Form 10-QSB

[X]             QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
    
                For the Quarterly period ended June 30, 1998

[ ]            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                  EXCHANGE ACT

      For the transition period from ________________ to _________________
                         Commission file number 0-28710

                     (Exact name of small business issuer as
                            specified in its charter)
  Performance Asset Management Fund IV, Ltd., A California Limited Partnership

  (State or other jurisdiction                                (IRS Employer    
of incorporation or organization)                          Identification No.) 
           California                                          33-0548134      
 

                    (Address of principal executive offices)
            4100 Newport Place, Suite 400, Newport Beach, California

                           (Issuer's telephone number)
                                 (714) 261-2400

              (Former name, former address and former fiscal year,
                          if changed since last report)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by court. Yes No .

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date: N/A

     Transitional Small Business Disclosure Format (check one):
                        Yes___              No _X_   


                                       1
<PAGE>

                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB




                                     PART I


Item 1. Financial Statements

Item 2. Management's Discussion and Analysis of Plan of Operation



                                     PART II


Item 1. Legal Proceedings

Item 2. Exhibits and Reports

                  Signatures


                                       2
<PAGE>



                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP


                                     PART I


ITEM 1.  FINANCIAL STATEMENTS


Index to the Financial Statements for the Partnership:

     Balance Sheets as of June 30, 1998 and December 31, 1997..................4

     Statements of Operations for the Three and Six months Ended
           June 30, 1998 and June 30, 1997.....................................5

     Statements of Partners' Capital (Deficit) for the Six months 
           Ended June 30, 1998 and the year ended December 31, 1997............6

     Statements of Cash Flows for the Six Months Ended June 30,
           1998 and June 30, 1997..............................................7

     Notes to Financial Statements ............................................8

     The financial statements have been prepared by Performance Asset Management
     Fund IV, Ltd., A California Limited  partnership  ("Partnership"),  without
     audit, pursuant to the rules and regulations of the Securities and Exchange
     Commission.  Certain information and footnote disclosures normally included
     in financial  statements  prepared in accordance  with  generally  accepted
     accounting principles have been condensed or omitted pursuant to such rules
     and regulations. The Partnership believes that the disclosures are adequate
     to make the  information  presented not misleading when read in conjunction
     with the Partnership's financial statements for the year ended December 31,
     1997.  The  financial   information  presented  reflects  all  adjustments,
     consisting only of normal recurring adjustments,  which are, in the opinion
     of  management,  necessary  for a fair  statement  of the  results  for the
     interim periods presented.




                                       3
<PAGE>



                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                                 BALANCE SHEETS
                       June 30, 1998 and December 31, 1997

                                   (UNAUDITED)
                                   ----------

<TABLE>
<CAPTION>
                                     ASSETS

                                                                   1998            1997 
                                                                   ----            ---- 
<S>                                                          <C>             <C>         
Cash and equivalents                                         $  2,038,807    $  1,995,810
Cash held in trust                                              2,915,849       2,849,998
Investments in distressed loan portfolios, net                  9,731,679       7,255,916
Deposit on distressed loan portfolio acquisition                     --         2,858,076
Due from affiliate                                                   --           231,443
Other assets                                                      104,977         104,977
                                                             ------------    ------------
         Total assets                                        $ 14,791,312    $ 15,296,220
                                                             ============    ============

                        LIABILITIES AND PARTNERS' CAPITAL

Accounts  payable                                            $      5,350    $     61,713
Due to affiliates, net                                            593,979       1,225,572
                                                             ------------    ------------
         Total liabilities                                        599,329       1,287,285
                                                             ------------    ------------

Commitments and contingencies

General partner's deficit (no units outstanding)               (1,020,772)     (1,039,077)
Limited partners' capital (12,000 units authorized;
  11,462 units issued and outstanding at June 30, 1998 and
  December 31, 1997)                                           15,212,755      15,048,012
                                                             ------------    ------------
         Total partners' capital                               14,191,983      14,008,935
                                                             ------------    ------------
         Total liabilities and partners' capital             $ 14,791,312    $ 15,296,220
                                                             ============    ============
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                        4
<PAGE>

