986 as a limited  partnership under
the Delaware Revised Uniform Limited Partnership Act. The Partnership's  general
partners are Common Goal Capital  Group,  Inc.  ("Common  Goal" or the "Managing
General  Partner") and Common Goal Limited  Partnership I (the "Minority General
Partner")  (collectively,  the "General  Partners").  With  limited  exceptions,
Common  Goal  has  exclusive  control  over  the  business  of the  Partnership,
including  the  right  to  manage  the  Partnership's  assets.  The  Partnership
commenced  operations on July 21, 1987 after having accepted  subscriptions  for
more  than the  requisite  minimum  of  116,000  depositary  units  representing
beneficial assignments of limited partnership interests (the "Depositary Units")
in a public offering registered with the U.S. Securities and Exchange Commission
on Form  S-11  (the  "Public  Offering").  The  Partnership  raised  a total  of
$19,129,110  in the Public  Offering  which  terminated on February 20, 1989. On
June 25, 1990,  the Managing  General  Partner  caused all holders of Depositary
Units to be admitted to the  Partnership  as Limited  Partners  holding units of
limited partnership interests (the "Units").

     The  Partnership's  primary business has been to invest in or make mortgage
loans (the "Mortgage  Loans"),  comprised of a mix of first and junior  Mortgage
Loans,  secured by health  care-related  real  properties  owned by unaffiliated
entities.  The  Partnership  does not  intend to own or acquire  real  property,
except in the event of foreclosure  when the Managing General Partner deems such
acquisition to be in the best interest of the  Partnership.  The Partnership has
one Mortgage Loan which remained outstanding as of March 31, 1997. See "Existing
Mortgage Loan" below.

     The  Partnership's  objectives in making  investments of the type described
above were:  (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  participation payable at maturity of the Mortgage Loan or upon the sale
or  refinancing  of  the  underlying  property  (the  "Participation").  Because
Participation in facility appreciation are paid only upon maturity of a Mortgage
Loan or a sale of the underlying  facility,  cash  distributions  as a result of
Participation  on the one  remaining  Mortgage Loan are not expected to commence
until  repayment or  maturity.  It is not an  objective  of the  Partnership  to
provide tax-sheltered income.

     Funds held pending distribution 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 or better by Moody's Investors  Service,  Inc., money
market funds

                                        1

<PAGE>

     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 geographic area and type of facility  (nursing home
or intermediate care or a mix of both); (2) the location, construction, quality,
condition and design of the facility;  (3) 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;  (4) the growth, tax and regulatory  environment of the community
in which a facility is located; (5) occupancy and demand for similar health care
facilities  with which the facility  would  compete;  (6) the mix of private and
government  pay patients;  and (7) the quality and  experience of the management
operating  the  facility.  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
interests  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.

  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.  The Managing  General
Partner  will attempt to resolve any  conflicts of interest  that may arise with
respect to the Joint Venture Loan (See  "Existing  Mortgage Loan" below) between
the Partnership and others by exercising the good faith required of fiduciaries.
Such  conflicts  will be resolved in the best  judgment of the Managing  General
Partner. In connection  therewith,  in 1990, Common Goal Health Care Pension and
Income Fund L.P. II ("Common Goal II"), an affiliated,  publicly-offered limited
partnership with investment objectives that are substantially identical to those
of the  Partnership  and  the  Partnership  participated  in a  ten-year  second
mortgage loan in the original  principal amount of $3,430,114 to an unaffiliated
third party through a joint venture  between the  Partnership and Common Goal II
(the "Joint Venture  Loan").  At December 31, 1996 and 1995,  the  Partnership's
mortgage loans receivable  included  $1,567,000  representing the  Partnership's
participation  in the remaining  $1,618,254 of the loan. See "Existing  Mortgage
Loan" below.

  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.

  Closed Mortgage Loans.
  ----------------------
     SHALP Loan.  The  Partnership  made its initial  mortgage  loan (the "SHALP
Loan") on August 12, 1987 and funded it in three  phases  through  December  15,
1987 for a total  outstanding  loan principal of $3,300,000.  The borrowers were
Stamford  Health  Associates  Limited  Partnership,  PersonaCare of Connecticut,
Inc., Homestead Health Center, Inc., Courtland Gardens Residence Homes, Inc. and
Courtland Health Center, Inc., all of which are affiliates of PersonaCare, Inc.,
("PersonaCare").  The  SHALP  Loan was  secured  by a second  mortgage  on three
separate long term care facilities containing a total of 267 beds in two nursing
care facilities and 68 rooms at a residential facility, all located in Stamford,
Connecticut. The SHALP Loan had a term of 10 years (maturing in August 1997). On
July 7, 1994,  the borrowers on the SHALP Loan repaid the  principal  balance of
$3,300,000,  and paid the related  prepayment  penalty of  $132,000,  additional
interest of $60,752 based on 1994 gross revenues  through May, 1994, and $23,421
in basic interest.  Since there was no appreciation in the value of the property
securing the SHALP Loan, the Partnership did not receive any additional  income.
Income  received  on  the  SHALP  Loan  from  inception  through  repayment  was
$2,412,788 in basic interest,  $900,885 in additional  interest based upon gross
revenues,  and a $132,000  prepayment  penalty (a total of $3,445,673  earned on
$3,300,000 over six years and nine months).


<PAGE>

  The Westwood Loan.  
  --------------------
     On March 10,  1988,  the  Partnership  funded a  $1,300,000  mortgage  loan
secured by a second  mortgage on a 120-bed long term nursing care  facility (the
"Westwood Facilities") in Poplar Bluff, Missouri (the "Westwood Loan"). When the
Westwood Loan was funded,  the loan-to-value  ratio was  approximately  91%. The
Westwood Loan had a term of 10 years (maturing in March 1998). The Westwood Loan
was supported by two separate  guarantees;  the first provided by Westwood Hills
Health Care Center,  Inc. (the  "Westwood Loan  Borrower")  and Health  Services
Management  Corporation  (which  manages the Westwood  Facility)  and the second
provided by John Rothert and R. William Brece,  Jr.  (principals of the Westwood
Loan  Borrower).  The  guarantees  were required to be maintained  until certain
loan- to-value ratios and debt service  coverage ratios were met. As of November
30,  1992,  the  conditions  for  release  of the  guarantees  were  met and the
guarantees  were  released.  The  guarantees  by Messrs.  Rothert and Brece were
subject  to  reinstatement  at any time  during  the loan  term if the  State of
Missouri or other regulatory agencies adjusted the reimbursement rates such that
debt service coverage was reduced to less than 1.3:1.0. Any reinstated guarantee
would have remained effective until the debt service ratio returned to the level
it was prior to the  adjustment  and  maintained  or exceeded  that level for 12
consecutive months. During 1994, $300,000 of the Westwood Loan was paid down. On
October 25, 1996, the borrower on the Westwood Loan repaid the principal balance
of $1,000,000,  and paid the related prepayment  penalty of $40,000,  additional
interest of $1,594 based on remaining  1995 gross  revenues and $58,135 based on
1996 gross  revenues  through  October 1996,  and $4,792 in basic  interest.  In
addition,  the borrowers paid $110,550 in additional equity interest,  $3,650 in
appraisal fees and $4,000 in estimated legal fees. The October 25, 1996 Westwood
Loan repayment totaled $1,222,720.

