FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

                    For the fiscal year ended March 31, 2001

                                       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: 0-20057


                      WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2

             California                          33-0391979
      State or other  jurisdiction  of       (I.R.S.  Employer

        incorporation or organization         Identification No.)


              3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626

                                 (714) 662-5565

                    Securities registered pursuant to Section
                                12(b) of the Act:

                                      NONE

                    Securities registered pursuant to section
                                12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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     No    X
----   -------

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




State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.

                                  INAPPLICABLE


                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:  (1) Any  annual  report  to  security  holders;  (2) Any proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the  Securities Act of 1933.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980).

                                      NONE


                                       2
<PAGE>


PART I.

Item 1.  Business

Organization

WNC  Housing  Tax  Credit  Fund  IV,  L.P.,  Series 2 (the  "Partnership")  is a
California Limited  Partnership formed under the laws of the State of California
on September 27, 1993. The Partnership was formed to acquire limited partnership
interests in other limited  partnerships or limited liability  companies ("Local
Limited Partnerships") which own multifamily housing complexes that are eligible
for low-income housing federal and, in some cases, California income tax credits
(the"Low Income Housing Credit").

The general  partner of the Partnership is WNC Tax Credit Partners IV, L.P. (the
"General  Partner").  The  general  partner  of  the  General  Partner  is WNC &
Associates,  Inc.  ("Associates").  Wilfred N. Cooper,  Sr.,  through the Cooper
Revocable  Trust,  owns 66.8% of the  outstanding  stock of Associates.  John B.
Lester,  Jr.  was the  original  limited  partner of the  Partnership  and owns,
through the Lester Family Trust,  28.6% of the outstanding  stock of Associates.
Wilfred N. Cooper,  Jr.,  President of Associates,  owns 2.1% of the outstanding
stock of  Associates.  The business of the  Partnership  is conducted  primarily
through the general partner, as the Partnership has no employees of its own.

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission on October 20, 1993, in July 1994 the Partnership  commenced a public
offering of 20,000 Units of Limited Partnership Interests ("Units"),  at a price
of $1,000 per Unit. As of the close of the public offering in July 1995, a total
of 15,600 Units representing approximately $15,241,000 had been sold. Holders of
Limited Partnership Interests are referred to herein as" Limited Partners.

Sempra Energy Financial, a California corporation,  which is not an affiliate of
the Partnership or General Partner,  has purchased 4,000 Units, which represents
25.6% of the Units  outstanding  for the  Partnership.  Sempra Energy  Financial
invested  $3,641,000.  A  discount  of  $359,000  was  allowed  due to a  volume
discount. See Item 12(a) in this 10-K.

Description of Business

The  Partnership's  principal  business  objective  is to  provide  its  Limited
Partners with Low Income Housing Credits.  The Partnership's  principal business
therefore  consists of investing as a limited partner or non-managing  member in
Local  Limited  Partnerships  each of which will own and operate a  multi-family
housing  complex (the "Housing  Complex")  which will qualify for the Low Income
Housing Credit.  In general,  under Section 42 of the Internal  Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce  Federal  taxes  otherwise due in each year of a ten-year  period.  In
general,  under Section 17058 of the  California  Revenue and Taxation  Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against  California taxes otherwise due in each year of a four-year period.  The
Housing Complex is subject to a fifteen-year  compliance period (the "Compliance
Period"),  and under state law may have to be maintained  as low income  housing
for 30 or more years.

In general,  in order to avoid  recapture  of Low Income  Housing  Credits,  the
Partnership  does not  expect  that it will  dispose of its  interests  in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited  Partnership of its Housing Complex prior to the end of the
applicable  Compliance  Period.  Because  of  (i)  the  nature  of  the  Housing
Complexes,  (ii) the  difficulty of predicting  the resale market for low-income
housing  15 or more years in the  future,  and (iii) the  ability of  government
lenders to  disapprove  of transfer,  it is not possible at this time to predict
whether the liquidation of the  Partnership's  assets and the disposition of the
proceeds,  if any, in  accordance  with the  Partnership's  Agreement of Limited
Partnership,   as  amended  by  Supplements  to  the  Prospectus   thereto  (the
"Partnership Agreement"), will be able to be accomplished promptly at the end of
the 15-year period. If a Local Limited Partnership is unable to sell its Housing
Complex,  it is  anticipated  that the local  general  partner  ("Local  General
Partner")  will either  continue to operate  such  Housing  Complex or take such
other actions as the Local General  Partner  believes to be in the best interest
of the Local Limited Partnership.  Notwithstanding the preceding,  circumstances
beyond the  control of the General  Partner or the Local  General  Partners  may
occur during the  Compliance  Period,  which would  require the  Partnership  to
approve the disposition of a Housing Complex prior to the end thereof,  possibly
resulting in recapture of Low Income Housing Credits.

                                       3
<PAGE>


As of March 31, 2001, the Partnership  had invested in twenty-two  Local Limited
Partnerships.  Each of these Local Limited  Partnerships  owns a Housing Complex
that is eligible  for the  federal  Low Income  Housing  Credit.  Certain  Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.

The Partnership's  investments in Local Limited  Partnerships are subject to the
risks incident to the management and ownership of low-income  housing and to the
management and ownership of multi-unit  residential  real estate.  Some of these
risks  are that the Low  Income  Housing  Credit  could be  recaptured  and that
neither the  Partnership's  investments  nor the Housing  Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes  receive  government  financing  or operating  subsidies,  they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests;  limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness.  If a  Local  Limited  Partnership  does  not  make  its  mortgage
payments,  the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits.  As a limited partner or non-managing  member of
the Local Limited  Partnerships,  the Partnership  will have very limited rights
with respect to  management  of the Local  Limited  Partnerships,  and will rely
totally  on the  general  partners  or  managing  members  of the Local  Limited
Partnerships for management of the Local Limited Partnerships.  The value of the
Partnership's  investments  will be subject to  changes  in  national  and local
economic conditions,  including unemployment  conditions,  which could adversely
impact vacancy levels, rental payment defaults and operating expenses.  This, in
turn, could substantially  increase the risk of operating losses for the Housing
Complexes and the Partnership.  In addition,  each Local Limited  Partnership is
subject to risks relating to environmental hazards and natural disasters,  which
might be uninsurable.  Because the Partnership's operations will depend on these
and other  factors  beyond the  control  of the  General  Partner  and the Local
General  Partners,  there can be no assurance  that the  anticipated  Low Income
Housing Credits will be available to Limited Partners.

In addition,  Limited  Partners are subject to risks in that the rules governing
the Low Income  Housing  Credit are  complicated,  and the use of credits can be
limited.  The only  material  benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will  develop.  All  Partnership  management
decisions are made by the General Partner.

As a limited partner or non-managing  member,  the  Partnership's  liability for
obligations of each Local Limited Partnership is limited to its investment.  The
Local General Partners of each Local Limited  Partnership retain  responsibility
for developing,  constructing,  maintaining,  operating and managing the Housing
Complexes.

Item 2.  Properties

Through its  investment  in Local Limited  Partnerships  the  Partnership  holds
limited partnership interests in Housing Complexes. The following table reflects
the  status  of the  twenty-two  Housing  Complexes  as of the dates and for the
periods indicated:



                                       4
<PAGE>


<TABLE>
<CAPTION>

                                                                   ------------------------------  ---------------------------------
                                                                        As of March 31, 2001             As of  December 31, 2000
                                                                   ------------------------------  ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                   Estimated   Encumbrances
                                               Name          Total Investment  Investment                   Low Income     of Local
                                                             in Local Limited   Paid to    Number           Housing         Limited
                                                              Partnerships      Date    of Units  Occupancy Credits     Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>             <C>             <C>             <C>      <C>   <C>           <C>
Apartment Housing of      East             Apartment Developers
East Brewton, Ltd.        Brewton,         Inc. and Thomas H.
                          Alabama          Cooksey         $   1,192,000   $  1,192,000    40       100%  $  1,863,000  $  1,145,000

Autumn Trace              Silsbee,         Olsen Securities
Associates, Ltd.          Texas            Corp.                 412,000        412,000    58        97%     714,000       1,253,000

Broken Bow Apartments     Broken Bow,      Retro Development,
I, Limited Partnership    Nebraska         Inc.                  608,000        608,000    16        88%   1,127,000               *

Candleridge Apartments    Waukee,          Eric A.
of Waukee L.P. II         Iowa             Sheldahl              125,000        125,000    23       100%     230,000         679,000

Chadwick Limited          Edan, North      Boyd Management, Inc.
Partnership               Carolina         Gordon L. Blackwell
                                           and Regency
                                           Investment
                                           Associates            378,000        378,000    48        96%     735,000       1,551,000

Comanche Retirement       Comanche,        Max L.
Village, Ltd.             Texas            Rightmer              136,000        136,000    22        95%     265,000         591,000

Crossings II Limited      Portage,         Raymond T.
Dividend Housing          Michigan         Cato, Jr.
Association Limited
Partnership                                                      432,000        432,000   114        91%     739,000       5,905,000

EW, a Wisconsin           Evansville,      Philip Wallis, James
Limited Partnership       Wisconsin        Poehlman, Cynthia
                                           Solfest Wallis, and
                                           Anita Poehlman        164,000        164,000    16        56%     306,000         613,000

*      Results of Broken Bow Apartments I, L.P. and Sidney Apartments I, L.P.
       have not been audited and thus have been excluded.  See Note 2 to the financial
       statements and report of certified public accountants.


</TABLE>


                                        5
<PAGE>

<TABLE>
<CAPTION>
                                                                   ------------------------------  ---------------------------------
                                                                        As of March 31, 2001             As of  December 31, 2000
                                                                   ------------------------------  ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                   Estimated   Encumbrances
                                               Name          Total Investment  Investment                   Low Income     of Local
                                                             in Local Limited   Paid to    Number           Housing         Limited
                                                              Partnerships      Date    of Units  Occupancy Credits     Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>                   <C>            <C>        <C>      <C>         <C>          <C>
Garland Street Limited    Malvarn,         Conrad L. Beggs,
Partnership               Arkansas         Audrey D. Beggs,
                                           Russell J. Altizer,
                                           and Marjorie L.
                                           Beggs                 164,000        164,000    18        94%        319,000      693,000

Hereford Seniors          Hereford,        Winston
Community, Ltd.           Texas            Sullivan              167,000        167,000    28       100%        330,000      799,000

Hickory Lane              Newton,          Olsen Securities
Associates, Ltd           Texas            Corp.                 174,000        174,000    24        96%        320,000      594,000

Honeysuckle Court         Vidor,           Olsen Securities
Associates, Ltd.          Texas            Corp                  339,000        339,000    48       100%        622,000    1,162,000

Klimpel Manor, Ltd        Fullerton,       Klimpel Manor
                          California       Apartments          1,774,000      1,774,000    59       100%      3,360,000    1,314,000

Lamesa Seniors            Lamesa,          Winston
Community, Ltd.           Texas            Sullivan              143,000        143,000    24        83%        284,000      671,000

Laredo Heights            Navasota,        Donald W.
Apartments Ltd.           Texas            Sowell                225,000        225,000    48        96%        413,000    1,101,000

Mountainview              North            John C. Loving
Apartments Limited        Wilkesboro,      and Gordon D.
Partnership               North            Brown, Jr.
                          Carolina                               195,000        195,000    24       100%        387,000      994,000

Palestine Seniors         Palestine,       Winston
Community, Ltd.           Texas            Sullivan              225,000        225,000    42       100%        446,000    1,124,000

Pecan Grove Limited       Forrest          Conrad Beggs, Audrey
Partnership               City,            Beggs and Russell
                          Arkansas         Altizer               240,000        240,000    32        94%        486,000    1,109,000

</TABLE>



                                       6
<PAGE>



<TABLE>
<CAPTION>

                                                                   ------------------------------  ---------------------------------
                                                                        As of March 31, 2001             As of  December 31, 2000
                                                                   ------------------------------  ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                   Estimated   Encumbrances
                                               Name          Total Investment  Investment                   Low Income     of Local
                                                             in Local Limited   Paid to    Number           Housing         Limited
                                                              Partnerships      Date    of Units  Occupancy Credits     Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>             <C>             <C>            <C>     <C>     <C>           <C>
Pioneer Street            Bakersfield,     Philip R. Hammond,
Associates                California       Jr. and Walter A.
                                           Dwelle              2,222,000      2,222,000   112        96%      4,116,000    1,862,000

Sidney Apartments I,      Sidney,          Retro Development,
Limited Partnership       Nebraska         Inc.  And Most
                                           Worshipful Prince
                                           Hall Grand Lodge      530,000        530,000    18       100%        972,000            *

Southcove                 Orange Cove,     Philip R. Hammond,
Associates                California       Jr. and Diane M.
                                           Hammond             2,000,000      2,000,000    54        85%      3,585,000    1,527,000

Walnut Turn               Buna,            Olsen Securities
Associates, Ltd.          Texas            Corp.                 188,000        188,000    24        96%        344,000      688,000
                                                           -------------   ------------   ----    ------  ------------- ------------
                                                           $  12,033,000   $ 12,033,000   892     93.77%  $  21,963,000 $ 25,375,000
                                                           =============   ============   ====    ======  ============= ============

</TABLE>

                                       7
<PAGE>
<TABLE>
<CAPTION>
                                ------------------------------------------------------------------------------------
                                                       For the year ended December 31, 2000
                                ------------------------------------------------------------------------------------
                                                                                             Low Income Housing
                                                                                            Credits Allocated to
       Partnership Name               Rental Income          Net Loss (Income)                  Partnership
--------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                   <C>                                 <C>
Apartment Housing of East
Brewton, Ltd.                                  $  114,000            $   (89,000)                        98.99%

Autumn Trace
Associates, Ltd.                                  209,000                (47,000)                        95.00%

Broken Bow Apartments I,
Limited Partnership                                     *                      *                         99.00%

Candleridge Apartments of
Waukee L.P. II                                    129,000                 (4,000)                        99.00%

Chadwick Limited
Partnership                                       183,000                (27,000)                        99.00%

Comanche Retirement Village,
Ltd.                                               67,000                (16,000)                        99.00%

Crossings II Limited Dividend
Housing Association Limited
Partnership                                       648,000               (145,000)                        98.99%

EW, a Wisconsin Limited
Partnership                                        74,000                (67,000)                        99.00%

Garland Street Limited
Partnership                                        69,000                (30,000)                        99.00%

Hereford Seniors Community,
Ltd.                                               96,000                      -                         99.00%

Hickory Lane
Associates, Ltd                                    75,000                (32,000)                        99.00%

Honeysuckle Court
Associates,Ltd.                                   191,000                (47,000)                        95.00%

Klimpel Manor, Ltd                                374,000                (55,000)                        96.00%

Lamesa Seniors
Community, Ltd.                                   103,000                (26,000)                        99.00%

Laredo Heights
Apartments Ltd.                                   167,000                  6,000                         99.00%

Mountainview Apartments
Limited Partnership                                96,000                (18,000)                        99.00%

Palestine Seniors
Community,Ltd.                                    148,000                 11,000                         99.00%

Pecan Grove
Limited Partnership                               123,000                (58,000)                        99.00%

</TABLE>

                                       8

<PAGE>


<TABLE>
<CAPTION>

                                ------------------------------------------------------------------------------------
                                                       For the year ended December 31, 2000
                                ------------------------------------------------------------------------------------
                                                                                             Low Income Housing
                                                                                            Credits Allocated to
       Partnership Name               Rental Income          Net Loss (Income)                  Partnership
--------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                    <C>                             <C>
Pioneer Street Associates                         491,000                (80,000)                        99.00%

Sidney Apartments I, Limited
Partnership                                             *                      *                         99.00%

Southcove Associates                              226,000               (103,000)                        99.00%

Walnut Turn Associates, Ltd.                       92,000                (32,000)                        99.00%
                                               ----------              ----------
                                               $3,675,000              $ 859,000
                                               ==========              ==========
*    Results of Broken Bow Apartments I, L.P. and Sidney Apartments I, L.P. have not been audited and thus have
     been excluded.  See Note 2 to the financial statements and report of certified public accountants.