                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

                                   ----------

<TABLE>
<CAPTION>
                                                        For the Three                   For the Six
                                                     Months Ended June 30           Months Ended June 30
                                                     --------------------           --------------------

                                                       1998           1997           1998           1997
                                                       ----           ----           ----           ----
<S>                                                <C>              <C>          <C>            <C>       
Portfolio collections                              $1,426,270       $671,596     $2,487,306     $1,417,226
Less: portfolio basis recovery                      1,353,199        647,997      2,372,118      1,391,732
                                                   ----------       --------     ----------     ----------
            Net investment income                      73,071         23,599        115,188         25,494
                                                   ----------       --------     ----------     ----------
Cost of operations:
      Collection expense                               11,185        130,582        104,203        167,889
      Management fee expense                           63,953         51,632        131,158        108,724
      Professional fees                                27,127         73,178         64,479        165,793
      Amortization                                       --              918           --            1,925
      General and administrative expense                1,049         10,903          1,421         63,800
                                                   ----------       --------     ----------     ----------
            Total operating expenses                  103,314        267,213        301,261        508,131
                                                   ----------       --------     ----------     ----------
Income (loss) from operations                         (30,243)      (243,614)      (186,073)      (482,637)
Other income:
      Interest                                         52,887        161,056        113,015        188,640
      Other income                                     11,336          2,275        256,106          9,993
                                                   ----------       --------     ----------     ----------
Net income (loss)                                     $33,980       ($80,283)      $183,048      ($284,004)
                                                   ==========       ========     ==========     ==========

Net income (loss) allocable to general partner         $3,398        ($8,028)       $18,305       ($28,400)
                                                   ==========       ========     ==========     ==========
Net income (loss) allocable to limited partners       $30,582       ($72,255)      $164,743      ($255,604)
                                                   ==========       ========     ==========     ==========
Net income (loss) per limited partnership unit          $2.67         ($6.30)        $14.37        ($22.30)
                                                   ==========       ========     ==========     ==========
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                        5
<PAGE>


                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                    STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
     For the Six Months Ended June 30, 1998 and Year Ended December 31, 1997

                                   (UNAUDITED)

                                   ----------

<TABLE>
<CAPTION>
                                          General        Limited
                                          Partner        Partners          Total
                                       ------------    ------------    ------------
<S>                                     <C>             <C>             <C>        
Balance, December 31, 1995                ($516,291)    $19,815,741     $19,299,450
     Redemption of partnership units           --           (40,000)        (40,000)
     Distributions                         (159,334)     (1,433,425)     (1,592,759)
     Net loss                               (73,217)       (658,949)       (732,166)
                                       ------------    ------------    ------------
Balance, December 31, 1996                 (748,842)     17,683,367      16,934,525
     Redemption of partnership units           --           (25,000)        (25,000)
     Distributions                         (222,907)     (2,004,399)     (2,227,306)
     Net income                             (67,328)       (605,956)       (673,284)
                                       ------------    ------------    ------------
Balance, December 31, 1997              ($1,039,077)    $15,048,012     $14,008,935
     Net income                              18,305         164,743         183,048
                                       ------------    ------------    ------------
Balance, June 30, 1998                  ($1,020,772)    $15,212,755     $14,191,983
                                       ============    ============    ============
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                        6
<PAGE>


                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                          STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 1998 and 1997

                                   (UNAUDITED)