  The Winthrop Loan.  
  --------------------
     On March 25, 1988, the Partnership  funded a mortgage loan in the principal
amount  of  $1,000,000  (the  "Winthrop  Loan")  which was  secured  by a second
mortgage on a 142-bed  nursing  care  facility in  Medford,  Massachusetts  (the
"Medford Facility").  The Partnership has also received additional collateral in
the form of a second  mortgage on a 170-bed  nursing care  facility  owned by an
affiliate of the borrower in Bryn Mawr, Pennsylvania (the "Bryn Mawr Facility").
The Winthrop  Loan had a term of 10 years  (maturing  in March  1998).  When the
Winthrop Loan was funded,  the loan-to-value  ratio was  approximately  91%. The
Winthrop  Loan was the  subject  of a  guarantee  of payment  of  principal  and
interest by Hardie Beloff (a principal of the  borrower) and the Winthrop  House
Associates Limited Partnership (the "Winthrop Borrower").  This guarantee was to
terminate upon the achievement of debt service  coverage of at least 1.3:1.0 for
36 consecutive months.

     In  December  of  1991,  the   Partnership   learned  that  state  Medicare
authorities  had notified the Winthrop  Borrower that the state had discovered a
series of overpayments  to the Winthrop  Borrower in connection with the Medford
Facility. The Winthrop Borrower entered into an agreement with the senior lender
on the Medford  Facility,  the  Partnership  and the state Medicare  authorities
whereby such funds would be repaid to the state. Pursuant to the agreement,  the
Winthrop Borrower paid all past due amounts of Additional Interest. The Winthrop
Loan,  which had been performing  according to its original terms, was repaid in
full in February  1996.  The borrower on the Winthrop  Loan repaid the principal
balance of $1,000,000,  and the related prepayment penalty of $55,000, $3,833 in
basic  interest  due, and $47,671 in interest to estimated  gross  revenue,  and
$8,728 in fees.

  Horizon Loan.  
  ---------------
     On July 8, 1988,  the  Partnership  funded a $1,400,000,  ten year mortgage
loan (the "Horizon Loan") to Horizon  Healthcare,  an Oregon general partnership
(the "Horizon Borrower"), secured by a second lien on a 150-bed nursing facility
in Moore, Oklahoma and an 89-bed nursing facility and a 200-bed nursing facility
each in Norman, Oklahoma (the "Horizon Facilities"). At the time of funding, the
Horizon   Facilities  were  leased  on  a  triple-net  basis  to  a  significant
not-for-profit  corporation.  In  November of 1989,  an issue arose  between the
Horizon  Borrower (who is also the landlord) and the tenant (the  not-for-profit
corporation),  whereby the tenant sought a reduction in lease payments and, as a
counter-measure,  the Horizon  Borrower  sought  possession.  The  landlord  was
granted an order for possession of the Horizon  Facilities  pursuant to which it
took  possession on  approximately  February 1, 1990. On or about July 25, 1990,
the  Partnership  notified the Horizon  Borrower  that it was in default on this
loan for failure to make  payments and that the  Partnership  intended to pursue
all available remedies against the borrower unless the loan was brought current.
On  September 7, 1990,  the  Partnership  sent the Horizon  Borrower a notice of
intent to foreclose.  The Partnership was advised that the Horizon Borrower also
had been in  default  on the first  mortgage  on the  Horizon  Facilities  since
approximately  July of 1990 and that the first  mortgagee (the "Senior  Lender")
also sent the  borrower a "notice  of intent of  non-judicial  foreclosure."  On
September 21, 1990,  the Senior Lender filed a petition in the District Court of
Cleveland County, Oklahoma,  against the Horizon Borrower,  seeking, among other
relief,  monetary  damages  in the amount  owed to it and  against  the  Horizon
Borrower,  the  Partnership  and others,  seeking to  foreclose  its lien on the
Horizon  Facilities.  On or  about  November  20,  1990,  the  Horizon  Borrower
transferred legal title to the Horizon  Facilities to an affiliated  corporation
("New Owner")  allegedly in violation of the mortgages of the Partnership and of
the  Senior  Lender,  and  immediately  thereafter,  the  New  Owner  instituted
bankruptcy proceedings for reorganization under Chapter 11 in Federal Bankruptcy
Court in Cleveland County,  Oklahoma.  A plan of reorganization  was approved by
all creditors of the New Owner and confirmed on May 29, 1991 (the "Plan"). Under
the terms of the Plan, the Partnership  received  monthly payments of $15,475.08
which was calculated by amortizing the principal amount of $1,469,000 at 12% per
annum over 25 years. After the Plan was confirmed,  the Partnership received the
modified  payments due it under the Plan  through  February,  1992.  At June 30,
1992,  the  Horizon  Loan was four months  delinquent  as to the  principal  and
interest payments required by, and therefore in default under, the Plan. On June
18, 1992, the Partnership, together with two other creditors of HHC, Inc., filed
an  involuntary  petition in  bankruptcy  against HHC,  Inc.,  the  successor in
interest to the assets of the Horizon Borrower. Common Goal intended to submit a
plan of  reorganization  to the  bankruptcy  court  that would vest title to the
Horizon  Facilities in an affiliate of Common Goal. On July 13, 1992,  the Board
of Directors of Common Goal met and decided to proceed no further with  attempts
to obtain control of the three properties  collateralizing the Horizon Loan. The
decision  was made because of the high risk  involved,  the low  probability  of
success and the amount of new  investment  required if the  Partnership  were to
obtain the properties. This action enabled the Senior Lender to proceed with its
foreclosure  proceedings  on  the  properties.  Management  of  the  Partnership
evaluated  the  exposure  with  respect to this  mortgage  loan  receivable  and
provided an  allowance  for loss of  $993,495 in 1992 in order to fully  reserve
against a loan  balance of  $1,393,495.  As of  December  31,  1992,  the entire
mortgage loan  receivable  and the  outstanding  allowance for loss were charged
off.