</TABLE>

                                       9
<PAGE>


Item 3.  Legal Proceedings

During 2000,  Associates identified a potential problem with a developer who, at
the time, was the local general partner in six Local Limited  Partnerships.  The
Partnership  has a 99%  limited  partnership  interest in two of those six Local
Limited  Partnerships.  Those  investments  are Broken Bow Apartments I, Limited
Partnership and Sidney Apartments I, Limited Partnership.  All of the properties
continue to experience  operating  deficits.  The local general  partner  ceased
funding the operating deficits,  which placed the Local Limited  Partnerships in
jeopardy  of  foreclosure.  Consequently,  Associates  voted to remove the local
general partner and the management company from the Local Limited  Partnerships.
After the local  general  partner  contested its removal,  Associates  commenced
legal action on behalf of the Local Limited  Partnerships  and was successful in
getting a receiver  appointed to manage the Local  Limited  Partnerships  and an
unaffiliated  entity appointed as property manager.  Associates was subsequently
successful  in attaining a summary  judgment to confirm the removal of the local
general partner, the receiver was discharged and Associates now controls all six
of the Local Limited Partnerships.

The six Local Limited  Partnerships  (hereinafter  referred to as  "Defendants")
were  defendants  in a separate  lawsuit.  The  lawsuit was filed by eight other
partnerships   in  which  the  local  general   partner  of  the  Local  Limited
Partnerships is or was involved (the  "Plaintiffs").  The Plaintiffs allege that
the local general  partner  accepted  funds from the  Plaintiffs  and improperly
loaned these funds to the  Defendants.  In July 2001, a tentative  settlement as
yet not  executed  was reached  with  respect to this  lawsuit for an  aggregate
amount of $35,000 of which the Partnership's share is approximately $11,700.

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

NONE.

PART II.

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Item 5a.

(a)  The  Units  are not  traded on a public  exchange  but were sold  through a
     public offering.  It is not anticipated that any public market will develop
     for the  purchase  and  sale of any  Unit and  none  exists.  Units  can be
     assigned  only if certain  requirements  in the  Partnership  Agreement are
     satisfied.

(b)  At March 31, 2001, there were 849 Limited Partners.

(c)  The Partnership was not designed to provide cash  distributions  to Limited
     Partners in  circumstances  other than  refinancing  or  disposition of its
     investments in Local Limited Partnerships.

(d)  No unregistered  securities  were sold by the  Partnership  during the year
     ended March 31, 2001.

Item 5b.

NOT APPLICABLE

                                       10
<PAGE>

Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>
                                      March 31                              December 31
                       ---------------------------------------  ------------------------------------

                            2001         2000         1999         1998         1997         1996
                         -----------  -----------  -----------  -----------  -----------  -----------
<S>                    <C>          <C>          <C>          <C>          <C>          <C>
ASSETS
Cash and cash
equivalents            $     84,147 $    180,133 $    552,348 $    738,364 $  1,480,862 $  2,371,389
Investments in
   limited
  partnerships, net       7,432,933    8,311,454   10,092,782   10,274,595    9,738,583   10,096,100
Due from affiliate                -            -            -            -            -       53,200
Loans receivable                  -            -            -            -      259,496            -
Other assets                    998          998          998        2,534       20,245       10,956
                         -----------  -----------  -----------  -----------  -----------  -----------

                       $  7,518,078 $  8,492,585 $ 10,646,128 $ 11,015,493 $ 11,499,186 $ 12,531,645
                         ===========  ===========  ===========  ===========  ===========  ===========

LIABILITIES
Payables  to limited
  partnerships         $          - $          - $    421,025 $    605,517 $    411,543 $    666,716
Accrued expenses             48,569       86,965            -            -            -            -
Accrued fees and
   expenses
  due to general
   partner
  and affiliates            107,278       72,598       29,722       28,066        1,137        9,339

PARTNERS' EQUITY          7,362,231    8,333,022   10,195,381   10,381,910   11,086,506   11,855,590
                         -----------  -----------  -----------  -----------  -----------  -----------

                       $  7,518,078 $  8,492,585 $ 10,646,128 $ 11,015,493 $ 11,499,186 $ 12,531,645
                         ===========  ===========  ===========  ===========  ===========  ===========

Selected results of operations, cash flows and other information for the Partnership are as follows:
</TABLE>
<TABLE>
<CAPTION>
                            For the Years Ended      For the Three Months              For the Years Ended
                                 March 31               Ended March 31                     December 31
                          ------------------------  ------------------------   -------------------------------------

                             2001         2000         1999         1998         1998         1997          1996
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------
                                                                  (Unaudited)
<S>                    <C>          <C>          <C>          <C>          <C>          <C>         <C>
Income (loss) from
  operations (Note 1)  $   (139,153)$   (870,197)$    (21,846)$     (1,492)$    (50,484)$   (31,969)$     55,374
Equity in losses of
   limited
  partnerships             (831,638)    (992,162)    (164,683)    (191,552)    (658,728)   (737,115)    (628,631)
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------
Net loss               $   (970,791)$ (1,862,359)$   (186,529)$   (193,044)$   (709,212)$  (769,084)$   (573,257)
                          ===========  ===========  ===========   ==========   ==========   ==========   ===========

Net loss allocated to:

   General partner     $     (9,708)$    (18,624)$     (1,865)$     (1,930)$     (7,092)$    (7,691)$     (5,733)
                          ===========  ===========  ===========   ==========    ==========  ==========   ===========
      Limited partners $   (961,083)$ (1,843,735)$   (184,664)$   (191,114)$   (702,120)$  (761,393)$   (567,524)
                          ===========  ===========  ===========   ==========   ==========   ==========   ===========
Net loss per limited
  partner unit         $     (61.61)$    (118.19)$     (11.84)$     (12.25)$     (45.01)$    (48.81)$     (36.38)
                       ============ ============    ============  ============ ============ ===========  ============

Outstanding weighted
  limited partner
  units                      15,600       15,600       15,600       15,600       15,600      15,600       15,600
                          ===========  ===========  ===========   ==========   ==========   ==========   ===========

Note 1 - Loss from operations in 2000 includes a charge for impairment losses on investments in limited
partnerships of $766,559.  (See Note 2 to the audited financial statements.)
</TABLE>

                                       11
<PAGE>

<TABLE>
<CAPTION>
                            For the Years Ended      For the Three Months              For the Years Ended
                                 March 31               Ended March 31                     December 31
                          ------------------------  ------------------------   -------------------------------------

                             2001         2000         1999         1998         1998         1997          1996
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------
                                                                  (Unaudited)

<S>                     <C>           <C>          <C>        <C>           <C>          <C>          <C>
Net cash provided by
  (used in):

  Operating activities  $   (101,935) $   (19,827) $   (8,424) $     12,245  $   26,255  $    52,765  $     60,895
  Investing activities         5,949     (352,388)   (177,592)    (109,910)    (768,753)    (935,090)   (2,837,890)
  Financing activities             -            -           -            -            -       (8,202)     (137,346)
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------

Net change in cash and
  cash equivalents           (95,986)    (372,215)   (186,016)     (97,665)    (742,498)    (890,527)   (2,914,341)

Cash and cash
  equivalents,
  beginning of period        180,133      552,348     738,364    1,480,862    1,480,862    2,371,389     5,285,730
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------

Cash and cash
  equivalents,
  end of period         $     84,147  $   180,133  $  552,348  $ 1,383,197  $   738,364  $  1,480,862 $  2,371,389
                          ===========  ===========  ===========   ==========   ==========   ==========   ===========
</TABLE>

Low Income Housing Credit per Unit was as follows for the years ended
December 31:
<TABLE>
<CAPTION>
                                2000               1999              1998               1997               1996
                           ---------------    ---------------   ----------------   ---------------    ---------------
<S>                             <C>                 <C>                <C>               <C>                <C>
Federal                         $     141           $    135           $    124          $    113           $    105
State
                                        -                  -                  -                 -                  -
                           ---------------    ---------------   ----------------   ---------------    ---------------
Total                           $     141           $    135           $    124          $    113           $    105
                           ===============    ===============   ================   ===============    ===============
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Forward Looking Statements

With  the  exception  of  the  discussion  regarding   historical   information,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  our  future  cash  flows and  ability  to  obtain  sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical  results are not necessarily  indicative of the operating results for
any future period.

Subsequent  written and oral forward  looking  statements  attributable to us or
persons  acting on our behalf  are  expressly  qualified  in their  entirety  by
cautionary  statements  in this Form 10-K and in other reports we filed with the
Securities and Exchange  Commission.  The following discussion should be read in
conjunction  with  the  Financial  Statements  and the  Notes  thereto  included
elsewhere in this filing.

                                       12
<PAGE>


Uncertainty with Respect to Investment in Broken Bow and Sidney

The  Partnership  has two  investments  accounted  for under the equity  method,
consisting of 99% limited partnership interests in each of Broken Bow Apartments
I,  Limited  Partnership  ("Broken  Bow"),  and  Sidney  Apartments  I,  Limited
Partnership ("Sidney").

The independent auditors engaged to perform an audit of Broken Bow and Sidney's'
financial statements as of and for the year ended December 31, 1999, were unable
to form an opinion on those financial statements.  This was due to the inability
to  obtain  from  the  former  local  general  partner  certain  general  ledger
information   for  a  period  of   approximately   three   months  and  reliable
confirmations  of advances  to/notes  receivable  from the former local  general
partner.  Further,  the  independent  auditors were unable to obtain  management
representation  letters from the former property management company, which is an
affiliate  of the  former  local  general  partner.  As of  July  9,  2001,  the
Partnership  had not obtained  audited  financial  statements for Broken Bow and
Sidney  as of and for the  year  ended  December  31,  2000.  As a  result,  the
Partnership has not included the financial  information of Broken Bow and Sidney
in the  combined  condensed  financial  statements  presented  in  Note 3 to the
financial statements.  The combined condensed financial information presented in
Note 3 for the prior periods has been restated to exclude the accounts of Broken
Bow and Sidney. The Partnership has reflected equity in the net losses of Broken
Bow and Sidney totaling  ($156,823)  ($(10.05) per limited partnership unit) for
the year ended March 31, 2000, based on nine months of reported results provided
by Broken Bow and Sidney and on three months of results estimated by Associates.
Such  estimates  may be materially  misstated  due to the lack of  corroborative
financial  information.  During the year ended March 31, 2000,  the  Partnership
advanced  $120,906  in cash to Broken  Bow and Sidney  for  operating  expenses,
including  legal fees relating to certain  litigation  involving these and other
properties as outlined in Note 7.

As a result of the foregoing, in 2000, management performed an evaluation of the
Partnership's  remaining  investment balances in Broken Bow and Sidney including
the cash advances noted above and other anticipated costs and determined that an
impairment  adjustment  was  necessary.  An  impairment  loss  of  $766,559  was
recognized  at March  31,  2000.  This  impairment  loss  included  $558,688  in
remaining book value of the Partnership's  investments in Broken Bow and Sidney,
$120,906 and $30,753 of cash advances,  pre and post year end,  $37,670  accrual
for  anticipated  legal  costs,  and $18,542 of estimated  accounting  and other
related costs.

During 2001,  Broken Bow and Sidney continued to experience  negative cash flows
from operations. All mortgages were suspended under a written agreement with the
lender  which  expired in May 2001 and no payments  have been made since  August
2000.

WNC is currently  attempting to sell the Broken Bow and Sidney  properties.  WNC
may not be successful in its efforts to sell and the lender may foreclose on the
properties as the loans are now in default.

As a result of the aforementioned  operating difficulties,  there is uncertainty
as to whether the Partnership will ultimately retain its interests in Broken Bow
and  Sidney.  If the  investments  are  sold  or  otherwise  not  retained,  the
Partnership  could be subject to recapture of tax credits and certain  prior tax
deductions.  There is further  uncertainty as to costs that the  partnership may
ultimately  incur in connection  with its  investments in Broken Bow and Sidney.
The Partnership's financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

Financial Condition

The  Partnership's  assets at March 31, 2001  consisted  primarily of $84,000 in
cash and aggregate  investments in the twenty-two Local Limited  Partnerships of
$7,433,000.  Liabilities  at March 31, 2001  primarily  consisted  of $49,000 of
accrued expenses and $107,000 due to General Partner or affiliates for advances.

Results of Operations

Year Ended March 31, 2001 Compared to Year Ended March 31, 2000 The Partnerships
net loss for the year ended March 31, 2001 was $(971,000), reflecting a decrease
of $(891,000) from the net loss experienced for the year ended March 31, 2000 of
$(1,862,000).  The decline in net loss is due to the  impairment  loss  recorded
during  2000 in  connection  with  two of the  limited  partnership  investments
totaling $767,000,  a reduction in the equity in



                                       13
<PAGE>



losses of limited  partnerships  which  decreased by $160,000 due largely to the
impairment loss recorded in 2000,  offset by a reduction in income of $8,000 and
an increase in other operating expenses fees of $27,000.

Year  Ended  March 31,  2000  Compared  to Year Ended  December  31,  1998.  The
Partnerships  net loss for the  year  ended  March  31,  2000 was  $(1,862,000),
reflecting an increase of  $(1,153,000)  from the net loss  experienced  for the
year ended December 31, 1998 of  $(709,000).  The increase in net loss is due to
the impairment loss recorded in connection  with two of the limited  partnership
investments  totaling  $(767,000),  a reduction  in income of  $(29,000)  and an
increase in the equity in losses of limited partnerships of $(333,000).

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The  Partnership's  net loss for the  three  months  ended  March  31,  1999 was
$187,000  reflecting a decrease of $6,000 from the net loss  experienced for the
three months ended March 31, 1998.  The decline in net loss is primarily  due to
equity in losses of limited partnerships which declined by $27,000 to $(165,000)
for the three months ended March 31, 1999 from  $(192,000)  for the three months
ended March 31, 1998.  The reduction in equity losses  recognized  was partially
offset by an increase in loss from  operations  of $21,000 to $(22,000)  for the
three months ended March 31, 1999 from $(1,000) for the three months ended March
31, 1998, due to a comparable  increase in operating  expense  allocations and a
decrease in interest income.

Cash Flows

Year Ended March 31, 2001  Compared to Year Ended March 31, 2000 Net decrease in
cash for the year ended March 31,  2001 was $(96,000) compared to a net decrease
in cash for the year ended March 31, 2000 of $(372,000).  The change of $276,000
was due  primarily  to a  decrease  in cash  paid  for  investments  in  limited
partnerships  of  $251,000,  a decrease of $121,000 in cash  advances to limited
partnerships,  offset by an increase of $47,000 of fees paid to General Partner,
a net  decrease of $28,000 in  distributions  from  limited  partnerships  and a
decrease in income of $8,000.

Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. Net decrease
in cash for the year  ended  March 31,  2000 was  $(372,000)  compared  to a net
decrease in cash for the year ended December 31, 1998 of $(742,000).  The change
was due  primarily  to a decrease  in  investments  in limited  partnerships  of
$787,000  offset by an increase of  $(121,000)  in cash advances paid to limited
partnerships  and a decrease in loans  collected  from limited  partnerships  of
$(259,000).

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used  during the three  months  ended  March 31,  1999 was  $(186,000),
compared  to net cash used  during  the three  months  ended  March 31,  1998 of
$(98,000). The change was due primarily to an increase in investments in limited
partnerships of $72,000 and an increase in cash used for operating activities of
$20,000,   partially  offset  by  an  increase  in  distributions  from  limited
partnerships of $4,000.

During the year ended March 31, 2001 and 2000 and the three  months  ended March
31, 1999 accrued payables, which consist partly of related party management fees
due to the General  Partner,  decreased by $4,000 and  increased by $130,000 and
$2,000, respectively. The General Partner does not anticipate that these accrued
management fees will be paid in full until such time as capital  reserves are in
excess of future foreseeable working capital requirements of the Partnership.