                                   ----------

<TABLE>
<CAPTION>
                                                                       1998           1997
                                                                       ----           ----
<S>                                                                <C>            <C>       
Cash flows from operating activities:
         Net income (loss)                                           $183,048      ($284,004)
         Adjustments to reconcile net income (loss) to net cash
             provided by operating activities:
                  Amortization                                           --            1,925
                  Decrease (increase) in assets:
                          Due from affiliates                         231,443        136,022
                  Increase (decrease) in liabilities:
                          Accounts payable                            (56,363)         5,511
                          Due to affiliates                          (631,593)     1,415,057
                                                                  -----------    -----------
                  Net cash provided by (used in)
                      operating activities                           (273,465)     1,274,511
                                                                  -----------    -----------
Cash flows provided by (used in) investing activities:
         Recovery of portfolio basis                                2,372,118      1,391,732
         Cash held in trust                                           (65,851)       689,995
         Purchase of investments in distressed loan portfolios     (4,847,881)      (520,672)
         Deposit on distressed loan portfolio acquisition           2,858,076           --
                                                                  -----------    -----------
                  Net cash provided by investing activities           316,462      1,561,055
                                                                  -----------    -----------
Cash flows provided by (used in) financing activities:
         Redemption of limited partnership units                         --          (15,000)
         Distributions to partners                                       --       (1,909,915)
                                                                  -----------    -----------
                  Net cash used in financing activities                  --       (1,924,915)
                                                                  -----------    -----------
Net (decrease) increase in cash                                        42,997        910,651
Cash at beginning of period                                         1,995,810      2,121,545
                                                                  -----------    -----------
Cash at end of period                                              $2,038,807     $3,032,196
                                                                  ===========    ===========
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                        7
<PAGE>


                   PERFORMANCE ASSET MANAGEMENT FUND IV, LTD.,
                        A CALIFORNIA LIMITED PARTNERSHIP

                          Notes to Financial Statements

Organization and Description of Business

Performance  Asset  Management Fund IV, Ltd., A California  Limited  Partnership
("Partnership"),  was  formed in October  1992,  for the  purpose  of  acquiring
investments in or direct  ownership of distressed loan portfolios from financial
institutions  and other sources.  Interests in the  Partnership  were sold in an
intrastate  offering to residents of  California  pursuant to the  provisions of
Section 3(A)(11) of the Securities Act of 1933; however, the Partnership did not
begin  its  primary   operations  until  March  1993.  The  General  Partner  is
Performance Development, Inc., a California corporation ("General Partner").

The  Partnership  terminates at December 31, 2005. At that time, the Partnership
will  distribute  any remaining  cash after payment of  Partnership  obligations
following the sale or collection of all assets.

Profits,  losses,  and  cash  distributions  are  allocated  90% to the  limited
partners and 10% to the General Partner until such time as the limited  partners
have  received cash equal to 100% of their  contributions  to the capital of the
Partnership plus an amount equal to 6% per annum of the original limited partner
capitalization yet to be returned. Thereafter,  Partnership profits, losses, and
cash  distributions will be allocated 70% to the limited partners and 30% to the
General Partner.

Cash and Equivalents

The Partnership  defines cash equivalents as all highly liquid  investments with
an original  maturity of three months or less.  The  Partnership  maintains cash
balances at one bank in accounts which, at times, may exceed  federally  insured
limits. The Partnership uses a cash management system whereby idle cash balances
are  transferred  daily into a master  account  and  invested  in high  quality,
short-term  securities  that do not enjoy the benefit of the federal  insurance.
The General  Partner  believes  that these cash  balances are not subject to any
significant  credit risk, due to the nature of the  investments and the strength
of the  bank  and has not  experienced  any  losses  with  cash  and  equivalent
investments.  The Partnership received interest income from these investments of
$113,015  and $188,640 for the six months ended June 30, 1998 and June 30, 1997,
respectively.


