FORM 10-K/A
                                 AMENDMENT NO. 1

                       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 December 31, 1998

                                       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: 0-28370


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

California                                                           33-0596399
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 X No ____

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

                                       1

<PAGE>


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  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.
The business of the Partnership is conducted  primarily through  Associates,  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

                                       3
<PAGE>


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 an Housing Complex prior to the end thereof, possibly
resulting in recapture of Low Income Housing Credits.

As of December 31,  1998,  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  makes  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 December 31, 1998 and for
the periods indicated.



                                       4



<PAGE>

<TABLE>
<CAPTION>

                                        --------------------------------------------------------------------------------------------
                                                       As of December 31, 1998
                                        --------------------------------------------------------------------------------------------
                                                                      Partnership's
                                                                      Total Investment  Amount of    Estimated Low   Encumbrances of
Partnership                   General Partner    Number of     Occu-  in Local Limited  Investment   Income Housing  Local Limited
Name              Location    Name                   Units     pancy  Partnerships      Paid to Date    Credits      Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>         <C>                        <C>   <C>     <C>            <C>             <C>            <C>

Apartment Housing East        Apartment Developers
of East Brewton,  Brewton,    Inc. and Thomas H.
Ltd.              Alabama     Cooksey                    40       0%   $ 1,255,000    $   828,000     No Form 8609   $  1,011,000


Autumn Trace      Silsbee,    Olsen Securities Corp.     58     100%       412,000        412,000      $   714,000      1,269,000
Associates, Ltd.  Texas

Broken Bow        Broken Bow, Retro Development, Inc.    16      88%       608,000        546,000        1,127,000        750,000
Apartments I,     Nebraska
Limited
Partnership

Candleridge       Waukee,     Eric A. Sheldahl           23     100%       125,000        125,000          230,000        685,000
Apartments of     Iowa
Waukee L.P. II

Chadwick Limited  Edan, North Boyd Management, Inc.
Partnership       Carolina    Gordon L. Blackwell
                              and Regency Investment
                              Associates                 48     100%       378,000        378,000          735,000      1,571,000

Comanche          Comanche,   Max L. Rightmer            22      92%       136,000        136,000          265,000        594,000
Retirement        Texas
Village, Ltd.

Crossings II      Portage,    Raymond T. Cato, Jr.      114      81%       432,000        361,000          739,000      6,074,000
Limited Dividend  Michigan
Housing
Association
Limited
Partnership

EW, a Wisconsin   Evansville, Philip Wallis, James
Limited           Wisconson   Poehlman, Cynthia
Partnership                   Solfest Wallis, and
                              Anita Poehlman             16     100%       164,000        164,000          306,000        628,000



</TABLE>

                                       5


<PAGE>
<TABLE>
<CAPTION>


                                        --------------------------------------------------------------------------------------------
                                                       As of December 31, 1998
                                        --------------------------------------------------------------------------------------------
                                                                      Partnership's
                                                                      Total Investment  Amount of    Estimated Low   Encumbrances of
Partnership                   General Partner    Number of     Occu-  in Local Limited  Investment   Income Housing  Local Limited
Name              Location    Name                   Units     pancy  Partnerships      Paid to Date    Credits      Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>         <C>                        <C>    <C>      <C>            <C>              <C>            <C>

Garland Street    Malvarn,    Conrad L. Beggs,
Limited           Arkansas    Audrey D. Beggs,
Partnership                   Russell J. Altizer,
                              and Marjorie L. Beggs      18     100%       164,000         164,000         319,000        699,000

Hereford Seniors  Hereford,   Winston Sullivan           28      96%       167,000         167,000         330,000        804,000
Community, Ltd.   Texas

Hickory Lane      Newton,     Olsen Securities Corp.     24      98%       174,000         174,000         320,000        597,000
Associates, Ltd   Texas

Honeysuckle Court Vidor,      Olsen Securities Corp      48     100%       339,000         339,000         622,000      1,168,000
Associates, Ltd.  Texas

Klimpel Manor,    Fullerton,  Klimpel Manor
Ltd               California  Apartments                 59      96%     1,774,000       1,774,000       3,360,000      1,984,000

Lamesa Seniors    Lamesa,     Winston Sullivan           24      98%       143,000         143,000         284,000        675,000
Community, Ltd.   Texas

Laredo Heights    Navasota,   Donald W. Sowell           48      96%       225,000         225,000         413,000      1,001,000
Apartments Ltd.   Texas

Mountainview      North       John C. Loving and
Apartments        Wilkesboro, Gordon D. Brown, Jr.       24     100%       195,000         195,000         387,000      1,002,000
Limited           North
Partnership       Carolina

Palestine Seniors Palestine,  Winston Sullivan           42     100%       225,000         225,000         446,000      1,132,000
Community, Ltd.   Texas
</TABLE>


                                       6

<PAGE>

<TABLE>
<CAPTION>


                                        --------------------------------------------------------------------------------------------
                                                       As of December 31, 1998
                                        --------------------------------------------------------------------------------------------
                                                                      Partnership's
                                                                      Total Investment  Amount of    Estimated Low   Encumbrances of
Partnership                    General Partner    Number of     Occu-  in Local Limited  Investment   Income Housing  Local Limited
Name            Location       Name                   Units     pancy  Partnerships      Paid to Date    Credits      Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>             <C>            <C>                       <C>    <C>      <C>            <C>              <C>            <C>

Pecan Grove     Forrest City,  Conrad Beggs, Audrey
Limited         Arkansas       Beggs and Russell
Partnership                    Altizer                   32      98%       240,000       240,000          486,000        1,118,000

