FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the fiscal year ended:    December 31, 1996

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


For the transition period from                   to

Commission file number  0-26048



                 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
             (Exact name of registrant as specified in its charter)


            California                              33-0563307
  (State or other jurisdiction of       (I.R.S. Employer Identification No.)
  incorporation or organization)




              3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
                    (Address of principal executive offices)


                                 (714) 662-5565
                         (Registrant's telephone number,
                              including area code)

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
<PAGE>

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes [ ]    No [X]

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

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold,  or the average  bid and asked  prices of
such stock,  as of a specified  date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405.) - 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 1 (the  "Partnership")  is a
California Limited  Partnership formed under the laws of the State of California
on May 4,  1993 to  acquire  limited  partnership  interests  in  local  limited
partnerships  ("Local Limited  Partnerships")  which own  multifamily  apartment
complexes  that are eligible for low-income  housing  federal income tax credits
(the "Housing Tax Credit").

The general partner of the Partnership is WNC Tax Credits Partner IV, L.P. ("TCP
IV"). The general  partner of TCP IV is WNC & Associates,  Inc.  ("Associates").
The business of the  Partnership is conducted  primarily  through  Associates as
neither TCP IV nor the Partnership has employees of their own.

On October 20, 1993, the Partnership commenced a public offering ("Offering") of
10,000 Units of Limited Partnership Interest ("Limited  Partnership  Interest"),
at a price  of  $1,000  per  Limited  Partnership  Interest.  The  Partnership's
offering  terminated  on July 19,  1994. A total of 10,000  Limited  Partnership
Interests representing $10,000,000 had been sold.

Holders of Limited  Partnership  Interests  are  referred  to herein as "Limited
Partners."

The  Partnership  has  applied and will apply  funds  raised  through its public
offerings,   including  the  installment   payments  of  the  Limited  Partners'
promissory  notes as received,  to the purchase price and  acquisition  fees and
costs of Local Limited  Partnership  Interests,  reserves,  and expenses of this
Offering.


Description of Business
-----------------------

The Partnership's principal business is to provide its Limited Partners with Low
Income Housing Credits. The Partnership's  principal business therefore consists
of investing as a limited  partner in Local Limited  Partnerships  each of which
will own and  operate an  apartment  complex  ("Apartment  Complex")  which will
qualify for the federal  low-income  housing tax credit (the "Low Income Housing
Credit In general, under Section 42, an owner of a low-income housing project is
entitled  to receive  the Low Income  Housing  Credit in each year of a ten-year
period (the "Credit Period"). The Apartment Complex is subject to a fifteen-year
compliance period (the "Compliance Period").

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 a Local Limited  Partnership of any Apartment Complex prior to the end of the
applicable  Compliance  Period.  Because  of (i)  the  nature  of the  Apartment
Complexes,  (ii) the  difficulty of predicting  the resale market for low-income
housing  15 or  more  years  in the  future,  and  (iii)  the  inability  of the
Partnership to directly cause the sale of Apartment

                                       3
<PAGE>


Complexes by the general partners of the respective Local Limited Partnerships (
the "Local General Partners"),  but generally only to require such Local General
Partners  to use their  respective  best  efforts  to find a  purchaser  for the
Apartment  Complexes,  it is not  possible  at this time to predict  whether the
liquidation of substantially all of the Partnership's assets and the disposition
of the  proceeds,  if any, in  accordance  with the  Partnership's  Agreement of
Limited  Partnership  ("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 an Apartment  Complex,  it is anticipated  that the Local General
Partner  will either  continue to operate  such  Apartment  Complex or take such
other actions as the Local General  Partner  believes to be in the best interest
of the Local Limited Partnership. In addition,  circumstances beyond the control
of the  General  Partner  may occur  during the  Compliance  Period  which would
require the Partnership to approve the disposition of an Apartment Complex prior
to the end thereof.

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  multifamily  residential  real estate.  Some of these
risks are that the Low Income Housing Credit could be recaptured and neither the
Partnership's  investments  nor the Apartment  Complexes  owned by Local Limited
Partnerships will be readily marketable. Additionally, there can be no assurance
that the  Partnership  will be able to  dispose  of its  interests  in the Local
Limited  Partnerships  at the end of the  Compliance  Period.  The  value of the
Partnership's  investments  could 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
Apartment Complexes and the Partnership. The Apartment Complexes will be subject
to loss through  foreclosure.  In addition,  each Local Limited  Partnership  is
subject to risks relating to  environmental  hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors  beyond the control of TCP IV and the Local General  Partners,
there can be no assurance that Partnership operations will be profitable or that
the  anticipated  Low  Income  Housing  Credits  will be  available  to  Limited
Partners.

The Apartment  Complexes  owned by the Local Limited  Partnerships  in which the
Partnership has invested or is expected to invest were or are being developed by
Local  General  Partners  who  acquired  the sites and  applied  for  applicable
mortgages and  subsidies.  The  Partnership  became or will become the principal
limited  partner in these Local Limited  Partnerships  pursuant to  arm's-length
negotiations  with  the  Local  General  Partners.  As a  limited  partner,  the
Partnership's  liability for  obligations  of the Local Limited  Partnership  is
limited to its investment.  The Local General Partners retain responsibility for
developing,  constructing,  maintaining,  operating  and managing the  Apartment
Complex.

As of December 31, 1996 and 1995, the  Partnership  had invested in twenty Local
Limited Partnerships. Each of these Local Limited Partnerships owns an Apartment
Complex that is or is expected to be eligible for the Housing Tax Credit. All of
the Local Limited  Partnerships also benefit from government  programs promoting
low or  moderate  income  housing.  As of December  31,  1996,  construction  or
rehabilitation of the underlying Apartment Complexes was completed on all twenty
Apartment Complexes.


                                       4
<PAGE>



The  following  is a schedule  of the status as of  December  31,  1996,  of the
Apartment Complexes owned by Local Limited Partnerships in which the Partnership
was a limited partner as of December 31, 1996.

            SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
                   IN WHICH THE PARTNERSHIP HAS AN INVESTMENT
                             AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
                                               No. of       Units                Units               Percentage of Total
Name & Location                                 Apts.       Completed             Occupied           Units Occupied
---------------                                 -----       ---------             --------           --------------

<S>                                            <C>                <C>                  <C>                     <C> 
ALPINE                                         36                 36                   36                      100%
  Alpine, (Brewster Co.) Texas
BAYCITY                                        62                 62                   60                      97%
  Baytown (Harris Co.) Texas
BECKWOOD MANOR                                 42                 42                   38                      90%
  Marianna (Lee Co.), Arkansas
BRISCOE MANOR                                  31                 31                   31                      100%
  Galena (Kent Co.), Maryland
EVERGREEN                                      24                 24                   22                      92%
  Maynard (Randolph Co.), Arkansas
FAWN HAVEN                                     28                 28                   27                      96%
  Manchester (Adams Co.), Ohio
FORT STOCKTON                                  36                 36                   32                      89%
  Ft Stockton (Pecos Co.), Texas
HIDDEN VALLEY                                  40                 40                   39                      98%
  Gallup (McKinley Co.), New Mexico
HOI LENOIR                                     34                 34                   34                      100%
  Lenoir (Caldwell Co. ), North
Carolina
INDIAN  CREEK                                  48                 48                   43                      90%
  Bucyrus (Crawford Co.) Ohio
LAUREL CREEK                                   24                 24                   24                      100%
  San Luis Obispo (San Luis Obispo) CA
MADISONVILLE                                   32                 32                   28                      88%
  Madisonville (Madison Co.) Texas
MOUNTAIN GRAHAM                                40                 40                   38                      96%
  Safford (Graham Co.) Arizona

                                       5
<PAGE>
<CAPTION>
                                               No. of       Units                Units               Percentage of Total
Name & Location                                 Apts.       Completed             Occupied           Units Occupied
---------------                                 -----       ---------             --------           --------------


<S>                                            <C>                <C>                  <C>                     <C> 
NORTHSIDE PLAZA                                48                 48                   48                      100%
  Angleton (Brazoria Co.) Texas
PAMPA MANOR                                    32                 32                   26                      81%
  Pampa (Gray Co) Texas
REGENCY COURT                                  115                115                  101                     88%
  Monrovia (Los Angeles Co.), CA

SANDPIPER                                      24                 24                   24                      100%
  Aulander,(Bertie Co.), N.C.
VERNON MANOR                                   28                 28                   28                      100%
  Vernon (Wilbarger Co.), Texas
WATERFORD PLACE                                32                 32                   30                      94%
  Calhoun Falls (Abbeville Co.)       S.C.
YANTIS SENIORS                                 24                 24                   24                      100%
  Yantis (Wood Co) Texas

                                               780                780                  733                     94%
                                               ===                ===                  ===                     ===
</TABLE>


Description of Local Limited Partnerships
-----------------------------------------

The Partnership  has become a limited partner in the Local Limited  Partnerships
listed below.  Each Local Limited  Partnership owns an apartment complex located
per the above chart.

The  following   tables  contain   information   concerning  the  Local  Limited
Partnerships acquired by the Partnership.
<TABLE>
<CAPTION>
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
     Local     Project Name     Construction    Estimated      Number of          Basic         Permanent        Local Limited
Limited                         Completion      Development    Apartment Units    Monthly       Mortgage Loan    Partnership's
Partnership                                     Cost With                         Rents         Amount           Anticipated Tax
                                                Land                                                             Credits (1)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S>            <C>              <C>            <C>             <C>                <C>           <C>              <C>     
ALPINE         Alpine Manor     April 1994      $1,167,000     36 1BR             $243          $931,000         $394,000
               Apartments                                      674 sq. ft.                      (3)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
BAYCITY        Baycity          April 1994      $1,826,000     18 1BR units       $200          $791,000         $626,000
               Village                                         710 sq. ft.                      (acquisition)
               Apartments                                                                       (3)
               (4)                                             30 2BR units       $225
                                                               799 sq. ft.                      $738,000
                                                                                                (rehab)
                                                               14 3BR units       $310          (3)
                                                               1,190 sq. ft.

-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
                                       6
<PAGE>
<CAPTION>
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
     Local     Project Name     Construction    Estimated      Number of          Basic         Permanent        Local Limited
Limited                         Completion      Development    Apartment Units    Monthly       Mortgage Loan    Partnership's
Partnership                                     Cost With                         Rents         Amount           Anticipated Tax
                                                Land                                                             Credits (1)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S>            <C>              <C>            <C>             <C>                <C>           <C>              <C>     
BECKWOOD       Riverview        August 1994     $1,779,000     40 1BR units       $250          $1,401,000       $609,000
               Apartments                                      563 sq. ft.                      (3)
               (2)
                                                               2 2BR units        $290
                                                               764 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
BRISCOE        Briscoe          January 1995    $1,546,000     31 1BR units       $345          $1,500,000       $648,000
               Manor                                           624 sq. ft.                      (3)
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
EVERGREEN      Broadway Cove    September 1994  $1,123,000     24 1BR units       $265          880,000          $386,000
               Apartments                                      624 sq. ft.                      (3)
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
FAWN HAVEN     Fawn Haven       December 1993   $1,069,000     28 1BR units       $220          $873,000 (3)     $376,000
               Village                                         579 sq. ft.
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
FORT           Fort Stockton    October 1994    $1,248,000     36 1BR units       $255          1,024,000        $453,000
STOCKTON       Manor                                           674 sq. ft.                      (3)
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
HIDDEN         Hidden           August 1994     $1,912,000     10 1BR units       $270          $1,500,000       $801,000
VALLEY         Valley                                          645 sq. ft.                      (3)
               Apartments
                                                               20 2BR units       $320
                                                               827 sq. ft.