                                       8
<PAGE>



Cash Held in Trust

The General Partner  anticipates  that the  Partnership  and  Performance  Asset
Management, Ltd., A California Limited Partnership; Performance Asset Management
Fund II, Ltd. A California  Limited  Partnership;  Performance  Asset Management
III, Ltd., A California  Limited  Partnership;  and Performance Asset Management
Fund V, Ltd. A California Limited  Partnership ("PAM Funds") may, in the future,
be reorganized and merged into Performance Asset Management  Company, a Delaware
Corporation  ("PAMCO")  ("Rollup").  In an effort to accomplish the Rollup,  the
General Partner, on behalf of the Partnership and the PAM Funds, entered into an
agreement on December  12,  1995,  with the State of  California  Department  of
Corporations ("Department"), pursuant to the provisions of which the Performance
Asset  Management  Fund  Trust  ("Trust")  was  created.  Certain  funds  of the
Partnership  are held by the Trust and these  funds held in trust are subject to
the terms of the Trust  agreement.  The Trust was the  recipient  of those funds
resulting  from a  settlement  of certain then  pending  litigation  between the
Partnership and its affiliates and West Capital Financial Services Corp. and its
affiliates.  The funds held by the Trust must not be less than $5,000,000  which
is  comprised  of funds  from  the  Partnership  and the PAM  Funds.  The  Trust
agreement  specifies  that  the  Trust  will  terminate  and  the  trustee  will
distribute all of the remaining  funds held by the trustee on August 16, 1998 if
the Rollup is not completed by such date.  The  Department has indicated that it
will oppose the  termination of the Trust on August 16, 1998. The Partnership is
attempting to reach an agreement with the Department  regarding the  termination
of the Trust and the disposition of the  Partnership's  funds held by the Trust.
The  Partnership's  share of the Trust's funds at June 30, 1998 and December 31,
1997 was $2,915,849 and $2,849,998.

Investments in Distressed Loan Portfolios and Revenue Recognition

Investments  in distressed  loan  portfolios are carried at the lower of cost or
estimated net realizable value.  Amounts collected are treated as a reduction to
the carrying basis of the related  investments on an individual  portfolio basis
and are reported in the  Statement of Operations  as portfolio  basis  recovery.
Under the cost recovery method of revenue  recognition  used by the Partnership,
net  investment  income is not  recognized  until 100%  recovery of the carrying
value of the investment in each portfolio occurs. Estimated net realizable value
represents  the General  Partner's  estimates,  based on its  present  plans and
intentions,  of the present value of future  collections.  Due to the distressed
nature of these investments,  no interest is earned on outstanding balances, and
there is no assurance that the unpaid  principal  balances of these  investments
will ultimately be collected. Any adjustments reducing the carrying value of the
individual portfolios are recorded in the results of operations as a general and
administrative expense.

Organization Costs, Net

Organization costs include legal and other professional fees incurred related to
the organization of the  Partnership.  These costs are capitalized and amortized
using the straight-line  method over five years.  Organization  costs were fully
amortized at December 31, 1997.


                                       9
<PAGE>



Professional Fees

Professional  fees are  incurred  in relation  to ongoing  accounting  and legal
assistance.

Income Taxes

No provision for income taxes has been made in the financial statements,  except
for the  Partnership's  minimum  state  franchise  tax  liability  of $800.  All
partners  report  individually  on their  share of the  Partnership's  operating
results.

Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reported period.  Actual
results could differ from the estimates.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