Pioneer Street  Bakersfield,   Philip R. Hammond, Jr.
Associates      California     and Walter A. Dwelle     112      78%     2,222,000     2,222,000        4,116,000        1,903,000


Sidney          Sidney,        Retro Development,
Apartments      Nebraska       Inc.  And Most
I, Limited                     Worshipful Prince Hall
Partnership                    Grand Lodge               18     100%       530,000       484,000     No Form 8609          444,000

Southcove       Orange Cove,   Philip R. Hammond, Jr.
Associates      Califonia      and Diane M. Hammond      54     100%     2,000,000     2,000,000        3,585,000        1,538,000


Walnut Turn     Buna, Texas    Olsen Securities Corp.    24     100%       188,000       188,000          344,000          692,000
Associates,                                             ---     ----     ---------     ---------        ---------        ---------
Ltd.
                                                        892      92%   $12,096,000   $11,490,000      $19,128,000      $27,339,000
                                                        ===     ===     ==========    ==========       =========        ==========


</TABLE>
                                       7


<PAGE>

<TABLE>
<CAPTION>

                                ------------------------------------------------
                                      For the year ended December 31, 1998
                                ------------------------------------------------
                                                              Low Income Housing
                                       Rental                 Credits Allocated
Partnership Name                       Income      Net loss   to Partnership
--------------------------------------------------------------------------------
<S>                               <C>             <C>                    <C>

Apartment Housing of East
Brewton, Ltd.                     $         -     $        -             98.99%


Autumn Trace Associates, Ltd.         206,000        (43,000)            95.00%


Broken Bow Apartments I,
Limited Partnership                    39,000       (117,000)            99.00%

Candleridge Apartments of
Waukee L.P. II                        116,000         (8,000)            99.00%

Chadwick Limited Partnership          188,000        (18,000)            99.00%

Comanche Retirement Village,
Ltd.                                   63,000        (21,000)            99.00%

Crossings II Limited Dividend
Housing Association Limited
Partnership                           692,000        (19,000)            98.99%

EW, a Wisconsin Limited
Partnership                           105,000        (20,000)            99.00%

Garland Street Limited
Partnership                            66,000        (26,000)            99.00%

Hereford Seniors Community,
Ltd.                                   89,000         (7,000)            99.00%

Hickory Lane Associates, Ltd           81,000        (13,000)            99.00%

Honeysuckle Court Associates,
Ltd.                                  191,000        (18,000)            95.00%

Klimpel Manor, Ltd                    344,000        (85,000)            96.00%

Lamesa Seniors Community, Ltd.         84,000         (8,000)            99.00%


Laredo Heights Apartments Ltd.        166,000         (9,000)            99.00%


Mountainview Apartments
Limited Partnership                    90,000        (11,000)            99.00%

Palestine Seniors Community,
Ltd.                                  135,000         (1,000)            99.00%

Pecan Grove Limited Partnership       114,000        (46,000)            99.00%
</TABLE>

                                       8

<PAGE>
<TABLE>
<CAPTION>

                                ------------------------------------------------
                                      For the year ended December 31, 1998
                                ------------------------------------------------
                                                              Low Income Housing
                                       Rental                 Credits Allocated
Partnership Name                       Income      Net loss   to Partnership
--------------------------------------------------------------------------------
<S>                               <C>             <C>                    <C>

Pioneer Street Associates        $   507,000      $ (37,000)             99.00%

Sidney Apartments I, Limited
Partnership                           77,000        (42,000)             99.00%

Southcove Associates                 218,000       (102,000)             99.00%

Walnut Turn Associates, Ltd.         129,000        (17,000)             99.00%
                                   ---------      ---------

                                 $ 3,700,000     $ (668,000)
                                   =========      =========


</TABLE>













                                      9



<PAGE>


Item 3.  Legal Proceedings

NONE.

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  Partnerships  Agreement of
     Limited Partnership ("Partnership Agreement") are satisfied.

(b)  At December 31, 1998, there were 836 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 1998.

Item 5b.

NOT APPLICABLE

Item 6.  Selected Financial Data

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

                                       1998              1997             1996              1995             1994
                                       ----              ----             ----              ----             ----
ASSETS
<S>                             <C>               <C>               <C>              <C>               <C>
Cash and cash equivalents       $    738,364      $   1,480,862     $  2,371,389     $  5,285,730      $    720,130

Subscriptions receivable                   -                 -                 -                -           597,100
Investments in limited
    partnerships, net             10,274,595         9,738,583        10,096,100        9,417,744         6,235,586
Due from affiliate                         -                 -            53,200                -                 -
Loan receivable                            -           259,496                 -                -           880,760
Other assets                           2,534            20,245            10,956           29,568             2,128
                                  ----------        ----------        ----------       ----------         --------
                                $ 11,015,493      $ 11,499,186      $ 12,531,645     $ 14,733,042      $  8,435,704
                                  ==========        ==========        ==========       ==========        ==========

<CAPTION>

LIABILITIES
<S>                             <C>               <C>               <C>              <C>               <C>
Due to limited partnerships     $    605,517      $    411,543      $    666,716     $  2,134,797      $  3,276,750

Accrued interest payable                   -                 -                 -                -               404

Loan payable                               -                 -                 -                -           280,569

Accrued fees and expenses
    due to general partner
    and affiliates                    28,066             1,137             9,339          146,685           414,501

PARTNERS' EQUITY                  10,381,910        11,086,506        11,855,590       12,451,560         4,463,480
                                  ----------        ----------        ----------       ----------         --------
                                $ 11,015,493      $ 11,499,186      $ 12,531,645     $ 14,733,042      $  8,435,704
                                  ==========        ==========        ==========       ==========        ==========