     At the time the  Partnership  entered  into  its  loan  agreement  with the
Horizon  Borrower in June of 1988,  the  Partnership  received  tenant  estoppel
letters  executed by certain  officers of  Adventist  Living  Centers,  Inc.,  a
Wisconsin  not-for-profit  corporation  ("ALC").  In  these  letters,  ALC  made
representations  to the  Partnership  concerning  certain  leases then in effect
between the Horizon borrower and ALC.

     On November 14,  1990,  ALC filed a Chapter 11  bankruptcy  petition in the
United States Bankruptcy Court for the Northern District of Illinois. On May 20,
1991,  a proof of  claim  was  filed on  behalf  of the  Partnership  in the ALC
bankruptcy  case  alleging  that at the time ALC's  petition was filed,  ALC was
indebted to the Partnership in the amount of $1,629,404.56 based on ALC's breach
of its tenant  estoppel  letters.  In March of 1993, the  Partnership  reached a
settlement of this claim and on March 19, 1993, the  Partnership  received final
payment of $42,500.  Future  settlements  in the pending  state court action may
require a return of funds to the  creditors  committee  formed under the federal
bankruptcy court.

     On October 23, 1991, a complaint was filed on behalf of the  Partnership in
the  Circuit  Court of DuPage  County,  Illinois.  Named as  defendants  in that
complaint were ALC, the Horizon  Borrower and certain  individuals  and entities
either  currently  or  formerly  affiliated  with ALC or the  Horizon  Borrower,
including the Horizon  Borrower's  general partners.  The complaint alleged that
the defendants made false  representations  of material fact to the Partnership.
The  complaint  sought  recovery  of damages in the  amount of  $1,400,000  plus
interest, costs and attorneys' fees.

     On January 5, 1994,  the DuPage  County  Circuit  Court granted the Horizon
Borrower  and  its  general  partners  leave  to  file  an  amended  answer  and
counterclaim against the Partnership. The Partnership was granted until February
2, 1994 to answer or otherwise  respond to the  counterclaim.  The  counterclaim
asserted that after ALC defaulted on lease payments to Horizon,  the Partnership
interfered with Horizon's  attempts to renegotiate its leases with ALC for three
Oklahoma  nursing home  facilities  for which the  Partnership  provided  second
mortgage financing, and also interfered with the Horizon Borrower's negotiations
with an entity the Horizon Borrower proposed as a substitute tenant for ALC. The
counterclaim   also  asserted  that  the  Partnership   misrepresented   certain
information  regarding a proposal to operate the nursing  home  facilities,  and
breached its loan agreement  with Horizon by  withholding  consent from proposed
rent reductions to ALC. The counterclaim  sought damages from the Partnership in
the amount of approximately $6.8 million. On April 25, 1994 the Circuit Court of
DuPage County entered an order granting the Partnership's  Motion to Dismiss the
counterplaintiffs'  counterclaim  with prejudice in the Horizon Loan Litigation.
The court found that the  counterplaintiffs  did not have standing to assert the
claims against the  Partnership.  Without  determining  the validity of any such
claims,  the Court  determined  that the claims  could only be  asserted by HHC,
Inc., the successor to Horizon  Healthcare (the original borrower) which filed a
bankruptcy  petition in November 1990.  Subsequently,  Horizon moved to have the
above  motion  vacated.  On July 5, 1994,  the Circuit  Court denied the Horizon
Motion to Vacate.  Following  the entry of this Order,  the  parties  engaged in
substantial discovery.  After the completion of discovery, the Partnership filed
an amended  complaint on September 12, 1995.  This pleading named the Lake Union
Conference of Seventh-day  Adventists ("Lake Union") as an additional defendant.
Although Lake Union objected to being added as a defendant,  the Court ruled, on
October 10, 1995, that it should be included in the case.

     In its complaint,  the Partnership  sought $1,400,000  (principal amount of
the loan to Horizon) plus interest owing and punitive damages.  During 1996, the
Partnership  settled the Horizon loan  litigation  for a total of  $480,000.  In
December 1996 the Partnership  received $353,530 as settlement to this suit, net
of $126,470 in attorneys' fees.

  Existing Mortgage Loan.
  -----------------------

  The Joint Venture Loan.  
  -------------------------
     On September 7, 1989,  the  Partnership  funded a short-term  mortgage loan
(the "Honeybrook Loan") in the original  principal amount of $3,370,000,  to two
Tennessee limited partnerships (individually, a "Borrower" and collectively, the
"Borrowers").  One of the Tennessee limited  partnerships owns a 100-bed skilled
care and  intermediate  care facility and the other limited  partnership  owns a
101-bed  retirement  and assisted  care  facility,  both of which are located in
Honeybrook,  Pennsylvania (collectively,  the "Facilities"). The Honeybrook Loan
was originally secured by a second mortgage on the skilled and intermediate care
facility and by  collateral  assignments  of 100% of the general  partners'  and
limited partners' interests in each Borrower. The security interest was taken in
the Borrower that owns the retirement and assisted care facility  insofar as the
facility  is  subject  to a HUD  regulatory  agreement  which  prohibits  junior
encumbrances on the facility.  The security  interest is subject and subordinate
to all applicable HUD  regulations.  When the  Honeybrook  Loan was funded,  the
loan-to-value ratio was approximately 89%. The Partnership elected to extend the
original  term of the  Honeybrook  Loan and assigned its  obligation to make the
long-term  loan to a newly created joint venture with Common Goal II (the "Joint
Venture Loan"). The Joint Venture Loan was made on or about August 1, 1990, with
the Partnership making a $3,430,114  contribution at that time to fund the Joint
Venture Loan. In 1991, Common Goal II contributed  $95,600,  thereby  decreasing
the  Partnership's  contribution  by that amount.  The Borrowers  made a $30,000
repayment of principal in 1991, bringing the Partnership's  contribution down to
$3,304,514 at December 31, 1991 and in December 1992 made a principal paydown of
$211,514 to bring the balance to $3,093,000  on December 31, 1992.  The $211,514
was received on January 7, 1993 and  reclassified as a short term receivable for
year end 1992. An additional $70,000 was paid down on the principal on March 29,
1993.