Disclosure regarding: Forward Looking Statements

The information  contained in this report on Form 10-QSB,  other than historical
facts, contains  "forward-looking  statements" (as such term is defined with the
meaning of the  Private  Securities  Litigation  Reform Act of 1995)  including,
without limitation, statements as to the Partnership's objective to grow through
future  portfolio  acquisitions,  portfolio  account  sales,  the  Partnership's
ability  to  realize   operating   efficiencies   in  the   integration  of  its
acquisitions,  trends in the  Partnership's  future operating  performance,  and
statements  as  to  the   Partnership's  or  the  General   Partner's   beliefs,
expectations and opinions.  Forward looking  statements may be identified by the
use of forward looking terminology, such as "may", "will", "expect", "estimate",
"anticipate",  "probable",  "possible",  "should", "continue", or similar terms,
variations  of those  terms or the  negative  of  those  terms.  Forward-looking
statements are subject to risks and uncertainties and may be affected by various
factors which may cause actual  results to differ  materially  from those in the
forward-looking statements. In addition to the factors discussed in this Report,
certain risks, uncertainties and other factors,  including,  without limitation,
the risk that the Partnership will not be able to realize operating efficiencies
in the integration of its acquisitions,  risks associated with growth and future
acquisitions,  fluctuations in quarterly operating results,  and the other risks
detailed from time to time in the Partnership's  filings with the Securities and
Exchange  Commission,  including the Partnership's Annual Report on Form 10-KSB,
dated on March 31,  1998,  can  cause  actual  results  and  developments  to be
materially  different  from those  expressed or implied by such  forward-looking
statements.


                                       10
<PAGE>



Results of Operations

The  Partnership  recorded net investment  income of $115,188 for the six months
ended June 30, 1998, a 352% increase from $25,494 for the  comparable  period in
1997.  This increase was generated  from  collections  in excess of the carrying
value of certain portfolios.  Approximately 5% of portfolio collections received
for the six months ended June 30, 1998 are  reflected as income,  compared to 2%
for the similar period in 1997.

Net investment income of $115,188 for the six months ending June 30, 1998 is the
direct result of portfolio  collection  proceeds from eight of the Partnership's
portfolios.  These  eight  portfolios  owned  by  the  Partnership  contain  two
portfolios  which  contribute  58% of the net  investment  income  and six other
portfolios which  contribute the remaining net investment  income during the six
months ended June 30, 1998. Collections for the months ended April 30, 1998, May
31,  1998,  and  June  30,  1998,  totaled  $411,489,  $456,357,  and  $558,424,
respectively.

The Partnership received proceeds from portfolio sales of $445,949 of which 100%
were  recorded as  recoveries  of  investment  basis and  reflected in portfolio
collections for the six months ended June 30, 1998.  Proceeds  totaling  $54,019
were received for the comparable period ended June 30, 1997. The General Partner
continues to believe that proceeds from both  collection  and portfolio  account
sales will continue in subsequent periods.

Total operating  expenses of the  Partnership  decreased 41% to $301,261 for the
six months ended June 30, 1998, from $508,181 for the comparable period in 1997.
The decrease is due primarily to a 61% reduction in professional fees to $64,479
for the six months ended June 30, 1998,  from $165,793 for the similar period in
1997.  Collection  expenses  decreased 38%, to $104,203 for the six months ended
June 30,  1998  from  $167,889  for the same  period  in 1997.  This is due to a
decrease in skip tracing used in that period.  Management  fees increased by 21%
to $131,158  for the six months ended June 30, 1998,  from  $108,724,  which was
directly  related to the increase of investments in distressed  loan  portfolios
and net assets under management.

Total  operating  expenses  of the  Partnership  as a  percentage  of  portfolio
collections  decreased  24%, to 12% for the six months  ended June 30, 1998 from
36% in the comparable period in 1997. This decrease is primarily attributed to a
decrease in professional fees due to less activity in legal fees associated with
the  Partnership.  Operating  expenses as a percentage of portfolio  collections
decreased  33% to 7% for the three months  ended June 30, 1998,  compared to 40%
for the similar period ended June 30, 1997. The decrease in operating expense as
a  percent  of  portfolio  collections  is  primarily  attributed  to  increased
portfolio sales reflected in portfolio collections.

Total operating  expenses of the  Partnership  decreased 61% to $103,314 for the
three months  ended June 30, 1998 from  $267,213  for the  comparable  period of
1997.  The decrease in total  operating  expenses is primarily  attributed  to a
reduction in collection expenses by 91%. This decrease in collection expenses is
due  essentially  to a reduction  in skip  tracing  used to locate and  identify
Partnership debtor accounts. Management


                                       11
<PAGE>

fees  increased  24% for the quarter ended June 30, 1998 to $63,953 from $51,632
for the similar  period ended 1997,  due to the  acquisition  of new  portfolios
increasing the net assets under  management.  Professional fees decreased 63% to
$27,127, from $73,173 due to a reduction of legal fees.

