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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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(Mark One)



| | x |  | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| | - |  | ------------------------------------------------------------------------------------

[Fee Required]



For the fiscal year ended December 31, 2002 or



| |  ̈ |  | Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
| | - |  | -----------------------------------------------------------------------------------------

[No Fee Required]



For the transition period from
 to



Commission file number 0-20103



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WELLS REAL ESTATE FUND IV, L. P.

(Exact name of registrant as specified in its charter)



|Georgia                                                       |  | 58-1915128                             
|------------------------------------------------------------- |  | ---------------------------------------
|State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
|                                                             
|6200 The Corners Parkway, Suite 250 Norcross, GA              |  | 30092                                  
|(Address of principal executive offices)                      |  | (Zip Code)                             
|                                                             
|Registrants telephone number, including area code            |  | (770) 449-7800                         
|                                                             
|Securities registered pursuant to Section 12 (b) of the Act:  |  |                                        
|                                                             
|Title of each class                                           |  | Name of exchange on which registered   
|NONE                                                          |  | NONE                                   
|                                                             
|Securities registered pursuant to Section 12 (g) of the Act:  |  |                                        



CLASS
A UNIT

(Title of Class)



CLASS B UNIT

(Title of Class)



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



Yes  x    No ̈



Aggregate market value of the voting
stock held by non-affiliates: Not Applicable



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PART I



ITEM 1.    BUSINESS



General



Wells Real Estate Fund IV, L.P. (the Partnership) is a Georgia
public limited partnership with Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia non-public limited partnership, serving as the General Partners. The Partnership was formed on October 25, 1990, for the purpose of
acquiring, developing, constructing, owning, operating, improving, leasing and otherwise managing income-producing commercial properties for investment purposes. The Partnership has two classes of limited partnership interests, Class A and Class B
units. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c) add or remove a general partner. A
majority vote on any of the above described matters will bind the Partnership without the concurrence of the general partners. Each limited partner unit has equal voting rights, regardless of class.



On March 4, 1991, the Partnership commenced an offering of up to $25,000,000
of Class A or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership did not commence active operations until it received and accepted
subscriptions for 125,000 units on May 13, 1991. The offering was terminated on February 29, 1992 at which time the Partnership had sold approximately 1,322,909 Class A units and 38,551 Class B units representing capital contributions of $13,614,652
from investors who were admitted to the Partnership as limited partners. From the original funds raised, the Partnership has invested a total of $11,188,611 in properties, paid $748,805 in acquisition and advisory fees, and paid $1,767,236 in
selling commission and organization and offering expenses.



Employees



The Partnership has no
direct employees. The employees of Wells Capital Inc., the general partner of Wells Partners, and Wells Management Company, Inc. an affiliate of the General Partners, perform a full range of real estate services including leasing and property
management, accounting, asset management and investor relations for the Partnership. See Item 11Compensation of General Partners and Affiliates for a summary of the fees paid to the General Partners and their affiliates during the
fiscal year ended December 31, 2002.



Insurance



Wells Management Company, Inc. carries comprehensive
liability and extended coverage with respect to all properties in which the Partnership has an ownership interest. In the opinion of management of the partnership, all such properties are adequately insured.



Competition



The Partnership will experience competition for tenants from owners and
managers of competing projects which may include the General Partners and their affiliates. As a result, the Partnership may provide free rent, reduced charges for tenant improvements and other inducements, all of which may have an adverse impact on
results of operations. At the time the Partnership elects to dispose of its properties, the Partnership will also be in competition with sellers of similar properties to locate suitable purchasers for its properties.



2



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ITEM
2.    PROPERTIES



The Partnership owns
interests in all of its real estate assets through joint ventures with other Wells Real Estate Funds. As of December 31, 2002, the Partnership owned interests in the following four properties through the affiliated joint ventures listed below:



|                       |  |                                                                      |  |                                                                                                                        |  | Occupancy |  
|---------------------- |  | -------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | --------- | -
|Joint Venture          |  | Joint Venture Partners                                               |  | Properties                                                                                                             |  | 12/31/02  |  
|Fund III-IV Associates |  |  Wells Real Estate Fund III, L.P.  Wells Real Estate Fund IV, L.P. |  | 1. Stockbridge Village Center A retail shopping center located in Stockbridge, Georgia                                 |  | 100       | %
|                       |  |                                                                      |  | 2. Reciprocal Group Building A two-story office building located in Richmond, Virginia                                 |  | 100       | %
|Fund IV-V Associates   |  |  Wells Real Estate Fund IV, L.P.  Wells Real Estate Fund V, L.P.   |  | 3. Village Overlook Property Two substantially identical two-story office buildings located in Clayton County, Georgia |  | 95        | %
|                       |  |                                                                      |  | 4. IBM Jacksonville Building A four-story office building located in Jacksonville, Florida                             |  | 74        | %



The Partnership does not
have control over the operations of the joint ventures; however, it does exercise significant influence. Accordingly, the Partnership accounts for its investments in joint ventures using the equity method of accounting.



As of December 31, 2001 the lease expirations scheduled during each of the
following ten years for all properties in which the Partnership owned an interest through the joint ventures described above assuming no exercise of renewal options or termination rights, are summarized below:



|Years of Lease Expiration |  | Number of Leases Expiring |  | Square Feet Expiring |  | Share of Annualized Gross Base Rent |           | Partnership Annualized Gross Base Rent |   | Percentage of Total Square Feet Expiring |  |        | Percentage of Total Annualized Base Rent | 
|------------------------- |  | ------------------------- |  | -------------------- |  | ----------------------------------- | --------- | -------------------------------------- | - | ---------------------------------------- |  | ------ | ---------------------------------------- | 
|2003(1)                   |  | 5                         |  | 69,234               |  | $                                   | 1,219,164 |                                        | $ | 462,646                                  |  | 27.83  | %                                        | 
|2004                      |  | 6                         |  | 14,027               |  |                                     | 286,548   |                                        |   | 112,217                                  |  | 5.64   |                                          | 
|2005                      |  | 9                         |  | 21,426               |  |                                     | 415,847   |                                        |   | 163,444                                  |  | 8.61   |                                          | 
|2006                      |  | 2                         |  | 5,641                |  |                                     | 127,687   |                                        |   | 48,100                                   |  | 2.27   |                                          | 
|2007                      |  | 5                         |  | 14,826               |  |                                     | 318,257   |                                        |   | 132,192                                  |  | 5.96   |                                          | 
|2008                      |  | 3                         |  | 14,024               |  |                                     | 273,542   |                                        |   | 117,049                                  |  | 5.63   |                                          | 
|2009(2)                   |  | 2                         |  | 45,632               |  |                                     | 687,279   |                                        |   | 291,661                                  |  | 18.34  |                                          | 
|2011(3)                   |  | 1                         |  | 63,986               |  |                                     | 492,692   |                                        |   | 210,823                                  |  | 25.72  |                                          | 
|2012                      |  | 1                         |  | 0                    |  |                                     | 12,000    |                                        |   | 5,135                                    |  | 0.00   |                                          | 
|                          |  |                           |  |                      |  |                                     |           |                                        |   |                                          |  |        |                                          | 
|                          |  | 34                        |  | 248,796              |  | $                                   | 3,833,016 |                                        | $ | 1,543,267                                |  | 100.00 | %                                        | 
|                          |  |                           |  |                      |  |                                     |           |                                        |   |                                          |  |        |                                          | 

|(1) |  | IBM lease (68,100 square feet) at the IBM Jacksonville Building.
|--- |  | ----------------------------------------------------------------

|(2) |  | Reciprocal Group lease (43,000 square feet) at the Reciprocal Group Building.
|--- |  | -----------------------------------------------------------------------------

|(3) |  | Kroger lease (63,986 square feet) at the Stockbridge Village Shopping Center.
|--- |  | -----------------------------------------------------------------------------



3



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The joint ventures and
properties in which the Partnership owned an interest as of December 31, 2002 as further described below:



Fund IIIIV Associates



On March 27, 1991, the Partnership and Wells Fund III, a public limited partnership affiliated with the Partnership through common general partners formed Fund III-IV Associates. The investment
objectives of Wells Fund III are substantially identical to those of the Partnership. As of December 31, 2002, the Partnership had contributed $6,415,731 and Wells Fund III had contributed $8,375,551 to Fund III-IV Associates for equity interests of
43% and 57%, respectively. The Partnership owns interests in the following two properties through Fund III-IV Associates.



Stockbridge Village Shopping Center



On April 4, 1991, Fund III-IV Associates purchased 13.62 acres of real property located in Clayton County, Georgia for the purchase price of $3,057,729,
including acquisition costs, for the purpose of developing, constructing and operating a shopping center known as the Stockbridge Village Shopping Center. The multi-tenant shopping center contains approximately 112,891 square feet, of which
approximately 63,986 square feet are occupied by the Kroger Company, a retail grocery chain. Kroger is the only tenant in occupancy of more than ten percent of the rentable square feet of this property. The Kroger lease is for an initial term of 20
years, commencing November 14, 1991, with an option to extend for four consecutive five year periods at the same rental rate as the original lease. The annual base rent payable under the Kroger lease $492,692. The remaining 48,794 square feet are
comprised of 16 separate retail spaces and 3 free-standing retail buildings. As of December 31, 2002, the Partnership had contributed a total of $4,574,247 and Wells Fund IV had contributed a total of $5,114,502 to fund the total costs of $9,688,749
related to the acquisition and development of the Stockbridge Village Shopping Center.



The average effective annual rental rate per square foot was $11.32 for 2002, $11.82 for 2001, $11.29 for 2000, $11.23 for 1999, and $10.82 for 1998.



Reciprocal Group Building



The Reciprocal Group Building is a two-story office building containing
approximately 43,000 square feet located in Richmond, Virginia, which was acquired by Fund III-IV Associates on July 1, 1992, for $4,689,106 including acquisition and closing costs. As of December 31, 2002, the Partnership had contributed $1,301,229
and Wells Fund III had contributed $3,783,304 to Fund III-IV Associates for the acquisition of the Reciprocal Group Building.



General Electric, the previous tenant, elected not to renew its lease at the Reciprocal Group Building, which expired March 31, 2000. Management leased
100% of this building to the Reciprocal Group on October 4, 2000 for a term of eight years, with rent commencing in February 2001. The total cost of refurbishments, tenant improvements and building maintenance was $1,407,002. These costs were funded
out of cash from operations of the Partnership and Wells Fund IV, which caused a substantial reduction in distributions paid to the Partnership from Fund III-IV Associates and, consequently, distributions payable from the Partnership to the Limited
Partners in 2000. The Partnership funded $570,914 of these improvements, which were fully funded as of December 31, 2001.



The average effective annual rental rate per square foot was $13.45 for 2002, $12.33 for 2001, $3.07 for 2000 and $12.27 for 1999 and 1998.



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Fund IVV
Associates



On April 14, 1992, the Partnership and Wells
Real Estate Fund V, L.P. (Wells Fund V), a Georgia public limited partnership affiliated with the Partnership through common general partners, formed Fund IV-V Associates. The investment objectives of Wells Fund V are substantially
identical to those of the Partnership. As of December 31, 2002, the Partnership and Wells Fund V had contributed approximately $4,837,041 and $8,032,509 to Fund IV-V Associates for equity interests of approximately 38% and 62%, respectively.



The Partnership owns interests in the following two properties
through Fund IV-V Associates:



IBM
Jacksonville Building



On June 8, 1992,
Fund IV- V Associates acquired 5.676 acres of real property located in Jacksonville, Florida at a purchase price of $1,360,000 for the purpose of developing, constructing, and operating a four-story office building containing approximately 87,600
square feet (the IBM Jacksonville Building). As of December 31, 2002, the Partnership contributed $3,479,750 and Wells Fund V contributed $5,000,116 to Fund IV- V Associates to fund the acquisition and development of the IBM Jacksonville
Building.