     On November 3, 1993, Life Care Centers of America,  Inc. ("Life Care") paid
a total of  $1,746,790  in a  restructuring  of the Joint  Venture  Loan. Of the
$1,691,477 allocated to the Partnership, $1,455,336 was applied to principal and
$145,534 to a Prepayment  Penalty.  A Refinance  Fee of $72,750 was  negotiated,
while Gross Revenue,  Basic  Interest and Additional  Interest were taken as set
forth in the loan  documents.  The  Partnership's  balance has been paid down to
$1,567,664  while the Common Goal II balance has also been paid down to $50,590.
In connection with the repayment of principal, the Partnership agreed to release
its mortgage on the skilled care and  intermediate  care facility.  Life Care or
its affiliates operate the retirement and assisted care facility,  which secures
the Joint Venture Loan.

     The  Joint  Venture  Loan  is  guaranteed  by Life  Care  and by one of the
beneficial  owner of the Borrowers.  In connection  with the  negotiation of the
Refinance  Fee, two  individual  guarantors  who are no longer  employees of the
Borrowers  were released  from their  guaranty  obligations.  As of December 31,
1996,  Life  Care had an  audited  net  worth of in  excess  of  $67,000,000,  a
substantial amount of which was illiquid. A substantial portion of the net worth
of the individual guarantor is also illiquid.

     The table set forth below provides  information  concerning the basic terms
and conditions of the Mortgage Loan made and currently  held by the  Partnership
as of the date of this report.










<PAGE>

                    Common Goal Existing Mortgage Loans



                                  Joint Venture
                                      Loan
                                      ----
                         



Date of Loan             8/1/90

Type of Loan             Second Mortgage on
                         Facility

Outstanding              1,567,664 (1)
Principal
Amount

Base                     13.7% (2)
Interest Rate

Maturity                 1/1/2000

Type of Property/        Collateral assignment
Location of Property     of interest in 101-bed
Securing Loan            retirement and assisted
                         care facility in Honeybrook, PA
                                             

<PAGE>

                                   Notes

          (1) This amount reflects the funding  provided to the Joint Venture by
     the Partnership.

          (2) This loan currently  requires payment of additional  interest at a
     rate of 1.95% of gross revenues from the Facilities in excess of $1,694,000
     per annum.  This  provision is currently  the subject of  negotiation  as a
     result  of the  refinancing  of this  loan  and the  release  of the  Joint
     Venture's lien on one of the Facilities.  The Partnership believes that the
     negotiations  will not have a material  effect on the amount of  additional
     interest  received.  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. As a
     result  of the  refinancing  of this  loan,  the fair  market  value of the
     retirement  and assisted care facility has been deemed to be $6,400,000 for
     the purpose of calculating the  participation.  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.










<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 are
allocated  98% to Limited  Partners and 2% to the General  Partners.  Net income
arising from a Disposition  is allocated  98% to Limited  Partners and 2% 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% per annum  preferred  cumulative  return thereon (less
previous  distributions  to the Limited  Partners in repayment of such amounts).
The remainder of such net income shall be 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 98% to
the  Limited  Partners  and 2% 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 are 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 8% 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% 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 8% annual  cumulative
return on Adjusted  Contributions.  

Distributions of Disposition  Proceeds.  
-----------------------------------------
     The Managing  General  Partner has the right to reinvest or distribute  all
Disposition Proceeds, through the end of the eleventh year after the date of the
Prospectus.   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 8% annual  cumulative  return but excluding  distributions  pursuant to
     above),  equals  the 11% 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 Partnership Management Fee, if
     any, and then (b) their 2% interest in Adjusted Cash From Operations; and

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

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

     Since it was the intention of the Managing General Partner to liquidate the
Partnership's  assets  between 1999 and 2004, the Managing  General  Partner has
commenced  an orderly  liquidation  and will not reinvest  loan  proceeds in new
Mortgage  Loans.  The  Partnership's  last  remaining  Mortgage  Loan, the Joint
Venture Loan, will mature on January 1, 2000.

          Proceeds from the liquidation  shall 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. The Managing Partner also
has the right to determine  the rate at which  returns of principal  (returns of
Original Contribution) are distributed to the limited partners.
  

<PAGE>

Item 2.   Description of Property.

  The Partnership owned no real property as of December 31, 1996.

Item 3.        Legal Proceedings.

     The Partnership  settled  certain legal  proceedings in connection with the
default  of the  Horizon  Borrower  on the  Horizon  Loan in 1996.  See "Item 1.
Description of Business - Closed Mortgage Loans- Horizon Loan."

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 Partnership originally caused depositary receipts representing units of
limited partnership interest to be issued in its public offering which continued
from  February  of 1987 to  February  of  1989,  pursuant  to the  terms of such
depositary  receipts.  On June 25, 1990, the Managing General Partner caused all
holders  of  depositary  units to be  admitted  to the  Partnership  as  Limited
Partners  and  distributed  to  such  Limited  Partners  the  units  of  limited
partnership  interests (the "Units")  represented by their depositary  receipts.
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  Unitholder  (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,  1,911,411  Units  were  outstanding  and were held by
approximately 1559 holders of record.

     The Partnership made distributions to Limited Partners of $922,965, or $.48
per unit during 1996,  $1,261,461  or $.66 per Unit during 1995,  $1,777,746  or
$.93 per Unit during 1994,  $1,866,722 or $.98 per Unit during 1993,  $1,824,848
or $.95  per Unit  during  1992,  $1,913,781  or $1.00  per  Unit  during  1991,
$2,031,742  or $1.06 per Unit during  1990,  $1,812,715  or $.96 per Unit during
1989,  and  $843,048  or $.73 per  Unit  during  1988.  In  addition,  principal
distributions  of  $1,000,000  ($.52 per  Unit),  $3,000,000  ($1.57  per Unit),
$5,000,000  ($2.62  per Unit) and  $500,000  ($.26 per Unit) were  disbursed  in
December 1993, July 1994, May 1995 and July 1996, respectively.  The Partnership
does not intend to make additional Mortgage Loans.

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

     Liquidity  and Capital  Resources.  
     ------------------------------------
     Common  Goal  Health  Care  Participating  Mortgage  Fund L.P.,  a Delaware
limited  partnership  (the  "Partnership"),  was formed to make  mortgage  loans
secured by real property  comprised of a mix of first and junior Mortgage Loans,
secured by health care  related  properties.  The Public  Offering  commenced on
February 20, 1987 and  continued  through  February  20,  1989,  when the Public
Offering terminated. Total gross offering proceeds raised were $19,129,110.