                                                               10 3BR units       $370
                                                               946 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
HOI OF         Skyland          February 1994   $1,162,000     8 1BR units        $214          $650,000         $399,500
LENOIR         Apartments                                      623 sq. ft.                      (acquisition)
               (4)                                                                              (3)
                                                               22 2BR units       $234
                                                               823 sq. ft.                      $190,000
                                                                                                (rehab)
                                                               4 3BR units        $249          (3)
                                                               950 sq. ft.
                                                                                                $378,000 (5)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
INDIAN         Indian Creek     November 1994   $1,780,000     16 1BR units       $205          $1,497,000       $637,000
CREEK          Apartments                                      664 sq. ft.                      (3)

                                                               32 2BR units       $250
                                                               751 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
LAUREL         Laurel           June 1994       $2,165,000     19 1BR units       $337-413      $750,000         $2,313,000
               Creek                                           620 sq. ft.                      (CCRC) (6)
               Apartments
                                                               5 2BR units        $498
               (2)                                             840 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
MADISON-       Madisonville     September 1994  $1,0250,000    28 1BR units       $296          $992,000 (3)     $445,000
VILLE          Manor                                           656 sq. ft.
               Senior
               Citizens                                        4 2BR units        $351
               Apartments                                      776 sq. ft.
               (2)

-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------  
                                       7
<PAGE>
<CAPTION>
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
     Local     Project Name     Construction    Estimated      Number of          Basic         Permanent        Local Limited
Limited                         Completion      Development    Apartment Units    Monthly       Mortgage Loan    Partnership's
Partnership                                     Cost With                         Rents         Amount           Anticipated Tax
                                                Land                                                             Credits (1)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
<S>            <C>              <C>            <C>             <C>                <C>           <C>              <C>     
MT.            Mt. Graham       November 1994   $1,876,000     8 1BR units        $232          $1,500,000       $788,000
GRAHAM         Apartments                                      592 sq. ft.                      (3)

                                                               24 2BR units       $282
                                                               734 sq. ft.

                                                               8 3BR units        $329
                                                               897 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
NORTHSIDE      Northside        December 1994   $1,758,000     44 1BR units       $259          $1,384,000       $613,000
               Plaza                                           654 sq. ft.                      (3)
               Apartments
               (2)                                             4 2BR units        $306
                                   774 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
PAMPA          Pampa            June 1994       $1,029,000     32 1BR units       $275          $854,000 (3)     $363,000
               Manor                                           650 sq. ft.
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
REGENCY        Regency          June 1995       $9,050,000     107 1BR units      $445-527      $4,400,000       $3,417,000
               Court                                           550 sq. ft.                      (CHFA) (7)
               Apartments
                                                               8 2BR units                      $150,000
               30 1&2-story                                    740 sq. ft.        $528-633      (HOME) (8)
               Buildings
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
SANDPIPER      Sandpiper        April 1995      $1,100,000     22 1BR units       $315          $960,000         $433,000
               Square                                          650 sq. ft.                      (FmHA) (3)
               Apartments
                                                               2 2BR units        $335
               (2)                                             800 sq. ft.
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
VERNON         Vernon           May 1994        $905,000       28 1BR units       $260          $744,000 (3)     $325,000
               Manor                                           674 sq. ft.
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
WATER-         Waterford        April 1994      $1,514,000     32 1BR units       $289          $1,201,000       $549,000
FORD           Place                                           649 sq. ft.                      (3)
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
YANTIS         Yantis           February        $842,000       24 1BR units       $265          $641,000 (3)     $287,000
               Seniors          1994                           674 sq. ft.
               Apartments
               (2)
-------------- ---------------- --------------- -------------- ------------------ ------------- ---------------- -----------------
</TABLE>

(1)      Low Income Housing  Credits are available over a ten-year  period.  For
         the year in which the credit first becomes available with respect to an
         Apartment Complex, The Partnership will receive only that percentage of
         the annual  credit  which  corresponds  to the number of months  during
         which The  Partnership  was a  limited  partner  of the  Local  Limited
         Partnership,  and during which the Apartment  Complex was completed and
         in service. See the discussion under "The Low Income Housing Credit" in
         the Prospectus.

(2)      Senior citizen housing.

(3)      The Rural  Economic and Community  Development  Services  (formerly the
         Farmers  Home  Administration)  of  the  United  States  Department  of
         Agriculture  ("RECDS")  provided  the  mortgage  loans  under the RECDS
         Section 515 Mortgage Loan Program.  Each of these  mortgage loans has a
         50-year  term and  bears  annual  interest  at a market  rate  prior to
         reduction of the  interest  rate by a mortgage  interest  subsidy to an
         annual rate of 1%, with principal and interest payable monthly based on
         a 50-year amortization schedule.

                                       8
<PAGE>

(4)      Rehabilitation property.

(5)      The loan was provided by Housing Opportunities, Inc. ("HOI"), the Local
         General Partner, is unsecured, and bears interest at the rate of 7% per
         annum payable  annually,  with all principal  payable on the earlier of
         March 30, 2008 or the sale or refinancing of the Apartment Complex.

(6)      The California Community Reinvestment Corporation ("CCRC") provided the
         mortgage  loan at an interest rate of 8.5% per annum (equal to the U.S.
         Treasury  Index  plus  1.25% per  annum),with  principal  and  interest
         payable monthly based on a 30-year amortization schedule.

(7)      California Housing Finance Agency ("CHFA") makes below-market mortgages
         available for those projects where at least 20% of the apartment  units
         are set aside for very low income tenants at affordable rents. The CHFA
         loan will be a 30-year  loan and is  expected  to bear  interest at the
         rate of 6.85% per annum,  with principal and interest  payable  monthly
         based on a 30-year amortization schedule.

(8)      The HOME Program was created under the National  Affordable Housing Act
         of 1990.  States,  metropolitan  cities,  urban  counties and consortia
         (contiguous   units  of  local   government)  are  eligible  to  become
         participating  jurisdictions  in the HOME  Program.  The HOME funds are
         allocated  by  formula,   with  60%  of  these  funds   available   for
         metropolitan  cities,  urban counties and consortia and 40% for states.
         HOME funds may be used for tenant-based  rental assistance,  assistance
         to home-buyers and homeowners,  property acquisition, new construction,
         moderate or substantial rehabilitation, site improvements,  demolition,
         relocation expenses and other reasonable and necessary expenses related
         to  development of non-luxury  housing.  The HOME loan will be provided
         through CDCLA,  will be a 15-year loan and is expected to bear interest
         at the rate of 3% per annum, with principal and interest payable as set
         forth below under "Other Terms of Investments." All unpaid amounts will
         be due and payable on maturity of the loan.

         Alpine (ALPINE) Alpine is in Brewster County, Texas at the intersection
of U.S.  Highways 67/90 and State Highway 118, 152 miles southwest of Odessa, 26
miles north of Big Bend National Park, and 89 miles north of the Mexican Border.
The population of Alpine is approximately  5,600. The city's major employers are
the Alpine Independent School district and Sul Ross State University.

         Baytown (BAYCITY) Baytown is in Harris County,  Texas,  along Galveston
Bay.  Interstate Highway 10 connects Baytown with Houston, 30 miles to the west.
Baytown's  population  is  approximately  66,000.  It's major  employers are the
Goosecreek School District and Exxon.

         Marianna (BECKWOOD) Marianna, the county seat of Lee County,  Arkansas,
is 60 miles southwest of Memphis and 100 miles east of Little Rock. In 1990, the
population  of  Marianna  was  approximately  6,000.  The city is located at the
intersection  of  U.S.  Highway  79 and  State  Highway  1,  which  connects  to
Interstate  Highway 40 approximately  17 miles to the north.  Major employers in
the city include  Douglas & Lomason (auto  stamping),  Doors of Arkansas  (metal
doors), and Markland Labs (ethnic hair products).

         Galena (BRISCOE) Galena is in Kent County, Maryland, 40 miles southwest
of Wilmington,  Delaware and 40 miles northwest of Dover, Delaware. In 1990, the
population of Galena was  approximately  325.  Access to the city is provided by
State  Highway  213 and U.S.  Highway  301.  The economy of Kent County is based
largely in agriculture. The largest employer in Galena is Galena Middle School.

         Maynard (EVERGREEN) Maynard is in Randolph County, Arkansas along State
Highways  115  and  166,  seven  miles  south  of  the  Missouri  border  in the
northeastern  section of the state.  The population of Maynard is  approximately
330. The largest employer in Maynard is Hill Sawmill.

                                       9
<PAGE>

         Manchester (FAWN HAVEN) Manchester is in Adams County,  Ohio, along the
Ohio River. U.S. Highway 52 connects Manchester with Cincinnati,  60 miles west,
and  Portsmouth,  50  miles  east.  The  population  of  Manchester  in 1990 was
approximately 2,300. The city's two major employers are Manchester Manufacturing
(men's  apparel) and Welded Wire  (manufacturer  of products  for  refrigeration
industry).

         Fort Stockton (FORT STOCKTON) Fort Stockton is the county seat of Pecos
County,  Texas. The city is located in the southwestern  section of Texas at the
intersection of Interstate  Highway 10, U.S. Highways 67, 285 and 385, and State
Highway 18. The population of Fort Stockton is approximately  8,500. The economy
of Pecos County is based  primarily in oil, gas and  ranching.  Fort  Stockton's
largest employer is Northern Natural Gas.

         Gallup (HIDDEN  VALLEY)  Gallup is the county seat of McKinley  County,
New  Mexico.  The city is located in the  western  section of the state 20 miles
east of the  Arizona  border  and 135 miles  northwest  of  Albuquerque,  at the
intersection  of Interstate  Highway 40 and U.S.  Highway 666. The population of
Gallup is  approximately  19,000.  The economy is based  primarily in retail and
services;  approximately  15 Federal and state  agencies have offices in Gallup.
Tourism  also  contributes  to Gallup's  economy.  The largest  employer for the
city's residents is the U.S. government.

         Lenoir (HOI OF LENOIR)  Lenoir is the county  seat of Caldwell  County,
North  Carolina.  The city is in the  western  section of the state  along State
Highway  321,  at the edge of the  Pisgah  National  Forest  and the Blue  Ridge
Mountains.  Charlotte  is 85  miles  southeast  and  Winston-Salem  is 85  miles
northeast of Lenoir. The city's


population is approximately 14,200. Furniture manufacturing is the main industry
in Lenoir.  Included  among the city's major  employers are Broyhill  Furniture,
Bernhardt Furniture and Singer Furniture.

         Bucyrus  (INDIAN CREEK) Bucyrus is the county seat of Crawford  County,
Ohio,  and  is  located  in the  north  central  section  of  the  state  at the
intersection  of Interstate  Highway 30 and State Highways 100, 98 and 4. Toledo
is 65 miles  northwest and Cleveland is 75 miles  northeast.  The  population of
Bucyrus  is  approximately  13,500.  Manufacturing  is  the  largest  source  of
employment in Crawford County,  followed by services and retail trade. The major
employers in the Bucyrus area are Anchor/Swan  (automobile hose  manufacturing),
Baja Boat (fiberglass boats), and General Electric (fluorescent lamps).