The IBM Jacksonville Building is
leased primarily by International Business Machines Corporation (IBM), a computer sales and service corporation. The initial term of the IBM lease for 62,406 square feet is 9 years and 11 months and commenced upon completion of the
building in June 1993, with an option to extend the initial lease for two consecutive five-year periods. The annual base rent payable under the IBM lease during the initial term is $1,122,478. IBM is also required to pay additional rent equal to its
share of operating expenses during the lease term.



The IBM lease will expire on April 30, 2003. IBM has informed Fund IV-V Associates that it will not exercise the first option to extend the lease term at that time. Annual revenues are estimated to be reduced by approximately
$1,275,000 when this space becomes vacant on April 30, 2003. Management is actively marketing the property to prospective tenants. In connection therewith, management has undertaken a renovation project for the common areas, including the lobbies
and corridors, in an effort to make the building attractive to prospective tenants.



The average effective annual rental per square foot at the Jacksonville Building was $12.72 for 2002, $17.49 for 2001, $16.46 for 2000, $16.80 for 1999, and $16.69 for 1998.



Village Overlook Property



On September 14, 1992, Fund IV- V Associates acquired 2.655
acres of real property in Stockbridge, Georgia for $440,000 for the purpose of constructing two substantially identical two-story office buildings containing approximately 17,847 rentable square feet each (the Village Overlook Property).
As of December 31, 2002, the Partnership had contributed $1,357,291 and Wells Fund V had contributed $3,032,393 to Fund IV- V Associates for the acquisition and development of the Village Overlook Property.



The average effective annual rental per square foot was
$18.86 for 2002, $16.51 for 2001, $15.90 for 2000, $12.75 for 1999, and $13.46 for 1998.



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ITEM
3.    LEGAL PROCEEDINGS



There were no
material pending legal proceedings or proceedings known to be contemplated by governmental authorities involving the Partnership during the fourth quarter of 2002.



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



No matters were submitted to a vote of the Limited Partners during the fourth
quarter of 2002.



(THE REMAINDER OF THIS PAGE
IS INTENTIONALLY LEFT BLANK)



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PART II



ITEM
5.    MARKET FOR PARTNERSHIPS UNITS AND RELATED SECURITY HOLDER MATTERS



As of February 28, 2003, the Partnership had 1,322,909 outstanding Class A Units held by a total of 1,263 Limited Partners and 38,551 outstanding Class B Units held by a total of 20 Limited Partners.
The capital contribution per unit is $10.00. There is no established public trading market for the Partnerships limited partnership units, and it is not anticipated that a public trading market for the units will develop. Under the Partnership
Agreement, the General Partners have the right to prohibit transfers of units.



Because fiduciaries of retirement plans subject to ERISA are required to determine the value of the assets of such retirement plans on an annual basis, the General Partners are required under the Partnership Agreement to report
estimated Unit values to the Limited Partners each year in the Partnerships annual Form 10-K. The methodology to be utilized for determining such estimated Unit values under the Partnership Agreement requires the General Partners to estimate
the amount a Unit holder would receive if the Partnerships properties were sold at their estimated fair market values as of the end of the Partnerships fiscal year and the proceeds therefrom (without reduction for selling expenses) were
distributed to the Limited Partners in liquidation of the Partnership. Utilizing this methodology, the General Partners have estimated Unit valuations, based upon their estimates of property values as of December 31, 2002, to be approximately $9.06
per Class A Unit and $9.06 per Class B Unit, based upon market conditions existing in early December 2002. In connection with these estimated valuations, the General Partners obtained an opinion from David L. Beal Company, an independent MAI
appraiser, to the effect that such estimates of value were reasonable; however, due to the inordinate expense involved in obtaining appraisals for all of the Partnerships properties, no actual appraisals were obtained. Accordingly, these
estimates should not be viewed as an accurate reflection of the values of the Limited Partners Units, what a Limited Partner might be able to sell his Units for, or the fair market value of the Partnerships properties, nor do they
represent the amount of net proceeds Limited Partners would receive if the Partnerships properties were sold and the proceeds distributed in a liquidation of the Partnership. The valuations performed by the General Partners are estimates only,
and are based a number of assumptions which may not be accurate or complete. In addition, property values are subject to change and could decline in the future. Further, as set forth above, no appraisals have or will be obtained. For these reasons,
the estimated Unit valuations set forth above should not be used by or relied upon by investors, other than fiduciaries of retirement plans for limited ERISA reporting purposes, as any indication of the fair market value of their Units.



Cash available for distribution to the Limited Partners is
distributed on a annual basis unless Limited Partners elect to have distributions paid monthly. Under the Partnership Agreement, distributions are allocated first to the Limited Partners holding Class A Units until they have received cash
distributions in each fiscal year of the Partnership equal to 10% of their adjusted capital contribution. After this preference is satisfied, the General Partners will receive an amount of Net Cash from Operations equal to one-tenth of the total
amount of Net Cash from Operations distributed. Afterwards, the Limited Partners holding Class A Units will receive 90% of Net Cash from Operations, and the General Partners will receive 10%. No Net Cash from Operations will be distributed to
Limited Partners holding Class B Units. Cash distributions made to the Limited Partners holding Class A Units for the two most recent fiscal years were as follows:



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|Distribution For Quarter Ended |  | Total Cash Distribution |  | Per Class A Unit Investment Income |  | Per Class A Unit Return of Capital |  | Per Class B Unit Return of Capital |  | General Partner Return of Capital
|------------------------------ |  | ----------------------- |  | ---------------------------------- |  | ---------------------------------- |  | ---------------------------------- |  | ---------------------------------
|March 31, 2001                 |  | $231,582                |  | $0.10                              |  | $0.07                              |  | $0.00                              |  | $0.00                            
|June 30, 2001                  |  | $239,783                |  | $0.12                              |  | $0.06                              |  | $0.00                              |  | $0.00                            
|Sept. 30, 2001                 |  | $264,576                |  | $0.12                              |  | $0.09                              |  | $0.00                              |  | $0.00                            
|Dec. 31, 2001                  |  | $264,571                |  | $0.11                              |  | $0.09                              |  | $0.00                              |  | $0.00                            
|March 31, 2002                 |  | $248,046                |  | $0.11                              |  | $0.08                              |  | $0.00                              |  | $0.00                            
|June 30, 2002                  |  | $231,509                |  | $0.06                              |  | $0.11                              |  | $0.00                              |  | $0.00                            
|Sept. 30, 2002                 |  | $231,509                |  | $0.07                              |  | $0.10                              |  | $0.00                              |  | $0.00                            
|Dec. 31, 2002                  |  | $195,437                |  | $0.05                              |  | $0.11                              |  | $0.00                              |  | $0.00                            



The fourth quarter
distribution was accrued for accounting purposes in 2002 and was paid to the limited partners holding Class A units in February 2003.



ITEM 6.    SELECTED FINANCIAL DATA



The following sets forth a summary of the selected financial data as of and for the fiscal years ended December 31, 2002, 2001, 2000, 1999, and 1998.



|                                                                                 |  | 2002 |           | 2001 |   | 2000      |  | 1999 |           | 1998
|-------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | ---- | --------- | ----
|Total assets                                                                     |  | $    | 8,928,642 |      | $ | 9,506,490 |  | $    | 9,644,595 |     
|Total revenues                                                                   |  |      | 488,633   |      |   | 678,096   |  |      | 428,694   |     
|Net income                                                                       |  |      | 385,016   |      |   | 595,337   |  |      | 357,405   |     
|Net (loss) allocated to General Partners                                         |  |      | 0         |      |   | 0         |  |      | 0         |     
|Net income allocated to Class A Limited Partners                                 |  |      | 385,016   |      |   | 595,337   |  |      | 357,405   |     
|Net loss allocated to Class B Limited Partners                                   |  |      | 0         |      |   | 0         |  |      | 0         |     
|Net Income per Class A Limited Partner Unit                                      |  | $    | 0.29      |      | $ | 0.45      |  | $    | 0.27      |     
|Net Loss per Class B Limited Partner Unit                                        |  |      | 0         |      |   | 0         |  |      | 0         |     
|Cash Distributions per Class Cash Distribution per Class A Limited Partner
Unit: |  |      |           |      |   |           |  |      |           |     
|Investment Income                                                                |  |      | 0.29      |      |   | 0.45      |  |      | 0.09      |     
|Return of Capital                                                                |  |      | 0.40      |      |   | 0.31      |  |      | 0.07      |     



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|ITEM 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
|------- |  | --------------------------------------------------------------------------------------



(a)    Forward Looking Statements



This report contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including discussion and analysis of the financial condition of
the Partnership, anticipated capital expenditures required to complete certain projects, amounts of cash distributions anticipated to be distributed to limited partners in the future and certain other matters. Readers of this Report should be aware
that there are various factors that may cause actual results to differ materially from any forward-looking statements made in this report including lease-up risks, inability to obtain new tenants upon expiration of existing leases, and the potential
need to fund tenant improvements, leasing commissions or other capital expenditures or lease-up costs out of operating cash flow.



(b)    Results of Operations



Gross Revenues



Gross revenues of the Partnership were $488,633, $678,096 and $428,694 for 2002, 2001 and 2000, respectively. The 2002 decrease from 2001 and the 2001
increase from 2000 resulted primarily from the corresponding fluctuations in equity in income of joint ventures described below.



Equity in Income of Joint VenturesOperations



Gross Revenues of Joint Ventures



Gross revenues of the joint ventures in which the partnership holds an interest decreased in 2002, as
compared to 2001, primarily due to a decrease in occupancy of the IBM Jacksonville Building. Such gross revenues increased in 2001, as compared to 2000, primarily as a result of increased rental income and operating cost reimbursements from tenants
of the Village Overlook Property and the Reciprocal Group Building due to increases in occupancy in 2001, partially offset by a decrease in rental income at Stockbridge Village II.



Expenses of Joint Ventures



The expenses of the joint ventures in which the partnership holds an interest remained relatively stable in
2002, as compared to 2001, and in 2001, as compared to 2000. The 2002 decrease in expenses resulting from the decrease in occupancy of the IBM Jacksonville Building was offset by additional HVAC repair costs incurred for the IBM Jacksonville
Building and increases in administrative salaries for the IBM Jacksonville Building and the Village Overlook Property.



Expenses



Expenses of the Partnership were $103,617, $82,759, and $71,289 for 2002, 2001, and 2000, respectively. Expenses increased in 2002 from 2001, primarily as
a result of increased administrative salaries and professional fees, offset by a reduction in other general and administrative costs. Expenses increased in 2001 from 2000 primarily due to an increase in administrative salaries.



As a result, net income of the Partnership was $385,016, $595,337, and
$357,405 for the years ended December 31, 2002, 2001, and 2000, respectively.



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(c)    Liquidity and Capital Resources



Cash Flows Used In Operating Activities



Net cash flows used in operating activities was $89,400, $74,470, and $64,803 for 2002, 2001, and 2000, respectively. The 2002 increase from 2001, and the 2001 increase from 2000, resulted primarily from the increase in partnership
administration costs and professional expenses discussed above.



Cash Flows From Investing Activities



Net cash flows provided by investing activities was $1,047,790, $603,678, and $743,211 for 2002, 2001 and 2000, respectively. These fluctuations are primarily a result of changes in the amounts invested in Fund III-IV Associates from
$0 in 2002 as compared to approximately $376,000 in 2001 and $179,000 in 2000, in order to fund the build-out of the Reciprocal Group Building, which was completed during the first half of 2001.



Cash Flows Used In Financing Activities



Net cash flows used in financing activities was $975,637, $735,940, and
$471,383 for 2002, 2001, and 2000 respectively, consistent with the changes in net cash flows provided by investing activities, offset by reserving distributions to limited partners for the last three quarters of 2000 in order to fund the build-out
of the Reciprocal Group Building during 200 and 2001.