</TABLE>

                                       10

<PAGE>


Selected  results  of  operations,  cash  flows  and other  information  for the
Partnership are as follows for the years ended December 31:
<TABLE>
<CAPTION>

                                1998              1997               1996               1995              1994
                                ----              ----               ----               ----              ----

<S>                        <C>                <C>               <C>                <C>                <C>
Loss from operations       $     (50,484)     $     (31,969)    $      55,374      $      56,606      $     (25,432)

Equity in losses from
 limited partnerships           (658,728)          (737,115)         (628,631)          (628,521)          (239,118)
                               ---------          ---------         ---------          ---------          ---------
Net loss                   $    (709,212)     $    (769,084)    $    (573,257)     $    (571,915)     $    (264,550)
                               =========          =========         =========          =========          =========

Net loss allocated to:
     General partner       $      (7,092)     $      (7,691)    $      (5,733)     $      (5,719)     $      (2,646)
                               =========          =========         =========          =========          =========
     Limited partners      $    (702,120)     $    (761,393)    $    (567,524)     $    (566,196)     $    (261,904)
                               =========          =========         =========          =========          =========
Net loss per limited
 partner unit              $      (45.01)     $      (48.81)    $      (36.38)     $      (46.90)     $      (92.74)
                               =========          =========         =========          =========          =========
Outstanding weighted
 limited partner units            15,600             15,600            15,600             12,073              2,824
                               =========          =========         =========          =========          =========
<CAPTION>

                                1998              1997               1996               1995              1994
                                ----              ----               ----               ----              ----
Net cash provided by
 (used in):
<S>                        <C>                 <C>              <C>                 <C>               <C>
    Operating activities   $      26,255       $     52,765     $      60,895       $     54,970      $     (25,518)
    Investing activities        (768,753)          (935,090)       (2,837,890)        (5,315,585)        (4,655,255)
    Financing activities               -             (8,202)         (137,346)         9,826,215          5,400,903
                               ---------          ---------         ---------          ---------          ---------
Net change in cash and
 cash equivalents               (742,498)          (890,527)       (2,914,341)         4,565,600            720,130
Cash and cash
 equivalents, beginning
 of period                     1,480,862          2,371,389         5,285,730            720,130                  -
                               ---------          ---------         ---------          ---------          ---------
Cash and cash
 equivalents, end of
 period                    $     738,364       $  1,480,862     $   2,371,389       $  5,285,730       $    720,130
                               =========          =========         =========          =========          =========
</TABLE>

Low Income  Housing  Credit per Unit was as follows for the years ended December
31:
<TABLE>
<CAPTION>

                                1998              1997               1996               1995              1994
                                ----              ----               ----               ----              ----
<S>                        <C>                 <C>              <C>                  <C>                <C>
Federal                    $         124       $        113     $         105        $        76        $        29
State                                  -                  -                 -                  -                  -
                               ---------          ---------         ---------          ---------          ---------
Total                      $         124       $        113     $         105        $        76        $        29
                               =========          =========         =========          =========          =========
</TABLE>

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

Financial Condition

The Partnership's assets at December 31, 1998 consisted primarily of $738,000 in
cash and aggregate  investments in the twenty-two Local Limited  Partnerships of
$10,275,000. Liabilities at December 31, 1998 primarily consisted of $606,000 in
payables to limited  partnerships and $22,000 of accrued annual  management fees
due to the General Partner.


                                       11
<PAGE>

Results of Operations

Year Ended  December 31, 1998  Compared to Year Ended  December  31,  1997.  The
Partnership's net loss for 1998 was $(709,000), reflecting a decrease of $60,000
from the net loss  experienced in 1997. The decline in net loss is primarily due
to equity in losses from limited  partnerships  which  declined to $(659,000) in
1998 from $(737,000) in 1997 and a decrease in  amortization  expense of $9,000,
partially offset by a decrease in interest income of $27,000.

Year Ended  December 31, 1997  Compared to Year Ended  December  31,  1996.  The
Partnership's  net loss  for 1997 was  $(769,000),  reflecting  an  increase  of
$196,000  from the net loss  experienced  in 1996.  The  increase in net loss is
primarily due to equity in losses from limited  partnerships  which increased to
$(737,000) in 1997 from  $(629,000) in 1996 and a decrease in interest income of
$88,000.

Cash Flows

Year Ended  December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was  $(742,000),  compared to net cash used in 1997 of  $(891,000).
The  change was due  primarily  to a decrease  in cash used for  investments  in
limited partnerships of $164,000, a refund of offering expenses received in 1998
of $5,000,  and a decrease in cash paid to the General Partner and or affiliates
of  $17,000,  partially  offset by a decrease  in  interest  income  received of
$35,000,  and a decline in  distributions  from Local  Limited  Partnerships  of
$2,000.

Year Ended  December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was  $(891,000),  compared to  $(2,914,000) in 1996. The change was
due primarily to a decrease in cash used for investments in limited partnerships
of $1,876,000,  a decrease in cash paid to the General Partner and or affiliates
of  $215,000,  a decrease  in  offering  expenses  of $23,000  and a decrease in
interest  paid of $5,000,  partially  offset by a decrease  in  interest  income
received of $96,000.

During  1998  accrued  payables,   which  consist  primarily  of  related  party
management fees due to the General  Partner,  increased by $27,000.  The General
Partner does not anticipate that these accrued fees will be paid until such time
as  capital  reserves  are  in  excess  of  future  forseeable  working  capital
requirements of the Partnership

The Partnership  expects its future cash flows,  together with its net available
assets at December 31, 1998, to be  sufficient to meet all currently  forseeable
future cash requirements.