         San Luis Obispo (LAUREL) San Luis Obispo is the county seat of San Luis
Obispo County,  California.  The city is approximately  100 miles north of Santa
Barbara,  225 miles north of Los Angeles,  and 230 miles south of San Francisco,
along U.S.  Highway  101.  The  population  of San Luis Obispo is  approximately
43,000. The city's major employers are California  Polytechnic  University,  San
Luis Obispo County government and Diablo Canyon Power Plant.

         Madisonville  (MADISONVILLE) Madisonville is the county seat of Madison
County,  Texas,  and is  located  in the  eastern  section  of the  state  along
Interstate  Highway 45 and U.S.  Highway 75.  Dallas is 45 miles  northwest  and
Austin is 45 miles  southwest of  Madisonville.  The  population  of the city is
approximately  3,500.  While the economy is based in oil and  cattle,  the major
employers in the  Madisonville  area are Monterey  Mushroom Plant,  Madisonville
School District, and Accura Fiberglass.

         Safford  (MT.  GRAHAM)  Safford  is the county  seat of Graham  County,
Arizona,  located  at the  intersection  of  U.S.  Highways  70  and  666 in the
southeastern section of the state on the south bank of the Gila River. Tucson is
125  miles  southwest  and  Phoenix  is 165  miles  northwest  of  Safford.  The
population of Safford is approximately 7,500. Agriculture is the mainstay of the
Safford and Graham County  economy,  with cotton being the principal  commodity.
The major  employers  are the school  system and the  Federal  and state  prison
systems.

         Angleton  (NORTHSIDE)  Angleton is the county seat of Brazoria  County,
Texas, and is located in the southwestern section of the state, approximately 15
miles  northwest  of the Gulf of Mexico  and 55 miles  south of  Houston.  State
Highways 288 and 35 intersect at Angleton providing access to Interstate Highway
45 and State Highway 59. The population of Angleton is approximately 17,000. The

                                       10
<PAGE>

local economy is based in chemical manufacturing, petroleum processing, offshore
maintenance  services,  diversified  manufacturing,   biomedical,   electronics,
commercial  fishing,  and agriculture.  County  government is one of the largest
employers,  along  with  Intermedics  (manufacturer  of  pacemakers)  and  Texas
Department of Corrections (prison facility).

         Pampa  (PAMPA) Pampa is the county seat of Gray County,  Texas,  and is
located in the  northwestern  section of the state at the  intersection  of U.S.
Highway 60 and State  Highways  70 and 152.  Amarillo is 40 miles  southwest  of
Pampa.  The city's  population  is  approximately  20,000.  The  economy of this
section of Texas is based  primarily in farming and oil. The major  employers in
Pampa are Hoechst-Celanese  (chemical plant), IRI International (drilling rigs &
steel forging) and Pampa School District.

         Monrovia (REGENCY) is located in Los Angeles County,  California,  near
the city of Pasadena and the San Gabriel  Mountains.  The population of Monrovia
is approximately 36,000.

         Aulander  (SANDPIPER)  Aulander is in Bertie  County,  in  northeastern
North  Carolina  along U.S.  Highway 13.  Greenville  is 45 miles  southwest and
Raleigh is 70 miles southwest. Aulander's population is approximately 1,300. The
economy of the city is based primarily in agriculture,  and the largest employer
for Aulander residents is Golden Peanut (peanut shelling plant).

         Vernon (VERNON) Vernon is the county seat of Wilbarger  County,  Texas,
and is  located  50  miles  west  of  Wichita  Falls,  180  miles  northwest  of
Dallas/Fort Worth, and 180 miles south of Oklahoma City, Oklahoma.  Vernon is at
the  intersection  of U.S.  Highway  287  and  State  Highway  283.  The  city's
population is approximately 12,000. Agriculture and oil are the main industries,
and major employers include two state hospitals,  a meat packing company,  and a
junior college.

         Calhoun Falls (WATERFORD) Calhoun Falls is located in Abbeville County,
in the western section of South Carolina,  along the Georgia border.  Greenville
is 55 miles north, and Columbia is 100 miles east. State Highway 72 connects the
city with  Greenwood  (25 miles east) and U.S.  Highway 178. The  population  of
Calhoun Falls is  approximately  2,300.  Major employers in the area include the
West     Point-Pepperell-Calhoun     Falls    Plant     (sheeting)    and    the
Fieldcrest-Cannon-Rocky River Plant (carpeting).

         Yantis  (YANTIS)  Yantis is in Wood County,  Texas in the  northeastern
section  of the state  along  State  Highway  154.  The city is 90 miles east of
Dallas, 30 miles north of Tyler and 14 miles north of Quitman,  the county seat.
The population of Yantis is approximately  250. The county's economy is based in
mineral and agricultural business and tourism. The largest employer in Yantis is
the school district.
<TABLE>
<CAPTION>
-------------- ----------------------------- ------------------- ------------------------------------------- ------------------
                                                                 Sharing Ratio:

                                                                                           Allocations(4)    Approximate
Local          Local                                                                       and Sale or       Partnership's
Limited        General                       Property                                      Refinancing       Capital
Partnership    Partners                      Manager (1)          Cash Flow (2)            Proceeds(5)       Contributions (3)
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
<S>            <C>                           <C>                  <C>                        <C>            <C>     
ALPINE         1600 Capital Company, Inc.    M-DC Group, Inc.     WNC: 1st $600               99/1           $243,000
                                             dba Alpha            LGP: 2nd $1,150
                                             Management Co.,      Balance: 99/1               51/49
                                             Inc.
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
BAYCITY        Green Companies Development   Green Realty Co.,    WNC: 1st $750               99/1           $301,000
               Group, Inc.                   Inc.                 LGP: 2nd
                                                                  $1,075                     51/49
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
BECKWOOD       Phillips Development          Phillips             WNC: 1st                    95/5           $307,000
               Corporation                   Development          $1,000
                                             Corporation          LGP: 2nd                    51/49
                                                                  $2,860
                                                                  Balance: 95/5
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
                                       11
<PAGE>
<CAPTION>
-------------- ----------------------------- ------------------- ------------------------------------------- ------------------
                                                                 Sharing Ratio:

                                                                                           Allocations(4)    Approximate
Local          Local                                                                       and Sale or       Partnership's
Limited        General                       Property                                      Refinancing       Capital
Partnership    Partners                      Manager (1)          Cash Flow (2)            Proceeds(5)       Contributions (3)
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
<S>            <C>                           <C>                  <C>                        <C>            <C>     
BRISCOE        McKnight & DeCoster, Inc.     Insignia             WNC: 1st                    99/1           $308,000
                                             Management Group     $1,500
                                                                  LGP: 2nd                   51/49
                                                                  $2,210
                                                                  Balance: 99/1

-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
EVERGREEN      Phillips                      Phillips             1st $3,375 - $725 to        95/5           $195,000
               Development                   Development          Partnership, $2,560 to
               Corporation                   Corporation          LGP, then 95/5             51/49
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
FAWN HAVEN     George E. Maharg              Maharg               WNC: 1st $700               99/1           $167,000
                                             Management,          LGP: 2nd
               Maharg Realty, Inc.           Inc.                 $1,450                     51/49
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
FORT           1600 Capital Company, Inc.    M-DC Group,          WNC: 1st $900               99/1           $224,000
STOCKTON                                     Inc. dba Alpha       LGP: 2nd
                                             Management           $1,700                     51/49
                                             Co., Inc.            Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
HIDDEN         Alan Deke Noftsker            M-DC Group,           WNC: 1st                   99/1           $413,000
VALLEY                                       Inc. dba Alpha       $1,000
                                             Management           LGP: 2nd                    51/49
                                             Co., Inc.            $2,700
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
HOI OF         Housing                       Weaver Realty        WNC: 1st                   99/1            $198,000
LENOIR         Opportunities, Inc.           Company              $1,000
                                                                  Balance: 85/10             85/10
                                                                  (5% to Class B             (5% to
                                                                  Limited                    Class B
                                                                  Partner) (6)               Limited
                                                                                             Partner)
                                                                                           (6)
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
INDIAN         Georg E. Maharg               Maharg               WNC: 1st                    99/1           $306,000
CREEK                                        Management,          $1,200
                                             Inc.                 LGP: 2nd                    51/49
                                                                  $2,500
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
LAUREL         San Luis  Obispo  Non-Profit  Housing Authority    WNC: 25%                    99/1           $1,079,000
               Housing Corporation           of the City of San   LGP: 75%
                                             Luis Obispo                                      51/49
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------

MADISON-       Jean Johnson                  Johnson              WNC: 1st $725               99/1           $207,000
VILLE                                        Enterprises          LGP: 2nd
                                             Management Co.       $1,700                      51/49
                                             (J.E.M.C.O.)         Balance: 99/1

-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
MT.            Rural Housing, Inc.           Landmark             WNC: 1st                    99/1           $410,000
GRAHAM                                       Management           $1,000
                                             Group, Inc.          LGP: 2nd                    51/49
                                                                  $5,300
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
NORTHSIDE      Jean Johnson                  Johnsom              WNC: 1st                    99/1           $302,000
                                             Enterprises          $1,000
                                             Management Co.       LGP: 2nd                    51/49
                                             (J.E.M.C.O.)         $2,490
                                                                   Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------

                                       12
<PAGE>
<CAPTION>
-------------- ----------------------------- ------------------- ------------------------------------------- ------------------
                                                                 Sharing Ratio:

                                                                                           Allocations(4)    Approximate
Local          Local                                                                       and Sale or       Partnership's
Limited        General                       Property                                      Refinancing       Capital
Partnership    Partners                      Manager (1)          Cash Flow (2)            Proceeds(5)       Contributions (3)
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
<S>            <C>                           <C>                  <C>                        <C>            <C>     

PAMPA          1600 Capital Company, Inc.    M-DC Group,          WNC: 1st $750               99/1           $180,000
                                             Inc. dba             LGP: 2nd
                                             Alpha                $1,500                      51/49
                                             Management           Balance: 99/1
                                             Co., Inc.
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
REGENCY        Ralph F.                      ALM Management,      "Residual Rental             99/1          $1,692,000
               Alfieri                       Inc.                 Receipts" will
                                                                  distributed annually         51/49
               Dennis V.                                          as follows:
               Alfieri                                            3.4$ to  CDCLA in
                                                                  repayment of HOME loan;
               Timothy J.                                         30% to CDCLA as a
               Smith                                              lease payment;
                                                                  33% to the
               Glenn W.                                           Partnership; and
               Togawa                                             33% to LGP

               Dennis H.
               Costanzo

-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
SANDPIPER      Norwood Stone                 Wynnefield           WNC: 1st                    99/1           $219,000
               (8)                           Properties, Inc.     $800
                                                                  LGP: 2nd $1,550             51/49
                                                                  Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
VERNON         1600 Capital Company, Inc.    M-DC Group,          WNC: 1st $700               99/1           $161,000
                                             Inc. dba Alpha       LGP: 2nd
                                             Management           $1,600                      51/49
                                             Co., Inc.            Balance: 99/1
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
WATER-         Thomas E. Connelly, Jr.       Douglas               WNC: 1st $500              99/1           $272,000
FORD                                         Management           LGP: 2nd
               TEC Rental Properties, Inc.   Company of           $2,970                      51/49
                                             Greenville, Inc.     Balance: 99/1
               Warren H. Abernathy, II

               Solid South, Inc.
-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
YANTIS         Charles Cannon, Jr.           M-DC Group,          WNC: 1st $500               99/1           $145,000
                                             Inc. dba Alpha       LGP: 2nd
                                             Management           $1,000                      51/49
                                             Co., Inc.            Balance: 99/1

-------------- ----------------------------- -------------------- ------------------------ ----------------- -------------------
</TABLE>


1) The maximum annual  management fee payable to the property manager  generally
is determined pursuant to FmHA or other lender  regulations.  Each Local General
Partner is authorized to employ  either  itself or one of its  Affiliates,  or a
third party,  as a property  manager for leasing and management of the Apartment
Complex so long as the fee therefor  does not exceed the amount  authorized  and
approved by FmHA or other lender for the Apartment Complex.