Financial Condition, Liquidity and Capital Resources.

The Partnership's  total assets decreased  approximately 3% to $14,791,312 as of
June 30, 1998, from $15,296,220 at December 31, 1997. The decrease was primarily
attributed  to  portfolio  collection  proceeds of  $2,487,306,  of which 95% or
$2,372,118  was  recorded as a reduction of  investment  portfolio  assets.  The
purchase  related to the deposit on distressed  loan  portfolio  acquisition  of
$2,858,076 was consummated  shortly after the year-end,  and is reflected in the
increase in investments in distressed loan portfolios.  The decrease of $231,443
in due from  affiliates  is primarily  the result of the receipt of payments due
the Partnership for the prior period's collections.

The decrease of $631,593 in due to  affiliates  during the six months ended June
30,  1998,  was due  primarily  to the  payments of accrued  legal  expenses and
management fees to the General Partner.

The Partnership acquired three new distressed loan portfolio assets in the first
half of 1998 from third party financial  institutions which specialize in credit
card  origination.  The General Partner  anticipates  that the Partnership  will
acquire  additional  portfolios  in the near future.  Future  acquisitions  will
depend on the asset market,  which continues to grow in size and diversity.  The
General  Partner   believes  that  the  Partnership  will  continue  to  acquire
low-end-priced distressed portfolios; however, the General Partner will continue
to evaluate assets with different  pricing and debtor account structure in order
to determine  whether such portfolios can generate  strong  immediate cash flows
and provide additional liquidity to the Partnership.

The Partnership has made no future  commitments with credit card originators and
other financial  institutions to acquire portfolio  assets.  The General Partner
plans to use its present  contacts  and  relationships  to identify  and acquire
additional  assets  at  optimal  prices,  and  believes  that  it  will  have no
difficulties  in  identifying  and acquiring  such assets.  The General  Partner
suspended  distributions to its partners in the third quarter of 1997 to improve
the financial  condition of the Partnership  and provide the Partnership  future
portfolio acquisitions.  The General Partner also believes current cash reserves
and  future  portfolio   collection  proceeds  will  be  sufficient  to  acquire
additional  portfolio  assets in the next twelve  months.  However,  the General
Partner will continuously  monitor its liquidity and evaluate whether additional
external capital resources will be necessary for future growth.

Impact of Additional Partnership Acquisitions and Resources on Operations.

The General Partner  anticipates  that  additional  portfolio  acquisitions  and
continued expansion will improve the Partnership's liquidity,  profitability and
financial  condition,  which will result in increased portfolio  collections and
sales. The General Partner believes that Performance Capital Management, Inc., a
California  corporation and an affiliate to the General Partner  ("PCM"),  which
serves as the servicer of the


                                       12
<PAGE>

Partnership's portfolios of indebtedness,  must continue to increase that amount
of its  collection  representatives  and human  resources in order to supplement
such growth to the Partnership. PCM is seeking to lease office space in which it
will plan to move and expand their facilities. The General Partner believes that
this move provides the adequate  operating  facilities  for the future growth of
PCM, which will subsequently increase portfolio collections for the Partnership.

A proposal is currently under consideration by the General Partner,  pursuant to
which PAM Funds and the Partnership  would merge with and into PAMCO. The result
of the  proposed  merger would be that a series of  interrelated  changes to the
current organizational form of PAMCO would be implemented, including (a) merging
the  Partnership  and the PAM Funds  with and into  PAMCO,  as a result of which
PAMCO would be the sole surviving entity;  (b) terminating the PAM Funds and the
Partnership and (c) converting the Limited Partners interests in the Partnership
into shares of common stock issued by PAMCO.