Impact of Year 2000 Issue

The General  Partner has assessed the  Partnership's  exposure to date sensitive
computer  systems that may not be operative  subsequent  to 1999. As a result of
this  assessment,  the  General  Partner  has  executed a plan to  minimize  the
Partnership's  exposure to financial loss and/or  disruption of normal  business
operations  that may  occur  as a result  of Year  2000  non-compliant  computer
systems.

Business Computer Systems

These systems include both computer hardware and software  applications relating
to operations such as financial reporting. The Partnership does not maintain its
own systems and thus utilizes the computer systems of the General  Partner.  The
General Partner  developed a compliance  plan for each of its business  computer
systems,  with  particular  attention  given to  critical  systems.  The General
Partner  contracted  with an outside  vendor to  evaluate,  test and repair such
systems.  The assessment  consisted of determining the compliance with Year 2000
of critical  computer hardware and software.  Incidences of non-compliance  were
found with respect to computer  software  applications  and were corrected.  The
vendor found no instances of non-compliance  with respect to computer  hardware.
The amount expended and to be expended by the General Partner is nominal.

                                       12

<PAGE>


The Local General Partners or property  managers  maintain the business computer
systems that relate to the  operations  of the Local Limited  Partnerships.  The
General  Partner is in the process of obtaining  completed  questionnaires  from
such Local General  Partners and property  management  companies to assess their
respective  Year 2000  readiness.  The General Partner intends to identify those
Local  General  Partners and  property  management  companies  that have systems
critical to the operations of the Local Limited  Partnerships  that are not Year
2000  compliant.  For those  Local  General  Partners  and  property  management
companies  which  have  business  computer  systems  which will not be Year 2000
compliant  prior  to the Year  2000 and  where  the lack of such  compliance  is
determined to have a potential  material effect on the  Partnership's  financial
condition  and results of  operations,  the General  Partner  intends to develop
contingency plans which may include changing property management companies.

Outside Vendors

The General  Partner has obtained  assurances  from its  suppliers of electrical
power and banking and telecommunication services that their critical systems are
all Year 2000 compliant.  There exists,  however,  inherent uncertainty that all
systems of outside vendors or other third parties on which the General  Partner,
and thus the Partnership, and the Local General Partners and property management
companies,  and thus the  Local  Limited  Partnerships  rely  will be Year  2000
compliant. Therefore, the Partnership remains susceptible to the consequences of
third party critical computer systems being non-compliant.

Personal Computers

The General  Partner has  determined  that its  personal  computers  and related
software critical to the operations of the Partnership are Year 2000 compliant.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data










                                       13
<PAGE>















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

                              FINANCIAL STATEMENTS

              For The Years Ended December 31, 1998, 1997 and 1996

                                      with

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS















                                       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  sheet of WNC Housing Tax Credit Fund
IV, L.P., Series 2 (a California Limited  Partnership) (the "Partnership") as of
December 31, 1998, and the related  statements of operations,  partners'  equity
(deficit) and cash flows for the year then ended. 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 audit. We did not
audit the financial  statements of the limited partnerships in which WNC Housing
Tax Credit Fund IV, L.P., Series 2 is a limited partner.  These investments,  as
discussed in Note 3 to the financial statements, are accounted for by the equity
method.  The  investments in these limited  partnerships  represented 93% of the
total assets of WNC Housing Tax Credit Fund IV,  L.P.,  Series 2 at December 31,
1998.  Substantially all of the financial statements of the limited partnerships
were audited by other  auditors whose reports have been furnished to us, and our
opinion,  insofar  as it  relates  to the  amounts  included  for those  limited
partnerships, is based solely on the reports of the other auditors.

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

In our  opinion,  based on our  audit and the  reports  of other  auditors,  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 December 31, 1998, and the results of its
operations  and its cash  flows  for the year then  ended,  in  conformity  with
generally accepted accounting principles.




                                               BDO SEIDMAN, LLP

Orange County, California
April 9, 1999









                                       15
<PAGE>



                          INDEPENDENT AUDITORS' REPORT



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


We have audited the  accompanying  balance  sheet of WNC Housing Tax Credit Fund
IV, L.P., Series 2 ( a California Limited Partnership) (the "Partnership") as of
December 31, 1997, and the related  statements of operations,  partners'  equity
(deficit)  and cash  flows for each of the years in the  two-year  period  ended
December 31, 1997.  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  audit.  We did  not  audit  the  financial
statements of the limited  partnerships in which WNC Housing Tax Credit Fund IV,
L.P., Series 2 is a limited partner.  These investments,  as discussed in Note 2
to the  financial  statements,  are  accounted  for by the  equity  method.  The
investment in these limited partnerships  represented 85% of the total assets of
WNC  Housing  Tax  Credit  Fund  IV,  L.P.,  Series  2  at  December  31,  1997.
Substantially all of the financial  statements of the limited  partnerships were
audited by other  auditors  whose  reports  have been  furnished  to us, and our
opinion,  insofar  as it  relates  to the  amounts  included  for these  limited
partnerships, is based solely on the reports of the other auditors.

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

In our opinion,  based on our audits and the reports of the other auditors,  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 December 31, 1997, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 1997, in conformity with generally accepted accounting principles.