(3)  Reflects  the amount of the net cash flow from  operations,  if any,  to be
distributed to the Partnership  ("WNC") and the Local General Partner(s) ("LGP")
of each Local Limited  Partnership for each year of operations.  In most but not
all  instances,  to the extent that the specific  dollar amounts which are to be
paid to the Partnership are not paid annually, they will accrue and be paid from
sale or refinancing proceeds as an obligation of the Local Limited Partnership.

                                       13
<PAGE>

(4) Subject to certain special allocations,  reflects the respective  percentage
interests of the Partnership and the Local General Partner(s) in profits, losses
and Low Income Housing Credits of each Local Limited Partnership commencing with
entry of the Partnership as a limited partner.

(5) Reflects the  respective  percentage  interests of the  Partnership  and the
Local General  Partner(s) in any net cash proceeds from sale or  refinancing  of
the  Apartment  Complexes,  after  payment of the mortgage  loan and other Local
Limited Partnership  obligations (see, e.g., note 3), and the following,  in the
order set forth:

     ALPINE:  The  capital   contribution  of  the  Partnership  (less  previous
distributions) and the Local General Partner's sales preparation fee.
     BAYCITY: The capital contribution of the Partnership, an amount equal to 5%
of net proceeds to the Local General  Partner,  and the Local General  Partner's
sales preparation fee.
     BECKWOOD:  An  amount  equal to 5% of net  proceeds  to the  Local  General
Partner,  the capital  contribution  of the  Partnership,  and the Local General
Partner's sales preparation fee.
     BRISCOE: The capital contribution of the Partnership, and the Local General
Partner's  sales  preparation  fee.  
     EVERGREEN:  An amount  equal to 5% of net  proceeds  to the  Local  General
Partner,  the capital  contribution  of the  Partnership  and the Local  General
Partner's sales preparation fee.
     FAWN HAVEN: The Local General  Partners' sales preparation fee, the capital
contribution  of the  Partnership,  and  the  Local  General  Partner's  capital
contribution.
     FORT STOCKTON:  The capital  contribution of the Partnership (less previous
distributions), and the Local General Partner's sales preparation fee.
     HIDDEN  VALLEY:  An amount equal to 5% of net proceeds to the Local General
Partner,  the capital  contribution  of the  Partnership,  and the Local General
Partner's sales preparation fee.
     HOI OF LENOIR:  The Local  General  Partner's  sales  preparation  fee, the
capital  contribution  of the  Partnership,  and the Class B  Limited  Partner's
capital contribution ($10).
     INDIAN  CREEK:  The Local  General  Partner's  sales  preparation  fee, the
capital contribution of the Partnership, and the Local General Partner's capital
contribution.
     LAUREL:   The  capital   contribution  of  the  Partnership,   the  capital
contribution of the Local General Partner and the Local General  Partner's sales
preparation fee.
     MADISONVILLE:  An amount equal to 5% of net  proceeds to the Local  General
Partner,  the capital  contribution  of the  Partnership,  and the Local General
Partner's sales preparation fee.
     MT. GRAHAM:  The capital  contribution  of the  Partnership,  and the Local
General Partner's capital contribution, pro rata.
    NORTHSIDE:  An amount  equal to 5% of net  proceeds  to the  Local  General
Partner,  the capital  contribution  of the  Partnership,  and the Local General
Partner's sales preparation fee.
     PAMPA: The capital  contribution of the Partnership,  and the Local General
Partner's  sales  preparation  fee.  REGENCY:  The capital  contribution  of the
Partnership, and the Local General Partner's sales preparation fee.
     SANDPIPER:  The  capital  contribution  of the  Partnership  and the  Local
General Partner's sales preparation fee.
     VERNON: The capital contribution of the Partnership, and the
Local  General   Partner's  sales  preparation  fee.   
     WATERFORD:  The  capital  contribution  of the  Partnership,  and the Local
General Partners' sales preparation fee.
     YANTIS: The capital contribution of the Partnership,  and the Local General
Partner's sales preparation fee. 

As used above, the term "sales  preparation fee" means a fee in the amount of 3%
of sale or refinancing proceeds,  except that with respect to HOI OF LENOIR, the
"sales preparation fee" is equal to 6% of sale or refinancing proceeds.

(6) The Class B Limited  Partner  is  Information  Conservation,  Inc.,  a North
Carolina corporation.
                               
                                       14
<PAGE>


ITEM 2.  PROPERTIES:

Through its  investment  in Local Limited  Partnerships  the  Partnership  holds
interests in Apartment Complexes.  See Item 1 for information  pertaining to the
Apartment Complexes.


ITEM 3.  LEGAL PROCEEDINGS:

None.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:

None.


                                       15
<PAGE>


PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S  LIMITED  PARTNERSHIP  INTERESTS AND RELATED
SECURITY HOLDER MATTERS:

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.  Units  can  be  assigned  only  if  certain
requirements in the Partnership's Agreement are satisfied.

   At  December  31,  1996,  there were 734  registered  holders  of Units.  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.  The Low Income Housing  Credits for 1996, 1995 and
1994 were $136, $101 and $32, respectively, per Unit.


ITEM 6.  SELECTED FINANCIAL DATA
                                                                               
<TABLE>
<CAPTION>
                                                                                              May 4, 1993
                                                                                             (Inception) to
                                                      Years Ended December 31,                 December 31,
                                  ------------------------------------------------            ------------
                                  1996               1995                  1994                   1993
                                  ----               ----                  ----                   ----

<S>                             <C>                 <C>                  <C>                   <C>         
Revenue                         $     51,654        $     68,682         $     85,261          $          0

Partnership operating
expenses                              82,499              86,499               67,946                11,634

Equity in loss of
   Local Limited
   Partnerships                   (1,023,557)           (727,986)            (413,316)                   (0)
                                 -----------         -----------          -----------           -----------

Net loss                        $ (1,054,402)       $   (745,803)        $   (396,001)         $    (11,634)
                                 ===========         ===========          ===========           ===========

Net loss per Limited
Partnership Interest            $    (104.39)       $     (73.83)        $     (50.35)         $     (23.55)
                                 ===========         ===========          ===========           ===========

Total assets                    $  6,784,147        $  8,355,140         $ 10,391,250          $  2,389,712
                                 ===========         ===========          ===========           ===========                         

Net investment in
   Local Limited
  Partnerships                  $  5,771,116        $  6,928,034         $  7,852,303          $    355,087
                                 ===========         ===========          ===========           ===========

Capital contributions
   payable to
   Local Limited
   Partnerships                 $    256,610        $    799,745         $  2,289,218          $    125,263
                                 ===========         ===========          ===========           ===========

Accrued fees and expenses
due to affiliates               $     91,982        $     65,438         $     75,820          $  1,229,220
                                 ===========         ===========          ===========           ===========
</TABLE>

                                       16
<PAGE>



ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:

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

Since inception the  Partnership has received  $10,000,000 in cash from the sale
of  Units.  Substantially  all of the  $10,000,000  has  been  committed  to the
purchase  price and  acquisition  fees and cost of  investments in Local Limited
Partnerships,  reserves and expenses of the offering. Although not presently the
case, the  Partnership  previously had identified its  investments in advance of
receipt of sufficient cash capital to fund the  investments.  As of December 31,
1996, the Partnership had made capital  contributions to Limited Partnerships in
the  amount  of  approximately   $6,921,000  and  had  further   obligations  of
approximately $257,000.

As of December 31, 1996,  the  Partnership  was  indebted to  Associates  in the
amount of approximately  $92,000.  The components of such  indebtedness  were as
follows:  advances  for  operating  expenses  of  approximately  $300 and assets
management fees of approximately, $91,700.

Overall,  as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash  equivalents  of  approximately  $414,000 for the year
ended  December  31,  1996.  This  decrease  in cash  consisted  of cash used in
investing  activities  of  approximately  $437,800,  offset by cash  provided by
financing   activities   and  operating   activities  of  the   Partnership   of
approximately  $2,000  and  $22,000,   respectively.   Cash  used  in  investing
activities consisted of capital contributions made to Local Limited Partnerships
and acquisition costs of approximately $442,400 and $5,500, respectively, offset
by distributions of approximately $10,100. Cash provided by financing activities
consisted of advances from TCP IV or its affiliates.  Cash provided by operating
activities  consisted  primarily  of  interest  income.  Cash used in  operating
activities consisted primarily of payments for operating fees and expenses.  The
major components of all these activities are discussed in greater detail below.

Overall,  as reflected in its Statement of Cash Flows, the Partnership had a net
decrease in cash and cash equivalents of  approximately  $697,000 for the period
ended December 31, 1995. This decrease consists of cash used by the Partnerships
investing activities of approximately  $915,000,  offset by cash provided by the
Partnerships  financing  activities and opertating  activities of  approximately
$163,000 and $55,000, respectively.  Cash used in investing activities consisted
of capital  contributions  to Limited  Partnerships  and payments of acquisition
fees of approximately $1,318,000 and $7,000, respectively,  offset by changes in
advances and distributions of approximately  $409,000 and $1,000,  respectively.
Cash provided from financing activities consisted of cash collected from capital
contributions  receivable and the net return of offering costs of  approximately
$145,000 and 18,000, respectively.

Prior to sale of the  Apartment  Complexes,  it is not expected  that any of the
Local Limited  Partnerships in which the Partnership has invested or will invest
will generate cash sufficient to provide distributions to The Partnership of any
material amount.  Distributions  to the Partnership  would first by used to meet
operating  expenses  of the  Partnership,  including  the  payment  of the Asset

                                       17
<PAGE>

Management Fee to TCP IV. See Item 11 hereof. As a result, it is not anticipated
that the Partnership will provide distributions to the Limited Partners prior to
the same of the Apartment Complexes.

The Partnership's  investments are not readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating  losses for the  Apartment  Complexes,  the Local  Limited
Partnerships  and the  Partnership.  These  problems may result from a number of
factors,  many of which cannot be  controlled  by TCP IV.  Nevertheless,  TCP IV
anticipates  that  capital  raised  from  the  sale of the  Limited  Partnership
Interests is sufficient to fund the Partnership's operations.

The Partnership's investments will not be readily marketable and may be affected
by adverse  general  economic  conditions  which, in turn,  could  substantially
increase the risk of operating  losses for the  Apartment  Complexes,  the Local
Limited  Partnerships  and the  Partnership.  These  problems  may result from a
number of factors,  many of which cannot be controlled by TCP IV.  Nevertheless,
TCP IV anticipates that capital raised from the sale of the Limited  Partnership
Interests will be sufficient to fund the  Partnership's  investment  commitments
and proposed operations.