The  Partnership   currently  has  insufficient  working  capital  to  fund  its
operations.  WNC and Associates,  Inc., the general partner of the  Partnership,
has  agreed  to  continue  providing  advances  sufficient  enough  to fund  the
operations and working capital  requirements of the Partnership through at least
April 1, 2002.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data

                                       14
<PAGE>







Report of Independent Certified Public Accountants


To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 2


We have audited the  accompanying  balance sheets of WNC Housing Tax Credit Fund
IV, L.P., Series 2 (a California Limited  Partnership) (the "Partnership") as of
March 31, 2001 and 2000,  and the related  statements of  operations,  partners'
equity (deficit) and cash flows for the years ended March 31, 2001 and 2000, the
three months ended  March 31,  1999 and the year ended December 31, 1998.  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.  A significant  portion of the  financial  statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors  whose reports have been furnished to us. As discussed in Note 3 to the
financial  statements,  the Partnership  accounts for its investments in limited
partnerships   using  the  equity  method.  The  portion  of  the  Partnership's
investments in limited  partnerships  audited by other auditors  represented 81%
and 81% of the total  assets  of the  Partnership  at March  31,  2001 and 2000,
respectively.  Our opinion, insofar as it relates to the amounts included in the
financial  statements for the limited partnerships which were audited by others,
is based solely on the reports of the other auditors.

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

As  more  thoroughly  discussed  in  Note 2 to  the  financial  statements,  the
independent  auditors engaged to perform the audits of the financial  statements
as of and for the year ended  December  31,  1999 for Broken Bow  Apartments  I,
Limited Partnership  ("Broken Bow") and Sidney Apartments I, Limited Partnership
("Sidney"),  were unable to express an opinion on those financial statements. In
addition, the Partnership did not obtain audited financial statements for Broken
Bow and Sidney as of and for the year ended December 31, 2000. The Partnership's
investments in Broken Bow and Sidney have been fully impaired at March 31, 2000.

In our opinion,  except for the effects of such adjustments and disclosures,  if
any,  as  might  have  been  determined  to be  necessary  had the 2000 and 1999
financial  statements  of Broken  Bow and Sidney  been  audited,  the  financial
statements  referred to above  present  fairly,  in all material  respects,  the
financial  position  of WNC  Housing  Tax  Credit  Fund  IV,  L.P.,  Series 2 (a
California  Limited  Partnership) as of March 31, 2001 and 2000, and the results
of its  operations  and its cash flows for the years  ended  March 31,  2001 and
2000,  the three  months  ended March 31,  1999 and the year ended  December 31,
1998, in conformity with accounting  principles generally accepted in the United
States of America.

                                               /s/BDO SEIDMAN, LLP
                                                  BDO SEIDMAN, LLP
Orange County, California
July 9, 2001



                                       15
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                                 BALANCE SHEETS


<TABLE>
<CAPTION>


                                                                            March 31
                                                                 -------------------------------
                                                                     2001             2000
                                                                 --------------   --------------
<S>                                                            <C>              <C>
 ASSETS

 Cash and cash equivalents                                     $        84,147  $       180,133
 Investments in limited partnerships,
   net (Notes 2, 3 and 4)                                            7,432,933        8,311,454
 Other assets                                                              998              998
                                                                 --------------   --------------
                                                               $     7,518,078  $     8,492,585
                                                                 ==============   ==============
 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 Liabilities:
   Accrued expenses (Note 2)                                   $        48,569  $        86,965
   Accrued fees and expenses due to General
     Partner and affiliates (Note 4)                                   107,278           72,598
                                                                 --------------   --------------
      Total liabilities                                                155,847          159,563
                                                                 --------------   --------------
 Commitments and contingencies (Note 7)

 Partners' equity (deficit):
    General partner                                                    (78,690)         (68,982)
    Limited partners (20,000 units authorized;
      15,600 units issued and outstanding)                           7,440,921        8,402,004
                                                                 --------------   --------------
          Total partners' equity                                     7,362,231        8,333,022
                                                                 --------------   --------------
                                                               $     7,518,078  $     8,492,585
                                                                 ==============   ==============
 See report of independent certified public accountants and accompanying notes to financial statements.
</TABLE>

                                       16
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                          For the
                                                                                            Three
                                                                                            Months        For the Year
                                                              For the Years Ended           Ended           Ended
                                                                   March 31                March 31      December 31
                                                         ----------------------------   ------------   ---------------
                                                            2001            2000              1999             1998
                                                         ------------   -------------   ------------   ---------------
<S>                                                    <C>            <C>             <C>            <C>
Interest income                                        $       7,274  $       14,374  $        6,850 $         47,017
Other income                                                   2,950           4,000               -                -
                                                         ------------   -------------   ------------   ---------------
Total income                                                  10,224          18,374           6,850           47,017
                                                         ------------   -------------   ------------   ---------------
Operating expenses:
   Amortization (Notes 3 and 4)                               40,934          40,935          10,230           32,099
   Asset management fees (Note 4)                             44,000          42,900          10,725           42,900
   Other                                                      64,443          38,177           7,741           22,502
   Impairment on investments in limited
      partnerships (Notes 2 and 3)                                 -         766,559               -                -
                                                         ------------   -------------   ------------   ---------------
         Total operating expenses                            149,377         888,571          28,696           97,501
                                                         ------------   -------------   ------------   ---------------
Loss from operations                                        (139,153)       (870,197)        (21,846)         (50,484)

Equity in losses of limited
  partnerships (Note 3)                                     (831,638)       (992,162)       (164,683)        (658,728)
                                                         ------------   -------------   ------------   ---------------
Net loss                                               $    (970,791) $   (1,862,359) $     (186,529)$       (709,212)
                                                         ============   =============   ============   ===============
Net loss allocated to:
   General partner                                     $      (9,708) $      (18,624) $       (1,865)$         (7,092)
                                                         ============   =============   ============   ===============
   Limited partners                                    $    (961,083) $   (1,843,735) $     (184,664)$       (702,120)
                                                         ============   =============   ============   ===============
Net loss per limited partner unit                      $      (61.61) $      (118.19) $       (11.84)$         (45.01)
                                                         ============   =============   ============   ===============
Outstanding weighted limited partner
  units                                                       15,600          15,600          15,600           15,600
                                                         ============   =============   ============   ===============
 See report of independent certified public accountants and accompanying notes to financial statements.

</TABLE>

                                       17
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998
<TABLE>
<CAPTION>
                                                                 General           Limited
                                                                 Partner           Partners           Total
                                                         ----------------    ----------------    ---------------
<S>                                                     <C>                <C>                 <C>
Partners' equity (deficit) at January 1, 1998           $        (41,447)  $     11,127,953    $    11,086,506

Offering costs                                                        46              4,570              4,616

Net loss                                                          (7,092)          (702,120)         (709,212)
                                                         ----------------    ---------------     --------------
Partners' equity (deficit) at December 31, 1998                  (48,493)        10,430,403         10,381,910

Net loss                                                          (1,865)          (184,664)         (186,529)
                                                         ----------------    ---------------     --------------
Partners' equity (deficit) at March 31, 1999                     (50,358)        10,245,739         10,195,381

Net loss                                                         (18,624)        (1,843,735)       (1,862,359)
                                                         ----------------    ---------------     --------------
Partners' equity (deficit) at March 31, 2000                     (68,982)         8,402,004          8,333,022

Net loss                                                          (9,708)          (961,083)         (970,791)
                                                         ----------------    ---------------     --------------
Partners' equity (deficit) at March 31, 2001            $        (78,690)  $      7,440,921    $     7,362,231
                                                         ================    ===============     ==============
 See report of independent certified public accountants and accompanying notes to financial statements.

</TABLE>

                                       18
<PAGE>



                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                           For the
                                                                                             Three
                                                                                            Months        For the Year
                                                              For the Years Ended            Ended           Ended
                                                                   March 31                 March 31      December 31
                                                         ----------------------------   ------------   ---------------
                                                            2001            2000              1999             1998
                                                         ------------   -------------   ------------   ---------------
<S>                                                  <C>             <C>            <C>             <C>
Cash flows from operating
  activities:

  Net loss                                           $     (970,791) $  (1,862,359) $     (186,529) $      (709,212)
  Adjustments to reconcile net loss to net
  cash (used in) provided by operating activities:
    Amortization                                             40,934         40,935          10,230           32,099
    Impairment loss on investments in limited
      partnerships                                                -        766,559               -                -
    Equity in losses of limited
      partnerships                                          831,638        992,162         164,683          658,728
    Change in other assets                                        -              -           1,536           17,711
    Change in accrued expenses                              (38,396)             -               -                -
    Change in accrued fees and expenses
     due to General Partner and affiliates                  (34,680)        42,876           1,656           26,929
                                                       -------------   ------------    ------------   ---------------
Net cash (used in) provided by
  operating activities                                     (101,935)       (19,827)         (8,424)          26,255
                                                       -------------   ------------    ------------   ---------------
Cash flows from investing
  activities:
  Investments in limited
    partnerships, net                                             -       (251,149)       (184,492)      (1,037,700)
  Capitalized acquisition costs and
    fees                                                          -              -               -             (465)
  Distributions from limited
    partnerships                                              5,949         19,667           6,900            5,300
  Loans receivable                                                -              -               -          259,496
  Offering expenses                                               -              -               -            4,616
  Cash advances to limited partnerships                           -       (120,906)              -                -
                                                       -------------   ------------    ------------   ---------------
Net cash used in investing
  activities                                                  5,949       (352,388)       (177,592)        (768,753)
                                                       -------------   ------------    ------------   ---------------
Net decrease in cash and cash
  equivalents                                               (95,986)      (372,215)       (186,016)        (742,498)

Cash and cash equivalents,
  beginning of period                                       180,133        552,348         738,364        1,480,862
                                                       -------------   ------------    ------------   ---------------
Cash and cash equivalents, end of
  period                                             $       84,147  $     180,133  $      552,348  $       738,364
                                                       =============   ============    ============   ===============
SUPPLEMENTAL DISCLOSURE
   OF CASH FLOW INFORMATION:
    Taxes paid                                       $          800  $         800  $            -  $           800
                                                       =============   ============    ============   ===============
 See report of independent certified public accountants and accompanying notes to financial statements.

</TABLE>
                                       19
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
Organization
------------
WNC Housing Tax Credit Fund IV, L.P., Series 2 (the "Partnership") was formed on
September  27,  1993  under the laws of the state of  California  and  commenced
operations on July 18, 1994. The Partnership  was formed to invest  primarily in
other limited  partnerships  (the "Local  Limited  Partnerships")  which own and
operate multi-family housing complexes (the "Housing Complex") that are eligible
for low income housing  credits.  The local general partners (the "Local General
Partners")  of  each  Local  Limited   Partnership  retain   responsibility  for
maintaining, operating and managing the Housing Complex.

The  general  partner  is WNC  Tax  Credit  Partners,  IV,  L.P.  (the  "General
Partner"), a California limited partnership.  WNC & Associates,  Inc. ("WNC") is
the general partner of the General Partner.  Wilfred N. Cooper, Sr., through the
Cooper  Revocable  Trust,  owns 66.8% of the  outstanding  stock of WNC. John B.
Lester,  Jr.  was the  original  limited  partner of the  Partnership  and owns,
through the Lester Family Trust,  28.6% of the outstanding stock of WNC. Wilfred
N. Cooper, Jr., President of WNC, owns 2.1% of the outstanding stock of WNC.

The Partnership  shall continue in full force and effect until December 31, 2050
unless terminated prior to that date pursuant to the partnership agreement .

The financial  statements  include only activity relating to the business of the
Partnership,  and do not give  effect to any assets that the  partners  may have
outside of their interests in the Partnership, or to any obligations,  including
income taxes, of the partners.

The Partnership Agreement authorized the sale of 20,000 units at $1,000 per unit
("Units").  The  offering of Units  concluded  in July 1995 at which time 15,600
Units representing subscriptions,  net of discounts for volume purchases of more
than 100 units,  in the amount of  $15,241,000  had been  accepted.  The General
Partner has a 1% interest in operating  profits and losses,  taxable  income and
losses,  cash available for  distribution  from the Partnership and tax credits.
The limited  partners  will be  allocated  the  remaining  99% of these items in
proportion to their respective investments.

After the limited partners have received proceeds from sale or refinancing equal
to their capital contributions and their return on investment (as defined in the
Partnership  Agreement) and the General  Partner has received  proceeds equal to
its capital  contributions  and a subordinated  disposition fee (as described in
Note 4) from the remainder,  any additional sale or refinancing proceeds will be
distributed  90% to the limited  partners  (in  proportion  to their  respective
investments) and 10% to the General Partner.

Change in Reporting Year End
----------------------------
In 1999, the Partnership  elected to change its year end for financial reporting
purposes from December 31 to March 31.  All financial  information  reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial  information relating to
the Local Limited Partnerships included in Note 3.

                                       20

<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Risks and Uncertainties
-----------------------
The Partnership's  investments in Local Limited  Partnerships are subject to the
risks incident to the management and ownership of low-income  housing and to the
management and ownership of multi-unit  residential  real estate.  Some of these
risks  are that the low  income  housing  credit  could be  recaptured  and that
neither the  Partnership's  investments  nor the Housing  Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes  receive  government  financing  or operating  subsidies,  they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests;  limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations.  The Housing Complexes are or will be subject
to  mortgage  indebtedness.  If a Local  Limited  Partnership  does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex  and low  income  housing  credits.  As a limited  partner  of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local  Limited  Partnerships,  and will rely totally on the
Local General  Partners of the Local Limited  Partnerships for management of the
Local Limited Partnerships.  The value of the Partnership's  investments will be
subject  to  changes  in  national  and  local  economic  conditions,  including
unemployment  conditions,  which could adversely  impact vacancy levels,  rental
payment  defaults and operating  expenses.  This, in turn,  could  substantially
increase  the  risk of  operating  losses  for  the  Housing  Complexes  and the
Partnership.  In addition,  each Local Limited  Partnership  is subject to risks
relating  to  environmental   hazards  and  natural  disasters  which  might  be
uninsurable. Because the Partnership's operations will depend on these and other
factors  beyond  the  control  of the  General  Partner  and the  Local  General
Partners,  there can be no assurance  that the  anticipated  low income  housing
credits will be available to Limited Partners.

In addition,  Limited  Partners are subject to risks in that the rules governing
the low income  housing  credit are  complicated,  and the use of credits can be
limited.  The only  material  benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop.  All management decisions will
be made by the General Partner.

Method of Accounting For Investments in Limited Partnerships
------------------------------------------------------------
The Partnership  accounts for its investments in limited  partnerships using the
equity method of  accounting,  whereby the  Partnership  adjusts its  investment
balance for its share of the Local Limited  Partnership's  results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnership are consistent with those of the Partnership.  Costs incurred by the
Partnership  in  acquiring  the  investments  are  capitalized  as  part  of the
investment account and are being amortized over 30 years (see Note 3).

Losses from Local Limited Partnerships for the year ended December 31, 1998 have
been recorded by the Partnership based on reported results provided by the Local
Limited  Partnerships.  Losses  from Local  Limited  Partnerships  for the three
months  ended  March  31,  1999  have  been   estimated  by  management  of  the
Partnership.  Losses from Local Limited  Partnerships  for the years ended March
31, 2001 and 2000 have been recorded by the Partnership  based on nine months of
reported results provided by the Local Limited  Partnerships and on three months
of results  estimated by management of the Partnership.  Losses from the limited
partnerships  allocated to the Partnership  will not be recognized to the extent
that the investment balance would be adjusted below zero.


                                       21
<PAGE>



                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Offering Expenses
-----------------
Offering  expenses consist of underwriting  commissions,  legal fees,  printing,
filing and  recordation  fees,  and other costs  incurred  with selling  limited
partnership  interests in the  Partnership.  The General Partner is obligated to
pay all  offering  and  organization  costs in  excess of 15%  (including  sales
commissions) of the total offering proceeds.  Offering expenses are reflected as
a reduction of partners'  capital and amounted to $970,717 as of March 31, 2001,
2000 and 1999 and December 31, 1998.

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 revenues  and expenses  during the  reporting  period.
Actual results could materially differ from those estimates.

Cash and Cash Equivalents
-------------------------
The Partnership  considers  highly liquid  investments  with maturities of three
months or less when purchased to be cash  equivalents.  As of March 31, 2001 and
2000, the Partnership had no cash equivalents.