Distributions



The Partnership
made distributions to the limited partners holding Class A units of $0.69, $0.76 and $0.16 per unit for the years ended December 31, 2002, 2001 and 2000, respectively. Such distributions have been made from net cash from operations and distributions
received from investments in joint ventures. No distributions have been made to the limited partners holding Class B units or to the General Partners.



The General Partners anticipate that distributions per unit to limited partners holding Class A Units will continue in 2003. Distributions accrued for the
fourth quarter of 2002 to the limited partners holding Class A Units were paid in February 2003. No cash distributions were made to limited partners holding Class B Units.



Capital Resources



The Partnership is an investment vehicle formed for the purpose of acquiring, owning and operating income-producing real properties and has invested all
of its funds available for investment. Accordingly, it is unlikely that the Partnership will acquire interests in any additional properties.



(d)    Related-Party Transactions



Management and Leasing Fees



Wells Management Company, Inc., an affiliate of the General Partners, receives compensation for supervising the management of the Partnerships
properties owned through joint ventures equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time lease-up of newly constructed properties in an
amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term
net basis (ten or more years), 1% of the gross revenues



10



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except for initial leasing
fees equal to 3% of the gross revenues over the first five years of the lease term.



The Partnership incurred management and leasing fees and lease acquisition costs, at the joint venture level, of $95,871, $148,456 and $173,471 for the years ended December 31, 2002, 2001 and 2000, respectively.



Administration Reimbursements



Wells Capital, Inc. performs certain administrative services for the
Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by individual administrative personnel.
During 2002, 2001 and 2000, the Partnership reimbursed $41,496, $36,424 and $27,277, respectively, to Wells Capital, Inc. and its affiliates for these services.



Conflicts of Interests



The general partners are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of
interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may be in competition with the Partnership for tenants in similar geographic markets.



(e)    Inflation



The real estate market has not been affected significantly by inflation in
the past three years due to the relatively low inflation rate. However, there are provisions in the majority of tenant leases, which would protect the Partnership from the impact of inflation. These provisions include reimbursement billings for
operating expense pass-through charges, real estate tax and insurance reimbursements on a per square foot basis, or in some cases, annual reimbursement of operating expenses above a certain per square foot allowance. However, due to the long-term
nature of the leases, the leases may not re-set frequently enough to cover inflation.



(f)    Application of Critical Accounting Policies



The Partnerships accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the
application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenue and expenses during the reporting periods. If managements judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting
policies would have been applied; thus, resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of the Partnerships results of operations to
those of companies in similar businesses.



Below is a discussion
of the accounting policies that management considers to be critical in that they may require complex judgment in their application or require estimates about matters that are inherently uncertain. Additional discussion of accounting policies that
management considers to be significant, including further discussion of the critical accounting policies described below, is presented in Note 1 to the Partnerships financial statements included in this report.



11



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Investment in Real
Estate Assets



The Partnerships management is
required to make subjective assessments as to the useful lives of its depreciable assets. The Partnership considers the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net
income. The estimated useful lives of the Partnerships assets by class are as follows:



|Building              |  | 25 years   
|--------------------- |  | -----------
|Building improvements |  | 10-25 years
|Land improvements     |  | 20-25 years
|Tenant improvements   |  | Lease term 



In the event that
management uses inappropriate useful lives or methods for depreciation, the Partnerships net income would be misstated.



Valuation of Real Estate Assets



Management continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate assets in which the
Partnership has an ownership interest, either directly or through investments in joint ventures, may not be recoverable. When indicators of potential impairment are present which indicate that the carrying amounts of real estate assets may not be
recoverable, management assesses the recoverability of the real estate assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future operating cash flows expected from the use of the
asset and its eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has
determined that there has been no impairment in the carrying value of real estate assets held by the Partnership at December 31, 2002 and 2001.



Projections of expected future cash flows requires management to estimate future market rental income amounts subsequent to the expiration of current
lease agreements, property operating expenses, discount rates, the number of months it takes to re-lease the property, and the number of years the property is held for investment. The use of inappropriate assumptions in the future cash flow analysis
would result in an incorrect assessment of the propertys future cash flows and fair value, and could result in the overstatement of the carrying value of real estate assets held by the joint ventures and net income of the Partnership.



(g) Subsequent Event



On March 18, 2003, four Wells affiliated joint ventures (collectively, the
Seller, defined below) entered into an agreement (the Agreement) to sell five real properties (the Sale Properties, defined below) located in Stockbridge, Georgia to an unrelated third-party (the
Purchaser) for a gross sales price of $23,750,000. Contemporaneously with the Purchasers execution and delivery of the Agreement to the Seller, the Purchaser paid a fully refundable earnest money deposit of $250,000 to the
designated escrow agent. This transaction is currently subject to a due diligence period of 60 days, during which the Purchaser has the right to terminate the Agreement. Accordingly, there are no assurances that this sale will close.



12



---



|(Collectively, the Seller) The Joint Ventures |  | Joint Venture Partners                                                 |  | Sale Properties                                                                                                                                                                      
|----------------------------------------------- |  | ---------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fund III-IV Associates                          |  |  Wells Real Estate Fund III, L.P.  Wells Real Estate Fund IV, L.P.   |  | 1. Stockbridge Village Center A retail shopping center located in Stockbridge, Georgia                                                                                               
|Fund V-VI Associates                            |  |  Wells Real Estate Fund V, L.P.  Wells Real Estate Fund VI, L.P.     |  | 2. Stockbridge Village II Two retail buildings located in Stockbridge, Georgia                                                                                                       
|Fund VI-VII Associates                          |  |  Wells Real Estate Fund VI, L.P.  Wells Real Estate Fund VII, L.P.   |  | 3. Stockbridge Village I Expansion A retail shopping center expansion located in Stockbridge, Georgia 4. Stockbridge
Village III Two retail buildings located in Stockbridge, Georgia
|Fund VII-VIII Associates                        |  |  Wells Real Estate Fund VII, L.P.  Wells Real Estate Fund VIII, L.P. |  | 5. Hannover Center A retail center located in Stockbridge, Georgia                                                                                                                   



|ITEM |  | 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|---- |  | -----------------------------------------------------------------



Since the Partnership does not borrow any money or make any foreign
investments, it is not subject to risks relating to interest rate or foreign currency exchange rate fluctuations.



13



---

PART II  OTHER INFORMATION



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



The Financial Statements of the Registrant and
supplementary data are detailed under Item 15(a) and filed as part of the report on the pages indicated.



|ITEM 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
|------- |  | -------------------------------------------------------------------------
|        |  | DISCLOSURE.                                                              



There were no
disagreements with the Partnerships independent public accountants during the two years ended December 31, 2002.



On May 16, 2002, the general partners dismissed Arthur Andersen LLP (Andersen) as the Partnerships independent public accountants effective
immediately.



Andersens reports on the financial statements
of the Partnership for the year ended December 31, 2001 and 2000 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.



During the years ended December 31, 2001 and 2000 and through the date of
Andersens dismissal, there were no disagreements with Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Andersens satisfaction, would have
caused Andersen to make reference to the subject matter in connection with its report on the financial statements of the Partnership for such year and there were no reportable events as set forth in Item 304(a)(1)(v) of Regulation S-K.



On July 3, 2002, the Partnership engaged Ernst & Young, LLP (Ernst &
Young) to audit the financial statements of the Partnership, effective immediately. During the fiscal year ended December 31, 2001, and through the date of appointment of Ernst & Young as the Partnerships independent public accountants,
the Partnership did not consult Ernst & Young with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the financial statements of
the Partnership, or any other matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.



THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)



14



---

PART III



ITEM 10.    GENERAL PARTNERS OF THE PARTNERSHIP



Wells Partners, L.P.



The sole General Partner of Wells Partners, L.P. is Wells Capital, Inc., a
Georgia corporation (Wells Capital). The executive offices of Wells Capital, Inc. are located at 6200 The Corners Parkway, Norcross, Georgia, 30092.



Leo F. Wells, III.



Mr. Wells is a resident of Atlanta, Georgia, is 59 years of age and holds a Bachelor of Business Administration Degree in Economics from the University of
Georgia. Mr. Wells is the President, sole Director and sole shareholder of Wells Real Estate Funds, Inc., which is the parent company of Wells Capital, Wells & Associates, Inc., Wells Management Company, Inc. and Wells Investment Securities,
Inc. Mr. Wells is the President and sole Director of Wells Capital. Mr. Wells is the President of Wells & Associates, Inc., a real estate brokerage and investment company formed in 1976 and incorporated in 1978, for which he serves as the
principal broker. Mr. Wells is also currently the sole Director and President of Wells Management Company, Inc., a property management company he founded in 1983. In addition, Mr. Wells is the President and Chairman of the Board of Wells Investment
Securities, Inc., Wells & Associates, Inc., and Wells Management Company, Inc., all of which are affiliates of the General Partners. From 1980 to February 1985, Mr. Wells served as vice-president of Hill-Johnson, Inc., a Georgia corporation
engaged in the construction business. From 1973 to 1976, he was associated with Sax Gaskin Real Estate Company, and from 1970 to 1973, he was a real estate salesman and property manager for Roy D. Warren & Company, an Atlanta real estate
company.



ITEM 11.    COMPENSATION OF
GENERAL PARTNERS AND AFFILIATES



The following table
summarizes the compensation and fees paid to the General Partners and their affiliates during the year ended December 31, 2002.



CASH COMPENSATION TABLE



|Name of Individual or Number in Group |  | Capacities in Which Served Form of Compensation |  | Cash Compensation
|------------------------------------- |  | ----------------------------------------------- |  | -----------------
|Wells Management Company, Inc.        |  | Property Manager Manager and Leasing Fees      |  | $95,871(1)       



|(1) |  | The Partnership does not own any properties directly. Accordingly, these fees are payable to Wells Management, Inc. by the joint ventures described in Item 1 and
represent the partnerships ownership interest in amounts attributable to the properties owned directly by these joint ventures for services rendered during 2002. Some of these fees were accrued for accounting purposes in 2002; however, were
not paid until January 2003.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



15



---

|ITEM 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
|-------- |  | ---------------------------------------------------------------



No Limited Partner is
known by the Partnership to own beneficially more than 5% of the outstanding units of the Partnership.



Set forth below is the security ownership of management as of February 28, 2003.



|Title of Class |  | Name and Address ofBeneficial Owner |  | Amount and Nature ofBeneficial Ownership     |  | Parent of Class
|-------------- |  | ----------------------------------- |  | -------------------------------------------- |  | ---------------
|Class A Units  |  | Leo F. Wells, III                   |  | 114.68 units(IRA, 401 (k)and Profit Sharing) |  | less than 1%   



No arrangements exist
which would, upon expectation thereof, result in a change in control of the Partnership.



ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



The compensation and fees paid or to be paid by the Partnership to the General Partners and their affiliates in connection with the operation of the Partnership are as follows:



Interest in Partnership Cash Flow and Net Sale Proceeds



The General Partners will receive a subordinated
participation in net cash flow from operations equal to 10% of net cash flow after the Limited Partners holding Class A Units have received preferential distributions equal to 10% of their adjusted capital contribution. The General Partners will
also receive a subordinated participation in net sale proceeds and net financing proceeds equal to 20% of residual proceeds available for distribution after the Limited Partners holding Class A Units have received a return of their adjusted capital
contribution plus a 10% cumulative return on their adjusted capital contributions and Limited Partners holding Class B Units have received a return of their adjusted capital contribution plus a 15% cumulative return on their adjusted capital
contribution; provided, however, that in no event shall the General Partners receive in the aggregate in excess of 15% of net sale proceeds and net financing proceeds remaining after payments to Limited Partners from such proceeds of amounts equal
to the sum of their adjusted capital contributions plus a 6% cumulative return on their adjusted capital contributions. The General Partners have received no distribution from cash flow or net sales proceeds in 2002.