     Partnership  assets  decreased  to  $4,236,513  at  December  31, 1996 from
$4,747,607  at December 31, 1995.  The decrease  from 1995 to 1996  ($511,094 or
approximately  10.77%)  resulted  primarily  from an  increase  of cash and cash
equivalents  by  $1,643,208,  ($500,000  of which was  returned  to the  Limited
Partners as a principal pay back), a decrease of accrued interest  receivable by
$133,081,  a  decrease  of  $23,319,  in  other  receivables  and  repayment  of
$2,000,000  in  Mortgage  Loan  receivables.   As  of  December  31,  1996,  the
Partnership's  loan  portfolio  consisted of one mortgage  loan,  the  aggregate
outstanding principal balance of which was $1,567,664. .

     The Partnership has structured its Mortgage Loans to provide for payment of
quarterly  distributions  from investment  income. The interest derived from the
Mortgage  Loans,  repayments of Mortgage Loans and interest earned on short-term
investments contribute to the Partnership's  liquidity.  These funds are used to
make cash distributions to 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.  Reference is made to
"Item 1. Description of Business" and the "Notes to the Financial Statements" in
"Item 7. Financial  Statements" for further information  regarding such Mortgage
Loan investments.

     The Partnership's balance of cash and cash equivalents at December 31, 1996
and 1995  was  $2,653,867  and  $1,010,659,  respectively,  which  consisted  of
operating  cash and  working  capital  reserves.  The  increase in cash and cash
equivalents  from  December  31, 1995  resulted  from net  income of $893,250,
Mortgage  Loan  payoffs of  $2,337,952,  and a decrease  in  interest  and other
receivables  of $156,400;  which were offset by a payment of $922,965  ($.48 per
Unit) in dividend  distributions  (which included $29,715 ($.02 per Unit) return
of capital),  and $500,000 ($.26 per Unit) return of principal,  and an increase
in accrued expenses and payables of $18,621.  Dividend  distributions noted as a
return of capital represent those  distributions  which are in excess of current
year earnings. The Partnership is required to maintain reserves not less than 1%
of gross offering proceeds (not less than $191,291),  but currently  maintains a
reserve significantly in excess of that amount, $2,653,867 at December 31, 1996.
The amount of cash and cash equivalents  currently maintained by the Partnership
is primarily the result of proceeds from the repayment of mortgage loans.

     On February 12, 1996, the  Partnership  received  $1,115,232 as a payoff on
the  Winthrop  Loan.  $1,000,000  was  applied  to  principal,  $3,833  to basic
interest,  $55,000 to a  prepayment  penalty,  and  $47,671 to  estimated  gross
revenue.  The  remaining  $8,728  was  used  for  legal  fees  incurred  by  the
transaction  and to the equity  participation  owed in accordance  with the loan
documents.  At the time of payoff, the parties were not able to determine if any
additional  gross revenue and equity  participation  were owed.  Therefore,  the
parties  entered  into two  separate  escrow  arrangements  whereby  funds  were
withheld  pending  further  determination  of whether  said  funds are owed.  In
November  1996,  the  partnership   received   $29,500  including  $7,000  for
reimbursement  of legal fees,  of  additional  gross  revenue  from the escrowed
funds, which were agreed to by the parties. On October 25, 1996, the Partnership
received $1,222,720 as a payoff on the Westwood Loan.  $1,000,000 was applied to
principal,  $4,792 to basic  interest,  $40,000  to a  prepayment  penalty,  and
$59,729 to gross revenue. In addition, the borrowers paid $110,550 in additional
equity interest, $3,650 in appraisal fees, and $4,000 in estimated legal fees.

     The  Partnership's  success and the resultant rate of return to Unitholders
is dependent upon,  among other things,  the continued  ability of the remaining
borrowers to pay the current interest,  additional interest and principal on the
Mortgage Loans.

     As a result  of the loan  payoffs  to date  (see  "Item 1.  Description  of
Business"),  the Partnership's rates of return have been and will continue to be
impacted.

  Results of Operations.  
  ------------------------
     The Partnership was organized in August 1986. The Partnership  funded seven
Mortgage Loans between 1987 and 1990, including a loan made by a venture between
the  Partnership and Common Goal II in August 1990. As of December 31, 1996, the
Partnership had one remaining Mortgage Loan. Since commencement of operations in
July of 1987, the  Partnership  invested all available funds (funds not invested
in Mortgage Loans) in short-term,  temporary investments. The interest earned on
these  investments  has been and is  expected  to  continue  to be less than the
interest rates  achievable on Mortgage Loans made by the  Partnership.  Although
the  Partnership's  earnings were expected to increase slowly once its portfolio
of Mortgage Loans was substantially  completed and borrowers  commenced payments
of Additional Interest, the default on the Partnership's $1,400,000 Horizon Loan
(made in July 1988) which  occurred in July of 1990 (as  described  above),  has
adversely impacted such expectation.

     During the years ended December 31, 1996,  1995, and 1994, the  Partnership
had net income of $893,250,  $388,420, and $827,967,  based on total revenues of
$1,072,159,  $727,059, and $1,215,181, and total expenses of $178,909, $338,639,
and $387,214,  respectively.  The  Partnership's  net income per Limited Partner
Unit was $.46  per  Unit in  1996,  $.20 per Unit in 1995,  and $.42 per Unit in
1994.  The  Partnership's  distributions,  including  returns of  principal,  to
Limited  Partners  were $.74 per unit in 1996,  $3.28 per Unit in 1995 and $2.50
per Unit in 1994. The 1996 distribution  included a $500,000 principal repayment
($.26 per Unit), the 1995 distribution included a $5,000,000 principal repayment
($2.62 per Unit),  and the 1994  distribution  included a  $3,000,000  principal
repayment ($1.57 per Unit).  Eliminating the effect of the principal  repayments
to the Limited  Partners,  the dividend  distributions  to Limited Partners were
$.48 per Unit in 1996, $.66 per Unit in 1995 and $.93 per Unit in 1994. The 1996
dividend  distributions  included a return of capital of $.03 per Unit. The 1995
dividend  distributions  included a return of capital of $.46 per Unit. The 1994
dividend distributions included a return of capital of $.51 per Unit.

     The  distributions  may not remain at the present level  (9.256%  financial
capital)  as a result  of loan  payoffs.  The  General  Partners  are  currently
reviewing the distribution policy and the matters of the additional reserves now
being held. The Partnership receives a lesser rate of return from its short-term
investments  than it would  receive  from the  loans,  (were they not paid down)
thereby reducing funds available for distribution.

     Expenses  decreased in 1996 by $159,730  primarily because of a decrease in
professional fees of $102,365.  In addition,  there was a decrease of $44,740 in
management fees and a decrease in mortgage servicing fees of $13,435 caused by a
drop in mortgage balances being serviced.