                                                  CORBIN & WERTZ

Irvine, California
April 23, 1998













                                       16
<PAGE>


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

                                 BALANCE SHEETS

                           December 31, 1998 and 1997



                                                1998                1997
                                                ----                ----

ASSETS

Cash and cash equivalents                $        738,364    $      1,480,862
Investments in limited
 partnerships (Note 3)                         10,274,595           9,738,583
Loans receivable (Note 2)                               -             259,496
Other assets (including due
 from related parties of $2,534                     2,534              20,245
 and $18,636 as of December 31,
 1998 and 1997, respectively)             ---------------     ---------------
                                         $     11,015,493    $     11,499,186
                                          ===============     ===============

LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)

Liabilities:
 Payables to limited partnerships
  (Note 5)                               $        605,517    $        411,543
 Accrued fees and advances due to
  General Partner and
  affiliate (Note 4)                               28,066               1,137
                                          ---------------     ---------------

         Total liabilities                        633,583             412,680
                                          ---------------     ---------------

Partners' equity (deficit):
 General partner                                  (48,493)            (41,447)
 Limited partners (20,000 units
  authorized, 15,600 units
  outstanding)                                 10,430,403          11,127,953
                                          ---------------     ---------------

         Total partners' equity                10,381,910          11,086,506
                                          ---------------     ---------------

                                         $     11,015,493    $     11,499,186
                                          ===============     ===============



                 See accompanying notes to financial statements
                                       17


<PAGE>


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

                            STATEMENTS OF OPERATIONS

              For The Years Ended December 31, 1998, 1997 and 1996


                                          1998           1997           1996
                                          ----           ----           ----

Interest income                    $      47,017   $     74,570   $    161,610
                                     -----------    -----------    -----------

Operating expenses:
 Amortization (Note 3)                    32,099         40,823         40,109
 Asset management fees (Note 4)           42,900         42,900         42,900
 Interest expense                              -              -          5,350
 Other                                    22,502         22,816         17,877
                                     -----------    -----------    -----------

    Total operating expenses              97,501        106,539        106,236
                                     -----------    -----------    -----------

Income (loss) from operations            (50,484)       (31,969)        55,374

Equity in losses from limited
 partnerships (Note 3)                  (658,728)      (737,115)      (628,631)
                                     -----------    -----------    -----------

Net loss                           $    (709,212)  $   (769,084)  $   (573,257)
                                     ===========    ===========    ===========

Net loss allocated to:
 General partner                   $      (7,092)  $     (7,691)  $     (5,733)
                                     ===========    ===========    ===========

 Limited partners                  $    (702,120)  $   (761,393)  $   (567,524)
                                     ===========    ===========    ===========

Net loss per limited partner
 unit                              $      (45.01)  $     (48.81)  $     (36.38)
                                     ===========    ===========    ===========

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




                 See accompanying notes to financial statements
                                       18

<PAGE>


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

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

              For The Years Ended December 31, 1998, 1997 and 1996


                                     General         Limited
                                     Partner         Partners          Total
                                     -------         --------          -----

Partners' equity (deficit)
 at January 1, 1996             $    (27,796)  $   12,479,356    $  12,451,560

Offering costs                          (227)         (22,486)         (22,713)

Net loss                              (5,733)        (567,524)        (573,257)
                                  ----------       ----------       ----------

Partners' equity (deficit)
 at December 31, 1996                (33,756)      11,889,346       11,855,590

Net loss                              (7,691)        (761,393)        (769,084)
                                  ----------       ----------       ----------

Partners' equity (deficit)
 at December 31, 1997                (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
                                  ==========       ==========       ==========







                 See accompanying notes to financial statements
                                       19





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

                            STATEMENTS OF CASH FLOWS

              For The Years Ended December 31, 1998, 1997 and 1996


                                              1998        1997            1996
                                              ----        ----            ----
Cash flows from operating
 activities:
 Net loss                               $   (709,212) $ (769,084)  $   (573,257)
 Adjustments to reconcile
  net loss to net cash
  provided by operating activities:
   Amortization                               32,099      40,823         40,109
   Equity in loss of limited
    partnerships                             658,728     737,115        628,631
   Change in other assets                     17,711       9,347         18,612
   Change in due from affiliates                   -      34,564        (53,200)
   Change in accrued fees
    and expenses due to General
    Partner and affiliates                    26,929           -              -
                                          ----------  ----------     ----------
Net cash provided by (used in)
 operating activities                         26,255      52,765         60,895
                                          ----------  ----------     ----------
Cash flows from investing
 activities:
 Investments in limited
  partnerships, net                      (1,037,700)    (674,929)    (2,793,730)
 Capitalized acquisition costs
  and fees                                     (465)      (8,278)       (25,347)
 Distributions from limited
  partnerships                                5,300        7,613          3,900
 Loans receivable                           259,496     (259,496)             -
 Offering expenses                            4,616            -        (22,713)
                                         ----------   ----------     ----------
 Net cash used in investing
  activities                               (768,753)    (935,090)    (2,837,890)
                                         ----------   ----------     ----------
Cash flows from financing
 activities:
  Advances due to general
  partner and affiliates                          -       (8,202)      (137,346)
                                         ----------   ----------     ----------
Net cash used in financing
 activities                                       -       (8,202)      (137,346)
                                         ----------   ----------     ----------
Net decrease in cash and
 cash equivalents                          (742,498)    (890,527)    (2,914,341)

Cash and cash equivalents,
 beginning of year                        1,480,862    2,371,389      5,285,730
                                         ----------   ----------     ----------
Cash and cash equivalents,
 end of year                            $   738,364  $ 1,480,862    $ 2,371,389
                                         ==========   ==========     ==========
SUPPLEMENTAL DISCLOSURE OF CASH
 FLOW INFORMATION:
    Interest paid                       $         -  $         -    $     5,350
                                         ==========   ==========     ==========
    Taxes paid                          $       800  $       800    $       800
                                         ==========   ==========     ==========
  SUPPLEMENTAL DISCLOSURE OF NON-
     CASH FINANCING ACTIVITIES :

  During 1998 and 1997, the  Partnership  recorded  investments  and payables to
  limited partnerships of $427,483 and $225,720, respectively.