Property Management and Leasing Fees



Wells Management Company, Inc., an affiliate of the General Partners,
receives compensation for supervising the management of the Partnerships properties owned through joint ventures equal to the lesser of: (A)(i) 3% of gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of
6%) plus a separate one-time fee for initial rent-up or leasing-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms length transactions by others rendering similar services in the same geographic
area for similar properties; and (ii) in the case of industrial and commercial properties which are leased on a long-term basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the
first five years of the lease term; or (B) the amounts charged by unaffiliated persons rendering



16



---

comparable services in the same geographic area. Wells Management Company, Inc. received $95,871 in
property management and leasing fee compensation for services rendered during the year ended December 31, 2002.



Real Estate Commissions



In connection with the sale of Partnership properties, the General Partners or their affiliates may receive commissions not exceeding the lesser of (A) 50% of the commissions customarily charged by other brokers in
arms-length transactions involving comparable properties in the same geographic area or (B) 3% of the gross sales price of the property, and provided that payments of such commissions will be made only after Limited Partners have received
prior distributions totaling 100% of their capital contributions plus a 6% cumulative return on their adjusted capital contributions. During 2002, no real estate commissions were paid to the General Partners or their affiliates.



ITEM 14.    CONTROLS AND PROCEDURES



Within the 90 days prior to the date of this report, the Partnership carried
out an evaluation, under the supervision and with the participation of management of Wells Capital, Inc., the corporate general partner of the General Partner of the Partnership, including the Principal Executive Officer and Principal Financial
Officer, of the effectiveness of the design and operation of the Partnerships disclosure controls and procedures pursuant to Rule 13a  14 under the Securities Exchange Act of 1934. Based upon that evaluation, the Principal Executive
Officer and Principal Financial Officer concluded that the Partnerships disclosure controls and procedures were effective.



There were no significant changes in the Partnerships internal controls or other factors that could significantly affect such controls subsequent to
the date of their evaluation.



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



|(a)1. |  | The Financial Statements are contained on pages F-2 through F-45 of this Annual Report on Form 10-K, and the list of the Financial Statements contained herein is set
forth on page F-1, which is hereby incorporated by reference.
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(a)2. |  | The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|----- |  | -------------------------------------------------------------------------------------------------------------



|(b) |  | No reports on Form 8-K were filed with the Commission during the fourth quarter of 2002.
|--- |  | ----------------------------------------------------------------------------------------



|(c) |  | The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.
|--- |  | -------------------------------------------------------------------------------------------------------------



|(d) |  | Not applicable.
|--- |  | ---------------



17



---



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|               |  | WELLS REAL ESTATE FUND IV, L.P. (Registrant)
|-------------- |  | --------------------------------------------
|              
|               |  | By:                                         
|              
|               |  | By:                                         
|              
|March 31, 2003 |  |                                             
|               |  |                                             
|              
|March 31, 2003 |  |                                             
|               |  |                                             



18



---



CERTIFICATIONS



I, Leo F. Wells, III, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the Partnership;
|-- |  | -------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared,
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and board of directors
of the corporate general partner of the General Partner:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                     
|---------------------
|Dated: March 31, 2003
|                     



19



---



CERTIFICATIONS



I, Douglas P. Williams, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of the Partnership;
|-- |  | -------------------------------------------------------------------



|2. |  | Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which this annual report is being prepared,
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and board of directors
of the corporate general partner of the General Partner:
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|6. |  | The registrants other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                     
|---------------------
|Dated: March 31, 2003
|                     



20



---



SUPPLEMENTAL
INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT

TO SECTION 15(d) OF THE ACT BY REGISTRANTS THAT HAVE NOT BEEN

REGISTERED PURSUANT TO SECTION 12 OF THE ACT.



No annual report or proxy material relating to an annual or other meeting of security holders has been sent to security
holders



21



---



EXHIBIT
INDEX

TO

2002 FORM 10-K

OF

WELLS REAL ESTATE FUND IV, L.P.



The following documents are filed as exhibits to this report. Those exhibits previously filed and incorporated herein by reference are identified below
by an asterisk. For each such asterisked exhibit, there is shown below the description of the previous filing. Exhibits which are not required for this report are omitted.



|Exhibit Number |  | Description of Document                                                                                                                                                                                                                                                                        
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              
|*4(a)          |  | Agreement of Limited Partnership of Wells Real Estate Fund IV, L.P. (Exhibit to Form 10-K of Wells Real Estate Fund
IV, L.P. for the fiscal year ended December 31, 1991, File No. 0-20103)                                                                                                    
|              
|*4(b)          |  | Certificate of Limited Partnership of Wells Real Estate Fund IV, L.P. (Exhibit 4(b) to Registration Statement of Wells
Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)                                                                                        
|              
|*10(a)         |  | Management Agreement between Wells Real Estate Fund IV, L.P. and Wells Management Company, Inc. (Exhibit to Form 10-K
of Wells Real Estate Fund IV, L.P. for the fiscal year ended December 31, 1991, File No. 0-20103)                                                                        
|              
|*10(b)         |  | Leasing and Tenant Coordinating Agreement between Wells Real Estate Fund IV, L.P. and Wells Management Company, Inc.
(Exhibit to Form 10-K of Wells Real Estate Fund IV, L.P. for the fiscal year ended December 31, 1991, File No. 0-20103)                                                   
|              
|*10(c)         |  | Custodial Agency Agreement between Wells Real Estate Fund IV, L.P. and Citizens and Southern Trust Company (Georgia)
National Association (Exhibit 10(f) to Amendment No. 3 to Registration Statement of Wells Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)
|              
|*10(d)         |  | Fund III and Fund IV Associates Joint Venture Agreement dated March 27, 1991 (Exhibit 10(g) to Post-Effective
Amendment No. 1 to Registration Statement of Wells Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)                                              
|              
|*10(e)         |  | Agreement of Purchase and Sale dated October 31, 1990 between 675 Industrial Park, Ltd. and The Vlass-Fotos Group,
Inc. (Exhibit 10(h) to Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)   
|              
|*10(f)         |  | Lease dated January 31, 1991 between The Vlass-Fotos Group, Inc. and The Kroger Co. (Exhibit 10(i) to Post-Effective
Amendment No. 1 to Registration Statement of Wells Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)                                       
|              
|*10(g)         |  | Lease Agreement dated January 31, 1991 between The Vlass-Fotos Group, Inc. and The Kroger Co. (Exhibit 10(j) to
Post-Effective Amendment No. 1 to Registration Statement of Wells Real Estate Fund IV, L.P. and Wells Real Estate Fund V, L.P., File No. 33-37830)                             

|
|





22



---

|   
|---
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10
|   
|*10

|
|





23



---

|       
|-------
|*10(u) 
|       
|*10(v) 
|       
|*10(w) 
|       
|*10(x) 
|       
|*10(y) 
|       
|*10(z) 
|       
|*10(aa)
|       
|*10(bb)
|       
|*10(cc)
|       
|99.1   
|       
|99.2   



24



---

INDEX TO FINANCIAL STATEMENTS



|Financial Statements                                                                 |  | Page
|------------------------------------------------------------------------------------ |  | ----
|                                                                                    
|WELLS REAL ESTATE FUND IV, L.P.                                                      |  |     
|                                                                                    
|Report of Independent Auditors  Ernst & Young LLP                                   |  | F-2 
|                                                                                    
|Report of Independent Public Accountants  Arthur Andersen LLP                       |  | F-3 
|                                                                                    
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-4 
|                                                                                    
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-5 
|                                                                                    
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-6 
|                                                                                    
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-7 
|                                                                                    
|Notes to Financial Statements                                                        |  | F-8 
|                                                                                    
|FUND III AND FUND IV ASSOCIATES                                                      |  |     
|                                                                                    
|Report of Independent Auditors                                                       |  | F-25
|                                                                                    
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-26
|                                                                                    
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-27
|                                                                                    
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-28
|                                                                                    
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-29
|                                                                                    
|Notes to Financial Statements                                                        |  | F-30
|                                                                                    
|Schedule III  Real Estate and Accumulated Depreciation                              |  | F-34
|                                                                                    
|FUND IV AND FUND V ASSOCIATES                                                        |  |     
|                                                                                    
|Report of Independent Auditors                                                       |  | F-36
|                                                                                    
|Balance Sheets as of December 31, 2002 and 2001                                      |  | F-37
|                                                                                    
|Statements of Income for the Years Ended December 31, 2002, 2001 and
2000            |  | F-38
|                                                                                    
|Statements of Partners Capital for the Years Ended December 31, 2002, 2001 and
2000 |  | F-39
|                                                                                    
|Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and
2000        |  | F-40
|                                                                                    
|Notes to Financial Statements                                                        |  | F-41
|                                                                                    
|Schedule III  Real Estate and Accumulated Depreciation                              |  | F-44



F-1



---



REPORT OF INDEPENDENT AUDITORS



The Partners

Wells Real Estate Fund IV, L.P.



We have audited the accompanying balance sheet of Wells Real Estate Fund IV,
L.P. (a Georgia public limited partnership) as of December 31, 2002 and the related statements of income, partners capital, and cash flows for the year then ended. These financial statements are the responsibility of the Partnerships
management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Wells Real Estate Fund IV, L.P. as of December 31, 2001, and for the years ended December 31, 2001 and 2000 were
audited by other auditors who have ceased operations and whose report dated January 25, 2002 expressed an unqualified opinion on those financial statements before the restatement adjustments described in Note 1.



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



In our opinion, the 2002 financial statements referred to above present fairly, in all material respects, the financial position of Wells Real Estate Fund IV, L.P. at December 31, 2002 and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally accepted in the United States.



As discussed above, the financial statements of Wells Real Estate Fund IV, L.P. as of December 31, 2001 and for the years ended December 31, 2001 and 2000 were audited by other auditors who have ceased
operations. As described in Note 1, these financial statements have been restated. We audited the adjustments described in Note 1 that were applied to restate the 2001 and 2000 financial statements. Our procedures included (a) agreeing the
restatement adjustment amounts to the corresponding accounts maintained in the underlying records of the Partnership, and (b) testing the application of the adjustments to the previously reported amounts. In our opinion, such adjustments are
appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2001 and 2000 financial statements of Wells Real Estate Fund IV, L.P. other than with respect to such restatement adjustments
and, accordingly, we do not express an opinion or any other form of assurance on the 2001 and 2000 financial statements taken as a whole.



/s/Ernst & Young LLP



Atlanta, Georgia

January 24, 2003





F-2



---



(The following is a copy
of the audit report previously issued by Arthur Andersen LLP in connection with the financial statements of Wells Real Estate Fund IV, L.P. for the fiscal year ended December 31, 2001 included in the previous years Form 10-K filing. This audit
report has not been reissued by Arthur Andersen in connection with the filing of this form 10-K for the fiscal year ended December 31, 2002.)



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To Wells Real Estate Fund IV, L.P.:



We have audited the accompanying balance sheets of WELLS REAL ESTATE FUND IV, L.P. (a Georgia public limited partnership) as of December 31, 2001 and 2000 and the related statements of income, partners capital,
and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements based
on our audits.



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



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wells Real Estate Fund IV, L.P. as of December 31, 2001 and 2000 and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.