Net Loss Per Limited Partner Unit
---------------------------------
Net loss per limited  partnership  unit is  calculated  pursuant to Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share. Net loss per unit
includes no dilution  and is computed  by  dividing  loss  available  to limited
partners by the weighted average number of units outstanding  during the period.
Calculation of diluted net income per unit is not required.

Reporting Comprehensive Income
------------------------------
In June 1997,  the FASB  issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 130, Reporting  Comprehensive  Income.  This statement  establishes
standards for reporting the components of comprehensive income and requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be included in a financial statement that is
displayed with the same prominence as other financial statements.  Comprehensive
income  includes net income as well as certain items that are reported  directly
within a separate  component  of  Partners'  equity and bypass net  income.  The
Partnership  adopted the  provisions of this  statement in 1998. For the periods
presented,  the Partnership has no elements of other  comprehensive  income,  as
defined by SFAS No. 130.

NOTE 2 - UNCERTAINTY WITH RESPECT TO INVESTMENTS IN BROKEN BOW AND SIDNEY:
--------------------------------------------------------------------------
         IMPAIRMENT OF INVESTMENTS
         -------------------------
The  Partnership  has two  investments  accounted  for under the equity  method,
consisting of 99% limited partnership interests in each of Broken Bow Apartments
I,  Limited  Partnership  ("Broken  Bow"),  and  Sidney  Apartments  I,  Limited
Partnership ("Sidney").


                                       22
<PAGE>




                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 2 -  UNCERTAINTY  WITH  RESPECT TO  INVESTMENTS  IN BROKEN BOW AND  SIDNEY:
--------------------------------------------------------------------------
IMPAIRMENT OF INVESTMENTS,  continued  ------------------------------------  The
independent  auditors  engaged to  perform an audit of Broken Bow and  Sidney's'
financial statements as of and for the year ended December 31, 1999, were unable
to form an opinion on those financial statements.  This was due to the inability
to  obtain  from  the  former  local  general  partner  certain  general  ledger
information   for  a  period  of   approximately   three   months  and  reliable
confirmations  of advances  to/notes  receivable  from the former local  general
partner.  Further,  the  independent  auditors were unable to obtain  management
representation  letters from the former property management company, which is an
affiliate  of the  former  local  general  partner.  As of  July  9,  2001,  the
Partnership  had not obtained  audited  financial  statements for Broken Bow and
Sidney  as of and for the  year  ended  December  31,  2000.  As a  result,  the
Partnership has not included the financial  information of Broken Bow and Sidney
in the  combined  condensed  financial  statements  presented  in  Note 3 to the
financial statements.  The combined condensed financial information presented in
Note 3 for the prior periods has been restated to exclude the accounts of Broken
Bow and Sidney. The Partnership has reflected equity in the net losses of Broken
Bow and Sidney totaling ($156,823)  ($(10.05) per limited partnership unit) for
the year ended March 31, 2000, based on nine months of reported results provided
by Broken Bow and Sidney and on three months of results estimated by Associates.
Such  estimates  may be materially  misstated  due to the lack of  corroborative
financial  information.  During the year ended March 31, 2000,  the  Partnership
advanced  $120,906  in cash to Broken  Bow and Sidney  for  operating  expenses,
including  legal fees relating to certain  litigation  involving these and other
properties as outlined in Note 7.

As a result of the foregoing, in 2000, management performed an evaluation of the
Partnership's  remaining  investment balances in Broken Bow and Sidney including
the cash advances noted above and other anticipated costs and determined that an
impairment  adjustment  was  necessary.  An  impairment  loss  of  $766,559  was
recognized  at March  31,  2000.  This  impairment  loss  included  $558,688  in
remaining book value of the Partnership's  investments in Broken Bow and Sidney,
$120,906 and $30,753 of cash advances,  pre and post year end, a $37,670 accrual
for  anticipated  legal  costs,  and $18,542 of estimated  accounting  and other
related costs.

During 2001,  Broken Bow and Sidney continued to experience  negative cash flows
from operations. All mortgages were suspended under a written agreement with the
lender  which  expired in May 2001 and no payments  have been made since  August
2000.

WNC is currently  attempting to sell the Broken Bow and Sidney  properties.  WNC
may not be successful in its efforts to sell and the lender may foreclose on the
properties as the loans are now in default.

As a result of the aforementioned  operating difficulties,  there is uncertainty
as to whether the Partnership will ultimately retain its interests in Broken Bow
and  Sidney.  If the  investments  are  sold  or  otherwise  not  retained,  the
Partnership  could be subject to recapture of tax credits and certain  prior tax
deductions.  There is further  uncertainty as to costs that the  partnership may
ultimately  incur in connection  with its  investments in Broken Bow and Sidney.
The Partnership's financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS
--------------------------------------------
As of the periods  presented,  the Partnership had acquired limited  partnership
interests  in  twenty-two  Local  Limited  Partnerships,  each of which owns one
Housing Complex  consisting of an aggregate of 892 apartment  units. As of March
31, 1999,  construction or rehabilitation of all of the apartment  complexes had
been  completed.   The  respective   general   partners  of  the  Local  Limited
Partnerships manage the day-to-day operations of the entities. Significant Local
Limited  Partnership  business  decisions require approval from the Partnership.
The Partnership,  as a limited partner,  is entitled to 96% to 99%, as specified
in the  partnership  agreements,  of the operating  profits and losses,  taxable
income and losses and tax credits of the Limited Partnerships.

                                       23
<PAGE>




                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
The  Partnership's  investments  in Local Limited  Partnerships  as shown in the
balance  sheets  at March  31,  2001 and 2000  are  approximately  $914,000  and
$876,000,  respectively,  greater than the Partnership's equity at the preceding
December  31 as shown in the  Local  Limited  Partnerships'  combined  financial
statements  presented  below.  This  difference  is primarily  due to unrecorded
losses,  as discussed below,  acquisition,  selection and other costs related to
the  acquisition  of  the  investments   which  have  been  capitalized  in  the
Partnership's  investment  account and to capital  contributions  payable to the
limited  partnerships  which were netted  against  partner  capital in the Local
Limited Partnership's financial statements. The Partnership's investment is also
lower than the Partnership's equity as shown in the Local Limited  Partnership's
combined financial  statements due to the losses recorded by the Partnership for
the three month  period  ended  March 31.  Lastly the  difference  is due to the
exclusion of the financial statements of Sidney and Broken Bow from the combined
condensed financial information presented below. See Note 2 for discussion.

Equity in losses of Local  Limited  Partnerships  is recognized in the financial
statements  until the related  investment  account is reduced to a zero balance.
Losses  incurred  after  the  investment  account  is  reduced  to zero  are not
recognized. If the Local Limited Partnerships report net income in future years,
the  Partnership  will resume applying the equity method only after its share of
such net  income  equals  the share of net  losses  not  recognized  during  the
period(s) the equity method was suspended.

Distributions  received by limited  partners are accounted for as a reduction of
the investment balance.  Distributions received after the investment has reached
zero are recognized as income. At March 31, 2000, the investment  account in one
of the Local Limited  Partnerships  had reached a zero balance.  Consequently  a
portion of the Partnership's  estimate of its share of losses for the year ended
March 31, 2001 and 2000  amounting to  approximately  $36,000 and $9,000 has not
been recognized by the Partnership as of March 31, 2001 and 2000.

Following  is a summary of the equity  method  activity  of the  investments  in
limited partnerships for the periods presented:
<TABLE>
<CAPTION>

                                                                                       For the Three     For the Year
                                                           For the Years Ended         Months Ended        Ended
                                                               March 31                 March 31         December 31
                                                     -----------------------------   ---------------   ---------------
                                                        2001            2000               1999              1998
                                                     ------------   --------------   ---------------   ---------------
<S>                                                <C>            <C>              <C>               <C>
Investments per balance sheet, beginning of year   $   8,311,454  $    10,092,782  $     10,274,595  $      9,738,583
Tax credit adjustment                                                     (62,593)                -           (23,291)
Capital contributions to limited partnerships,
net                                                            -                -                 -           827,482
Capital contributions to be paid                               -                -                 -           427,483
Impairment loss on investments in limited
   partnerships (Note 2)                                       -         (766,559)                -                 -
Capital contributions payable to Sidney and
   Broken Bow offset to book value                             -         (107,283)                -                 -
Accrued expense (Note 2)                                       -           86,965                 -                 -
Cash advances (Note 2)                                         -          120,906                 -                 -
Capitalized acquisition fees and costs                         -                -                 -               465
Distributions received                                    (5,949)         (19,667)           (6,900)           (5,300)
Equity in losses of limited partnerships                (831,638)        (992,162)         (164,683)         (658,728)
Amortization of capitalized acquisition fees and
   costs                                                 (40,934)         (40,935)          (10,230)          (32,099)
                                                     ------------   --------------   ---------------   ---------------
Investments per balance sheet, end of period       $   7,432,933  $     8,311,454  $     10,092,782  $     10,274,595
                                                     ============   ==============   ===============   ===============
</TABLE>

                                       24

<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
The financial  information from the individual financial statements of the Local
Limited  Partnerships  includes rental and interest subsidies.  Rental subsidies
are included in total  revenues  and interest  subsidies  are  generally  netted
against interest expense.  Approximate combined condensed financial  information
from the individual financial statements of the Local Limited Partnerships as of
December  31 and for the years  then  ended is as  follows  (Combined  condensed
financial  information  for Broken Bow and Sidney  have been  excluded  from the
presentation below. See Note 2 for further discussion):

                        COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                    2000                1999
                                                                               ---------------     ---------------
<S>                                                                          <C>                 <C>
ASSETS

Land                                                                         $      1,556,000    $      1,557,000
Buildings, net of accumulated amortization of $6,718,000 and $5,428,000
   for 2000 and 1999, respectively                                                 30,656,000          31,791,000
Due from affiliates                                                                     3,000               1,000
Other assets                                                                        2,221,000           2,194,000
                                                                               ---------------     ---------------
                                                                             $     34,436,000    $     35,543,000
                                                                               ===============     ===============
LIABILITIES

Mortgage and construction loans payable                                      $     25,375,000    $     26,091,000
Other liabilities (including due to related parties of $1,011,000 and
    $437,000 as of December 31,  2000 and 1999, respectively)                       1,652,000           1,003,000
                                                                               ---------------     ---------------
                                                                                   27,027,000          27,094,000
                                                                               ---------------     ---------------
PARTNERS' CAPITAL

WNC Housing Tax Credit Fund IV, L.P., Series 2                                      6,519,000           7,435,000
Other partners                                                                        890,000           1,014,000
                                                                               ---------------     ---------------
                                                                                    7,409,000           8,449,000
                                                                               ---------------     ---------------
                                                                             $     34,436,000    $     35,543,000
                                                                               ===============     ===============
</TABLE>

                                       25
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                 2000                1999               1998
                                                                                                     (Restated)
                                                            ---------------     ---------------    ---------------
<S>                                                       <C>                 <C>                <C>
Revenues                                                  $      3,832,000    $      3,768,000   $      3,750,000
                                                            ---------------     ---------------    ---------------
Expenses:
  Operating expenses                                             2,268,000           2,165,000          1,965,000
  Interest expense                                               1,134,000           1,154,000          1,131,000
  Depreciation and amortization                                  1,289,000           1,238,000          1,162,000
                                                            ---------------     ---------------    ---------------
   Total expenses                                                4,691,000          4,557 ,000          4,258,000
                                                            ---------------     ---------------    ---------------
Net loss                                                  $       (859,000)   $       (789,000)  $       (508,000)
                                                            ===============     ===============    ===============
Net loss  allocable to the  Partnership,  before equity
   in losses of Broken Bow and Sidney                     $       (849,000)   $       (778,000)  $       (501,000)
                                                            ===============     ===============    ===============
Net loss recorded by the Partnership,  before equity in
   losses of Broken Bow and Sidney                        $       (832,000)   $       (835,000)  $       (501,000)

Net loss of Broken Bow allocable to the Partnership                      -            (109,000)           (42,000)

Net loss of Sidney allocable to the Partnership                          -             (48,000)          (116,000)
                                                            ---------------     ---------------    ---------------
Net loss recorded by the Partnership                      $       (832,000)   $       (992,000)  $       (659,000)
                                                            ===============     ===============    ===============
</TABLE>
Certain Local Limited  Partnerships have incurred  significant  operating losses
and  have  working  capital  deficiencies.  In the  event  these  Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  and/or  the  Local  General  Partner  may be
required  to sustain  the  operations  of such Local  Limited  Partnerships.  If
additional  capital  contributions  are not made  when  they are  required,  the
Partnership's  investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.

NOTE 4 - RELATED PARTY TRANSACTIONS
-----------------------------------
Under the terms of the  Partnership  Agreement,  the Partnership is obligated to
the General Partner or its affiliates for the following items:

     Acquisition  fees of up to 8% of the gross  proceeds from the sale of Units
     as compensation for services rendered in connection with the acquisition of
     Local  Limited  Partnerships.  At the  end of all  periods  presented,  the
     Partnership   incurred   acquisition   fees  of   $1,058,950.   Accumulated
     amortization  of these  capitalized  costs was  $269,703 and $166,925 as of
     March 31,  2001 and 2000,  respectively.  Of the  accumulated  amortization
     recorded  on the  balance  sheet at March 31,  2001  $67,480 of the related
     expense was  reflected as equity in losses of limited  partnerships  on the
     statement of operations  during the fourth  quarter of the year ended March
     31,  2001 to  reduce  the  respective  net  acquisition  fee  component  of
     investments in local limited  partnerships  to zero for those Local Limited
     Partnerships which would otherwise be below a zero balance.


                                       26
<PAGE>

                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 4 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------
     Reimbursement  of costs incurred by the General  Partner in connection with
     the acquisition of Local Limited  Partnerships.  These  reimbursements have
     not  exceeded  1.2%  of  the  gross  proceeds.   The  Partnership  incurred
     acquisition costs of $169,103,  at the end of all periods presented,  which
     have been  included in  investments  in limited  partnerships.  Accumulated
     amortization  was  $46,011  and  $25,117,  as of March  31,  2001 and 2000,
     respectively. Of the accumulated amortization recorded on the balance sheet
     at March 31, 2001,  $15,258 of the related  expense was reflected as equity
     in losses of limited partnerships on the statement of operations during the
     fourth  quarter of the year ended March 31,  2001 to reduce the  respective
     net acquisition cost component of investments in local limited partnerships
     to zero for those Local Limited Partnerships which would otherwise be below
     a zero balance.

     An annual asset  management  fee equal to the greater  amount of (i) $2,000
     for each apartment  complex,  or (ii) 0.275% of gross  proceeds.  In either
     case,  the fee will be decreased or increased  annually based on changes to
     the Consumer  Price  Index.  However,  in no event will the maximum  amount
     exceed  0.2% of the  invested  assets  of the Local  Limited  Partnerships,
     including the  Partnership's  allocable share of the mortgages.  Management
     fees of $44,000 and $42,900 were incurred  during the years ended March 31,
     2001 and 2000,  respectively,  $10,725  during the three months ended March
     31, 1999 and $42,900 were incurred for the year ended December 31, 1998, of
     which $3,750 and $3,750 were paid during the years ended March 31, 2001 and
     2000 and $5,950 during the three months ended  March 31,  1999,  and $4,616
     were paid during the years ended December 31, 1998.

     A subordinated  disposition fee in an amount equal to 1% of the sales price
     of real estate  sold.  Payment of this fee is  subordinated  to the limited
     partners  receiving a preferred return of 16% through December 31, 2003 and
     6% thereafter (as defined in the Partnership Agreement) and is payable only
     if the  General  Partner or its  affiliates  render  services  in the sales
     effort.

The accrued fees and expenses due to General  Partner and affiliates  consist of
the following:
<TABLE>
<CAPTION>
                                                                                   March 31
                                                                        -------------------------------
                                                                           2001              2000
                                                                       ------------    ---------------

<S>                                                                   <C>             <C>
Reimbursement for expenses paid by the General
  Partner or an affiliate                                             $       1,119   $          6,689

Asset management fee payable                                                106,159             65,909
                                                                        ------------    ---------------
Total                                                                 $     107,278   $         72,598
                                                                        ============    ===============
</TABLE>
The General  Partner does not  anticipate  that these  accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable  working
capital requirements of the Partnership.