Year 2000 Compliance.

The General Partner  recognizes that the arrival of the Year 2000 poses a unique
challenge to the ability of the computer systems of PCM used to service,  manage
and  collect  the  portfolios  in which  the  Partnership  has an  interest,  to
recognize  properly and process date sensitive  information  related to the date
change from  December  31, 1999 to January 1, 2000.  As the century  date change
occurs,  date-sensitive  systems may  recognize the Year 2000 as 1900, or not at
all. This inability to recognize or treat properly the Year 2000 may cause PCM's
computer systems to process financial and operational  information  incorrectly,
which  could  have a material  adverse  effect on the  Partnership's  results of
operations.  PCM has assessed and begun remedial work relating to PCM's computer
software  programs  and  business  processes  to  provide  for PCM's  ability to
continue to function effectively.

In 1997,  PCM began the  process of  identifying,  evaluating  and  implementing
changes to PCM's computer programs necessary to address the Year 2000 issue. The
General  Partner is currently  addressing the  Partnership's  internal Year 2000
issue by coordinating with PCM in connection with PCM's modification of existing
programs  and  conversions  to new  programs.  The  General  Partner  is also in
communication  with  financial  institutions  and other  entities with which the
Partnership  conducts  business to help them  identify and resolve the Year 2000
issue as it relates to the Partnership's  business operations.  An assessment of
the  readiness of those third party  institutions  and  entities  with which the
Partnership  does  business  is ongoing.  While PCM and the General  Partner are
confident  that  PCM will  complete  the  assessment  and  remediation  of PCM's
computer  software,  there can be no assurance that the necessary  modifications
and  conversions by those third party  institutions  and entities with which the
Partnership  conducts business will be completed in a timely manner, which could
have a material adverse effect on the Partnership's  results of operations.  The
total cost to the  Partnership  associated with the required  modifications  and
conversions  is not  expected  to be material  to the  Partnership's  results of
operations and financial position and is being expensed as incurred.


                                       13
<PAGE>

                                     PART II

Item 1. Legal Proceedings.

No  additional  proceedings  have occurred  since May 10, 1998,  the date of the
latest report  provided.  In addition,  no material  developments are noted with
respect to those  matters  described  in the latest  report  dated May 10, 1998.
Reference is made to the  Partnership's  Form 10-KSB  dated March 31,  1998,  in
which  such  legal   proceedings  were  reported  in  Part  I,  Item  3,  "Legal
Proceedings". The registrant, by this reference, makes that disclosure a part of
this Form 10-QSB.

Item 2. Exhibits and Reports.


     (a) Exhibits

         Exhibit Number                     Exhibit

              1            Certificate of Limited Partnership Form LP-1 (Charter
                           Document) *

              2            Agreement of Limited Partnership (Instrument
                           defining the rights of Security Holders) **

*    Reference is made to the Partnership's  Form 10-KSB,  dated March 31, 1997,
     in which  that  Certificate  of  Limited  Partnership  was  included  as an
     exhibit.  The  Partnership,  by this reference,  makes that  Certificate of
     Limited Partnership a part of this Form 10-QSB.

**   Reference is made to the Partnership's  Form 10-KSB,  dated March 31, 1997,
     in which that Agreement of Limited  Partnership was included as an exhibit.
     The  Partnership,  by this  reference,  makes  that  Agreement  of  Limited
     Partnership a part of this Form 10-QSB.


                                       14
<PAGE>




                                   SIGNATURES



In  accordance  with  Section 13 or 15(d) of the Exchange  Act, the  Partnership
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

Dated: August 12, 1998              Performance Asset Management Fund IV, Ltd.,
                                    A California Limited Partnership
                                             (Registrant)


                                          By:  _________________________________
                                               Vincent E. Galewick
                                               President of the General Partner,
                                               Performance Development, Inc.