                 See accompanying notes to financial statements
                                       20

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

              For The Years Ended December 31, 1998, 1997 and 1996



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. is the original limited partner of the Partnership and owns, through
the Lester Family Trust, 28.6% of the outstanding stock of WNC.

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
loss and in cash available for distribution  from the  Partnership.  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.

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

                                       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 December 31, 1998, 1997 and 1996


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 in 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 2).

Losses from Local  Limited  Partnerships  allocated to the  Partnership  are not
recognized to the extent that the  investment  balance  would be adjusted  below
zero.

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 and $975,333 as of
December 31, 1998 and 1997, respectively.


                                       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 December 31, 1998, 1997 and 1996


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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.  Cash equivalents  totaled
$893,070 at December 31, 1997 which  consisted of investments  in U.S.  Treasury
Bills. The Partnership had no cash equivalents at December 31, 1998.

Concentration of Credit Risk

At December  31, 1998 and 1997,  the  Partnership  maintained  cash  balances at
certain  financial  institutions  in excess  of the  maximum  federally  insured
amount's.

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 years
presented,  the Partnership has no elements of other  comprehensive  income,  as
defined by SFAS No. 130.

Reclassifications

Certain  prior  year  balances  have been  reclassified  to  conform to the 1998
presentation.

NOTE 2 - LOANS RECEIVABLE

Loans receivable  represent amounts loaned by the Partnership to certain limited
partnerships in which the Partnership may invest.  Loans receivable consisted of
one loan with a balance of  $259,496  as of  December  31,  1997 which was fully
collected in 1998 upon  finalization  of its acquisition of an interest in a new
limited partnership.

                                       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 December 31, 1998, 1997 and 1996


NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS

As of December 31,  1998,  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
December  31,  1998,  construction  or  rehabilitation  of  all  but  one 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 of the Limited Partnerships.

The  Partnership's  investments  in Local Limited  Partnerships  as shown in the
balance  sheets at December 31, 1998 and 1997 are  approximately  $1,493,000 and
$1,555,000,  respectively, greater than the Partnership's equity as shown in the
Local Limited Partnerships'  financial statements.  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 (see Note 5).

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.  During 1998,  no  investment  accounts in Local
Limited Partnerships reached a zero balance.

Following  is a summary of the equity  method  activity  of the  investments  in
limited partnerships for the years ended December 31:

                                             1998                1997
                                             ----                ----

Investments per balance sheet,
 beginning of year                     $  9,738,583       $  10,096,100
Tax credit adjustment                       (23,291)                 -
Capital contributions to limited
 partnerships, net                          827,482             194,036
Capital contributions to be paid            427,483             225,720
Capitalized acquisition fees and
 costs                                          465               8,278
Distributions paid                           (5,300)             (7,613)
Equity in losses of limited
 partnerships                              (658,728)           (737,115)
Amortization of paid acquisition
 fees and costs                             (32,099)            (40,823)
                                        -----------         -----------

Investments per balance sheet,
 end of year                           $ 10,274,595       $   9,738,583
                                        ===========         ===========

                                       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 December 31, 1998, 1997 and 1996


NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

The financial  information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total  revenues  and  interest  subsidies  are  generally  netted in
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 BALANCE SHEETS

                                                    1998                1997
                                                    ----                ----

ASSETS

Buildings, net of accumulated
 amortization of $4,330,000 and
 $3,095,000 as of December 31, 1998
 and 1997,respectively                    $      33,328,000     $    34,598,000
Land                                              1,631,000           1,565,000
Construction in progress                          1,895,000                   -
Due from affiliates                                 299,000             669,000
Other assets                                      2,140,000           1,488,000
                                             --------------      --------------

                                           $     39,293,000    $     38,320,000
                                             ==============      ==============

LIABILITIES

Construction and mortgage loans payable    $     27,339,000    $     26,605,000
Other liabilities (including amounts
 due to related parties of $1,032,000
 and $1,307,000 as of December 31,
 1998 and 1997, respectively)                     1,757,000           2,061,000
                                             --------------      --------------

                                                 29,096,000          28,666,000
                                             --------------      --------------
PARTNERS' CAPITAL

WNC Housing Tax Credit Fund IV, L.P.,
 Series 2                                         8,782,000           8,184,000
Other partners                                    1,415,000           1,470,000
                                             --------------      --------------

                                                 10,197,000           9,654,000
                                             --------------      --------------

                                           $     39,293,000    $     38,320,000
                                             ==============      ==============


                                       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 December 31, 1998, 1997 and 1996


NOTE 3 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                   1998                1997              1996
                                   ----                ----              ----

Revenues                   $    3,893,000    $      3,535,000    $    3,057,000

Expenses:
 Operating expenses             2,072,000           1,909,000         1,518,000
 Interest expense               1,248,000           1,245,000         1,137,000
 Depreciation an
  amortization                  1,241,000           1,134,000         1,040,000
                               ----------          ----------        ----------

      Total expenses            4,561,000           4,288,000         3,695,000
                               ----------          ----------        ----------

Net loss                   $     (668,000)   $       (753,000)   $     (638,000)
                               ==========          ==========        ==========

Net loss allocable to
 Partnership               $     (659,000)   $       (737,000)   $     (629,000)
                               ==========          ==========        ==========

Net loss recorded by the
 Partnership               $     (659,000)   $       (737,000)   $     (629,000)
                               ==========          ==========        ==========

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.