ARTHUR ANDERSEN LLP



Atlanta, Georgia

January 25, 2002



F-3



---



WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



BALANCE SHEETS



DECEMBER 31, 2002 AND 2001





|                                               |  | 2002 |           | 2001
|---------------------------------------------- |  | ---- | --------- | ----
|ASSETS                                         |  |      |           |     
|INVESTMENT IN JOINT VENTURES                   |  | $    | 8,710,859 |     
|                                              
|DUE FROM JOINT VENTURES                        |  |      | 189,164   |     
|                                              
|CASH AND CASH EQUIVALENTS                      |  |      | 28,619    |     
|                                               |  |      |           |     
|Total assets                                   |  | $    | 8,928,642 |     
|                                               |  |      |           |     
|                                              
|LIABILITIES AND PARTNERS CAPITAL              |  |      |           |     
|LIABILITIES:                                   |  |      |           |     
|Partnership distributions payable              |  | $    | 198,439   |     
|Accounts payable                               |  |      | 15,271    |     
|                                               |  |      |           |     
|                                               |  |      | 213,710   |     
|                                               |  |      |           |     
|COMMITMENTS AND CONTINGENCIES                  |  |      |           |     
|                                              
|PARTNERS CAPITAL:                             |  |      |           |     
|Limited partners:                              |  |      |           |     
|Class A1,322,909 units issued and outstanding |  |      | 8,714,932 |     
|Class B38,551 units issued and outstanding    |  |      | 0         |     
|                                               |  |      |           |     
|Total partners capital                        |  |      | 8,714,932 |     
|                                               |  |      |           |     
|Total liabilities and partners capital        |  | $    | 8,928,642 |     
|                                               |  |      |           |     



See
accompanying notes.





F-4



---



WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF INCOME



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



|                                                |  | 2002 |         | 2001 |   | 2000   
|----------------------------------------------- |  | ---- | ------- | ---- | - | -------
|REVENUES:                                       |  |      |         |      |   |        
|Equity in income of Joint Ventures              |  | $    | 487,189 |      | $ | 672,305
|Interest income                                 |  |      | 1,444   |      |   | 5,791  
|                                                |  |      |         |      |   |        
|                                                |  |      | 488,633 |      |   | 678,096
|                                                |  |      |         |      |   |        
|EXPENSES:                                       |  |      |         |      |   |        
|Partnership administration                      |  |      | 65,665  |      |   | 54,121 
|Legal and accounting                            |  |      | 31,327  |      |   | 15,928 
|Other general and administrative                |  |      | 6,625   |      |   | 12,710 
|                                                |  |      |         |      |   |        
|                                                |  |      | 103,617 |      |   | 82,759 
|                                                |  |      |         |      |   |        
|                                               
|NET INCOME                                      |  | $    | 385,016 |      | $ | 595,337
|                                                |  |      |         |      |   |        
|                                               
|NET INCOME ALLOCATED TO CLASSA LIMITED PARTNERS |  | $    | 385,016 |      | $ | 595,337
|                                                |  |      |         |      |   |        
|                                               
|NET INCOME PER CLASSA LIMITED PARTNER UNIT      |  | $    | 0.29    |      | $ | 0.45   
|                                                |  |      |         |      |   |        
|                                               
|DISTRIBUTION PER CLASSA LIMITED PARTNER UNIT    |  | $    | 0.69    |      | $ | 0.76   
|                                                |  |      |         |      |   |        



See
accompanying notes.





F-5



---



WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF PARTNERS CAPITAL



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



|                           |  | Limited Partners |  | Total Partners Capital |           
|-------------------------- |  | ---------------- |  | ----------------------- | ----------
|                           |  | Class A          |  |                         | Class B   
|                           |  | Units            |  | Amount                  |           
|BALANCE, December 31, 1999 |  | 1,322,909        |  | $                       | 9,490,331 
|                          
|Net income                 |  | 0                |  |                         | 357,405   
|Partnership distributions  |  | 0                |  |                         | (206,144  
|                           |  |                  |  |                         |           
|BALANCE, December 31, 2000 |  | 1,322,909        |  |                         | 9,641,592 
|                          
|Net income                 |  | 0                |  |                         | 595,337   
|Partnership distributions  |  | 0                |  |                         | (1,000,512
|                           |  |                  |  |                         |           
|BALANCE, December 31, 2001 |  | 1,322,909        |  |                         | 9,236,417 
|                          
|Net income                 |  | 0                |  |                         | 385,016   
|Partnership distributions  |  | 0                |  |                         | (906,501  
|                           |  |                  |  |                         |           
|BALANCE, December 31, 2002 |  | 1,322,909        |  | $                       | 8,714,932 
|                           |  |                  |  |                         |           



See
accompanying notes.





F-6



---



WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



STATEMENTS OF CASH FLOWS



FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000



|                                                                              |  | 2002 |           |   | 2001 |   |          | 2000 | 
|----------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | -------- | ---- | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                         |  |      |           |   |      |   |          |      | 
|Net income                                                                    |  | $    | 385,016   |   |      | $ | 595,337  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Adjustments to reconcile net income to net cash used in operating
activities: |  |      |           |   |      |   |          |      | 
|Equity in income of Joint Ventures                                            |  |      | (487,189  | ) |      |   | (672,305 | )    | 
|Changes in accounts payable and accrued expenses                              |  |      | 12,773    |   |      |   | 2,498    |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Total adjustments                                                             |  |      | (474,416  | ) |      |   | (669,807 | )    | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Net cash used in operating activities                                         |  |      | (89,400   | ) |      |   | (74,470  | )    | 
|                                                                              |  |      |           |   |      |   |          |      | 
|CASH FLOWS FROM INVESTING ACTIVITIES:                                         |  |      |           |   |      |   |          |      | 
|Investment in Joint Ventures                                                  |  |      | 0         |   |      |   | (375,720 | )    | 
|Distributions received from Joint Ventures                                    |  |      | 1,047,790 |   |      |   | 979,398  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Net cash provided by investing activities                                     |  |      | 1,047,790 |   |      |   | 603,678  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                         |  |      |           |   |      |   |          |      | 
|Distributions to partners in excess of accumulated earnings                   |  |      | (516,101  | ) |      |   | (221,326 | )    | 
|Distributions to partners from accumulated earnings                           |  |      | (459,536  | ) |      |   | (514,614 | )    | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Net cash used in financing activities                                         |  |      | (975,637  | ) |      |   | (735,940 | )    | 
|                                                                              |  |      |           |   |      |   |          |      | 
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                          |  |      | (17,247   | ) |      |   | (206,732 | )    | 
|                                                                             
|CASH AND CASH EQUIVALENTS, beginning of year                                  |  |      | 45,866    |   |      |   | 252,598  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|CASH AND CASH EQUIVALENTS, end of year                                        |  | $    | 28,619    |   |      | $ | 45,866   |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|                                                                             
|SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:                               |  |      |           |   |      |   |          |      | 
|Joint venture distributions receivables                                       |  | $    | 189,164   |   |      | $ | 259,086  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 
|Partnership distributions payable                                             |  | $    | 198,439   |   |      | $ | 267,575  |      | 
|                                                                              |  |      |           |   |      |   |          |      | 





See accompanying notes.





F-7



---



WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2002, 2001 AND 2000



|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- |  | ------------------------------------------



Organization and Business



Wells Real Estate Fund IV, L.P. (the Partnership) is a public limited partnership organized on October 25, 1990 under the laws
of the state of Georgia. The general partners are Leo F. Wells, III and Wells Partners, L.P. (Wells Partners), a Georgia nonpublic limited partnership. The Partnership has two classes of limited partnership interests, Class A and Class B
units. Limited partners may vote to, among other things, (a) amend the partnership agreement, subject to certain limitations, (b) change the business purpose or investment objectives of the Partnership, and (c) remove a general partner. A majority
vote on any of the above-described matters will bind the Partnership without the concurrence of the general partners. Each limited partnership unit has equal voting rights, regardless of class.



On March 4, 1991, the Partnership commenced an offering of up
to $25,000,000 of Class A or Class B limited partnership units ($10.00 per unit) pursuant to a Registration Statement filed on Form S-11 under the Securities Act of 1933. The Partnership did not commence active operations until it received and
accepted subscriptions for 125,000 units on May 13, 1991. The offering was terminated on February 29, 1992 at which time the Partnership had sold approximately 1,322,909 Class A units and 38,551 Class B units representing capital contributions of
$13,614,652 from investors who were admitted to the Partnership as limited partners. From the original funds raised, the Partnership has invested a total of $11,188,611 in properties, paid $748,805 in acquisition and advisory fees, and paid
$1,767,236 in selling commission and organization and offering expenses.



The Partnership owns interests in all of its real estate assets through joint ventures with other Wells entities (the Joint Ventures). As of September 30, 2002, the Partnership owned interests in the following
four properties through the affiliated Joint Ventures listed below:



|Joint Venture          |  | Joint Venture Partners                                               |  | Properties                                                                                                            
|---------------------- |  | -------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------
|Fund III-IV Associates |  |  Wells Real Estate Fund III, L.P.  Wells Real Estate Fund IV, L.P. |  | 1. Stockbridge Village Center A retail shopping center located in Stockbridge, Georgia                                
|                       |  |                                                                      |  | 2. Reciprocal Group Building A two-story office building located in Richmond, Virginia                                
|                      
|Fund IV-V Associates   |  |  Wells Real Estate Fund IV, L.P.  Wells Real Estate Fund V, L.P.   |  | 3. Village Overlook Property Two substantially identical two-story office buildings located in Clayton County, Georgia
|                       |  |                                                                      |  | 4. IBM Jacksonville Building A four-story office building located in Jacksonville, Florida                            
|                      



F-8



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Each of
the aforementioned properties was acquired on an all cash basis.



Use of Estimates



The
preparation of the Partnerships financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.



Income Taxes



The Partnership is not subject to federal or state income taxes; therefore, none have been provided for in the accompanying financial statements. The partners are required to include their respective shares of profits and
losses in their individual income tax returns.



Distributions of Net Cash From Operations



Cash available for distribution, as defined by the partnership agreement, is distributed on a cumulative noncompounded basis to the limited partners quarterly. In accordance with the partnership agreement, distributions are
paid first to limited partners holding Class A units until they have received a 10% per annum return on their adjusted capital contributions, as defined. Cash available for distribution is then paid to the general partners until they have received
an amount equal to 10% of distributions. Any remaining cash available for distribution is split between the limited partners holding Class A units and the general partners on a basis of 90% and 10%, respectively. No cash distributions will be made
to the limited partners holding Class B units.



Distribution of Sales Proceeds



Upon sales of properties, the net sales proceeds are distributed in the following order:



| |  |  | To limited partners on a per unit basis until each limited partner has received 100% of his/her adjusted capital contribution, as defined
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners holding Class B units on a per unit basis until they receive an amount equal to the net cash available for distribution received by the limited
partners holding Class A units
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners on a per unit basis until they receive a cumulative 10% per annum return on their adjusted capital contribution, as defined
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To limited partners holding Class B units on a per unit basis until they receive a cumulative 15% per annum return on their adjusted capital contribution, as defined
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To all limited partners until they receive an amount equal to their respective cumulative distributions, as defined
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | To the general partners until they have received 100% of their capital contributions, as defined
| | - |  | ------------------------------------------------------------------------------------------------





F-9



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







| |  |  | Thereafter, 80% to the limited partners and 20% to the general partners
| | - |  | -----------------------------------------------------------------------



Allocation of Net Income, Net Loss, and Gain on Sale



Net income is defined as net income recognized by the
Partnership, excluding deductions for depreciation and amortization. Net income, as defined, of the Partnership will be allocated each year in the same proportions that net cash from operations is distributed to the limited partners holding Class A
units and the general partners. To the extent the Partnerships net income in any year exceeds net cash from operations, it will be allocated 99% to the limited partners and 1% to the general partners.



Net loss, depreciation, and amortization deductions for each
fiscal year will be allocated as follows: (a) 99% to the limited partners holding Class B units and 1% to the general partners until their capital accounts are reduced to zero, (b) then to any partner having a positive balance in his/her capital
account in an amount not to exceed such positive balance, and (c) thereafter to the general partners.