     Additionally, under the terms of the Partnership agreement, the Partnership
is required to reimburse  the  Managing  General  Partner for certain  operating
expenses. In 1996, 1995 and 1994, the Managing General Partner was reimbursed by
the  Partnership  for  $105,655,   $47,785,   and  $41,067  of  these  expenses,
respectively.  The Managing  General Partner believes that such charges have not
adversely affected the current yield to the Limited Partners.

<PAGE>

Item 7.   Financial Statements.




                       Independent Auditors' Report


The Partners
Common Goal Health Care
   Participating Mortgage Fund L.P.:

     We have audited the accompanying  balance sheets of Common Goal Health Care
Participating Mortgage Fund L.P. (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
Participating  Mortgage  Fund L.P.  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 2 of Note 4, 
which is as of April 4, 1997




                                       F-1
<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(a limited partnership)
<TABLE>
<CAPTION>

Balance Sheets

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

Cash and cash equivalents ......................      $2,653,867       1,010,659
Due from affiliates ............................           2,664             566
Accrued interest receivable ....................          12,318         145,399
Other receivables ..............................            --            23,319
Mortgage loans receivable  (note 2) ............       1,567,664       3,567,664
                                                       ---------       ---------

                                                      $4,236,513       4,747,607
                                                      ==========       =========
Liabilities and Partners' Capital

Accounts payable and accrued expenses$ .........          11,150           5,070

Due to affiliates ..............................          12,541            --
                                                          ------        --------
    Total liabilities ..........................          23,691           5,070


Partners' capital (Note 4):
  General partners .............................          61,050          43,185
  Limited partners .............................       4,151,772       4,699,352
                                                       ---------       ---------
    Total partners' capital ....................       4,212,822       4,742,537
                                                       ---------       ---------

                                                      $4,236,513       4,747,607
                                                      ==========       =========

</TABLE>
                                                                          

See accompanying notes to financial statements.






                                       F-2

<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(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 .............................   $  513,079      727,059    1,083,181
  Other income:
    Loan prepayment penalties .................       95,000         --        132,000
    Equity participation received in pay-off of
      mortgage loan receivable ................      110,550         --           --
    Recovery of loan receivable previously
      written off .............................      353,530         --           --
                                                     -------                        
      Total other income ......................      559,080         --        132,000
                                                     -------     --------      -------
                                                   1,072,159      727,059    1,215,181

Expenses:
  Professional fees ...........................       59,847      162,212      135,698
  Fees to affiliates:
    Management ................................       46,853       91,593      126,593
    Mortgage servicing ........................        6,255       19,690       21,044
  Other .......................................       65,954       65,144      103,879
                                                      ------       ------      -------
                                                     178,909      338,639      387,214
                                                     -------      -------      -------

      Net income ..............................   $  893,250      388,420      827,967
                                                  ==========      =======      =======

      Net income allocated to general partners    $   17,865        7,768       16,559
      Net income allocated to limited partners       875,385      380,652      811,408
                                                     -------      -------      -------
                                                  $  893,250      388,420      827,967
                                                  ==========      =======      =======

     Net income per limited partner unit$ .....         0.46         0.20         0.42
                                        ==              ====         ====         ====

 Weighted average limited partner units
         outstanding ..........................    1,911,411    1,911,411    1,911,411
                                                   =========    =========    =========
</TABLE>

See accompanying notes to financial statements.








                                       F-3

<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(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 ..........   $   145,688     14,546,499     14,692,187

Net income ............................        16,559        811,408        827,967

Distributions to limited partners
  ($.93 per unit) .....................          --       (1,777,746)    (1,777,746)

Distributions to general partners .....       (15,000)          --          (15,000)

Return of principal to limited partners
  ($1.57 per unit) ....................          --       (3,000,000)    (3,000,000)
                                             --------     ----------     ---------- 
Balance at December 31, 1994 ..........       147,247     10,580,161     10,727,408

Net income ............................         7,768        380,652        388,420

Distributions to limited partners
  ($.66 per unit) .....................          --       (1,261,461)    (1,261,461)

Distributions to general partners .....      (111,830)          --         (111,830)

Return of principal to limited partners
  ($2.62 per unit) ....................          --       (5,000,000)    (5,000,000)
                                             --------     ----------     ---------- 
Balance at December 31, 1995 ..........        43,185      4,699,352      4,742,537

Net income ............................        17,865        875,385        893,250

Distributions to limited partners
  ($.48 per unit) .....................          --         (922,965)      (922,965)

Return of principal to limited partners
  ($.26 per unit) .....................          --         (500,000)      (500,000)
  -----                                      --------        -------        -------

Balance at December 31, 1996 ..........   $    61,050      4,151,772      4,212,822
                    === ====              ===========      =========      =========
</TABLE>


See accompanying notes to financial statements.

                                       F-4

<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P. 
(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 ......................................   $   893,250        388,420        827,967
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Decrease  (increase) in due from affiliate ..        (2,098)          --            5,668
      Decrease in interest and other receivables ..       156,400         10,830        158,076
      Increase (decrease) in accounts
      payable and accrued expenses ................         6,080        (17,903)       (20,848)
      Increase (decrease) in due to affiliates ....        12,541           --             (430)
                                                           ------        -------        ------- 
          Net cash provided by operating activities     1,066,173        381,347        970,433
                                                        ---------        -------        -------

Cash flows from investing activities:
  Proceeds from mortgage loan principal
    repayments ....................................     2,000,000           --        3,600,000
                                                        ---------      --------       ---------
          Net cash provided by investing activities     2,000,000           --        3,600,000
                                                        ---------      --------       ---------

Cash flows from financing activities:
  Distributions and returns of principal to partners   (1,422,965)    (6,373,291)    (4,792,746)
                                                       ----------     ----------     ---------- 
          Net cash used in financing activities ...    (1,422,965)    (6,373,291)    (4,792,746)
                                                       ----------     ----------     ---------- 

Net increase (decrease) in cash and cash
  equivalents .....................................     1,643,208     (5,991,944)      (222,313)

Cash and cash equivalents, beginning of year ......     1,010,659      7,002,603      7,224,916
                                                        ---------      ---------      ---------
Cash and cash equivalents, end of year ............   $ 2,653,867      1,010,659      7,002,603
                                                      ===========      =========      =========
</TABLE>

See accompanying notes to financial statements.