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. As of December 31, 1998, the
         Partnership  incurred  acquisition  fees  of  $1,058,950.   Accumulated
         amortization of these  capitalized costs was $124,017 and $96,331 as of
         December 31, 1998 and 1997, respectively.

         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.  As of
         December 31, 1998 and 1997, the Partnership  incurred acquisition costs
         of $169,103 and  $168,638,  respectively,  which have been  included in
         investments  in  limited  partnerships.  Accumulated  amortization  was
         $16,859 and $12,447 as of December 31, 1998 and 1997, respectively.

                                       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 December 31, 1998, 1997 and 1996

NOTE 4 - RELATED PARTY TRANSACTIONS, continued

         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 $42,900 were incurred for 1998, 1997 and
         1996,  respectively,  of which  $4,616,  $6,000 and $155,000  were paid
         during 1998, 1997 and 1996, respectively.

         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 14% through December
         31, 2006 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  as of
December 31, 1998 and 1997 consist of the following:

                                                   1998            1997
                                                   ----            ----
Reimbursements for expenses paid by
 an affiliate of the General Partner           $  6,082         $ 1,137

Asset management fee payable                     21,984               -
                                                -------         -------

                                               $ 28,066         $ 1,137
                                                =======         =======

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.

NOTE 5 - PAYABLES TO LIMITED PARTNERSHIPS

Payables  to limited  partnerships  represent  amounts  which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions  are  payable  in  installments  and  are  due  upon  the  limited
partnerships  achieving certain operating and development  benchmarks (generally
within two years of the Partnership's initial investment).

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.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

In  1998,  the  Partnership  acquired  a  99%  limited  partner  interest  in an
additional  limited  partnership,  which committed the Partnership to additional
contributions   of  approximately   $1,255,000,   of  which  $827,482  has  been
contributed by the Partnership as of December 31, 1998.

                                       27

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

(a)(1)

(i)    On December 16, 1998, Corbin & Wertz,  Irvine,  California was dismissed
       as the Partnership's principal independent accountant.

(ii)   During the last two fiscal  years of  the  Partnership,  the  reports  of
       Corbin & Wertz  respecting  the financial  statements of  the Partnership
       did not contain an adverse opinion  or a  disclaimer of opinion, nor were
       any such reports  qualified or  modified as to  uncertainty,  audit scope
       or accounting principles.

(iii)  The decision to change accountants was approved by the board of directors
       of WNC & Associates, Inc., the general partner of the Partnership.

(iv)   During the last  two fiscal  years and  subsequent  interim period of the
       Partnership  there were no  disagreements  between Corbin & Wertz and the
       Partnership  on  any  matter  of  accounting   principles  or  practices,
       financial  statement  disclosure,  or auditing scope  or procedure of the
       nature  described  in  Item  304(a)(1)(iv)  of  Securities  and  Exchange
       Commission Regulation S-K.

(v)    During the last two fiscal years and  subsequent  interim period  of  the
       Partnership  there were no reportable events  of the  nature described in
       Item 304(a)(1)(v) of Securities and Exchange Commission Regulation S-K.

(a)(2)

On December 16, 1998, BDO Seidman,  LLP,  Costa Mesa,  California was engaged as
the Partnership's principal independent  accountant.  During the last two fiscal
years and subsequent interim period of the Partnership,  the Partnership did not
consult BDO Seidman,  LLP regarding (i) either,  the  application  of accounting
principles to a specified  transaction;  or the type of audit opinion that might
be rendered on the Partnership's  financial statements,  or (ii) any matter that
was  the  subject  of a  disagreement  (as  defined  in  Item  304(a)(1)(iv)  of
Securities and Exchange Commission Regulation S-K) or was a reportable event (as
defined in Item  304(a)(1)(v) of Securities and Exchange  Commission  Regulation
S-K).

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 68, is the founder,  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.

                                       28
<PAGE>

John B. Lester, Jr., age 65, is President, 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 36, is Executive Vice  President,  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 46, is Senior 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.

Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the  Acquisition  Committee  of WNC &  Associates,  Inc.,  and Chief
Financial Officer of WNC Management,  Inc. He has been involved with acquisition
and  investment  activities  with  respect to real estate  since 1985.  Prior to
joining the Sponsor in March 1999, he was the Director of Financial  Services at
TrizecHahn  Centers Inc., a developer  and operator of  commercial  real estate,
from 1995 to 1999,  a Senior  Manager  with E&Y  Kenneth  Leventhal  Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest  Companies,  a commercial and residential real estate developer,
from  1985 to 1988.  Mr.  Dickenson  is a  member  of the  Financial  Accounting
Standards  Committee for the National  Association of Real Estate  Companies and
the  American  Institute  of  Certified  Public  Accountants,  and a Director of
HomeAid  Southern  California,  a charitable  organization  affiliated  with the
building  industry.  He  graduated  from  Texas Tech  University  in 1978 with a
Bachelor of Business  Administration  -  Accounting  degree,  and is a Certified
Public Accountant in California and Texas.

Thomas J. Riha, age 44, is 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 53, 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.

                                       29
<PAGE>


N. Paul Buckland,  age 36, is Vice President - Acquisitions 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 44, 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 62, 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.

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  $43,000  were  incurred  for the year  ended
      December  31,  1998.  The  Partnership  paid the  General  Partner  or its
      affiliates $5,000 of those fees during 1998.

(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 $6,000 during the year
      ended December 31, 1998.

(d)   Interest  in  Partnership.   The  General   Partners  receive  1%  of  the
      Partnership's  allocated Low Income Housing  Credits,  which  approximated
      $20,000 for the General  Partner for the year ended December 31, 1998. The
      General  Partners are also  entitled to receive 1% of cash  distributions.
      There were no  distributions  of cash to the General  Partners  during the
      year ended December 31, 1998.