Gain on the sale or exchange of the Partnerships properties will be allocated generally in the same manner that the net proceeds
from such sale are distributed to partners after the following allocations are made, if applicable: (a) allocations made pursuant to a qualified income offset provision in the partnership agreement, (b) allocations to partners having negative
capital accounts until all negative capital accounts have been restored to zero, and (c) allocations to Class B limited partners in amounts equal to deductions for depreciation and amortization previously allocated to them with respect to the
specific partnership property sold, but not in excess of the amount of gain on sale recognized by the Partnership with respect to the sale of such property.



Investment in Joint Ventures



Basis of Presentation



The Partnership does not have control over the operations of the Joint Ventures; however, it does exercise significant influence.
Accordingly, the Partnerships investments in the Joint Ventures are recorded using the equity method of accounting, whereby original investments are recorded at cost and subsequently adjusted for contributions, distributions and net income
(loss) attributable to the Partnership, as further described below.



Allocation of Income and Distributions



Pursuant to the terms of the joint venture agreements, all income and distributions are allocated to joint venture partners in accordance with their respective ownership interests. Distributions of net
cash from operations is distributed to the joint venture partners on a quarterly basis.



Real Estate Assets



The Joint Ventures real estate assets are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related assets.
All repairs and maintenance expenditures are expensed as incurred. Depreciation for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real
estate asset.



Management continually monitors
events and changes in circumstances that could indicate that carrying amounts of real estate assets may not be recoverable. When indicators of potential



F-10



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







impairment are present, management assesses the recoverability of the assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future cash flows expected from the use and
eventual disposition of the asset. In the event the expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has determined
that there has been no impairment in the carrying value of real estate assets held by the Joint Ventures to date.



Revenue Recognition



The Joint Ventures leases typically include renewal options, escalation provisions and provisions requiring tenants to reimburse the
Joint Ventures for a pro rata share of operating costs incurred. All of the Joint Ventures leases are classified as operating leases, and the related rental income, including scheduled rental rate increases (other than scheduled increases
based on the Consumer Price Index) is recognized on a straight-line basis over the terms of the respective leases. Rental revenues collected in advance are recorded as deferred rent.



Rental Income



The future minimum rental income due Fund III and IV Associates under noncancelable operating leases at
December 31, 2002 is as follows:



|Year ending December 31: |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|2006                     |  |  
|Thereafter               |  |  
|                         |  |  
|                         |  | $
|                         |  |  





Two tenants contributed approximately 29% and 27% of rental income for the year ended December 31, 2002. In addition, two tenants will
contribute approximately 41% and 34% of future minimum rental income.



The future minimum rental income due Fund IV and V Associates under noncancelable operating leases at December 31, 2001 is as follows:



|Year ending December 31: |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|2007                     |  |  
|Thereafter               |  |  
|                         |  |  
|                         |  | $
|                         |  |  





One tenant contributed approximately 59% of rental income for the year ended December 31, 2002. In addition, one tenant will contribute
approximately 11% of future minimum rental income.



F-11



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Prepaid Expenses and Other Assets



Prepaid expenses and other assets of the Joint Ventures is comprised primarily of deferred leasing costs and refundable security deposits. Deferred leasing costs reflect costs incurred to procure operating leases, which are
capitalized and amortized on a straight-line basis over the terms of the related leases. Refundable security deposits represent cash deposits received from tenants, the offset to which is included in accounts payable and refundable security deposits
in the corresponding balance sheets. Pursuant to the respective leases, the Joint Ventures may apply such balances towards unpaid receivable balances or property damages, where applicable, or will refund such balances to the tenants upon the
expiration of the lease term.



Restatement
Adjustments



The Joint Ventures have
historically reported property operating costs net of reimbursements from tenants as an expense in their statements of income. These costs include property taxes, property insurance, utilities, repairs and maintenance, management fees and other
expenses related to the ownership and operation of the properties that are required to be reimbursed by the properties tenants in accordance with the terms of their leases. In response to FASB Emerging Issues Task Force consensus reached in
November 2001, the Joint Ventures now present these reimbursements as revenue and the gross property operating costs as expenses. Since this presentation does not impact the amount of reimbursements received or property operating costs incurred and
requires equal adjustments to revenues and expenses, the adoption of this guidance has no impact on the financial position, net income, or cash flows of the Partnership or its Joint Ventures.



The joint venture statements of income presented in Note 3
have been restated to reflect the effects of this revised presentation.



Cash and Cash Equivalents



The Partnership considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated
at cost, which approximates fair value, and consist of investments in money market accounts.



Reclassifications



Certain prior year amounts have been reclassified to conform with the current year financial statement presentation.



F-12



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



Due from Joint Ventures at December 31, 2002 and 2001 represents the Partnerships share of cash to be distributed from its joint
venture investments for the fourth quarters of 2002 and 2001 as follows:



|                           |  | 2002 |         | 2001
|-------------------------- |  | ---- | ------- | ----
|Fund III and IV Associates |  | $    | 150,407 |     
|Fund IV and V Associates   |  |      | 38,757  |     
|                           |  |      |         |     
|                           |  | $    | 189,164 |     
|                           |  |      |         |     



The
Partnership entered into a property management and leasing agreement with Wells Management Company, Inc. (Wells Management), an affiliate of the general partners. In consideration for supervising the management and leasing of the
Partnerships properties, the joint ventures pay Wells Management management and leasing fees equal to (a) 3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%), plus a separate fee for the
one-time initial lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the
case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross revenues except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term



The Joint Ventures incurred management and leasing fees and
lease acquisition costs of $95,871, $148,456, and $173,471, for the years ended December 31, 2002, 2001 and 2000, respectively, which were paid to Wells Management.



Wells Capital, Inc. (the Company), the general partner of Wells Partners, performs certain
administrative services for the Partnership, such as accounting and other partnership administration, and incurs the related expenses. Such expenses are allocated among the various Wells Real Estate Funds based on time spent on each fund by
individual administrative personnel. In the opinion of management, such allocation is a reasonable estimation of such expenses. During 2002, 2001 and 2000, the Partnership reimbursed $41,496, $36,424 and $27,277 to Wells Capital, Inc. and its
affiliates for these services.



The general
partners are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in the capacity as general partners of other Wells Real Estate Funds may be in competition with the
Partnership for tenants in similar geographic markets.



F-13



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







|3. |  | INVESTMENT IN JOINT VENTURES
|-- |  | ----------------------------



The Partnerships investment and percentage ownership in the Joint Ventures at December 31, 2002 and 2001 are summarized as follows:



|                           |  | 2002   |           |         | 2001 |  
|-------------------------- |  | ------ | --------- | ------- | ---- | -
|                           |  | Amount |           | Percent |      |  
|Fund III and IV Associates |  | $      | 5,029,902 |         | 43   | %
|Fund IV and V Associates   |  |        | 3,680,957 |         | 38   |  
|                           |  |        |           |         |      |  
|                           |  | $      | 8,710,859 |         |      |  
|                           |  |        |           |         |      |  



The
following is a roll forward of the Partnerships investment in the Joint Ventures for the years ended December 31, 2002 and 2001:



|                                                |  | 2002 |           |   | 2001 |  
|----------------------------------------------- |  | ---- | --------- | - | ---- | -
|Investment in Joint Ventures, beginning of year |  | $    | 9,201,538 |   |      | $
|Equity in income of Joint Ventures              |  |      | 487,189   |   |      |  
|Contributions to Joint Ventures                 |  |      | 0         |   |      |  
|Distributions from Joint Ventures               |  |      | (977,868  | ) |      |  
|                                                |  |      |           |   |      |  
|Investment in Joint Ventures, end of year       |  | $    | 8,710,859 |   |      | $
|                                                |  |      |           |   |      |  



Fund
III and IV Associates



On March 27, 1991,
the Partnership entered into a joint venture agreement with Wells Real Estate Fund III, L.P. The joint venture, Fund III and IV Associates, was formed for the purpose of developing, constructing, and operating the Stockbridge Village Shopping Center
in Stockbridge, Georgia. In addition, in July 1992, Fund III and IV Associates purchased the Reciprocal Group Building (formerly G.E. Lighting National Customer Center) in Richmond, Virginia.



F-14



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Following
is selected financial information for Fund III and IV Associates



Fund III and IV Associates

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001



|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Assets                                                                                                |  |      |            |     
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 3,331,775  |     
|Building and improvements, less accumulated depreciation of $5,261,361 in 2002 and
$4,597,821 in 2001 |  |      | 8,044,556  |     
|                                                                                                      |  |      |            |     
|Total real estate assets                                                                              |  |      | 11,376,331 |     
|Cash and cash equivalents                                                                             |  |      | 361,251    |     
|Prepaid expenses and other assets, net                                                                |  |      | 290,534    |     
|Accounts receivable                                                                                   |  |      | 131,297    |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 12,159,413 |     
|                                                                                                      |  |      |            |     
|                                                                                                     
|Liabilities and Partners Capital                                                                    
|Liabilities:                                                                                          |  |      |            |     
|Partnership distributions payable                                                                     |  | $    | 351,517    |     
|Accounts payable                                                                                      |  |      | 52,618     |     
|Due to affiliates                                                                                     |  |      | 0          |     
|                                                                                                      |  |      |            |     
|Total liabilities                                                                                     |  |      | 404,135    |     
|                                                                                                      |  |      |            |     
|Partners capital:                                                                                    |  |      |            |     
|Wells Real Estate Fund III                                                                            |  |      | 6,725,376  |     
|Wells Real Estate Fund IV                                                                             |  |      | 5,029,902  |     
|                                                                                                      |  |      |            |     
|Total partners capital                                                                               |  |      | 11,755,278 |     
|                                                                                                      |  |      |            |     
|Total liabilities and partners capital                                                               |  | $    | 12,159,413 |     
|                                                                                                      |  |      |            |     





F-15



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund III
and IV Associates

(A Georgia Joint Venture)

Statements of Income

for the Years Ended
December 31, 2002, 2001 and 2000



|                                                   |  | 2002 |           | 2001 |   |           | 2000 | 
|-------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | ---- | 
|Revenues:                                          |  |      |           |      |   |           |      | 
|Rental income                                      |  | $    | 1,855,981 |      | $ | 1,864,868 |      | 
|Reimbursement income (1)                           |  |      | 223,261   |      |   | 255,016   | (1)  | 
|Interest income                                    |  |      | 4,138     |      |   | 450       |      | 
|Other income                                       |  |      | 0         |      |   | 22,917    |      | 
|                                                   |  |      |           |      |   |           |      | 
|                                                   |  |      | 2,083,380 |      |   | 2,143,251 |      | 
|                                                   |  |      |           |      |   |           |      | 
|Expenses:                                          |  |      |           |      |   |           |      | 
|Depreciation                                       |  |      | 663,540   |      |   | 616,956   |      | 
|Management and leasing fees                        |  |      | 165,362   |      |   | 168,643   |      | 
|Operating costs                                    |  |      | 300,791   |      |   | 282,947   |      | 
|Property administration                            |  |      | 47,570    |      |   | 35,541    |      | 
|Legal and accounting                               |  |      | 25,220    |      |   | 14,515    |      | 
|                                                   |  |      |           |      |   |           |      | 
|                                                   |  |      | 1,202,483 |      |   | 1,118,602 |      | 
|                                                   |  |      |           |      |   |           |      | 
|Net income                                         |  | $    | 880,897   |      | $ | 1,024,649 |      | 
|                                                   |  |      |           |      |   |           |      | 
|                                                  
|Net income allocated to Wells Real Estate Fund III |  | $    | 503,975   |      | $ | 586,219   |      | 
|                                                   |  |      |           |      |   |           |      | 
|                                                  
|Net income allocated to Wells Real Estate Fund IV  |  | $    | 376,922   |      | $ | 438,430   |      | 
|                                                   |  |      |           |      |   |           |      | 



| | (1) |  | Amounts have been restated to reflect tenant reimbursements of $255,016 in 2001 and $223,686 in 2000 as revenue and gross property operating costs as expenses as
disclosed in the Restatement Adjustments section of Note 1.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-16