The Partnership  established  working capital reserves of at least 3% of capital
contributions,  an amount  which is  anticipated  to be  sufficient  to  satisfy
general  working  capital  and  administrative   expense   requirements  of  the
Partnership  excluding  payment of the asset  management fee as well as expenses
attendant to the preparation of tax returns and reports to the Limited  Partners
and other investor  servicing  obligations of the Partnership.  Liquidity would,
however,  be adversely  affected by  unanticipated  or greater than  anticipated
operating costs. The Partnership's  liquidity could also be affected by defaults
or delays in payment of the Limited  Partners'  promissory  notes,  from which a
portion of the working capital reserves is expected to be funded.  To the extent
that working capital reserves are insufficient to satisfy the cash  requirements
of the  Partnership,  it is anticipated  that  additional  funds would be sought
through bank loans or other institutional  financing.  TCP IV may also apply any
cash  distributions  received  from  the  Local  Limited  Partnerships  for such
purposes or to replenish or increase working capital reserves.

Under the  Partnership  Agreement the  Partnership  does not have the ability to
assess the Limited  Partners for  additional  capital  contributions  to provide
capital if needed by the Partnership or Local Limited Partnerships. Accordingly,
if  circumstances  arise that cause the Local  Limited  Partnerships  to require
capital  in  addition  to that  contributed  by the  Partnership  and any equity
contributed by the general partners of the Local Limited Partnerships,  the only
sources from which such capital  needs will be able to be satisfied  (other than
the limited reserves available at the Partnership level) will be (i) third-party
debt  financing  (which may not be  available,  if, as expected,  the  Apartment
Complexes  owned by the Local  Limited  Partnerships  are already  substantially
leveraged),  (ii)  additional  equity  contributions  or advances of the general
partners of the Local Limited  Partnerships,  (iii) other equity  sources (which
could adversely affect the Partnership's  interest in Housing Tax Credits,  cash
flow and/or  proceeds of sale or  refinancing  of the  Apartment  Complexes  and
result in adverse tax consequences to the Limited Partners), or (iv) the sale or
disposition  of the  Apartment  Complexes  (which  could  have the same  adverse

                                       18
<PAGE>

effects as discussed in (iii) above).  There can be no assurance that funds from
any of such sources would be readily available in sufficient amounts to fund the
capital requirement of the Local Limited Partnerships in question. If such funds
are not  available,  the Local Limited  Partnerships  would risk  foreclosure on
their Apartment  Complexes if they were unable to renegotiate the terms of their
first  mortgages  and any other debt secured by the  Apartment  Complexes to the
extent the capital requirements of the Local Limited Partnerships relate to such
debt.

The  Partnership's  capital  needs and  resources  are expected to undergo major
changes  during  their  first  several  years of  operations  as a result of the
completion  of its  offerings  of  Units  and its  acquisition  of  investments.
Thereafter,  the  Partnership's  capital  needs and resources are expected to be
relatively  stable over the  holding  periods of the  investments  except to the
extent of proceeds received in payment of Promissory Notes and disbursed to fund
the deferred obligations of the Partnerships.

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

As discussed  in Item 1 above,  as of December 31,  1996,  the  Partnership  had
acquired 20 Local Limited Partnership Interests. Each of the Apartment Complexes
owned by such  Local  Limited  Partnerships  has  received a  reservation  or an
allocation for Low Income Housing Credits. All 20 of the Apartment Complexes are
completed and in operation.

Consistent  with The  Partnership's  investment  objectives,  each Local Limited
Partnership  is  generating   Low  Income  Housing   Credits  for  a  period  of
approximately   ten  years,   commencing  with  completion  of  construction  or
rehabilitation  of its Apartment  Complex and is generating losses until sale of
the Apartment Complex.

As reflected on its Statements of Operations,  the  Partnership  had a losses of
approximately  $1,054,000  and  $746,000,  respectively,  for the periods  ended
December  31,  1996 and 1995.  The  component  items of revenue  and expense are
discussed below.

Revenue.  The  Partnership's  revenues  consist  entirely of interest  earned on
Promissory  Notes  and  cash  deposits  held in  financial  institutions  (i) as
Reserves,  or (ii) pending  investment in Local Limited  Partnerships.  Interest
revenue in future years will be a function of prevailing  interest rates and the
amount of cash balances.  It is anticipated  that the Partnership  will maintain
cash  Reserves  in an amount  not  materially  in excess of the  minimum  amount
required by its Partnership Agreement, which is 3% of Capital Contributions.

Expenses. The most significant component of operating expenses is expected to be
the Asset  Management Fee. The Asset  Management Fees is equal to the greater of
(i) $2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds, and will
be decreased or increased annually based on changes to the Consumer Price Index.

                                       19
<PAGE>

Amortization  expense consist of the  amortization  over a period of 30 years of
the Acquisition Fee and other expenses  attributable to the acquisition of Local
Limited Partnership Interests.

Other expense consists of the  Partnership's  administrative  expenses,  such as
accounting and legal fees, bank charges and investor reporting expenses.

Equity in Income from Local Limited  Partnerships.  The Partnership's  equity in
income from Local  Limited  Partnerships  is equal to  approximately  99% of the
aggregate net income of the Local Limited Partnerships  incurred after admission
of The Partnership as a limited partner thereof.

After rent-up,  the Local Limited  Partnerships  are expected to generate losses
during each year of operations;  this is so because,  although  rental income is
expected  to exceed  cash  operating  expenses,  depreciation  and  amortization
deductions claimed by the Local Limited  Partnerships are expected to exceed net
rental income.




                                       20
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:














                 WNC HOUSING TAX CREDIT FUND, IV, L.P., SERIES 1
                       (A California Limited Partnership)

                              FINANCIAL STATEMENTS

              For The Years Ended December 31, 1996, 1995 and 1994

                                      with

                      INDEPENDENT AUDITORS' REPORT THEREON














                                       21
<PAGE>









                          INDEPENDENT AUDITORS' REPORT





To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 1


We have audited the  accompanying  balance sheets of WNC Housing Tax Credit Fund
IV, L.P., Series 1 (a California Limited  Partnership) (the "Partnership") as of
December 31, 1996 and 1995 and the related  statements of operations,  partners'
equity  (deficit)  and cash flows for each of the years in the three year period
ended December 31, 1996. These financial  statements are the  responsibility  of
the  Partnership's  management.  Our  responsibility is to express an opinion on
these financial  statements based on our audits.  We did not audit the financial
statements of the limited  partnerships in which WNC Housing Tax Credit Fund IV,
L.P., Series 1 is a limited partner.  These investments,  as discussed in Note 3
to the  financial  statements,  are  accounted  for by the  equity  method.  The
financial   statements  of  substantially  all  of  the  limited   partnerships,
representing  85% and 83% of the total assets of WNC Housing Tax Credit Fund IV,
L.P.,  Series 1 at December  31, 1996 and 1995,  respectively,  were  audited by
other auditors whose reports have been furnished to us, and our opinion, insofar
as it relates to the amounts  included for such 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 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 1 (a
California  Limited  Partnership)  as of  December  31,  1996 and 1995,  and the
results of its  operations and its cash flows for each of the years in the three
year period  ended  December  31, 1996 in  conformity  with  generally  accepted
accounting principles.


                                                               /s/CORBIN & WERTZ

                                                                  CORBIN & WERTZ

Irvine, California
April 5, 1997, except for Notes 2 and 6 which are dated as of December 4, 1998


<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                                 BALANCE SHEETS

                           December 31, 1996 and 1995




                                                      1996              1995
                                                 -------------     ------------
ASSETS

Cash and cash equivalents                      $     997,025      $   1,410,867
Investments in limited partnerships                5,771,116          6,928,034
Due from affiliate                                     9,020                  -
Other assets                                           6,986             16,239
                                                ------------       ------------

                                               $   6,784,147      $   8,355,140
                                                ============       ============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
    Payable to limited partnerships            $     256,610      $     799,745
    Accrued fees and advances due to General 
      Partner and affiliate                           91,982             65,438
                                                ------------       ------------

         Total liabilities                           348,592            865,183
                                                ------------       ------------

Partners' equity (deficit):
    General partner                                  (35,545)           (25,001)
    Limited partners (10,000 units authorized
      - 10,000 units outstanding at
      December 31, 1996 and 1995)                  6,471,100          7,514,958
                                                ------------       ------------

         Total partners' equity                    6,435,555          7,489,957
                                                ------------       ------------

                                               $   6,784,147      $   8,355,140
                                                ============       ============


                 See accompanying notes to financial statements
                                      FS-2
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS

              For The Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>

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


<S>                                                   <C>                   <C>                   <C>            
Interest income                                       $        51,654       $       68,682        $        85,261
                                                       --------------        -------------         --------------

Operating expenses:
    Amortization                                               31,032               30,926                 20,797
    Asset management fees                                      40,000               36,667                 30,000
    Interest expense                                                -                    -                  4,327
    Other                                                      11,467                18,906                12,822
                                                       --------------        -------------         --------------

         Total operating expenses                              82,499               86,499                 67,946
                                                       --------------        -------------         --------------

(Loss) income from operations                                 (30,845)             (17,817)                17,315

Equity in losses from limited
    partnerships                                           (1,023,557)            (727,986)              (413,316)
                                                       --------------        -------------         --------------

Net loss                                              $    (1,054,402)      $     (745,803)       $      (396,001)
                                                       ==============        =============         ==============

Net loss allocated to:
    General partner                                   $       (10,544)      $       (7,458)       $        (3,960)
    Limited partners                                       (1,043,858)            (738,345)              (392,041)
                                                       --------------        -------------         --------------

Total net loss allocated                              $    (1,054,402)      $     (745,803)       $      (396,001)
                                                       ==============        =============         ==============

Net loss per weighted limited
    partner units                                     $      (104.39)       $       (73.83)       $       (50.35)
                                                       =============         =============         =============

Outstanding weighted limited
    partner units                                              10,000               10,000                  7,787
                                                       ==============        =============         ==============

</TABLE>


                 See accompanying notes to financial statements
                                      FS-3
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

              For The Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>
                                                           General               Limited
                                                           Partner              Partners                Total
                                                        ---------------      ----------------      ----------------

<S>                                                   <C>                   <C>                   <C>            
Equity (deficit) - January 1, 1994                    $        (1,235)      $      789,781        $       788,546

Capital contributions                                               -            9,022,000              9,022,000

Offering expenses                                             (12,993)          (1,286,340)            (1,299,333)

Collection on notes receivable                                      -               56,000                 56,000

Capital issued for notes receivable                                 -             (145,000)              (145,000)

Net loss                                                       (3,960)            (392,041)              (396,001)
                                                       --------------        -------------         --------------

Equity (deficit) - December 31, 1994                          (18,188)           8,044,400              8,026,212

Collection on notes receivable                                      -              145,000                145,000

Offering expenses                                                 645               63,903                 64,548

Net loss                                                       (7,458)            (738,345)              (745,803)
                                                       --------------        -------------         --------------

Equity (deficit) - December 31, 1995                          (25,001)           7,514,958              7,489,957

Net loss                                                      (10,544)          (1,043,858)            (1,054,402)
                                                       --------------        -------------         --------------

Equity (deficit) - December 31, 1996                  $       (35,545)      $    6,471,100        $     6,435,555
                                                       ==============        =============         ==============

</TABLE>


                 See accompanying notes to financial statements
                                      FS-4
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS

              For The Years Ended December 31, 1996, 1995 and 1994


<TABLE>
<CAPTION>

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

<S>                                                   <C>                   <C>                   <C>    
Cash flows from operating activities:
    Net loss                                          $    (1,054,402)      $     (745,803)       $      (396,001)
    Adjustments to reconcile net loss to net
      cash provided by operating activities:
        Amortization                                           31,032               30,926                 20,797
        Equity in loss of limited partnerships              1,023,557              727,986                413,316
        Accrued and unpaid asset management fees
          due to affiliate of general partner                  25,000               36,667                 30,000
        Accrued interest payable to affiliate of
          general partner                                           -                    -                (10,862)
        Change in due from affiliate                           (9,020)                   -                      -
        Change in other assets                                  6,253                5,661                 (9,900)
        Change in accrued interest payable                          -                    -                   (701)
                                                       --------------        -------------         --------------

    Net cash provided by operating activities                  22,420               55,437                 46,649
                                                       --------------        -------------         --------------

Cash flows from investing activities:
    Investments in limited partnerships, net                 (442,379)          (1,318,394)            (4,972,314)
    Distributions                                              10,075                1,350                      -
    Changes in advances from general partner
      and affiliates for acquisition fees                           -                    -                 (8,179)
    Change in advances receivable                                   -              409,286                687,310
    Acquisition costs and fees                                 (5,502)              (7,072)              (760,369)
                                                       --------------        -------------         --------------

    Net cash used in investing activities                    (437,806)            (914,830)            (5,053,552)
                                                       --------------        -------------         --------------

Cash flows from financing activities:
    Capital contributions from partners                             -              145,000              9,855,000
    Changes from advances from general partner
      and affiliates for:
        Acquisition of limited partnerships                         -              (47,049)            (1,039,414)
        Offering expenses                                           -                    -               (156,636)
        Other                                                   1,544                    -                      -
    Offering adjustments (expenses)                                 -               64,548             (1,299,333)
    Payments on loan payable                                        -                    -               (245,982)
                                                       --------------        -------------         --------------

    Net cash provided by financing activities                   1,544              162,499              7,113,635
                                                       --------------        -------------         --------------

Net change in cash and cash equivalents                      (413,842)            (696,894)             2,106,732

Cash and cash equivalents, beginning of year                1,410,867            2,107,761                  1,029
                                                       --------------        -------------         --------------

Cash and cash equivalents, end of year                $       997,025       $    1,410,867        $     2,107,761
                                                       ==============        =============         ==============
</TABLE>

Continued
                 
                                      FS-5
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994



<TABLE>
<CAPTION>
                               
                                                             1996                 1995                  1994
                                                        ---------------      ----------------      ----------------

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
<S>                                                   <C>                   <C>                   <C>            
    Interest paid                                     $             -       $            -        $         5,028
                                                       ==============        =============         ==============
    Income taxes paid                                 $           800       $          800        $           800
                                                       ==============        =============         ==============
</TABLE>

SUPPLEMENTAL DISCLOSURE OF NONCASH
  FINANCING AND INVESTING ACTIVITIES:

During  the years  ended  December  31,  1996,  1995 and 1994,  the  Partnership
incurred,  but  did not pay  $25,000,  $36,667  and  $30,000,  respectively,  of
management fees due to an affiliate.

During the year ended December 31, 1994, the Partnership  incurred,  but did not
pay  $2,163,955  of payables to limited  partnerships  (in  connection  with its
investments in limited partnerships).

During the year ended December 31, 1994, the Partnership  incurred,  but did not
pay acquisition fees of $31,691 payable to an affiliate.









                 See accompanying notes to financial statements
                                      FS-6
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

              For The Years Ended December 31, 1996, 1995 and 1994


                                                      
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

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

WNC Housing Tax Credit Fund IV, L.P.,  Series 1 (the  "Partnership")  was formed
under  the  California  Revised  Limited  Partnership  Act on May 4,  1993,  and
commenced  operations on October 20, 1993. The  Partnership was formed to invest
primarily  in other  limited  partnerships  which own and  operate  multi-family
housing complexes that are intended to qualify for low income housing credits.

The  general  partner  is WNC  Tax  Credit  Partners,  IV,  L.P.  (the  "General
Partner"),  a California  limited  partnership.  WNC &  Associates,  Inc. is the
general  partner of the General  Partner.  Wilfred N. Cooper,  Sr.,  through the
Cooper Revocable Trust,  owns 70% of the outstanding  stock of WNC & Associates,
Inc. John B. Lester,  Jr. is the original limited partner of the Partnership and
owns,  through the Lester Family Trust,  30% of the  outstanding  stock of WNC &
Associates, Inc.

The  Partnership  Agreement  authorized  the sale of  10,000  units  of  limited
partnership  interests  at $1,000  per Unit  ("Units").  The  offering  of Units
concluded in July 1994 at which time 10,000  Units in the amount of  $10,000,000
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 a 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  a
subordinated  disposition  fee (as described in Note 3), 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.

The Partnership's  investments in limited  partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate,
and  include  the risks  that  neither  the  Partnership's  investments  nor the
apartment   complexes  owned  by  the  limited   partnerships  will  be  readily
marketable.  Additionally there can be no assurance that the Partnership will be
able to dispose of its interests in the 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
apartment  complexes  and the  Partnership.  The  apartment  complexes  could be
subject to loss through  foreclosure.  In addition,  each limited partnership is
subject to risks relating to  environmental  hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other  factors  beyond the  control of the  General  Partner and the general
partners of the limited partnerships, there can be no assurance that Partnership
operations will be profitable or that the  anticipated  housing tax credits will
be available to limited partners.

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 limited partnership's results of operations and for
any distributions  received.  Costs incurred by the Partnership in acquiring the
investments in limited  partnerships  are  capitalized as part of the investment
and amortized over 30 years (see Note 3).

Losses  from  limited  partnerships  allocated  to the  Partnership  will not be
recognized to the extent that the  investment  balance  would be adjusted  below
zero.

                                      FS-7
<PAGE>


                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994



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 reported period. Actual
results could materially differ from those estimates.

Cash and Cash Equivalents
-------------------------

The  Partnership  considers all investments  with remaining  maturities of three
months or less when purchased to be cash  equivalents.  At December 31, 1996 and
1995, the  Partnership had cash  equivalents  representing  U.S.  Treasury Bills
totaling $647,124 and $1,190,989, respectively.

Concentration of Credit Risk
----------------------------

At December  31, 1996 and 1995,  the  Partnership  maintained  cash  balances at
certain financial institutions in excess of the federally insured maximum.

Offering Expenses
-----------------

Offering  expenses consist of underwriting  commissions,  legal fees,  printing,
filing and  recordation  fees, and other costs  incurred in connection  with the
selling of 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 limited  partners'  capital.  As of December 31,
1996 and 1995, the  Partnership  has incurred  offering and selling  expenses to
date of $606,705 and $750,000,  respectively, which are reflected as a reduction
of partners' equity.  During 1995, it was determined by management that offering
costs were overstated by $64,548 at December 31, 1994. Accordingly, during 1995,
the  correction  of such  overstatement  has been  reflected  as a reduction  to
offering  costs  and  accrued  fees and  advances  due to  General  Partner  and
affiliate.

Net Loss Per Limited Partner Unit
---------------------------------

Net loss per limited partner unit is computed by dividing the limited  partners'
share of net loss by the weighted  number of limited  partner units  outstanding
during the period.

Reclassifications
-----------------

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

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
--------------------------------------------

As of  December  31,  1996  and  1995,  the  Partnership  had  acquired  limited
partnership  interests in twenty  limited  partnerships,  each of which owns one
apartment  complex.  As of December  31,  1996,  construction  on all  apartment
complexes  was  complete.   The  respective  general  partners  of  the  limited
partnerships  manage  the day to day  operations  of the  limited  partnerships.
Significant  limited  partnership  business  decisions  require  approval of the
Partnership. The Partnership, as a limited partner, is entitled to up to 99%, as
specified in the partnership agreements,  of the operating profits and losses of
the  limited  partnerships  upon  its  acquisition  of its  limited  partnership
interests.


                                      FS-8
<PAGE>
                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------

The  Partnership's  investments  in the  limited  partnerships  as  shown in the
accompanying  balance  sheet as of December 31, 1996 and 1995 are  approximately
$956,000 and $1,519,000,  respectively, greater than the Partnership's equity as
shown in the limited  partnership's  financial  statements.  This  difference is
primarily due to acquisition costs related to the acquisition of the investments
that have been capitalized in the Partnership's  investment  account and will be
amortized  over 30  years  and  capital  contributions  accrued  but  not  paid.
<TABLE>
<CAPTION>
Following is a summary of the  components of the  Partnership's  investments  in
limited partnerships as of December 31, 1996 and 1995:

                                                                               1996                    1995
                                                                          ----------------       ------------------

<S>                                                                     <C>                     <C>              
Investments per balance sheet, beginning of period                      $      6,928,034        $       7,852,303

Tax credit adjustments                                                          (100,756)                (171,079)

Distributions                                                                    (10,075)                  (1,350)

Capitalized acquisition fees and costs                                             5,502                    4,072

Equity in losses of limited partnerships                                      (1,023,557)                (727,986)

Amortization of capitalized acquisition fees and costs                           (28,032)                 (27,926)
                                                                         ---------------         ----------------

Investments per balance sheet, end of period                            $      5,771,116        $       6,928,034
                                                                         ===============         ================
</TABLE>


The  financial  information  from the  individual  financial  statements  of the
limited partnerships include rental and interest subsidies. Rental subsidies are
included in  revenues  and  interest  subsidies  are  generally  netted  against
interest expense.  Approximate selected financial  information from the combined
financial  statements of the limited  partnerships at December 31, 1996 and 1995
and for each of the years in the three year period ended December 31, 1996 is as
follows:
<TABLE>
<CAPTION>

                                         COMBINED CONDENSED BALANCE SHEETS

                                                                          1996                      1995
                                                                     ----------------         -----------------
ASSETS

<S>                                                                <C>                     <C>
Buildings and improvements, net of  accumulated depreciation of
  $2,410,000 and $1,323,000  for 1996 and 1995,  respectively       $     31,310,000        $     32,285,000
Land                                                                       1,217,000               1,217,000
Other assets                                                               1,579,000               1,571,000
                                                                     ---------------         ---------------

                                                                    $     34,106,000        $     35,073,000
                                                                     ===============         ===============

</TABLE>
                                      FS-9
<PAGE>
          WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------

<TABLE>
<CAPTION>
                                   COMBINED CONDENSED BALANCE SHEETS, continued

                                                                               1996                    1995
                                                                          ----------------       ------------------
LIABILITIES AND PARTNERS' CAPITAL

<S>                                                                     <C>                     <C>              
Construction and  mortgage loans payable                                $     26,192,000        $      26,396,000
Other liabilities (including due to related parties of
  $921,000 and $1,592,000 as of December 31, 1996
  and 1995, respectively)                                                      1,871,000                2,600,000
                                                                         ---------------         ----------------
         Total liabilities                                                    28,063,000               28,996,000
                                                                         ---------------         ----------------

Partners' capital:
    WNC Housing Tax Credit Fund, L.P.                                          4,815,000                5,409,000
    Other partners                                                             1,228,000                  668,000
                                                                         ---------------         ----------------
         Total partners' capital                                               6,043,000                6,077,000
                                                                         ---------------         ----------------

                                                                        $     34,106,000        $      35,073,000
                                                                         ===============         ================
</TABLE>
<TABLE>
<CAPTION>


                                    COMBINED CONDENSED STATEMENTS OF OPERATIONS

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

<S>                                             <C>                     <C>                     <C>             
Revenues                                        $      3,004,000        $      2,335,000        $        841,000
                                                 ---------------         ---------------         ---------------

Expenses:
    Operating expenses                                 1,889,000               1,530,000                 389,000
    Interest expense                                   1,064,000                 641,000                 259,000
    Depreciation                                       1,087,000                 901,000                 592,000
                                                 ---------------         ---------------         ---------------

         Total expenses                                4,040,000               3,072,000               1,240,000
                                                 ---------------         ---------------         ---------------

Net loss                                        $     (1,036,000)       $       (737,000)       $       (399,000)
                                                 ===============         ===============         =============== 

Net loss allocable to Partnership               $     (1,024,000)       $       (728,000)       $       (413,000)
                                                 ===============         ===============         =============== 
</TABLE>


Certain limited  partnerships  have incurred  operating  losses and have working
capital deficiencies.  In the event these limited partnerships continue to incur
operating  losses,  additional  capital  contributions by the Partnership may be
required to sustain the operations of such limited  partnerships.  If additional
capital  contributions  are not made when they are required,  the  Partnership's
investment in certain of such limited partnerships could be impaired.