                                       27
<PAGE>


NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000 (in thousands, except for per share data).
<TABLE>
<CAPTION>
                                                June 30          September 30        December 31          March 31
                                            ----------------    ---------------     ---------------    ---------------
                  2001
                  ----
<S>                                       <C>                 <C>                 <C>               <C>
Income                                    $           2,000   $          2,000    $         2,000   $          4,000

Operating expenses                                   42,000             56,000             26,000             25,000

Equity in losses of limited partnerships           (187,000)          (186,000)          (187,000)          (272,000)

Net loss                                           (227,000)          (240,000)          (211,000)          (293,000)

Loss available to limited partner                  (224,000)          (238,000)          (208,000)          (291,000)

Loss per limited partner unit                           (14)               (15)               (13)               (19)

                  2000
                  ----
Income                                    $           4,000   $          4,000    $         3,000   $          7,000

Operating expenses                                   28,000             35,000             31,000            795,000

Equity in losses of limited partnerships           (156,000)          (157,000)          (199,000)          (480,000)

Net income (loss)                                  (180,000)          (188,000)          (227,000)        (1,268,000)

Loss available to limited partners                 (178,000)          (187,000)          (224,000)        (1,255,000)

Loss per limited partner unit                           (12)               (12)               (14)               (80)
</TABLE>

NOTE 6 - INCOME TAXES
---------------------
No provision  for income taxes has been recorded in the  accompanying  financial
statements as any  liability for income taxes is the  obligation of the partners
of the Partnership.


                                       28
<PAGE>





                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 2
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

NOTE 7-COMMITMENTS AND CONTINGENCIES
------------------------------------
During 2000,  WNC  identified a potential  problem with a developer  who, at the
time,  was the local  general  partner in six Local  Limited  Partnerships.  The
Partnership  has a 99%  limited  partnership  interest in two of those six Local
Limited  Partnerships.  Those  investments  are Broken Bow Apartments I, Limited
Partnership, and Sidney Apartments I, Limited Partnership. All of the properties
continue to experience  operating  deficits.  The local general  partner  ceased
funding the operating deficits,  which placed the Local Limited  Partnerships in
jeopardy of  foreclosure.  Consequently,  WNC voted to remove the local  general
partner and the management  company from the Local Limited  Partnerships.  After
the local general partner  contested its removal,  WNC commenced legal action on
behalf  of the  Local  Limited  Partnerships  and was  successful  in  getting a
receiver appointed to manage the Local Limited  Partnerships and an unaffiliated
entity  appointed  as  property  manager.  WNC was  subsequently  successful  in
attaining  a summary  judgment  to  confirm  the  removal  of the local  general
partner,  the receiver was  discharged and WNC now controls all six of the Local
Limited Partnerships.

The six Local Limited  Partnerships  (hereinafter  referred to as  "Defendants")
were  defendants  in a separate  lawsuit.  The  lawsuit was filed by eight other
partnerships   in  which  the  local  general   partner  of  the  Local  Limited
Partnerships is or was involved (the  "Plaintiffs").  The Plaintiffs allege that
the local general  partner  accepted  funds from the  Plaintiffs  and improperly
loaned these funds to the  Defendants.  In July 2001, a tentative  settlement as
yet not executed  was reached  with  respect to this  lawsuit for the  aggregate
amount of $35,000. The Partnership's allocated share of $11,700 has been accrued
in full at March 31, 2001.

The  Partnership   currently  has  insufficient  working  capital  to  fund  its
operations.  WNC and Associates,  Inc., the general partner of the  Partnership,
has  agreed  to  continue  providing  advances  sufficient  enough  to fund  the
operations and working capital  requirements of the Partnership through at least
April 1, 2002.

                                       29
<PAGE>



Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

NOT APPLICABLE

PART III.

Item 10.  Directors and Executive Officers of the Registrant

The Partnership has no directors or executive officers of its own. The following
biographical  information is presented for the directors and executive  officers
of Associates which has principal responsibility for the Partnership's affairs.

Directors and Executive Officers of WNC & Associates, Inc

The directors of WNC & Associates,  Inc. are Wilfred N. Cooper,  Sr., who serves
as Chairman of the Board,  John B.  Lester,  Jr.,  David N.  Shafer,  Wilfred N.
Cooper, Jr. and Kay L. Cooper.  The principal  shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.

Wilfred N.  Cooper,  Sr.,  age 70, is the  founder,  Chairman,  Chief  Executive
Officer,  and a Director of WNC &  Associates,  Inc.,  a Director of WNC Capital
Corporation,  and a general partner in some of the programs previously sponsored
by the  Sponsor.  Mr.  Cooper has been  involved in real estate  investment  and
acquisition  activities  since 1968.  Previously,  during 1970 and 1971,  he was
founder and principal of Creative Equity Development Corporation,  a predecessor
of WNC & Associates,  Inc., and of Creative  Equity  Corporation,  a real estate
investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell
International  Corporation,  last  serving as its  manager of housing  and urban
developments where he had  responsibility  for factory-built  housing evaluation
and project  management  in urban  planning  and  development.  Mr.  Cooper is a
Director of the  National  Association  of Home  Builders  (NAHB) and a National
Trustee  for NAHB's  Political  Action  Committee,  a Director  of the  National
Housing  Conference  (NHC)  and a member  of  NHC's  Executive  Committee  and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.

John B.  Lester,  Jr., age 67, is  Vice-Chairman,  a Director,  Secretary  and a
member of the Acquisition Committee of WNC & Associates, Inc., and a Director of
WNC Capital  Corporation.  Mr. Lester has 27 years of experience in  engineering
and construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates,  Inc., a provider
of engineering and construction  services to the oil refinery and  petrochemical
industries,  which  he  co-founded  in  1973.  Mr.  Lester  graduated  from  the
University of Southern  California in 1956 with a Bachelor of Science  degree in
Mechanical Engineering.

Wilfred N. Cooper,  Jr., age 38, is President,  Executive Vice President,  Chief
Operating Officer, a Director and a member of the Acquisition Committee of WNC &
Associates,  Inc. He is  President  of, and a  registered  principal  with,  WNC
Capital  Corporation,  a  member  firm of the  NASD,  and is a  Director  of WNC
Management,  Inc. He has been involved in investment and acquisition  activities
with respect to real estate since he joined the Sponsor in 1988.  Prior to this,
he  served  as  Government   Affairs  Assistant  with  Honda  North  America  in
Washington,  D.C. Mr. Cooper is a member of the Advisory  Board for LIHC Monthly
Report, a Director of NMHC and an Alternate  Director of NAHB. He graduated from
The American University in 1985 with a Bachelor of Arts degree.

David N.  Shafer,  age 49, is  Executive  Vice  President,  a Director,  General
Counsel,  and a member of the Acquisition  Committee of WNC & Associates,  Inc.,
and a  Director  and  Secretary  of WNC  Management,  Inc.  Mr.  Shafer has been
involved in real estate investment and acquisition  activities since 1984. Prior
to joining the Sponsor in 1990, he was  practicing  law with a specialty in real
estate and taxation.  Mr.  Shafer is a Director and President of the  California
Council of Affordable  Housing and a member of the State Bar of California.  Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts  degree,  from the New  England  School of Law in 1983 with a
Juris  Doctor  degree (cum laude) and from the  University  of San Diego in 1986
with a Master of Law degree in Taxation.

                                       30
<PAGE>


Thomas J. Riha, age 46, became Chief Financial  Officer  effective January 2001.
Prior to his  appointment  as Chief  Financial  Officer he was Vice  President -
Asset Management and a member of the Acquisition  Committee of WNC & Associates,
Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha
has been involved in acquisition and investment  activities with respect to real
estate since 1979.  Prior to joining the Sponsor in 1994,  Mr. Riha was employed
by Trust Realty Advisor, a real estate acquisition and management company,  last
serving as Vice  President - Operations.  Mr. Riha graduated from the California
State  University,  Fullerton in 1977 with a Bachelor of Arts degree (cum laude)
in Business Administration with a concentration in Accounting and is a Certified
Public  Accountant  and a member of the American  Institute of Certified  Public
Accountants.

Sy P. Garban,  age 55, is Vice  President - National  Sales of WNC & Associates,
Inc.  and has been  employed by the  Sponsor  since  1989.  Mr.  Garban has been
involved in real estate  investment  activities since 1978. Prior to joining the
Sponsor he served as  Executive  Vice  President  of MRW,  Inc.,  a real  estate
development  and management  firm.  Mr. Garban is a member of the  International
Association of Financial  Planners.  He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland,  age 38, is Vice President - Acquisitions  and a member of the
Acquisition  Committee of WNC &  Associates,  Inc. He has been  involved in real
estate  acquisitions and investments since 1986 and has been employed with WNC &
Associates, Inc. since 1994. Prior to that, he served on the development team of
the Bixby Ranch that  constructed  apartment  units and Class A office  space in
California and neighboring  states,  and as a land acquisition  coordinator with
Lincoln  Property   Company  where  he  identified  and  analyzed   multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.

David Turek, age 46, is Vice President - Originations of WNC & Associates,  Inc.
He has been involved with real estate  investment and finance  activities  since
1976 and has been employed by WNC & Associates,  Inc.  since 1996.  From 1995 to
1996,  Mr. Turek served as a consultant  for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties.  From 1990 to 1995, he was involved in the development of
conventional  and tax credit  multi-family  housing.  He is a Director  with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.

Kay L. Cooper,  age 64, is a Director of WNC & Associates,  Inc. Mrs. Cooper was
the founder and sole  proprietor  of Agate 108, a  manufacturer  and retailer of
home  accessory  products,  from 1975 until 1998.  She is the wife of Wilfred N.
Cooper,  Sr.,  the mother of Wilfred  N.  Cooper,  Jr. and the sister of John B.
Lester,  Jr. Ms. Cooper graduated from the University of Southern  California in
1958 with a Bachelor of Science degree.


                                       31
<PAGE>


Item 11.  Executive Compensation

The Partnership has no officers,  employees,  or directors.  However,  under the
terms of the  Partnership  Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:

(a)  Annual Asset  Management Fee. An annual asset management fee of the greater
     of (i)  $2,000 per  multi-family  housing  complex or (ii)  0.275% of Gross
     Proceeds. The base fee amount will be adjusted annually based on changes in
     the  Consumer  Price  Index,  however  in no event  will the  annual  asset
     management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
     sum of the Partnership's  investment in Local Limited  Partnerships and the
     Partnership's  allocable share of the amount of indebtedness related to the
     Housing  Complexes.  Fees of $44,000,  $43,000,  $11,000  and $43,000  were
     incurred  during  the years  ended  March  31,  2001 and 2000 and the three
     months  ended  March  31,  1999  and the  year  ended  December  31,  1998,
     respectively.  The  Partnership  paid the General Partner or its affiliates
     $4,000,  $4,000,  $6,000 and $5,000 of those  fees  during the years  ended
     March 31, 2001 and 2000, the three months ended March 31, 1999 and the year
     ended December 31, 1998, respectively.

(b)  Subordinated  Disposition Fee. A subordinated  disposition fee in an amount
     equal to 1% of the  sale  price  received  in  connection  with the sale or
     disposition of a Housing  Complex.  Subordinated  disposition  fees will be
     subordinated  to  the  prior  return  of  the  Limited   Partners'  capital
     contributions  and  payment  of the  Return on  Investment  to the  Limited
     Partners.  "Return  on  Investment"  means an  annual,  cumulative  but not
     compounded,  "return" to the Limited Partners (including Low Income Housing
     Credits) as a class on their adjusted capital contributions  commencing for
     each Limited  Partner on the last day of the calendar  quarter during which
     the Limited Partner's capital  contribution is received by the Partnership,
     calculated at the following  rates:  (i) 16% through December 31, 2003, and
     (ii) 6% for the balance of the Partnership's term. No disposition fees have
     been paid.

(c)  Operating  Expense.  The Partnership  reimbursed the General Partner or its
     affiliates  for  operating  expenses  of  approximately  $58,000,  $31,000,
     $11,000 and $6,000  during the years  ended  March 31,  2001 and 2000,  the
     three  months  ended March 31, 1999 and the year ended  December  31, 1998,
     respectively.

(d)  Interest  in  Partnership.   The  General   Partners   receive  1%  of  the
     Partnership's  allocated Low Income  Housing  Credits,  which  approximated
     $22,000,  $20,000 and  $20,000 for the General  Partner for the years ended
     March 31, 2000 and December 31, 1998. The General  Partner is also entitled
     to receive 1% of cash distributions. There were no distributions of cash to
     the General  Partner  during the years  ended March 31, 2001 and 2000,  the
     three months ended March 31, 1999 or the year ended December 31, 1998.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     Security Ownership of Certain Beneficial Owners

(a)  Security Ownership of Certain Beneficial Owners
     -----------------------------------------------
     The following is the only limited  partner known to the General  Partner to
     own beneficially in excess of 5% of the outstanding Units.
<TABLE>
<CAPTION>
<S>     <C>                              <C>                                 <C>              <C>
                                                                               Amount of
                                         Name and Address of                    Units
                 Title of Class          Beneficial Owner                    Controlled       Percent of Class
         ------------------------------- ---------------------------------- ------------------- -------------------
         Units of Limited                Sempra Energy Financial               4,000 Units            25.6%
         Partnership Interests           P.O. Box 126943
                                         San Diego, CA 92113-6943
</TABLE>

                                       32
<PAGE>



(b)  Security Ownership of Management
     ---------------------------------

     Neither the General  Partner,  its  affiliates,  nor any of the officers or
     directors  of  the  General  Partner  or its  affiliates  own  directly  or
     beneficially any Units in the Partnership.

(c)  Changes in Control
     ------------------
     The  management  and control of the  General  Partner may be changed at any
     time in accordance with its organizational  documents,  without the consent
     or approval of the Limited Partners. In addition, the Partnership Agreement
     provides for the admission of one or more additional and successor  General
     Partners in certain circumstances.

     First,   with  the   consent   of  any  other   General   Partners   and  a
     majority-in-interest  of the  Limited  Partners,  any  General  Partner may
     designate  one or  more  persons  to be  successor  or  additional  General
     Partners. In addition,  any General Partner may, without the consent of any
     other General Partner or the Limited Partners,  (i) substitute in its stead
     as General  Partner  any  entity  which has,  by merger,  consolidation  or
     otherwise,  acquired  substantially  all  of its  assets,  stock  or  other
     evidence of equity interest and continued its business, or (ii) cause to be
     admitted to the Partnership an additional General Partner or Partners if it
     deems such  admission to be necessary or desirable so that the  Partnership
     will be classified a partnership for Federal income tax purposes.  Finally,
     a  majority-in-interest  of the Limited Partners may at any time remove the
     General Partner of the Partnership and elect a successor General Partner.

Item 13.  Certain Relationships and Related Transactions

The General Partner manages all of the Partnership's  affairs.  The transactions
with  the  General  Partner  are  primarily  in the  form  of  fees  paid by the
Partnership for services  rendered to the Partnership and the General  Partner's
interests  in the  Partnership,  as discussed in Item 11 and in the notes to the
Partnership's financial statements.

                                       33

<PAGE>


PART IV.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Financial Statements

(a)(1) Financial statements included in Part II hereof:

Report of Independent  Certified Public  Accountants  Balance Sheets,  March 31,
       2001 and 2000
       Statements of Operations for the years ended March 31, 2001
       and 2000,  the three  months  ended  March  31,  1999 and the year  ended
       December  31, 1998
       Statements  of  Partners'  Equity for the years ended
       March 31, 2001 and 2000,  the three months ended  March 31,  1999 and the
       year ended December 31, 1998
       Statements of Cash Flows for the years ended
       March 31, 2001 and 2000,  the three  months  ended March 31, 1999 and the
       year ended December 31, 1998
       Notes to Financial Statements

(a)(2) Financial statement schedules included in Part IV hereof:

       Report of Independent Certified Public Accountants on Financial Statement
       Schedules Schedule III - Real Estate Owned by Local Limited Partnerships

(b)    Reports on Form 8-K

1.     NONE

(c)    Exhibits

3.1    Articles  of   incorporation   and  by-laws:   The   registrant   is  not
       incorporated.  The Partnership  Agreement is included as Exhibit B to the
       Prospectus  which is included  in  Post-Effective  No 11 to  Registration
       Statement  on  Form  S-11  dated  May 24,  1995  incorporated  herein  by
       reference as Exhibit 3.