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund III
and IV Associates

(A Georgia Joint Venture)

Statements of Partners Capital

for the
Years Ended December 31, 2002, 2001 and 2000



|                           |  | Wells Real Estate Fund III |           |   | Wells Real Estate Fund IV |   |           | Total Partners Capital | 
|-------------------------- |  | -------------------------- | --------- | - | ------------------------- | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $                          | 6,993,642 |   |                           | $ | 5,230,514 |                         | 
|                          
|Net income                 |  |                            | 289,542   |   |                           |   | 216,547   |                         | 
|Partnership contributions  |  |                            | 216,683   |   |                           |   | 162,058   |                         | 
|Partnership distributions  |  |                            | (589,377  | ) |                           |   | (440,790  | )                       | 
|                           |  |                            |           |   |                           |   |           |                         | 
|Balance, December 31, 2000 |  |                            | 6,910,490 |   |                           |   | 5,168,329 |                         | 
|                          
|Net income                 |  |                            | 586,219   |   |                           |   | 438,430   |                         | 
|Partnership contributions  |  |                            | 502,342   |   |                           |   | 375,720   |                         | 
|Partnership distributions  |  |                            | (919,618  | ) |                           |   | (687,778  | )                       | 
|                           |  |                            |           |   |                           |   |           |                         | 
|Balance, December 31, 2001 |  |                            | 7,079,433 |   |                           |   | 5,294,701 |                         | 
|                          
|Net income                 |  |                            | 503,975   |   |                           |   | 376,922   |                         | 
|Partnership distributions  |  |                            | (858,032  | ) |                           |   | (641,721  | )                       | 
|                           |  |                            |           |   |                           |   |           |                         | 
|Balance, December 31, 2002 |  | $                          | 6,725,376 |   |                           | $ | 5,029,902 |                         | 
|                           |  |                            |           |   |                           |   |           |                         | 





F-17



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund III
and IV Associates

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended
December 31, 2002, 2001 and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 880,897    |   |      | $ | 1,024,649  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 663,540    |   |      |   | 616,956    |      | 
|Amortization of deferred lease acquisition costs                                  |  |      | 58,442     |   |      |   | 41,831     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                               |  |      | 82,702     |   |      |   | (83,773    | )    | 
|Prepaid expenses and other assets, net                                            |  |      | (15,200    | ) |      |   | 517        |      | 
|Accounts payable                                                                  |  |      | 12,953     |   |      |   | (1,231     | )    | 
|Due to affiliates                                                                 |  |      | (3,406     | ) |      |   | 1,536      |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 799,031    |   |      |   | 575,836    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 1,679,928  |   |      |   | 1,600,485  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investment in deferred lease acquisition costs                                    |  |      | (12,245    | ) |      |   | (172,157   | )    | 
|Investment in real estate                                                         |  |      | (64,983    | ) |      |   | (719,893   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (77,228    | ) |      |   | (892,050   | )    | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions from joint venture partners                                         |  |      | 0          |   |      |   | 878,062    |      | 
|Distributions to joint venture partners                                           |  |      | (1,556,774 | ) |      |   | (1,376,276 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (1,556,774 | ) |      |   | (498,214   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net increase (decrease) in cash and cash equivalents                              |  |      | 45,926     |   |      |   | 210,221    |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 315,325    |   |      |   | 105,104    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 361,251    |   |      | $ | 315,325    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Supplemental disclosures of noncash activities:                                   |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 351,517    |   |      | $ | 408,538    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



Fund
IV and V Associates



On April 14, 1992, the
Partnership entered into a joint venture agreement with Wells Real Estate Fund V, L.P. The joint venture, Fund IV and V Associates, was formed for the purpose of investing in commercial real properties. During 1992, Fund IV and V Associates
purchased a parcel of land on which the Village Overlook Project was developed. During 1992, the joint venture also purchased a second parcel of land in Jacksonville, Florida, on which the Jacksonville IBM Building was developed. During 2000, the
Partnership made additional capital contributions to Fund IV and V Associates. Ownership interests were recomputed accordingly.



F-18



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Following
is selected financial information of Fund IV and V Associates:



Fund IV and V Associates

(A Georgia Joint Venture)

Balance Sheets

December 31, 2002 and 2001





|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Assets                                                                                                |  |      |            |     
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 2,011,534  |     
|Building and improvements, less accumulated depreciation of $4,262,645 in 2002 and
$3,710,357 in 2001 |  |      | 7,531,090  |     
|Construction in progress                                                                              |  |      | 75,997     |     
|                                                                                                      |  |      |            |     
|Total real estate assets                                                                              |  |      | 9,618,621  |     
|Cash and cash equivalents                                                                             |  |      | 304,906    |     
|Prepaid expenses and other assets, net                                                                |  |      | 110,776    |     
|Accounts receivable                                                                                   |  |      | 89,916     |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 10,124,219 |     
|                                                                                                      |  |      |            |     
|                                                                                                     
|Liabilities and Partners Capital                                                                    
|Liabilities:                                                                                          |  |      |            |     
|Accounts payable                                                                                      |  | $    | 176,801    |     
|Partnership distributions payable                                                                     |  |      | 144,263    |     
|Deferred rent                                                                                         |  |      | 30,756     |     
|Due to affiliates                                                                                     |  |      | 0          |     
|                                                                                                      |  |      |            |     
|Total liabilities                                                                                     |  |      | 351,820    |     
|                                                                                                      |  |      |            |     
|Partners capital:                                                                                    |  |      |            |     
|Wells Real Estate Fund IV                                                                             |  |      | 3,680,957  |     
|Wells Real Estate Fund V                                                                              |  |      | 6,091,442  |     
|                                                                                                      |  |      |            |     
|Total partners capital                                                                               |  |      | 9,772,399  |     
|                                                                                                      |  |      |            |     
|Total liabilities and partners capital                                                               |  | $    | 10,124,219 |     
|                                                                                                      |  |      |            |     



F-19



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund IV
and V Associates

(A Georgia Joint Venture)

Statements of Income

for the Years Ended
December 31, 2002, 2001 and 2000



|                                                  |  | 2002 |           | 2001 |   |           | 2000 | 
|------------------------------------------------- |  | ---- | --------- | ---- | - | --------- | ---- | 
|Revenues:                                         |  |      |           |      |   |           |      | 
|Rental income                                     |  | $    | 1,771,231 |      | $ | 2,113,934 |      | 
|Reimbursement income (1)                          |  |      | 187,690   |      |   | 174,201   | (1)  | 
|Interest income                                   |  |      | 6,307     |      |   | 8,618     |      | 
|Other income                                      |  |      | 428       |      |   | 330       |      | 
|                                                  |  |      |           |      |   |           |      | 
|                                                  |  |      | 1,965,656 |      |   | 2,297,083 |      | 
|                                                  |  |      |           |      |   |           |      | 
|Expenses:                                         |  |      |           |      |   |           |      | 
|Depreciation                                      |  |      | 552,288   |      |   | 516,534   |      | 
|Management and leasing fees                       |  |      | 184,697   |      |   | 232,632   |      | 
|Operating costs                                   |  |      | 838,357   |      |   | 861,954   |      | 
|Partnership administration                        |  |      | 85,845    |      |   | 47,647    |      | 
|Legal and accounting                              |  |      | 11,723    |      |   | 17,414    |      | 
|                                                  |  |      |           |      |   |           |      | 
|                                                  |  |      | 1,672,910 |      |   | 1,676,181 |      | 
|                                                  |  |      |           |      |   |           |      | 
|Net income                                        |  | $    | 292,746   |      | $ | 620,902   |      | 
|                                                  |  |      |           |      |   |           |      | 
|                                                 
|Net income allocated to Wells Real Estate Fund IV |  | $    | 110,268   |      | $ | 233,875   |      | 
|                                                  |  |      |           |      |   |           |      | 
|                                                 
|Net income allocated to Wells Real Estate Fund V  |  | $    | 182,478   |      | $ | 387,027   |      | 
|                                                  |  |      |           |      |   |           |      | 



| | (1) |  | Amounts have been restated to reflect tenant reimbursements of $174,201 in 2001 and $211,778 in 2000 as revenue and gross property operating costs as expenses as
disclosed in the Restatement Adjustments section of Note 1.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-20



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund IV
and V Associates

(A Georgia Joint Venture)

Statements of Partners Capital

for the
Years Ended December 31, 2002, 2001 and 2000



|                           |  | Wells Real Estate Fund IV |           |   | Wells Real Estate Fund V |   |           | Total Partners Capital | 
|-------------------------- |  | ------------------------- | --------- | - | ------------------------ | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $                         | 4,232,634 |   |                          | $ | 7,031,998 |                         | 
|                          
|Net income                 |  |                           | 205,660   |   |                          |   | 340,338   |                         | 
|Partnership contributions  |  |                           | 16,686    |   |                          |   | 0         |                         | 
|Partnership distributions  |  |                           | (390,017  | ) |                          |   | (645,420  | )                       | 
|                           |  |                           |           |   |                          |   |           |                         | 
|Balance, December 31, 2000 |  |                           | 4,064,963 |   |                          |   | 6,726,916 |                         | 
|                          
|Net income                 |  |                           | 233,875   |   |                          |   | 387,027   |                         | 
|Partnership distributions  |  |                           | (392,001  | ) |                          |   | (648,704  | )                       | 
|                           |  |                           |           |   |                          |   |           |                         | 
|Balance, December 31, 2001 |  |                           | 3,906,837 |   |                          |   | 6,465,239 |                         | 
|                          
|Net income                 |  |                           | 110,268   |   |                          |   | 182,478   |                         | 
|Partnership distributions  |  |                           | (336,148  | ) |                          |   | (556,275  | )                       | 
|                           |  |                           |           |   |                          |   |           |                         | 
|Balance, December 31, 2002 |  | $                         | 3,680,957 |   |                          | $ | 6,091,442 |                         | 
|                           |  |                           |           |   |                          |   |           |                         | 





F-21



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Fund IV
and V Associates

(A Georgia Joint Venture)

Statements of Cash Flows

for the Years Ended
December 31, 2002, 2001 and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 292,746    |   |      | $ | 620,902    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 552,288    |   |      |   | 516,534    |      | 
|Amortization of deferred leasing costs                                            |  |      | 45,918     |   |      |   | 53,622     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                               |  |      | 129,204    |   |      |   | 36,616     |      | 
|Prepaid expenses and other assets, net                                            |  |      | 831        |   |      |   | (11,923    | )    | 
|Accounts payable                                                                  |  |      | 82,248     |   |      |   | 28,560     |      | 
|Deferred rent                                                                     |  |      | 30,756     |   |      |   | 0          |      | 
|Due to affiliates                                                                 |  |      | (40,809    | ) |      |   | (13,858    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 800,436    |   |      |   | 609,551    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 1,093,182  |   |      |   | 1,230,453  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investments in deferred leasing costs                                             |  |      | 0          |   |      |   | (29,140    | )    | 
|Investment in real estate                                                         |  |      | (114,134   | ) |      |   | (105,007   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (114,134   | ) |      |   | (134,147   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions from joint venture partners                                         |  |      | 0          |   |      |   | 0          |      | 
|Distributions to joint venture partners                                           |  |      | (1,013,279 | ) |      |   | (1,036,759 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (1,013,279 | ) |      |   | (1,036,759 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (34,231    | ) |      |   | 59,547     |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 339,137    |   |      |   | 279,590    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 304,906    |   |      | $ | 339,137    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Supplemental disclosures of noncash activities:                                   |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 144,263    |   |      | $ | 265,119    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 