                                       F-5

<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(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  Participating   Mortgage  Fund  L.P.  (the
     Partnership), a Delaware Limited Partnership, was formed on August 20, 1986
     to  invest  in and make  mortgage  loans to  third-parties  and  affiliates
     involved in health  care.  Having sold more than the  specified  minimum of
     116,000 units ($1,160,000),  the Partnership  commenced  operations on July
     21, 1987. The Partnership's  offering terminated on February 20, 1989, with
     the  Partnership  having  sold the  specified  maximum of  1,912,911  units
     ($19,129,110).  There is no active public trading market for the units.  At
     December 31, 1996, there were 1,559 unit holders.

          The General  Partners  include  Common Goal Capital  Group,  Inc., the
     Managing  General  Partner,  and Common  Goal  Limited  Partnership  I, the
     Minority 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 3.5% of gross offering proceeds. These offering
     and organizational  expenses excluded broker/dealer selling commissions and
     included  accountable due diligence expense  reimbursements.  Broker/dealer
     selling commissions of 9.5% of gross proceeds were paid by the Partnership.
     Common  Goal  Securities,  Inc.  (CGSI),  an  affiliate  acting as managing
     dealer,  received selling  commissions of 2% of the gross offering proceeds
     and an additional  7.5% of the purchase price of all units sold directly by
     CGSI.  Additionally,  CGSI was  reimbursed  for all  expenses  incurred  in
     connection  with the offering  and also  received an amount equal to .5% of
     the  gross  offering  proceeds  for  accountable  expenses.   Offering  and
     organizational 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
PARTICIPATING MORTGAGE FUND L.P. 
(a limited partnership)

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

(1)  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 .75% per annum of adjusted contributions, as defined.
          Additionally,  a mortgage servicing fee equal to .25% per annum of the
          Partnership's outstanding mortgage loan principal amount is to be paid
          to Common Goal Mortgage Company, 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 1996,  1995 and 1994,  the  Managing
          General  Partner  was  reimbursed  by the  Partnership  for  $105,655,
          $47,785,  and $41,067 of these  expenses,  respectively.  The Managing
          General Partner believes that such charges have not adversely affected
          the current yield to the Limited Partners.

  (d)   Partnership Allocation of Income and Loss and Distributions
  
     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

                                    F-7                         (Continued)


<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P. 
(a limited partnership)

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

(1)  Continued

          due on Mortgage  Loans or business  or rental  interruption  insurance
     proceeds))  and net loss of the  Partnership  is  allocated  98% to Limited
     Partners  and  2% to  the  General  Partners.  Net  income  arising  from a
     Disposition  is  allocated  98% to Limited  Partners  and 2% 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% per annum preferred  cumulative return
     thereon (less previous  distributions  to the Limited Partners in repayment
     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 are 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  creation  of  working  capital
     reserves, are distributed 98% to the Limited Partners and 2% 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 are 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 8% 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% 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

                                    F-8                         (Continued)


<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P. 
(a limited partnership)

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

(1)  Continued

     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 8% annual cumulative return on Adjusted Contributions.

     Distributions of Disposition Proceeds
     -------------------------------------
  
          The Managing  General  Partner has the right to reinvest or distribute
     all  Disposition  Proceeds,  through the end of the eleventh year after the
     date of the  Prospectus.  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  8%  annual   cumulative  return  but  excluding
          distributions  pursuant to above),  equals the 11% 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  Partnership
          Management  Fee,  if any,  and then (b) their 2%  interest in Adjusted
          Cash From Operations; and

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

     Dissolution and Returns of Principal
     ------------------------------------

               Since it was the  intention  of the Managing  General  Partner to
          liquidate the Partnership's assets between 1999 and 2004, the Managing
          General  Partner has  commenced  an orderly  liquidation  and will not
          reinvest loan proceeds in new Mortgage Loans. The  Partnership's  last
          remaining  Mortgage  Loan,  the Joint  Venture  Loan,  will  mature on
          January 1, 2000.

                                    F-9                         (Continued)


<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P. 
(a limited partnership)

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

(1)  Continued

     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. The Managing
     General  Partner also has the right to determine  the rate at which returns
     of principal  (returns of Original  Contributions)  are  distributed to the
     limited partners.

          (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 is no allowance for losses necessary at December 31, 1996 and 1995.

          (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.

                                      F-10


<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(a limited partnership)

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

(2)  Mortgage Loans Receivable
<TABLE>
<CAPTION>

          Information  concerning mortgage loans receivable as of December 31 is
     as follows:

                                          Face and carrying              
                                     Basic  amount of mortgages             
                                     interest          MaturityPrior    
  Description                     rate      date        liens       1996        
        1995            
  
<S>                    <C>        <C>               <C>              <C>             <C>
Westwood loan ..       11.50%     March 10, 1998    $ 3,200,000            -         1,000,000
Winthrop loan ..       11.50%     March 25, 1998      7,200,000            -         1,000,000
Honey Brook loan       13.70%     January 1, 2000     8,810,000       1,567,664      1,567,664
                                                      ---------       ---------      ---------

                                                       $19,210,000    1,567,664      3,567,664
                                                       ===========   ===========    ===========
</TABLE>
          The loans are second  mortgage  loans  secured by health  care-related
     real properties. Interest is payable monthly and the principal balances are
     due at maturity.  The loans generally provide for the payment of additional
     interest  based upon gross  revenues of the  properties  and the payment of
     participation  interests ranging from 6% to 30% of the increase in the fair
     value of the properties at maturity or redemption,  or pursuant to any sale
     of the  facilities,  as defined.  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.  All  properties  are
     subject to a first mortgage lien.

          In 1990,  Common  Goal  Health  Care  Pension  and Income Fund L.P. II
     ("Common Goal II"), an  affiliated,  publicly-offered  limited  partnership
     with investment objectives that are substantially identical to those of the
     Partnership and the Partnership participated in a ten- year second mortgage
     loan in the original  principal  amount of  $3,430,114  to an  unaffiliated
     third party through a joint venture between the Partnership and Common Goal
     II (the  "Joint  Venture  Loan").  At  December  31,  1996  and  1995,  the
     Partnership's  mortgage loans receivable included $1,567,664,  representing
     the Partnership's participation in the remaining $1,618,254 of the loan.

          During 1994, $300,000 of the Westwood loan was paid down. During 1996,
     the  Westwood  and Winthrop  loans were paid off.  Prepayment  penalties of
     $40,000 and $55,000,  were  received on the  Westwood  and Winthrop  loans,
     respectively. In addition, the Westwood borrowers paid $110,550 as a result
     of equity  participation  interest.  Another mortgage loan, the SHALP loan,
     was paid off during 1994. A prepayment  penalty of $132,000 was received on
     the SHALP loan.