10.1   Amended and Restated Agreement of Limited Partnership of Chadwick Limited
       Partnership  filed as  exhibit  10.1 to Form 8-K dated  July 22,  1994 is
       hereby incorporated herein by reference as exhibit 10.1.

10.2   Second Amended and Restated  Agreement of Limited  Partnership of Garland
       Street Limited  Partnership  filed as exhibit 10.2 to Form 8-K dated July
       22, 1994 is hereby incorporated herein by reference as exhibit 10.2.

10.3   Amended and Restated  Agreement of Limited  Partnership of Lamesa Seniors
       Community,  Ltd. filed as exhibit 10.3 to Form 8-K dated July 22, 1994 is
       hereby incorporated herein by reference as exhibit 10.3.

10.4   Amended  and  Restated  Agreement  of Limited  Partnership  of  Palestine
       Seniors Community,  Ltd. filed as exhibit 10.4 to Form 8-K dated July 22,
       1994 is hereby incorporated herein by reference as exhibit 10.4.

10.5   Second Amended and Restated Agreement of Limited Partnership of Southcove
       Associates  filed as  exhibit  10.1 to Form 8-K  dated  August 8, 1994 is
       hereby incorporated herein by reference as exhibit 10.5.

10.6   Third Amended and Restated Agreement of Limited  Partnership of Southcove
       Associates  filed as  exhibit  10.2 to Form 8-K  dated  August 8, 1994 is
       hereby incorporated herein by reference as exhibit 10.6.


                                       34
<PAGE>

10.7   Amended  and  Restated  Agreement  of  Limited  Partnership  of  Comanche
       Retirement  Village,  Ltd. filed as exhibit 10.1 to Form 8-K dated August
       31, 1994 is hereby incorporated herein by reference as exhibit 10.7.

10.8   Amended and Restated  Agreement of Limited  Partnership  of  Mountainview
       Apartments  Limited  Partnership  filed as exhibit 10.1 to Form 8-K dated
       September 21, 1994 is hereby  incorporated herein by reference as exhibit
       10.8.

10.9   Second Amendment to Amended and Restated Agreement of Limited Partnership
       of Mountainview  Apartments Limited  Partnership filed as exhibit 10.2 to
       Form 8-K  dated  September  21,  1994 is  hereby  incorporated  herein by
       reference as exhibit 10.9.

10.10  AHmended and  Restated  Agreement  of Limited  Partnership  of Pecan
       Grove  Limited  Partnership  filed  as  exhibit  10.3 to Form  8-K  dated
       September 21, 1994 is hereby  incorporated herein by reference as exhibit
       10.10.

10.11  Second Amendment to Amended and Restated  Agreement of Limited
       Partnership of Pecan Grove Limited  Partnership  filed as exhibit 10.4 to
       Form 8-K  dated  September  21,  1994 is  hereby  incorporated  herein by
       reference as exhibit 10.11.

10.12  Second Amendment to and Entire Restatement of the Agreement of Limited
       Partnership  of Autumn Trace  Associates,  Ltd.  filed as exhibit 10.1 to
       Form  8-K  dated  October  31,  1994 is  hereby  incorporated  herein  by
       reference as exhibit 10.12.

       10.13  Amended and Restated  Agreement of Limited  Partnership  of EW , a
       Wisconsin  Limited  Partnership  filed as exhibit  10.2 to Form 8-K dated
       October 31, 1994 is hereby  incorporated  herein by  reference as exhibit
       10.13.

10.14  Agreement of Limited  Partnership of Klimpel Manor, Ltd. filed as exhibit
       10.3 to Form 8-K dated September 21, 1994 is hereby  incorporated  herein
       by reference as exhibit 10.14.

10.15  Amended and Restated  Agreement of Limited  Partnership of Hickory Lane
       Associates Limited filed as exhibit 10.15 to Form 10-K dated December 31,
       1995 is hereby incorporated herein by reference as exhibit 10.15.

10.16  Amended and Restated  Agreement  of Limited  Partnership  of  Honeysuckle
       Court Associates, Ltd. filed as exhibit 10.16 to Form 10-K dated December
       31, 1995 is hereby incorporated herein by reference as exhibit 10.16.

10.17  Amended and  Restated  Agreement  of Limited  Partnership  of Walnut Turn
       Associates,  Ltd.  filed as exhibit 10.17 to Form 10-K dated December 31,
       1995 is hereby incorporated herein by reference as exhibit 10.17.

10.18  Amended and Restated  Agreement of Limited  Partnership of Pioneer Street
       Associates,  a California  limited  partnership  filed as exhibit 10.1 to
       Form 8-K dated July 5, 1995 is hereby incorporated herein by reference as
       exhibit 10.18.

21.1   Financial  statements of Pioneer Street Associates,  a California Limited
       Partnership  as of and for the years  ended  December  31,  2000 and 1999
       together  with  independent   auditors'  report  thereon;  a  significant
       subsidiary of the Partnership.

(d)    Financial  statement  schedules follow, as set forth in subsection (a)(2)
       --------------------------------------
       hereof.

                                       35

<PAGE>


              Report of Independent Certified Public Accountants on
                          Financial Statement Schedules





To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 2


The audits  referred to in our report dated July 9, 2001,  relating to the 2001,
2000,  1999 and 1998  financial  statements  of WNC  Housing Tax Credit Fund IV,
L.P.,  Series 2 (the  "Partnership"),  which is contained in Item 8 of this Form
10-K, included the audit of the accompanying financial statement schedules.  The
financial  statement  schedules  are  the  responsibility  of the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statement  schedules  based  upon  our  audits.  The  opinion  to the  financial
statements contains an audit scope limitation paragraph describing the inability
of other  auditors  to express an opinion  on the  financial  statements  of two
limited partnerships.

In our  opinion,  except for the  effects of such audit scope  limitation,  such
financial  statement  schedules  present fairly, in all material  respects,  the
financial information set forth therein.



                                                /s/BDO SEIDMAN, LLP
                                                   BDO SEIDMAN, LLP

Orange County, California
July 9, 2001


                                       36
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 2001                           As of December 31, 2000
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Apartment Housing of East     East Brewton,
Brewton,Ltd.                  Alabama             $ 1,192,000       $ 1,192,000   $ 1,145,000  $ 2,339,000  $  (168,000) $ 2,171,000

Autumn Trace Associates,      Silsbee,
Ltd.                          Texas                   412,000           412,000     1,253,000    2,059,000     (544,000)   1,515,000

Broken Bow                    Broken Bow,
Apartments I, Limited         Nebraska
Limited Partnership                                   608,000           608,000             *            *            *            *

Candleridge Apartments        Waukee,
of Waukee L.P. II             Iowa                    125,000           125,000       679,000      883,000     (171,000)     712,000

Chadwick Limited              Edan, North
Partnership                   Carolina                378,000           378,000     1,551,000    2,020,000     (298,000)   1,722,000


Comanche Retirement           Comanche,
Village, Ltd.                 Texas                   136,000           136,000       591,000      748,000     (166,000)     582,000

Crossings II                  Portage,
Limited Dividend              Michigan
Housing Association
LimitedPartnership                                    432,000           432,000     5,905,000    6,952,000     (666,000)   6,286,000

EW, a Wisconsin               Evansville,
Limited Partnership           Wisconson               164,000           164,000       613,000      882,000     (224,000)     658,000

Garland Street                Malvarn,
Limited Partnership           Arkansas                164,000           164,000       693,000      924,000     (237,000)     687,000

Hereford Seniors              Hereford,
Community, Ltd.               Texas                   167,000           167,000       799,000    1,006,000     (142,000)     864,000

*    Results of Broken Bow  Apartments  I, L.P. and Sidney  Apartments  I, L.P.  have not been  audited and thus have been
      excluded.  See Note 2 to the  financial
     statements and report of certified public accountants.
</TABLE>

                                       37
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 2001                           As of December 31, 2000
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Hickory Lane                  Newton,
Associates, Ltd               Texas                   174,000           174,000       594,000      950,000     (160,000)     790,000

Honeysuckle Court             Vidor,
Associates, Ltd.              Texas                   339,000           339,000     1,162,000    1,833,000     (323,000)   1,510,000

Klimpel
Manor, Ltd                    Fullerton,            1,774,000         1,774,000     1,314,000    3,589,000     (649,000)   2,940,000
                              California
Lamesa Seniors                Lamesa,
Community, Ltd.               Texas                   143,000           143,000       671,000      818,000     (184,000)     634,000

Laredo Heights                Navasota,
Apartments Ltd.               Texas                   225,000           225,000     1,101,000    1,358,000     (179,000)   1,179,000

Mountainview                  North
Apartments Limited            Wilkesboro,
Partnership                   North Carolina          195,000           195,000       994,000    1,211,000      197,000    1,014,000

Palestine Seniors             Palestine,
Community, Ltd.               Texas                   225,000           225,000     1,124,000    1,385,000     (231,000)   1,154,000

Pecan Grove                   Forrest City,
Limited Partnership           Arkansas                240,000           240,000     1,109,000    1,402,000     (370,000)   1,032,000

Pioneer Street                Bakersfield,
Associates                    California            2,222,000         2,222,000     1,862,000    4,087,000     (876,000)   3,211,000

Sidney Apartments             Sidney,
I, Limited                    Nebraska
Partnership                                           530,000           530,000             *            *            *            *

Southcove                     Orange Cove,
Associates                    California            2,000,000         2,000,000     1,527,000    3,445,000     (753,000)   2,692,000

Walnut Turn                   Buna,
Associates, Ltd.              Texas                   188,000           188,000       688,000    1,040,000     (179,000)     861,000
                                                  ------------      -----------   ----------- ------------  ------------ -----------
                                                  $12,033,000       $12,033,000   $25,375,000 $ 38,931,000  $ 6,717,000 $ 32,214,000
                                                  ============      ============  ============ ============ =========== ============
</TABLE>

                                       38
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 2000
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>     <C>           <C>
Apartment Housing of East
Brewton, Ltd.                              $   114,000       $  (89,000)            1998    Completed       40 Years

Autumn Trace Associates, Ltd.                  209,000          (47,000)            1994    Completed     27.5 Years

Broken Bow Apartments I, Limited
Partnership                                          *                *             1996    Completed       40 Years

Candleridge Apartments of Waukee
L.P. II                                        129,000           (4,000)            1995    Completed     27.5 Years

Chadwick Limited Partnership                   183,000          (27,000)            1994    Completed       50 Years

Comanche Retirement.
Village, Ltd                                    67,000          (16,000)            1994    Completed       30 Years

Crossings II Limited Dividend
Housing Association Limited
Partnership                                    648,000         (145,000)            1997    Completed       40 Years

EW, a Wisconsin Limited
Partnership                                     74,000          (67,000)            1994    Completed     27.5 Years

Garland Street Limited
Partnership                                     69,000          (30,000)            1994    Completed     27.5 Years

Hereford Seniors
Community, Ltd.                                 96,000                0             1995    Completed       40 Years

Hickory Lane Associates, Ltd                    75,000          (32,000)            1995    Completed     27.5 Years

Honeysuckle Court
Associates, Ltd.                               191,000          (47,000)            1995    Completed     27.5 Years

Klimpel Manor, Ltd                             374,000          (55,000)            1994    Completed       40 Years

Lamesa Seniors
Community, Ltd.                                103,000          (26,000)            1994    Completed       40 Years

Laredo Heights Apartments Ltd.                 167,000            6,000             1996    Completed       45 Years

Mountainview Apartments Limited
Partnership                                     96,000          (18,000)            1994    Completed       40 Years

Palestine Seniors
Community, Ltd.                                148,000           11,000             1994    Completed       40 Years
</TABLE>

                                       39
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 2000
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>
Pecan Grove Limited Partnership                123,000          (58,000)            1994    Completed     27.5 Years

Pioneer Street Associates                      491,000          (80,000)            1995    Completed     27.5 Years

Sidney Apartments I, Limited
Partnership                                          *                *             1996    Completed       40 Years

Southcove Associates                           226,000         (103,000)            1994    Completed     27.5 Years

Walnut Turn Associates, Ltd.                    92,000          (32,000)            1995    Completed     27.5 Years
                                           ------------      ------------
                                           $ 3,675,000       $  859,000
                                           ============      ============
*    Results of Broken Bow Apartments I, L.P. and Sidney Apartments I, L.P. have not been audited and thus have
     been excluded.  See Note 2 to the financial statements and report of certified public accountants.

</TABLE>


                                       40
<PAGE>



WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 2000                          As of December 31, 1999
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Apartment Housing of East     East Brewton,
Brewton,Ltd.                  Alabama             $ 1,192,000       $ 1,192,000   $ 1,150,000  $ 2,339,000  $    74,000 $  2,165,000

Autumn Trace Associates,      Silsbee,
Ltd.                          Texas                   412,000           412,000     1,261,000    2,059,000      469,000    1,590,000

Broken Bow Apartments I,      Broken Bow,
Limited Partnership           Nebraska                608,000           608,000             *            *            *            *

Candleridge Apartments        Waukee,
of Waukee L.P. II             Iowa                    125,000           125,000       682,000      883,000      141,000      742,000

Chadwick Limited              Edan, North
Partnership                   Carolina                378,000           378,000     1,561,000    2,010,000      253,000    1,757,000

Comanche Retirement           Comanche,
Village, Ltd.                 Texas                   136,000           136,000       592,000      748,000      138,000      610,000

Crossings II                  Portage,
Limited Dividend              Michigan
Housing Association
LimitedPartnership                                    432,000           432,000     5,992,000    6,952,000      470,000    6,282,000

EW, a Wisconsin               Evansville,
Limited Partnership           Wisconson               164,000           164,000       619,000      869,000      189,000      680,000

Garland Street                Malvarn,
Limited Partnership           Arkansas                164,000           164,000       696,000      920,000      200,000      720,000

Hereford Seniors              Hereford,
Community, Ltd.               Texas                   167,000           167,000       802,000    1,005,000      117,000      888,000

*    Results of Broken Bow  Apartments  I, L.P. and Sidney  Apartments  I, L.P.  have not been  audited and thus have been
      excluded.  See Note 2 to the  financial
     statements and report of certified public accountants.