                                     FS-10
<PAGE>
                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------

The financial statements of one limited partnership, which represents 21% of the
total combined equity of the investments in limited  partnerships  were prepared
assuming  the limited  partnership  will  continue as a going  concern.  Through
December 31, 1996, the limited  partnership  has had recurring  losses,  working
capital  deficiencies  and has not been  billed for certain  expenses  due since
1994. The limited  partnership is seeking  abatement or an extended payment plan
to pay down certain of these liabilities; however, if the limited partnership is
unsuccessful,  additional funding may be requested from the Partnership.  In the
event the limited partnership is required to liquidate or sell its property, the
net  proceeds  could  be  significantly  less  than the  carrying  value of such
property.  As of December 31, 1996 and 1995, the carrying value of such property
totaled $7,423,972 and $7,615,430.

In September  1996, the original  general  partners of this limited  partnership
were removed. The Los Angeles County Housing Development  Corporation ("LACHDC")
was named as the sole general  partner.  In September  1997,  Community  Housing
Assistance Program,  Inc., a California nonprofit corporation replaced LACHDC as
the sole general partner.

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

As of  December  31,  1996,  due from  affiliate  consisted  of  advances  to an
affiliate for acquisition costs. These advances were non-interest  bearing,  due
on demand and were collected in 1997.

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
         Partnership  units as compensation for services  rendered in connection
         with the acquisition of limited partnerships.  Net acquisition fees are
         included in investment in limited partnerships. As of December 31, 1996
         and 1995, the  Partnership had incurred  acquisition  fees of $800,000.
         Accumulated amortization amounted to $70,632 and $43,964 as of December
         31, 1996 and 1995, respectively.

         Reimbursement  of costs incurred by an affiliate of the General Partner
         in  connection  with the  acquisition  of limited  partnerships.  These
         reimbursements  are not to  exceed  1.2% of the gross  proceeds.  As of
         December 31, 1996 and 1995, the Partnership  incurred acquisition costs
         of $43,658  and  $38,157,  respectively,  which have been  included  in
         limited   partnership   investment.    Accumulated   amortization   was
         insignificant for 1996 and 1995.

         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  (defined as the
         Partnership's  capital  contributions plus its allocable  percentage of
         the mortgage debt  encumbering the apartment  complexes) of the limited
         partnerships.   The  Partnership  incurred  asset  management  fees  of
         $40,000,  $36,667 and $30,000 for the years ended  December  31,  1996,
         1995 and 1994, respectively.  During 1996, the Partnership paid $15,000
         of such fees. No management fees were paid during 1995 and 1994.

         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 return on investment  (as defined in the
         Partnership  Agreement) and is payable only if services are rendered in
         the sales effort.

                                     FS-11
<PAGE>

                 WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For The Years Ended December 31, 1996, 1995 and 1994



NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------

<TABLE>
<CAPTION>
Accrued fees and  advances due  (to)/from  General  Partner and  affiliate as of
December 31, 1996 and 1995 consist of the following:

                                                                               1996                    1995
                                                                          ----------------       ------------------

<S>                                                                     <C>                     <C>    
Advances (due to)/due from an affiliate made for acquisition costs,
  organizational, offering and selling expenses                         $           (315)       $           1,229

Asset management fees                                                            (91,667)                 (66,667)
                                                                         ---------------         ----------------

                                                                        $        (91,982)       $         (65,438)
                                                                         ===============         ================
</TABLE>


NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
-----------------------------------------

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

NOTE 5 - 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 6 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

In October 1997, the  Partnership  acquired one additional  limited  partnership
interest  which  committed  the  Partnership  to  additional   contributions  of
approximately $276,000.


                                     FS-12
<PAGE>
ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE:

None.


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.

WILFRED  N.  COOPER,  SR.,  age 65,  has been the  principal  shareholder  and a
Director of Associates  since its  organization in 1971 and of Shelter  Resource
Corporation  since its organization in 1981 and of WNC Resources,  Inc. from its
organization in 1988 through its  acquisition by Associates in 1991,  serving as
President  of those  companies  until 1992 and as Chief  Executive  Office since
1992. He is also a general partner with Associates in WNC Financial Group,  L.P.
and WNC Tax  Credit  Partners,  L.P.  He  currently  is the  Chairman  and Chief
Executive  Officer of  Associates.  During 1970 and 1971 he was a  principal  of
Creative Equity  Development  Corporation,  a predecessor of Associates,  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.  Previously,  he had
responsibility  for new business  development  including  factory-built  housing
evaluation and project management in urban planning and development.  Mr. Cooper
is a Director and Trustee of the National  Association  of Home  Builders  Rural
Housing  Council,  a past President of the Rural Builders  Council of California
(RBCC) and a past President of Southern California Chapter II of the Real Estate
Syndication  and  Securities  Institute  (RESSI) of the National  Association of
Realtors (NAR). Mr. Cooper graduated from Pomona College in 1956 with a Bachelor
of Arts degree.

JOHN B.  LESTER,  JR.,  age 62,  has  been a  shareholder,  a  Director  and the
Secretary of Associates  since 1986,  the Executive  Vice President from 1986 to
1992,  and the  President  and  Chief  Operating  Office  since  1992.  He was a
shareholder,   Executive  Vice  President,  Secretary  and  a  Director  of  WNC
Resources,  Inc.  from 1988 through its  acquisition  by  Associates in 1991. He
currently is the President, Chief Operating Officer and Secretary of Associates.
From  1973  to  1986  he  was  Chairman  of the  Board  and  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 is
a  former  Director  of  the  Los  Angeles  Chapter  of the  Associated  General
Contractors of California.  His  responsibilities at Associates include property
acquisitions,  and office  administration.  Mr.  Lester is the  initial  limited
partner of the Partnership. Mr. Lester graduated from the University of Southern
California in 1956 with a Bachelor of Science degree in Mechanical Engineering.

                                     22
<PAGE>

DAVID N. SHAFER, age 43, He has been a Senior Vice President of Associates since
1992 and  General  Counsel  since  1990,  and  served as the  Director  of Asset
Management  form  1990 to  1992.  Previously  he was  employed  as an  associate
attorney  by the law firms of  Morinello,  Barone,  Holden & Nardulli  from 1987
until 1990, Frye,  Brandt & Lyster from 1986 to 1987 and Simon and Sheridan from
1984 to 1986. Mr. Shafer is a past President of Southern  California  Chapter II
of RESSI,  a Director and  President of RBCC, a Director of the Council of Rural
Housing  and  Development,  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 and from the  University of San Diego in 1986 with a Master
of Law degree in Taxation.

WILFRED N. COOPER,  JR., age 34, He has been employed by Associates  since 1988,
has been Senior  Vice  President  -  Marketing  since  1994,  and served as Vice
President  -  Marketing  from 1992 to 1994.  Previously,  he was  employed  as a
government  affairs  assistant by Honda North  America  from 1987 to 1988,  as a
legal assistant with respect to Federal  legislative  and regulatory  matters by
the law firm of  Schwartz,  Woods and Miller  from 1986 to 1987.  Mr.  Cooper is
responsible for overseeing all marketing  activities of WNC'S private and public
offerings.  Mr. Cooper has been  President and a registered  principal  with WNC
Capital  Corporation  since its  organization.  Mr.  Cooper  graduated  from The
American University in 1985 with a Bachelor of Arts degree.

THEODORE M. PAUL, age 41, has been Vice President - Finance of WNC & ASSOCIATES,
INC. since 1992 and Chief  Financial  Officer since 1990.  Previously,  he was a
Vice President and Chief Financial Officer of National  Partnership  Investments
Corp.,  a sponsor and general  partner of syndicated  partnerships  investing in
affordable rental housing  qualified for tax credits,  from 1986 until 1990, and
was  employed as an associate  by the  accounting  firms of Laventhol & Horwath,
during 1985,  and Mann & Pollack  Accountants,  from 1979 to 1984. Mr. Paul is a
member  of the  California  Society  of  Certified  Public  Accountants  and the
American Institute of Certified Public Accountants.  His responsibilities at WNC
& ASSOCIATES,  INC. include supervision of investor  partnership  accounting and
tax  reporting  matters and  monitoring  the  financial  condition  of the Local
Limited  Partnerships in which the Partnership  will invest.  Mr. Paul graduated
from the University of Illinois in 1978 with a Bachelor of Science degree and is
a Certified Public Accountant in the State of California.

THOMAS J. RIHA,  age 42, has been Vice  President  - Asset  Management  of WNC &
ASSOCIATES, INC. since 1994. He has more than 17 years' experience in commercial
and multi-family real estate investment and management. Previously, Mr. Riha was
employed by Trust  Realty  Advisor,  a real estate  acquisition  and  management
company,  from 1988 to 1994,  last serving as Vice  President - Operations.  His
responsibilities at WNC & ASSOCIATES, INC. include monitoring the operations and
financial  performance of, and regulatory  compliance by,  properties in the WNC
portfolio. 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 in the State
of  California  and a member  of the  California  Society  of  Certified  Public
Accountants and the American Institute of Certified Public Accountants.
  
                                     23
<PAGE>
SY GARBAN,  age 51, has 19 years'  experience in the real estate  securities and
syndication industry. He has been associated with WNC & ASSOCIATES,  INC., since
1989,  serving as National Sales  Director  through 1992 and as Vice President -
National Sales since 1992.  Previously,  he was employed by MRW,  Inc.,  Newport
Beach, California from 1980 to 1989, a real estate acquisition,  development and
management  firm.  Mr. Garban is a member of the  International  Association  of
Financial Planners.  Mr. Garban graduated from Michigan State University in 1967
with a Bachelor of Science degree in Business Administration.

CARL FARRINGTON,  age 54, has been associated with WNC & ASSOCIATES,  INC. since
1993,  currently  serving as Director - Originations  since 1994. Mr. Farrington
has more than 12 years'  experience  in finance  and real  estate  acquisitions.
Previously,  he served as Acquisitions Director for The Arcand Company from 1991
to 1993, and as Treasurer and Director of Finance and Administrator for Polytron
Corporation  from 1988 to 1991.  Mr.  Farrington is a member and Director of the
Council  of  Affordable  and  Rural  Housing  and  Development.  Mr.  Farrington
graduated from Yale  University  with a Bachelor of Arts degree in 1966 and from
Dartmouth College with a Master of Business Administration in 1970.