                                   F-11                         (Continued)


<PAGE>

COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(a limited partnership)

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

(2)  Continued
<TABLE>
<CAPTION>

          A summary of activity in mortgage loans receivable for the years ended
     December 31, 1996, 1995 and 1994 is as follows:

<S>                                                   <C>        
  Balance at December 31, 1993                        $7,167,664 
     Repayment of mortgage loans                      (3,600,000)
                                                      ---------- 
  Balance at December 31, 1994                         3,567,664 
     Repayment of mortgage loans                            -   
                                                      ----------
  Balance at December 31, 1995                         3,567,664 
     Repayment of mortgage loans                      (2,000,000)
                                                      ---------- 
  Balance at December 31, 1996                        $1,567,664 
                      === ====                        ========== 
</TABLE>

          All property securing the Partnership's mortgage loans at December 31,
     1996 is located in Pennsylvania.
<TABLE>
<CAPTION>

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

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

<S>                                <C>            <C>      
  December 31, 1996             $  1,567,664      1,699,963
  December 31, 1995                3,567,664      3,779,201
</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,  other receivables, due from and
     to affiliates, and accounts payable and accrued expenses approximated their
     fair values due to the short maturity of these instruments.


          In 1996, the  Partnership  settled  certain  litigation  relating to a
     previously charged-off mortgage loan in the amount of $480,000. Such amount
     was recorded in 1996, net of attorney fees of $126,470.

          (3) Federal Income Tax Information (Unaudited)

          Net income for  financial  reporting  purposes did not differ from net
     income for federal  income tax  purposes  for the years ended  December 31,
     1996,  1995 and 1994.  

          (4) Subsequent Events

               On  January  8,  1997,  the  Partnership   declared  and  paid  a
          distribution   of  $224,567   ($.12  per  Unit)  to  Limited   Partner
          unitholders of record at December 15, 1996. Additionally,  a return of
          principal to the Limited Partners of $611,360 ($.32 per unit) was also
          declared and paid by the Partnership on January 8, 1997.

               On  April  4,  1997,   the   Partnership   declared  and  paid  a
          distribution   of  $206,343   ($.11  per  unit)  to  Limited   Partner
          unitholders  of record at March 15,  1997.  Additionally,  a return of
          principal to the Limited Partners of $500,000 ($.26 per nit) was also
          declared and paid by the Partnership on April 4, 1997.


                                   F-12
  
<PAGE>

<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 Executive
                                        Officer, President, Treasurer and 
                                        Director

  Richard R. Wood             74        Director

  William Jasper              81        Director

     Albert E. Jenkins III is the President and Chief  Executive  Officer of the
Managing   General   Partner  as  well  as  the  Executive  Vice  President  and
Secretary/Treasurer  of Common Goal Mortgage  Company.  He is also President and
Chief Executive Officer of Common Goal Capital Group, Inc. II ("CG Capital Group
II"), the managing general partner of Common Goal Health Care Pension and Income
Fund L.P. II, a Delaware limited  partnership  which commenced a public offering
of its  securities  in January  1990.  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 I and Common Goal Management Company.
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,  St.
Catherine's  Care  Center of  Bloomville  and St.  Catherine's  Care  Centers of
Fostoria.  In  addition,  Mr.  Jenkins  is  President  and  a  director  of  St.
Catherine's  Health Care  Management,  Inc. and St.  Catherine's Care Centers of
Washington Court House Inc. Mr. Jenkins has been a licensed  securities salesman
since 1971 and an investment  advisor  registered under the Investment  Advisers
Act of 1940 since 1978.

     Richard  R. Wood is a  director  of the  Managing  General  Partner  and is
president,  a  director  and owner of 80% of the  outstanding  stock of  Renwood
Properties,  Inc. Mr. Wood is also a  co-general  partner of Common Goal Limited
Partnership  I and a director of Common Goal Capital Group Inc. II, the managing
general  partner of Common  Goal II. In  addition,  Mr.  Wood is a member of the
board of directors of the St Catherine's  affiliated  companies  which currently
own five health care  facilities in Ohio. Mr. Wood has,  either  individually or
together  with  or  through   Renwood,   sponsored  31  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 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.  He is  currently a
member of the National Leased Housing Association, Council for Rural Housing and
the Real Estate  Investment  Association.  Mr. Wood received a B.A. from Harvard
University  in 1943 and  attended  Massachusetts  Institute of  Technology  from
1947-1948.

     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.

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 9 through 13 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 Common Goal and its  Affiliates  for the year ended  December
31, 1996.

                         Capacities in
                         Which Compensation
  Name of Affiliate      was Received             Remuneration
  -----------------      ------------             ------------

  Common Goal            Management fee           $46,853

  Common Goal Mortgage   Mortgage loan            $ 6,255            
  Company                servicing fees

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 9-13 of the Prospectus.








<PAGE>

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 December 31, 1996.

     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  has entered into the joint  Venture Loan with Common Goal
II, an affiliated,  publicly-offered limited partnership. On August 1, 1990, the
joint venture made a $3,430,114 loan to an unaffiliated  third party, which loan
had a remaining  principal  balance of  $1,618,254  at December  31,  1996.  For
further  information  concerning this Mortgage Loan, see "Item 1. Description of
Business - "Existing Mortgage Loan" - " Joint Venture Loan."

     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 is paid a fee.  See Item 11,  Executive
Compensation, for the information concerning such fees.

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
               ------

                    3.1  Second  Amended  and  Restated   Agreement  of  Limited
               Partnership   of   Registrant   dated  as  of  February  1,  1987
               (incorporated  by  reference  from the  Registrants  Registration
               Statement  (File  No.  33-  8531) on Form  S-11  filed  under the
               Securities Act of 1933, as amended)

                    3.2 Pages 9-13 of the  Registrant's  final  prospectus dated
               February  20,  1987,  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
                                   PARTICIPATING MORTGAGE FUND L.P.

                                   By:  Common Goal Capital Group, Inc., 
                                        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/ Richard R. Wood           Director of Managing               April 14, 1997
-----------------------
Richard R. Wood               General Partner


/s/ William E. Jasper, Jr.    Director of Managing               April 14, 1997
---------------------------
William E. Jasper, Jr.        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
                                   PARTICIPATING MORTGAGE FUND L.P.

                                   By:  Common Goal Capital Group, Inc., 
                                        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.

     Position

_______________________       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
Richard R. Wood               General Partner

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


(A Majority of the Board of Directors of the Managing General Partner)



<PAGE>

<PAGE>