                                       30

<PAGE>


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.

                     Name and Address of        Amount of               Percent
 Title of Class      Beneficial Owner           Units Controlled        of Class
 -------------------------------------------------------------------------------
 Units of Limited    Sempra Energy Financial    4,000 Units              25.6%
 Partnership         P.O. Box 126943
 Interests           San Diego, CA  92113-6943

(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.

                                       31

<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
         Independent Auditors' Report
         Balance Sheets, December 31, 1998 and 1997
         Statements of Operations  for the years ended  December 31, 1998,  1997
          and 1996
         Statements of Partners'  Equity (Deficit)  for the years ended December
          31, 1998, 1997 and 1996
         Statements of  Cash Flows for  the  years ended December 31, 1998, 1997
          and 1996 Notes to Financial Statements

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

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

(b)      Reports on Form 8-K

1.       A  Form 8-K  dated  December 16,  1998  was filed on  December 22, 1998
         reporting the dismissal of the  Partnership's  former auditors and the
         engagement of new auditors. No financial statements were included.

(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 South-
         cove 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 South-
         cove Associates filed as exhibit 10.2 to  Form 8-K dated August 8, 1994
         is hereby incorporated herein by reference as exhibit 10.6.

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.

                                       32
<PAGE>

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 Partner-
         ship 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    Amended 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 Partner-
         ship 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 Wiscons-
         in 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 incorporat-
         ed 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 Stre-
         et 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.

(d)      Financial  statement  schedule  follows,  as set forth in subsection
         (a)(2) hereof.

                                       33
<PAGE>


              Report of Independent Certified Public Accountants on
                          Financial Statement Schedule





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


The audit  referred to in our report dated April 9, 1999,  relating to  the 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 schedule. The financial statement
schedule  is  the   responsibility   of  the   Partnership's   management.   Our
responsibility  is to express an opinion on this  financial  statement  schedule
based upon our audit.

In our opinion,  such  financial  statement  schedule  presents  fairly,  in all
material respects, the financial information set forth therein.



                                                       BDO SEIDMAN, LLP


Orange County, California
April 9, 1999

























                                       34

<PAGE>



WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>

                                                 -----------------------------------------------------------------------------------
                                                                                 As of December 31, 1998
                                                 -----------------------------------------------------------------------------------
                                          Partnership's Total   Amount of      Encumbrances of   Property
                                          Investment in Local   Investment     Local Limited        and     Accumulated    Net Book
Partnership Name              Location    Limited Partnerships  Paid to Date   Partnerships      Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                <C>           <C>            <C>           <C>          <C>             <C>

Apartment Housing of          East Brewton,
East Brewton, Ltd.            Alabama            $ 1,255,000   $  828,000     $ 1,011,000   $ 1,961,000   $         -    $ 1,961,000


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

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

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

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

Crossings II Limited          Portage,
Dividend Housing              Michigan               432,000      361,000       6,074,000     6,952,000       273,000      6,679,000
Association Limited
Partnership

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

Garland Street Limited        Malvarn,
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, Texas          174,000      174,000         597,000       924,000        97,000        827,000
Associates, Ltd


</TABLE>
                                       35
<PAGE>

WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>

                                                 -----------------------------------------------------------------------------------
                                                                                 As of December 31, 1998
                                                 -----------------------------------------------------------------------------------
                                          Partnership's Total   Amount of      Encumbrances of   Property
                                          Investment in Local   Investment     Local Limited        and     Accumulated    Net Book
Partnership Name              Location    Limited Partnerships  Paid to Date   Partnerships      Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>                <C>           <C>            <C>           <C>          <C>             <C>

Honeysuckle Court             Vidor, Texas       $   339,000   $    339,000   $ 1,168,000   $ 1,780,000  $    195,000    $ 1,585,000
Associates, Ltd.

Klimpel Manor, Ltd            Fullerton,
                              California           1,774,000      1,774,000     1,984,000     3,576,000       437,000      3,139,000

Lamesa Seniors                Lamesa, Texas          143,000        143,000       675,000       818,000       114,000        704,000
Community, Ltd.

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

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


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

Pecan Grove Limited           Forrest City,
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 I,          Sidney, Nebraska       530,000        484,000       444,000     1,419,000       100,000      1,319,000
Limited Partnership

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

Walnut Turn Associates,       Buna, Texas            188,000        188,000       692,000     1,015,000       108,000        907,000
Ltd.                                              ----------     ----------    ----------    ----------     ---------     ----------
                                                 $12,096,000    $11,490,000   $27,339,000   $41,184,000    $4,330,000    $36,854,000
                                                  ==========     ==========    ==========    ==========     =========     ==========
</TABLE>

                                       36


<PAGE>


WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
<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                                                                           Not
East 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>
                                       37
<PAGE>

WNC Housing Tax Credit Fund IV, L.P., Series 2
Schedule III
Real Estate Owned by Local Limited Partnerships
<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>

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>








                                     38





<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 Tax Credit Partners IV, L.P.  General Partner of the Registrant
Date:

By:  WNC & Associates, Inc.  General Partner of WNC Tax Credit Partners IV, L.P.
Date:


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

Date: July 13, 1999


By:  /s/ Michael L. Dickenson
Michael L. Dickenson, Vice-President -
Chief Financial Officer of WNC & Associates, Inc.

Date: July 13, 1999


By:  /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., General Partner

Date: July 13, 1999

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, Sr.
Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc.

Date: July 13, 1999



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

Date: July 13, 1999


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

Date: July 13, 1999


                                       39