MICHELE M. TAYLOR,  age 41, has been  employed by WNC & ASSOCIATES,  INC.  since
1986,  serving as a paralegal and office manager,  and currently is the Investor
Services  Director.  Previously she was  self-employed  between 1982 and 1985 in
non-financial  services  activities  and from 1978 to 1981 she was employed as a
paralegal by a law firm which  specialized  in real estate  limited  partnership
transactions.  Ms. Taylor graduated from the University of California, Irvine in
1976 with a Bachelor of Arts degree.

THERESA I. CHAMPANY, age 38, has been employed by WNC & ASSOCIATES,  INC., since
1989 and currently is the Marketing Services Director and a registered principal
with WNC  CAPITAL  CORPORATION.  Previously,  she was  employed  as  Manager  of
Marketing  Services  by August  Financial  Corporation  from 1986 to 1989 and as
office manager and Assistant to the Vice  President of Real Estate  Syndications
by  McCombs  Securities  Co.,  Inc.  from 1979 to 1986.  Ms.  Champany  attended
Manchester (Conn.) Community College from 1976 to 1978.

KAY L.  COOPER,  age 60, has been an officer and  Director of WNC &  ASSOCIATES,
INC. since 1971 and of WNC RESOURCES,  INC. from 1988 through its acquisition by
WNC & ASSOCIATES, INC. in 1991. Mrs. Cooper has also been the sole proprietor of
Agate 108, a manufacturer and retailer of home accessory  products,  since 1975.
She is the wife of Wilfred N. Cooper,  Sr., the mother of Wilfred N. Cooper, Jr.
and the sister of John B. Lester,  Jr. Mrs. Cooper graduated from the University
of Southern California in 1958 with a Bachelor of Science degree.

                                       24
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION:

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

(a)  Selection  fees in an  amount  equal  to 8% of the  gross  proceeds  of the
Partnerships'  Offering ("Gross Proceeds").  Through December 31, 1996, $800,000
of selection fees had been incurred by the Partnership.

(b) A  nonaccountable  expense  reimbursement  in an amount equal to 2% of Gross
Proceeds.  Through  December  31,  1996,  $200,000  had  been  incurred  by  the
Partnership.

(c) An annual  asset  management  fee in an amount  equal to the  greater of (i)
$2,000 for each Apartment Complex or (ii) 0.275% of gross proceeds.  $40,000 and
$36,667  had been  incurred  for the years  ended  December  31,  1996 and 1995,
respectively.

(d) A  subordinated  disposition  fee in an amount equal to 1% of the sale price
received in connection  with the sale or disposition of an Apartment  Complex or
interest in a Local Limited Partnership.  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
theLimited  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.


                                       25
<PAGE>


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT:

(a)      Security Ownership of Certain Beneficial Owners

         No  person  is  known  to  own  beneficially  in  excess  of 5% of  the
outstanding Limited Partnership Interests.

(b)      Security Ownership of Management

         Neither TCP IV,  Associates  nor any of the  officers or  directors  of
         Associates  own  directly  or  beneficially  any  Limited   Partnership
         Interests in the Partnership.

(c)      Changes in Control

         The  management  and control of the General  Partners may be changed at
         any time in accordance with their respective  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  anytime  remove the  General  Partner of the
         Partnership and elect a successor General Partner

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

All of the Partnerships' affairs are managed by TCP IV, through Associates.  The
transactions  with TCP IV and  Associates are primarily in the form of fees paid
by the Partnership for services  rendered to the Partnership and  reimbursements
of  expenses,  as  discussed  in Item 11 and in the  notes  to the  accompanying
financial statements.


                                       26
<PAGE>



PART IV.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:

Financial Statements


         Independent auditor's reports
         Balance sheets as of December 31, 1996 and 1995
         Statements of Operations  for the years ended  December 31, 1996,  1995
         and 1994.  Statement of Partners'  Equity (Deficit) for the years ended
         December  31,  1996,  1995 and 1994.  Statements  of Cash Flows for the
         years ended December 31, 1996, 1995 and 1994.
         Notes to Financial Statements.


Financial Statement Schedules:

These schedules are omitted because any required  information is included in the
financial  statements  and notes  thereto,  or they are not  applicable,  or not
required.

(3)      Articles  of   incorporation   and  by-laws:   The  registrant  is  not
         incorporated. The Partnership Agreement is included as Exhibit B to the
         Prospectus,  filed as Exhibit  28.1 to Form 10-K for fiscal  year ended
         December 31, 1995.

(10)     Material contracts:

10.1     Second  Amended  and  Restated  Agreement  of  Limited  Partnership  of
         Beckwood Manor Seven Limited  Partnership filed as exhibit 10.1 to Form
         8-K dated December 8, 1993 is hereby  incorporated  herein by reference
         as exhibit 10.1.

10.2     Amended and Restated  Agreement of Limited  Partnership of Alpine Manor
         filed as exhibit 10.3 to  Post-Effective  Amendment No 1 dated February
         16, 1994 is hereby incorporated herein by reference as exhibit 10.2.

10.3     Second Amended and Restated Agreement of Limited Partnership of Briscoe
         Manor,  Limited  Partnership  filed as exhibit  10.4 to  Post-Effective
         Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
         reference as exhibit 10.3.

10.4     Amended and Restated  Agreement and Certificate of Limited  Partnership
         of  Evergreen  Four,  Limited  Partnership  filed  as  exhibit  10.5 to
         Post-Effective  Amendment  No 1  dated  February  16,  1994  is  hereby
         incorporated herein by reference as exhibit 10.4.

                                       27
<PAGE>

10.5     Amended and Restated  Agreement and Certificate of Limited  Partnership
         of  Fawn  Haven,   Limited   Partnership   filed  as  exhibit  10.6  to
         Post-Effective  Amendment  No 1  dated  February  16,  1994  is  hereby
         incorporated herein by reference as exhibit 10.5.

10.6     Amended and Restated Agreement of Limited Partnership of Fort Stockton,
         L. P. filed  as  exhibit 10.7  to Post-Effective  Amendment  No 1 dated
         February 16, 1994 is hereby incorporated herein by reference as exhibit
         10.6.

10.7     Amended and Restated  Agreement and Certificate of Limited  Partnership
         of Madison Manor Senior Citizens Complex, Ltd. filed as exhibit 10.8 to
         Post-Effective  Amendment  No 1  dated  February  16,  1994  is  hereby
         incorporated herein by reference as exhibit 10.7.

10.8     Amended and Restated  Agreement and Certificate of Limited  Partnership
         of Mt. Graham  Housing,  Ltd. filed  as exhibit 10.9 to  Post-Effective
         Amendment  No 1 dated February 16, 1994 is hereby  incorporated  herein
         by reference as exhibit 10.8.

10.9     Amended and Restated  Agreement and Certificate of Limited  Partnership
         of  Northside  Plaza  Apartments,   Ltd.  filed  as  exhibit  10.10  to
         Post-Effective  Amendment  No 1  dated  February  16,  1994  is  hereby
         incorporated herein by reference as exhibit 10.9.

10.10    Amended and Restated  Agreement of Limited  Partnership of Pampa Manor,
         L.P.  filed as exhibit  10.11 to  Post-Effective  Amendment  No 1 dated
         February 16, 1994 is hereby incorporated herein by reference as exhibit
         10.10.

10.11    Amended and Restated Agreement of Limited  Partnership of Vernon Manor,
         L.P.  filed as exhibit  10.12 to  Post-Effective  Amendment  No 1 dated
         February 16, 1994 is hereby incorporated herein by reference as exhibit
         10.11.

10.12    Amended and  Restated  Agreement  of Limited  Partnership  of Waterford
         Place, A Limited  Partnership  filed as exhibit 10.13 to Post-Effective
         Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
         reference as exhibit 10.12.

10.13    Amended  and  Restated  Agreement  of  Limited  Partnership  of  Yantis
         Housing,  Ltd filed as exhibit 10.13 to  Post-Effective  Amendment No 1
         dated February 16, 1994 is hereby  incorporated  herein by reference as
         exhibit 10.12.

10.14    Third  Amended  and  Restated  Agreement  of  Limited  Partnership  and
         Certificate of Limited  Partnership of Indian Creek Limited Partnership
         filed as exhibit 10.16 to Post-Effective Amendment No 2 dated March 11,
         1994 is hereby incorporated herein by reference as exhibit 10.14.

                                       28
<PAGE>

10.15    Agreement of Limited  Partnership of Laurel Creek  Apartments  filed as
         exhibit  10.1 to Form 8-K  dated May 25,  1994 is  hereby  incorporated
         herein by reference as exhibit 10.15.

10.16    Second  Amended  and  Restated  Agreement  of  Limited  Partnership  of
         Sandpiper  Square, A Limited  Partnership filed as exhibit 10.2 to Form
         8-K dated May 25, 1994 is hereby  incorporated  herein by  reference as
         exhibit 10.16.

10.17    Amended and Restated Agreement of Limited  Partnership of Regency Court
         Partners  filed as  exhibit  10.1 to Form 8-K  dated  June 30,  1994 is
         hereby incorporated herein by reference as exhibit 10.17.

10.18    Disposition  and  Development  Agreement  By and Between The  Community
         Development  Commission  of the County of Los Angeles and Regency Court
         Partners  (including  forum of Ground  Lease)  filed as exhibit 10.2 to
         Form 8-K dated June 30, 1994 is hereby incorporated herein by reference
         as exhibit 10.18.

10.19    Amended  and  Restated  Agreement  of Limited  Partnership  of Bay City
         Village  Apartments,  Limited  Partnership  filed as  exhibit  10.19 to
         Post-Effective   Amendment   No  4  dated  July  14,   1994  is  hereby
         incorporated herein by reference as exhibit 10.19.

10.20    Second Amended and Restated Agreement of Limited  Partnership of Hidden
         Valley  Limited  Partnership  filed as exhibit 10.20 to  Post-Effective
         Amendment  No 4 dated July 14,  1994 is hereby  incorporated  herein by
         reference as exhibit 10.20.

10.21    Amended and Restated  Agreement of Limited  Partnership  of HOI Limited
         Partnership of Lenoir and Amendments  thereto filed as exhibit 10.21 to
         Post-Effective   Amendment   No  4  dated  July  14,   1994  is  hereby
         incorporated herein by reference as exhibit 10.21.

Reports on Form 8-K

No reports on From 8-K were filed during the fourth  quarter ended  December 31,
1996.

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<PAGE>


 SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                 WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1
                                  (Registrant)

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

Date:  January 21, 1999        By:    /s/ John B. Lester, Jr.
                                      -----------------------------------------
                                      John B. Lester, Jr.
                                      President

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:

DATE                 SIGNATURE:                     TITLE:
                                                    Director and Principal 
                                                    Executive Officer of 
                                                    WNC & Associates, Inc.
January 21, 1999     /s/ Wilfred N. Cooper, Sr.
                     --------------------------
                     Wilfred N. Cooper, Sr.

                                                    Director and Principal 
                                                    Operating Officer and 
                                                    Secretary of
                                                    WNC & Associates, Inc.
January 21, 1999     /s/ John B. Lester, Jr.
                     ------------------------------
                     John B. Lester, Jr.



                                                    Principal Financial  
                                                    Officer and Principal  
                                                    Accounting Officer of
                                                    WNC & Associates, Inc.
January 21, 1999     /s/ Theodore M. Paul
                     ------------------------------
                     Theodore M. Paul


                                       30