</TABLE>


                                       41
<PAGE>



WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 2000                          As of December 31, 1999
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Hickory Lane                  Newton,
Associates, Ltd               Texas                   174,000           174,000       596,000      924,000      128,000      796,000

Honeysuckle Court             Vidor,
Associates, Ltd.              Texas                   339,000           339,000     1,165,000    1,780,000      258,000    1,522,000

Klimpel
Manor, Ltd                    Fullerton,            1,774,000         1,774,000     1,962,000    3,576,000      543,000    3,033,000
                              California
Lamesa Seniors                Lamesa,
Community, Ltd.               Texas                   143,000           143,000       673,000      818,000      133,000      685,000

Laredo Heights                Navasota,
Apartments Ltd.               Texas                   225,000           225,000       995,000    1,350,000      138,000    1,212,000

Mountainview                  North
Apartments Limited            Wilkesboro,
Partnership                   North Carolina          195,000           195,000       998,000    1,211,000      292,000      919,000

Palestine Seniors             Palestine,
Community, Ltd.               Texas                   225,000           225,000     1,128,000    1,385,000      198,000    1,187,000

Pecan Grove                   Forrest City,
Limited Partnership           Arkansas                240,000           240,000     1,114,000    1,401,000      312,000    1,089,000

Pioneer Street                Bakersfield,
Associates                    California            2,222,000         2,222,000     1,883,000    4,087,000      729,000    3,358,000

Sidney Apartments             Sidney,
I, Limited                    Nebraska
Partnership                                           530,000           530,000             *            *            *            *

Southcove                     Orange Cove,
Associates                    California            2,000,000         2,000,000     1,532,000    3,445,000      626,000    2,819,000

Walnut Turn                   Buna,
Associates, Ltd.              Texas                   188,000           188,000       690,000    1,015,000      143,000      872,000
                                                  ------------      -----------   ----------- ------------  ------------ -----------
                                                  $12,033,000       $12,033,000   $26,091,000 $ 38,777,000  $ 5,551,000 $ 33,226,000
                                                  ============      ============  ============ ============ =========== ============
</TABLE>

                                       42
<PAGE>

WNC Hous
WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 1999
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>     <C>           <C>
Apartment Housing of East
Brewton, Ltd.                              $    91,000       $  (78,000)            1998    Completed       40 Years

Autumn Trace Associates, Ltd.                  204,000          (50,000)            1994    Completed     27.5 Years

Broken Bow Apartments I, Limited
Partnership                                          *                *             1996    Completed       40 Years

Candleridge Apartments of Waukee
L.P. II                                        120,000          (10,000)            1995    Completed     27.5 Years

Chadwick Limited Partnership                   188,000          (62,000)            1994    Completed       50 Years

Comanche Retirement.
Village, Ltd                                    68,000          (15,000)            1994    Completed       30 Years

Crossings II Limited Dividend
Housing Association Limited
Partnership                                    665,000         (140,000)            1997    Completed       40 Years

EW, a Wisconsin Limited
Partnership                                     99,000          (31,000)            1994    Completed     27.5 Years

Garland Street Limited
Partnership                                     66,000          (29,000)            1994    Completed     27.5 Years

Hereford Seniors
Community, Ltd.                                 93,000           (5,000)            1995    Completed       40 Years

Hickory Lane Associates, Ltd                   115,000          (16,000)            1995    Completed     27.5 Years

Honeysuckle Court
Associates, Ltd.                               194,000          (23,000)            1995    Completed     27.5 Years

Klimpel Manor, Ltd                             362,000          (74,000)            1994    Completed       40 Years

Lamesa Seniors
Community, Ltd.                                 81,000          (11,000)            1994    Completed       40 Years

Laredo Heights Apartments Ltd.                 146,000           (3,000)            1996    Completed       45 Years

Mountainview Apartments Limited
Partnership                                     93,000          (13,000)            1994    Completed       40 Years

Palestine Seniors
Community, Ltd.                                142,000            5,000             1994    Completed       40 Years
</TABLE>

                                       43
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 1999
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>
Pecan Grove Limited Partnership                120,000          (42,000)            1994    Completed     27.5 Years

Pioneer Street Associates                      482,000          (54,000)            1995    Completed     27.5 Years

Sidney Apartments I, Limited
Partnership                                          *                *             1996    Completed       40 Years

Southcove Associates                           213,000         (109,000)            1994    Completed     27.5 Years

Walnut Turn Associates, Ltd.                    90,000          (29,000)            1995    Completed     27.5 Years
                                           ------------      -----------
                                           $ 3,632,000       $ (789,000)
                                           ============      ===========
*    Results of Broken Bow Apartments I, L.P. and Sidney Apartments I, L.P. have not been audited and thus have
     been excluded.  See Note 2 to the financial statements and report of certified public accountants.

</TABLE>


                                       44
<PAGE>





WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 1999                          As of December 31, 1998
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Apartment Housing of East     East Brewton,
Brewton,Ltd.                  Alabama             $ 1,255,000       $   941,000   $ 1,011,000  $ 1,961,000  $         - $  1,961,000

Autumn Trace Associates,      Silsbee,
Ltd.                          Texas                   412,000           412,000     1,269,000    2,059,000      394,000    1,665,000

Broken Bow Apartments I,      Broken Bow,
Limited Partnership           Nebraska                608,000           546,000       750,000    1,383,000       49,000    1,334,000

Candleridge Apartments        Waukee,
of Waukee L.P. II             Iowa                    125,000           125,000       685,000      873,000      112,000      761,000

Chadwick Limited              Edan, North
Partnership                   Carolina                378,000           378,000     1,571,000    2,011,000      207,000    1,804,000

Comanche Retirement           Comanche,
Village, Ltd.                 Texas                   136,000           136,000       594,000      748,000       97,000      651,000

Crossings II                  Portage,
Limited Dividend              Michigan
Housing Association
LimitedPartnership                                    432,000           432,000     6,074,000    6,952,000      273,000    6,679,000

EW, a Wisconsin               Evansville,
Limited Partnership           Wisconson               164,000           164,000       628,000      869,000      156,000      713,000

Garland Street                Malvarn,
Limited Partnership           Arkansas                164,000           164,000       699,000      918,000      164,000      754,000

Hereford Seniors              Hereford,
Community, Ltd.               Texas                   167,000           167,000       804,000    1,006,000       94,000      912,000

Hickory Lane                  Newton,
Associates, Ltd               Texas                   174,000           174,000       597,000      924,000       97,000      827,000
</TABLE>


                                       45
<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                          --------------------------------------  --------------------------------------------------
                                                         As of March 31, 1999                          As of December 31, 1998
                                          --------------------------------------  --------------------------------------------------
                                            Partnership's Total    Amount of       Encumbrances of  Property                     Net
                                            Investment in Local  Investment Paid   Local Limited     and       Accumu lated     Book
      Partnership Name        Location      Limited Partnerships   to Date         Partnerships    Equipment   Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                 <C>               <C>           <C>          <C>          <C>          <C>
Honeysuckle Court             Vidor,
Associates, Ltd.              Texas                   339,000           339,000     1,168,000    1,780,000      195,000    1,585,000

Klimpel
Manor, Ltd                    Fullerton,            1,774,000         1,774,000     1,984,000    3,576,000      437,000    3,139,000
                              California
Lamesa Seniors                Lamesa,
Community, Ltd.               Texas                   143,000           143,000       675,000      818,000      114,000      704,000

Laredo Heights                Navasota,
Apartments Ltd.               Texas                   225,000           225,000     1,001,000    1,349,000       98,000    1,251,000

Mountainview                  North
Apartments Limited            Wilkesboro,
Partnership                   North Carolina          195,000           195,000     1,002,000    1,211,000      140,000    1,071,000

Palestine Seniors             Palestine,
Community, Ltd.               Texas                   225,000           225,000     1,132,000    1,384,000      164,000    1,220,000

Pecan Grove                   Forrest City,
Limited Partnership           Arkansas                240,000           240,000     1,118,000    1,397,000      250,000    1,147,000

Pioneer Street                Bakersfield,
Associates                    California            2,222,000         2,222,000     1,903,000    4,086,000      581,000    3,505,000

Sidney Apartments             Sidney,
I, Limited                    Nebraska
Partnership                                           530,000           484,000       444,000    1,419,000      100,000    1,319,000

Southcove                     Orange Cove,
Associates                    California            2,000,000         2,000,000     1,538,000    3,445,000      500,000    2,945,000

Walnut Turn                   Buna,
Associates, Ltd.              Texas                   188,000           188,000       692,000    1,015,000      108,000      907,000
                                                  ------------      -----------   ----------- ------------  ------------ -----------
                                                  $12,096,000       $11,674,000   $27,339,000 $ 41,184,000  $ 4,330,000 $ 36,854,000
                                                  ============      ============  ============ ============ =========== ============
</TABLE>

                                       46
<PAGE>

W
WNC Hous
WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 1998
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>     <C>           <C>
Apartment Housing of East                                                                                        Not
Brewton, Ltd.                              $         -       $        -             1998     Est.1999     Determined

Autumn Trace Associates, Ltd.                  206,000          (43,000)            1994    Completed     27.5 Years

Broken Bow Apartments I, Limited
Partnership                                     39,000         (117,000)            1996    Completed       40 Years

Candleridge Apartments of Waukee
L.P. II                                        116,000           (8,000)            1995    Completed     27.5 Years

Chadwick Limited Partnership                   188,000          (18,000)            1994    Completed       50 Years

Comanche Retirement.
Village, Ltd                                    63,000          (21,000)            1994    Completed       30 Years

Crossings II Limited Dividend
Housing Association Limited
Partnership                                    692,000          (19,000)            1997    Completed       40 Years

EW, a Wisconsin Limited
Partnership                                    105,000          (20,000)            1994    Completed     27.5 Years

Garland Street Limited
Partnership                                     66,000          (26,000)            1994    Completed     27.5 Years

Hereford Seniors
Community, Ltd.                                 89,000           (7,000)            1995    Completed       40 Years

Hickory Lane Associates, Ltd                    81,000          (13,000)            1995    Completed     27.5 Years

Honeysuckle Court
Associates, Ltd.                               191,000          (18,000)            1995    Completed     27.5 Years

Klimpel Manor, Ltd                             344,000          (85,000)            1994    Completed       40 Years

Lamesa Seniors
Community, Ltd.                                 84,000           (8,000)            1994    Completed       40 Years

Laredo Heights Apartments Ltd.                 166,000           (9,000)            1996    Completed       45 Years

Mountainview Apartments Limited
Partnership                                     90,000          (11,000)            1994    Completed       40 Years

Palestine Seniors
Community, Ltd.                                135,000           (1,000)             1994    Completed       40 Years
</TABLE>

                                       47
<PAGE>





WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                   ----------------------------------------------------------------------------------
                                                         For the year ended December 31, 1998
                                   ----------------------------------------------------------------------------------
                                                                              Year                      Estimated
                                                                           Investment                  Useful Life
         Partnership Name             Rental Income        Net loss         Acquired        Status       (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>                    <C>
Pecan Grove Limited Partnership                114,000          (46,000)            1994    Completed     27.5 Years

Pioneer Street Associates                      507,000          (37,000)            1995    Completed     27.5 Years

Sidney Apartments I, Limited
Partnership                                     77,000          (42,000)            1996    Completed       40 Years

Southcove Associates                           218,000         (102,000)            1994    Completed     27.5 Years

Walnut Turn Associates, Ltd.                   129,000          (17,000)            1995    Completed     27.5 Years
                                           ------------      -----------
                                           $ 3,700,000       $ (668,000)
                                           ============      ===========

</TABLE>


                                       48
<PAGE>



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.

WNC HOUSING TAX CREDIT FUND IV, L.P., Series 2

By:    WNC & Associates, Inc.       General Partner

By: /s/ Wilfred N. Cooper, Sr.
    --------------------------
Wilfred N. Cooper, Sr.,
Chairman and Chief Executive Officer of WNC & Associates, Inc.

Date: August 6, 2001


By: /s/ Thomas J. Riha
Thomas J. Riha
Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: August 6, 2001



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.


By /s/ Wilfred N. Cooper, Jr.
   --------------------------
Wilfred N. Cooper, Jr., President and Director of WNC & Associates, Inc.

Date: August 6, 2001


By: /s/ John B. Lester, Jr.
    -----------------------
John B. Lester, Jr., Director of WNC & Associates, Inc.

Date: August 6, 2001


By: /s/ David N. Shafer
    -------------------
David N Shafer, Director of WNC & Associates, Inc.

Date: August 6, 2001


                                       49


<PAGE>



                                 C O N T E N T S






INDEPENDENT AUDITOR'S REPORT ON
     THE FINANCIAL STATEMENTS................................................. 1


FINANCIAL STATEMENTS

     Balance sheets.......................................................   2-3
     Statements of income..................................................  4-7
     Statements of changes in partners' equity................................ 8
     Statements of cash flows...............................................9-10
     Notes to financial statements.........................................11-14




<PAGE>



                          INDEPENDENT AUDITOR'S REPORT



To the Partners
Pioneer Street Associates
(A California Limited Partnership)
Visalia, California


I have audited the accompanying  balance sheets of Pioneer Street  Associates (A
California  Limited  Partnership),  as of December  31,  1999 and 1998,  and the
related  statements of income,  partners'  equity,  and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing  standards.
Those standards  require that I plan and perform the audits 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.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Pioneer  Street  Associates  (A
California  Limited  Partnership)  as of  December  31,  1999 and 1998,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with generally accepted accounting principles.

                                   /s/ Bernard E. Rea, CPA
                                       Bernard E. Rea, CPA


Stockton, California
March 30, 2000



                                      - 1 -
<PAGE>


                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2000 and 1999
<TABLE>
<CAPTION>


                 ASSETS                                              2000                        1999
                                                                     ----                        -----

<S>                                                                  <C>                        <C>
CURRENT  ASSETS
     Cash                                                            $    87,783               $    85,496
     Real estate tax ans insurance                                         3,586                    13,444
     Prepaid expense                                                       5,158                     4,987
                                                                     -----------               -------------
                  Total current  ASSETS                              $    96,527               $   103,927
                                                                     -----------               -------------
RESTRICTED DEPOSITS AND FUNDED RESERVES
     Tenants' security deposits                                      $    40,805               $    39,399
     Replacement reserve                                                 166,527                   135,180
                                                                     -----------               -------------
                                                                     $   207,332               $   174,579
                                                                     -----------               -------------
PROPERTY AND EQUIPMENT, AT COST
     Land                                                            $   300,000               $   300,000
     Buildings                                                         3,608,910                 3,608,910
     Equipment                                                       $   178,017               $   178,017
                                                                     -----------               -------------
                                                                     $ 4,086,927               $ 4,086,927
Less accumulated depreciation                                            875,784                   728,662
                                                                     -----------               -------------
                                                                     $ 3,211,143               $ 3,358,265
                                                                     -----------               -------------
OTHER ASSETS
deferred change, less accumulated
 amortization of $16,487 and $13,403                                 $    49,363               $    52,447
                                                                     -----------               -------------
                                                                     $ 3,564,365               $ 3,689,218
                                                                     ===========               =============
</TABLE>


                       See Notes to Financial Statements.
                                       2
<PAGE>












                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2000 and 1999
<TABLE>
<CAPTION>


                   LIABILITIES AND PARTNER                           2000                        1999
                                                                     ----                        -----

<S>                                                                  <C>                        <C>
CURRENT LIABILITIES
     Current maturities of long-term debt                            $    23,655                $   22,374
     Accounts payable                                                     13,192                     3,580
     Bank overdraft                                                          - -                       - -
     Accrued interest                                                     12,680                       - -
     Accrued reporting fee                                                 4,000                     2,000
     Accrued property taxes                                                  - -                        -
                                                                     -----------                 ----------
              Total current liabilities                              $    53,527                $   27,954
                                                                     -----------                 ---------

DEPOSIT AND PREPAYMENT LIABILITIES
     Tenants' security deposits                                      $    35,250                $   35,250
     Prepaid rents                                                           - -                       - -
                                                                     -----------                 ---------
                                                                     $    35,250                $   35,250
                                                                     -----------                 ---------
LONG-TERM DEBT
     Mortgage payable, less current maturities                       $ 1,838,754                $1,860,474
                                                                     -----------                ----------
COMMITMENT

PARTNERS' EQUITY                                                     $ 1,636,834                $ 1,765,540
                                                                     -----------                ------------
                                                                     $ 3,564,365                $ 3,689,218
                                                                     ===========                ============

</TABLE>


                       See Notes to Financial Statements.

                                       3
<PAGE>



                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                                    2000                        1999
                                                                   ------                      ------
<S>                                                                   <C>                         <C>
RENTAL INCOME
     Apartments                                                       $  519,492                  $  519,492
     Tenant assistance payments                                              - -                         - -
     Furniture and equipment                                                 - -                         - -
     Commercial                                                             - -                          - -
     Parking spaces                                                          - -                         - -
     Subsidy income                                                          - -                         - -
     Miscellaneous                                                           - -                         - -
                                                                     -----------                  -----------
         Sub-total potential rent revenue                             $  519,492                  $  519,492
                                                                     -----------                  -----------
VACANCIES
     Apartments                                                      $  (28,535)                  $  (37,696)
     Commercial                                                              - -                         - -
     Parking spaces                                                          - -                         - -
     Miscellaneous                                                           - -                         - -
                                                                      ----------                  -----------
         Sub-total vacancies                                         $  (28,535)                  $  (37,696)
                                                                     -----------                  -----------
             Net rental revenue                                       $  490,957                  $  481,796
                                                                     -----------                  -----------
FINANCIAL REVENUE
     Interest Income - project operations                             $    2,038                  $    1,346
     Income from investments - replacement reserve                         7,227                       5,029
     Income from investments - operating reserve                             - -                         - -
     Income from investments - miscellaneous                                 - -                         - -
                                                                      ----------                  -----------
Sub-total financial revenue                                           $    9,265                  $    6,375
                                                                      ----------                  -----------
OTHER REVENUE
     Laundry and vending                                              $   12,438                  $   10,555
     NSF and late charges                                                    - -                         - -
     Damage and cleaning fees                                                - -                         329
     Forfeited tenant security deposits                                    5,981                      11,443
     Other revenue                                                        10,464                      14,646
                                                                       ---------                  -----------
  Sub-total other revenue                                             $   28,883                  $   36,973
                                                                      ----------                  -----------
    Total revenues                                                    $  529,105                  $  525,144
                                                                      ==========                  ===========
</TABLE>

                      See Notes to Financial Statements.
                                      - 4 -
<PAGE>


                           PIONEER STREET ASSOCIATES

                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                                  2000                         1999
                                                                  -----                        -----
<S>                                                                    <C>                   <C>
OPERATING EXPENSES

     Renting expenses
         Advertising                                                   $      27                   $     - -
         Miscellaneous renting expenses                                   20,282                      13,942
                                                                       ---------                   ----------
             Sub-total renting expenses                                $  20,309                   $  13,942
                                                                       ---------                   ----------
     Administrative expenses
         Office salaries                                               $     - -                   $     - -
         Office supplies                                                   1,132                       1,117
         Office rent                                                         - -                         - -
         Management fee                                                   40,920                      38,201
         Manager's salary                                                 22,138                      21,536
         Legal expense                                                       429                       6,900
         Audit expense                                                     3,565                       3,475
         Bookkeeping / accounting services                                   - -                         - -
         Telephone and answering service                                     722                         796
         Bad debts                                                           - -                         - -
         Miscellaneous administrative expenses                                28                         - -
                                                                       ---------                   ----------
             Sub-total administrative expenses                         $  68,934                   $  72,025
                                                                       ---------                   ----------
     Utilities expense
         Fuel oil / coal                                               $     - -                   $     - -
         Electricity                                                       9,295                       8,044
         Water                                                            11,886                      11,542
         Gas                                                                 - -                         - -
         Sewer                                                             2,554                       3,830
                                                                       ---------                   ----------
             Sub-total utilities expense                               $  23,735                   $  23,416
                                                                       =========                   ==========
</TABLE>

                       See Notes to Financial Statements.
                                      - 5 -
<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                2000                        1999
                                                                -----                      ------
<S>                                                                   <C>                         <C>
Operating and maintenance expense
         Janitor and cleaning payroll                                 $      - -                  $      - -
         Janitor and cleaning supplies                                       - -                         - -
         Janitor and cleaning contract                                       - -                         - -
         Exterminating payroll / contract                                    - -                         - -
         Exterminating supplies                                              - -                         - -
         Garbage and trash removal                                        16,459                      15,959
         Security payroll / contract                                         - -                         - -
         Grounds payroll                                                     - -                         - -
         Grounds supplies                                                    - -                         - -
         Grounds contract                                                 22,588                      14,200
         Repairs payroll                                                  28,924                      29,264
         Repairs material                                                 18,131                      13,196
         Repairs contract                                                 33,060                      18,133
         Elevator maintenance / contract                                     - -                         - -
         Heating / cooling repairs and maintenance                           - -                         - -
         Swim pool maintenance / contract                                    - -                         - -
         Snow removal                                                        - -                         - -
         Decorating payroll / contract                                       - -                         - -
         Decorating supplies                                               2,052                       1,633
         Vehicle and maintenance equipment o & r                             - -                         - -
         Miscellaneous operating and maint. expenses                       8,516                         949
                                                                      ----------                  -----------
             Sub-total operating & maint. expense                     $  129,730                  $   93,334
                                                                      ----------                  -----------
     Taxes and insurance
         Real estate taxes                                            $   37,321                  $   46,488
         Payroll taxes                                                     4,772                       4,875
         Miscellaneous taxes, licenses, and permits                          205                         175
         Property and liability insurance                                  6,018                       6,663
         Fidelity bond insurance                                             - -                         - -
         Workman's compensation                                            5,237                       3,652
         Health insurance and other employee benefits                      4,541                       4,180
         Other insurance                                                     - -                         - -
                                                                       ---------                  -----------
             Sub-total taxes & insurance                              $   58,094                  $   66,033
                                                                       ---------                  -----------
                    Total operating expenses                          $  300,802                  $  268,750
                                                                      ==========                  ===========
</TABLE>

                       See Notes to Financial Statements.
                                      - 6 -
<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                                2000                        1999
                                                                ----                        -----
<S>                                                                   <C>                          <C>
OTHER EXPENSES
     Interest expense - mortgage                                      $  153,003                   $ 154,753
     Interest expense - notes                                                - -                         - -
     Miscellaneous financial expense                                         - -                         - -
     Depreciation and amortization                                       150,206                     150,207
     Limited partnership tax                                                 800                         800
     Non project expenses                                                  4,000                       5,000
                                                                      ----------                   ----------
         Sub-total other expenses                                     $  308,009                   $ 310,760
                                                                      ----------                   ----------
                    Total expenses                                    $  608,811                   $ 579,510
                                                                      ----------                   ----------
                    Net income (loss)                                 $  (79,706)                  $ (54,366)
                                                                      ===========                  ==========
</TABLE>

                       See Notes to Financial Statements.
                                      - 7 -
<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' EQUITY
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>
                                                                                 General                     Limited
                                                      Total                      Partners                    Partner
                                                      -------                    --------                    --------
<S>                                                   <C>                         <C>                        <C>
Partners' equity
     December 31, 1998                                $ 1,832,905                 $ (152,113)                $ 1,985,018

Partners' capital
     contributions                                            - -                        - -                         - -

Partners' capital
     distributions                                         12,999)                   (12,999)                        - -

Net income (loss)                                         (54,366)                      (544)                    (53,822)
                                                      ------------                -----------                ------------
Partners' equity
     December 31, 1999                                $ 1,765,540                 $ (165,656)                $ 1,931,196

Partners' capital
     contributions                                            - -                         - -                         - -

Partners' capital
     distributions                                        (49,000)                   (49,000)                         - -

Net income (loss)                                         (79,706)                      (797)                    (78,909)
                                                      ------------                -----------                ------------
Partners' equity
     December 31, 2000                                $ 1,636,834                 $ (215,453)                $ 1,852,287
                                                      ============                ===========                ============
Percentage at
     December 31, 2000                                       100%                          1%                         99%
                                                       ============               =============              =============
</TABLE>

                       See Notes to Financial Statements.
                                      - 8 -
<PAGE>

                           PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>

                                                                2000                        1999
                                                                -----                      ------
<S>                                                                   <C>                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                $  (79,706)                 $ (54,366)
     Adjustments to reconcile net income
      (loss) to net cash provided by
       (used in) operating activities:
         Depreciation and amortization                                   150,206                    150,207
         Change in assets and liabilities:
          Decrease (increase) in:
             Rents receivable                                                - -                        - -
             Prepaid expenses                                               (171)                       679
             Tenants' security deposits                                   (1,406)                      (894)
             Tax and insurance impounds                                    9,858                       (312)
          Increase (decrease) in:
             Accounts payable                                              9,612                     (4,162)
             Bank overdraft                                                  - -                         - -
             Accrued reporting fee                                         2,000                     (1,000)
             Accrued interest                                             12,680                         - -
             Prepaid rents                                                   - -                         - -
             Tenants' security deposits                                      - -                         - -
             Net cash provided by (used in)                           ----------                  ----------
             operating activities                                     $  103,073                  $  90,152
                                                                      ----------                  ----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Funding of replacement reserve                                   $  (31,347)                 $ (35,319)
     Withdrawals from replacement reserve                                    - -                         - -
     Acquisition of property and equipment                                   - -                         - -
                 Net cash provided by (used in)
                                                                      ----------                  ----------
                     investing activities                             $  (31,347)                 $ (35,319)
                                                                      ----------                  ----------
CASH FLOWS FROM FINANCING ACTIVITIES
     Partner contributions                                            $      - -                  $     - -
     Partner distributions                                               (49,000)                   (12,999)
     Principal payments on long-term debt                                (20,439)                   (20,624)
                                                                      ----------                  ----------
             Net cash provided by (used in)
                     financing activities                             $  (69,439)                 $ (33,623)
                                                                      ==========                  ==========
</TABLE>

                       See Notes to Financial Statements.
                                      - 9 -
<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>


                                                                2000                        1999
                                                                ----                        ----

<S>                                                                   <C>                         <C>
                 Increase (decrease) in cash and
                     cash equivalents                                 $    2,287                  $  21,210

Cash and cash equivalents
     Beginning                                                            85,496                     64,286
                                                                      ----------                  ----------
     Ending                                                           $   87,783                  $  85,496
                                                                      ----------                  ----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION
         Cash paid during the year for interest, net
             of capitalized interest                                  $  153,003                  $ 154,753
                                                                      ==========                  ==========
</TABLE>

                       See Notes to Financial Statements.
                                     - 10 -

<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary of the Partnership's significant accounting policies consistently
     applied  in  the  preparation  of  the  accompanying  financial  statements
     follows.

     Capitalization and Depreciation
     -------------------------------
     Land,  buildings and  improvements  are recorded at cost.  Depreciation  of
     buildings  and  equipment  is  computed   principally  using  the  Modified
     Accelerated  Cost  Recovery  System which  approximates  straight-line  for
     buildings and  double-declining  balance for  equipment  over the following
     estimated useful lives:

                                                                      Years
                                                                      -----

                     Buildings                                         27.5
                     Equipment                                          7

     Improvements  are  capitalized,  while  expenditures  for  maintenance  and
     repairs are charged to expense as incurred.  Upon  disposal of  depreciable
     property,  the  appropriate  property  accounts  are reduced by the related
     costs and  accumulated  depreciation.  The  resulting  gains and losses are
     reflected in the statement of operations.

     Cash and cash equivalents
     -------------------------
     For purposes of reporting  the  statements of cash flows,  the  Partnership
     includes all cash accounts which are not subject to withdrawal restrictions
     or  penalties,  and all highly  liquid debt  instruments  purchased  with a
     maturity  of  three  months  or less as cash and  cash  equivalents  on the
     accompanying balance sheet.

     Amortization
     ------------
     Deferred  charges are amortized over the following  estimated  useful lives
     using the straight-line method:

                                                         Years
                                                         -----
                     Deferred debt expense                  30
                     Tax credit monitoring fee              15


      Income Taxes
      ------------
     No  provision  or  benefit  for  income  taxes has been  included  in these
     financial statements since taxable income or loss passes through to, and is
     reportable by, the partners individually.


                                     - 11 -
<PAGE>

NOTES TO FINANCIAL STATEMENTS




Note 1 - Summary of Significant Accounting Policies (continued)

      Estimates
      ---------

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions that affect certain reported amounts and disclosures.

     Personal Assets and Liabilities
     -------------------------------
     In accordance with the generally accepted method of presenting  partnership
     financial statements,  the financial statements do not include the personal
     assets and  liabilities  of the partners,  including  their  obligation for
     income  taxes  on  their  distributive  shares  of the  net  income  of the
     Partnership, nor any provision for income tax expense.


NOTE 2 - ORGANIZATION

     Pioneer Street  Associates is a California  Limited  Partnership  which was
     formed in February 1994, to develop, construct, own, maintain and operate a
     112-unit multi-family  apartment complex known as Foothill Vista Apartments
     and is located in the city of Bakersfield, California. The major activities
     of the  Partnership  are  governed by the  Partnership  Agreement  and Loan
     Agreement with the California Community Reinvestment  Corporation (CCRC), a
     California nonprofit public benefit corporation.  Under the Loan Agreement,
     the  Partnership  is required  to provide  low cost  housing to moderate or
     low-income households.

     The  Partnership  has three  general  partners  and one  investing  limited
     partner.  Partnership  transactions with the general partners are described
     in other notes to this financial statement.


NOTE 3 - Deferred charges

     Deferred  charges  as of  December  31,  2000  and  1999,  consists  of the
     following:


                                              2000         1999
                                              ----         -----

    Deferred debt expense                $  39,200       $  39,200
    Tax credit monitoring fee               26,650          26,650
                                         ---------       ------------
                                         $  65,850       $  65,850
                                         =========       ============

   Less accumulated amortization            16,487          13,403
                                         ---------       ------------
                                         $  49,363       $  52,447

                                         =========       ===========

                                       12

<PAGE>




NOTES TO FINANCIAL STATEMENTS




Note 4 - Restricted deposits and Funded reserves

     In  accordance  with  the  Partnership  and the  CCRC  Replacement  Reserve
     Agreements,  the Partnership is required to maintain a replacement  reserve
     account.  The  account  is to be funded  annually  in the amount of $28,000
     until the aggregate balance of the account reaches $182,000.


Note 5 - Long-Term Debt

     Long-Term  debt  consisted of a permanent  loan with CCRC in face amount of
     $1,960,000.

     Under the terms of the 30-year Promissory Note with CCRC, the loan provides
     for an initial  interest  rate of 8.17% and monthly  payments of $14,614.74
     commencing on November 1, 1995, and continuing  through September 2025. The
     interest rate and monthly  payment will be adjusted at year eleven (11) and
     year  Twenty-one  (21),  at which time the  interest  rate will be adjusted
     based on the Current  Index plus 2.75% and the payment will be adjusted and
     determined by the amount of the monthly payment that would be sufficient to
     repay  the note  within  360  months of the  initial  payment  date.  As of
     December 31, 1999 the current  interest,  rate and minimum  monthly payment
     due is 8.17% and $14,617.74, respectively.

     The  apartment  complex is pledged as  collateral  for the  mortgage and is
     secured by deeds of trust,  assignment of rents,  security  agreements  and
     fixture filings against the property.

     Aggregate  maturities  of  Long-term  debt for the next  five  years are as
     follows:

                  December 31, 2001               $    23,655
                               2002                    26,114
                               2003                    28,329
                               2004                    30,733
                               2005                    33,340
                         Thereafter                 1,720,238
                                                  ------------
                              TOTAL               $ 1,862,409
                                                  =============

NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

     Annual reporting Fee
     --------------------
     An annual  reporting fee of $2,000 is payable to the limited  partner,  WNC
     California  Housing Tax Credit Fund IV, L.P. Series 2, an investor  limited
     partner which holds a 99% interest in the  partnership,  for services to be
     rendered for accounting  matters relating to preparation of tax returns and
     other reports required.

     Annual PARTNERSHIP administrative Fee
     -------------------------------------
     An  annual  partnership  administrative  fee of $2,000  is  payable  to the
     general partners,  for their services to be rendered in connection with the
     administration of the day to day business of the Partnership.



                                     - 13 -
<PAGE>

NOTES TO FINANCIAL STATEMENTS




NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (continued)


       Management Fee
       --------------

       In accordance with the management  agreement,  the Partnership paid Tetra
       Property Management Company, affiliates of one of the general partners, a
       management fee during 2000 in the amount of 40,920, for services rendered
       in connection with the leasing and operation of the project.  The fee for
       its services is approximately 8% of the project's rental income.

NOTE   7 - concentration of credit risk

       The  Partnership  maintains  cash and cash  equivalents  at two financial
       institutions  located in  California.  The  accounts  are  insured by the
       Federal  Deposit  Insurance  Corporation  up to  $100,000  per  financial
       institution.  At December  31,  1999,  the  Partnership'  uninsured  cash
       balances totaled $82,212

Note 8 - Commitment

       The Partnership  entered into a Regulatory  Agreement with the Tax Credit
       Allocation  Committee  (TCAC),  established  under  Section  50185 of the
       Health and Safety Code of the State of California.  Under this Agreement,
       the  Partnership  shall  maintain  the project as a Qualified  Low-income
       Housing  Project for a period of 55 consecutive  taxable years  beginning
       with 1995, the first taxable year of the Credit  Period.  In exchange for
       this  agreement,  TCAC  has  authorized  an  allocation  relating  to the
       low-income  housing  credit  under the  provisions  of  Section 42 of the
       Internal Revenue Code.


Note 9 - Current VULNERABILITY due to certain concentrations

       The  Partnership's   sole  asset  is  Foothill  Vista   Apartments.   The
       Partnership's  operations are concentrated in the multifamily real estate
       market.





                                     - 14 -