F-22



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







|4. |  | INCOME TAX BASIS NET INCOME AND PARTNERS CAPITAL
|-- |  | -------------------------------------------------



A reconciliation of the Partnerships financial statement net income to net income presented in accordance with the Federal Income
Tax basis of accounting is as follows for the years ended December 31, 2002, 2001 and 2000:



|                                                                                                                |  | 2002 |         |   | 2001 |   |         | 2000 | 
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- | 
|Financial statement net income                                                                                  |  | $    | 385,016 |   |      | $ | 595,337 |      | 
|Increase (decrease) in net income resulting from:                                                               |  |      |         |   |      |   |         |      | 
|Meals & Entertainment                                                                                           |  |      | 167     |   |      |   | 0       |      | 
|Penalties                                                                                                       |  |      | 11      |   |      |   | 0       |      | 
|Depreciation expense for financial reporting purposes in excess of amounts for income
tax purposes              |  |      | 218,498 |   |      |   | 192,719 |      | 
|Expenses deductible when paid for income tax purposes, accrued for financial reporting
purposes                 |  |      | (15,201 | ) |      |   | (7,139  | )    | 
|Rental income accrued for financial reporting purposes less than (in excess of) amounts
for income tax purposes |  |      | 48,677  |   |      |   | (16,903 | )    | 
|Other                                                                                                           |  |      | 0       |   |      |   | (798    | )    | 
|                                                                                                                |  |      |         |   |      |   |         |      | 
|Income tax basis net income                                                                                     |  | $    | 637,168 |   |      | $ | 763,216 |      | 
|                                                                                                                |  |      |         |   |      |   |         |      | 



A
reconciliation of the partners capital balances, as presented in the accompanying financial statements, to partners capital balances, as presented in accordance with the Federal Income Tax basis of accounting, is as follows for the years
ended December 31, 2002, 2001 and 2000:



|                                                                                                                                          |  | 2002 |            |   | 2001 |   |            | 2000 | 
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Financial statement partners capital                                                                                                     |  | $    | 8,714,932  |   |      | $ | 9,236,417  |      | 
|Increase (decrease) in partners capital resulting from:                                                                                  |  |      |            |   |      |   |            |      | 
|Meals & Entertainment                                                                                                                     |  |      | 167        |   |      |   | 0          |      | 
|Penalties                                                                                                                                 |  |      | 11         |   |      |   | 0          |      | 
|Depreciation expense for financial reporting purposes in excess of amounts for income
tax purposes                                        |  |      | 1,262,221  |   |      |   | 1,043,723  |      | 
|Capitalization of organization costs for income tax purposes, which are accounted for as
cost of capital for financial reporting purposes |  |      | 1,735,988  |   |      |   | 1,735,988  |      | 
|Accumulated rental income accrued for financial reporting purposes in excess of amounts
for income tax purposes                           |  |      | (91,656    | ) |      |   | (140,333   | )    | 
|Accumulated expenses deductible when paid for income tax purposes, accrued for financial
reporting purposes                               |  |      | 2,292      |   |      |   | 17,493     |      | 
|Partnerships distributions payable                                                                                                       |  |      | 198,439    |   |      |   | 267,575    |      | 
|Other                                                                                                                                     |  |      | (5,936     | ) |      |   | (5,936     | )    | 
|                                                                                                                                          |  |      |            |   |      |   |            |      | 
|Income tax basis partners capital                                                                                                        |  | $    | 11,816,458 |   |      | $ | 12,154,927 |      | 
|                                                                                                                                          |  |      |            |   |      |   |            |      | 



F-23



---

WELLS REAL ESTATE FUND IV, L.P.

(A Georgia Public Limited Partnership)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







|5. |  | QUARTERLY RESULTS (UNAUDITED)
|-- |  | -----------------------------



Presented below is a summary of the unaudited quarterly financial information for the years ended December 31, 2002 and 2001:



|                                                 |  | 2002 Quarters Ended
|------------------------------------------------ |  | -------------------
|                                                 |  | March 31           
|Revenues                                         |  | $                  
|Net income                                       |  |                    
|Net income allocated to Class A limited partners |  |                    
|Net income per Class A limited partner unit      |  | $                  
|Distribution per Class A limited partner unit    |  |                    



|                                                 |  | 2001 Quarters Ended
|------------------------------------------------ |  | -------------------
|                                                 |  | March 31           
|Revenues                                         |  | $                  
|Net income                                       |  |                    
|Net income allocated to Class A limited partners |  |                    
|Net income per Class A limited partner unit (a)  |  | $                  
|Distribution per Class A limited partner unit    |  |                    



|(a) |  | The totals of the four quarterly amounts do not equal the totals for the year. This difference results from rounding differences between quarters.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



F-24



---



REPORT OF INDEPENDENT AUDITORS



The Partners

Fund III and Fund IV Associates:



We have audited the accompanying balance sheets of Fund III and Fund IV
Associates, a Georgia Joint Venture, as of December 31, 2002 and 2001, and the related statements of income, partners capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audit also included the
financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.



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



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fund III and Fund IV Associates at December 31, 2002 and 2001, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



/s/ Ernst & Young LLP



Atlanta, Georgia

March 18, 2003





F-25



---



Fund III and Fund IV Associates

(A Georgia Joint Venture)



Balance Sheets

December 31, 2002 and 2001





|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Assets                                                                                                |  |      |            |     
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 3,331,775  |     
|Building and improvements, less accumulated depreciation of $5,261,362 in 2002 and
$4,597,822 in 2001 |  |      | 8,044,556  |     
|                                                                                                      |  |      |            |     
|Total real estate assets                                                                              |  |      | 11,376,331 |     
|Cash and cash equivalents                                                                             |  |      | 361,251    |     
|Other assets, net                                                                                     |  |      | 290,534    |     
|Accounts receivable                                                                                   |  |      | 131,297    |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 12,159,413 |     
|                                                                                                      |  |      |            |     
|Liabilities and Partners Capital                                                                     |  |      |            |     
|Liabilities:                                                                                          |  |      |            |     
|Partnership distributions payable                                                                     |  | $    | 351,517    |     
|Accounts payable and refundable security deposits                                                     |  |      | 52,618     |     
|Due to affiliates                                                                                     |  |      | 0          |     
|                                                                                                      |  |      |            |     
|Total liabilities                                                                                     |  |      | 404,135    |     
|                                                                                                      |  |      |            |     
|Partners capital:                                                                                    |  |      |            |     
|Wells Fund III                                                                                        |  |      | 6,725,376  |     
|Wells Fund IV                                                                                         |  |      | 5,029,902  |     
|                                                                                                      |  |      |            |     
|Total partners capital                                                                               |  |      | 11,755,278 |     
|                                                                                                      |  |      |            |     
|Total liabilities and partners capital                                                               |  | $    | 12,159,413 |     
|                                                                                                      |  |      |            |     



See
accompanying notes





F-26



---



Fund III and Fund IV Associates

(A Georgia Joint Venture)



Statements of Income

For the Years Ended December 31, 2002, 2001 and 2000



|                                 |  | 2002 |           | 2001 |   | 2000     
|-------------------------------- |  | ---- | --------- | ---- | - | ---------
|Revenues:                        |  |      |           |      |   |          
|Rental income                    |  | $    | 1,855,981 |      | $ | 1,864,868
|Reimbursement income             |  |      | 223,261   |      |   | 255,016  
|Interest income                  |  |      | 4,138     |      |   | 450      
|Other income                     |  |      | 0         |      |   | 22,917   
|                                 |  |      |           |      |   |          
|                                 |  |      | 2,083,380 |      |   | 2,143,251
|                                 |  |      |           |      |   |          
|Expenses:                        |  |      |           |      |   |          
|Depreciation                     |  |      | 663,540   |      |   | 616,956  
|Management and leasing fees      |  |      | 165,362   |      |   | 168,643  
|Operating costs                  |  |      | 300,791   |      |   | 282,947  
|Joint Venture administration     |  |      | 47,570    |      |   | 35,541   
|Legal and accounting             |  |      | 25,220    |      |   | 14,515   
|                                 |  |      |           |      |   |          
|                                 |  |      | 1,202,483 |      |   | 1,118,602
|                                 |  |      |           |      |   |          
|Net income                       |  | $    | 880,897   |      | $ | 1,024,649
|                                 |  |      |           |      |   |          
|Net income allocated to Fund III |  | $    | 503,975   |      | $ | 586,219  
|                                 |  |      |           |      |   |          
|Net income allocated to Fund IV  |  | $    | 376,922   |      | $ | 438,430  
|                                 |  |      |           |      |   |          



See
accompanying notes.





F-27



---



Fund III and Fund IV Associates

(A Georgia Joint Venture)



Statements of Partners Capital

For the Years Ended December 31, 2002, 2001 and 2000



|                           |  | Fund III |            |   | Fund IV |   |            | Total Partners Capital | 
|-------------------------- |  | -------- | ---------- | - | ------- | - | ---------- | ----------------------- | 
|Balance, December 31, 1999 |  |          | $6,993,642 |   |         |   | $5,230,514 |                         | 
|                          
|Net income                 |  |          | 289,542    |   |         |   | 216,547    |                         | 
|Partnership contributions  |  |          | 216,683    |   |         |   | 162,058    |                         | 
|Partnership distributions  |  |          | (589,377   | ) |         |   | (440,790   | )                       | 
|                           |  |          |            |   |         |   |            |                         | 
|Balance, December 31, 2000 |  |          | 6,910,490  |   |         |   | 5,168,329  |                         | 
|                          
|Net income                 |  |          | 586,219    |   |         |   | 438,430    |                         | 
|Partnership contributions  |  |          | 502,342    |   |         |   | 375,720    |                         | 
|Partnership distributions  |  |          | (919,618   | ) |         |   | (687,778   | )                       | 
|                           |  |          |            |   |         |   |            |                         | 
|Balance, December 31, 2001 |  |          | 7,079,433  |   |         |   | 5,294,701  |                         | 
|                          
|Net income                 |  |          | 503,975    |   |         |   | 376,922    |                         | 
|Partnership distributions  |  |          | (858,032   | ) |         |   | (641,721   | )                       | 
|                           |  |          |            |   |         |   |            |                         | 
|Balance, December 31, 2002 |  | $        | 6,725,376  |   |         | $ | 5,029,902  |                         | 
|                           |  |          |            |   |         |   |            |                         | 



See
accompanying notes.





F-28



---



Fund III and Fund IV Associates

(A Georgia Joint Venture)



Statements of Cash Flows

For the Years Ended December 31, 2002, 2001 and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 880,897    |   |      | $ | 1,024,649  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 663,540    |   |      |   | 616,956    |      | 
|Amortization of deferred lease acquisition costs                                  |  |      | 58,442     |   |      |   | 41,831     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable, net                                                          |  |      | 82,702     |   |      |   | (83,773    | )    | 
|Other assets, net                                                                 |  |      | (15,200    | ) |      |   | 517        |      | 
|Accounts payable and refundable security deposits                                 |  |      | 12,953     |   |      |   | (1,231     | )    | 
|Due to affiliates                                                                 |  |      | (3,406     | ) |      |   | 1,536      |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 799,031    |   |      |   | 575,836    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 1,679,928  |   |      |   | 1,600,485  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investment in deferred lease acquisition costs                                    |  |      | (12,245    | ) |      |   | (172,157   | )    | 
|Investment in real estate                                                         |  |      | (64,983    | ) |      |   | (719,893   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (77,228    | ) |      |   | (892,050   | )    | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions from joint venture partners                                         |  |      | 0          |   |      |   | 878,062    |      | 
|Distributions to joint venture partners                                           |  |      | (1,556,774 | ) |      |   | (1,376,276 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (1,556,774 | ) |      |   | (498,214   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net increase (decrease) in cash and cash equivalents                              |  |      | 45,926     |   |      |   | 210,221    |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 315,325    |   |      |   | 105,104    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 361,251    |   |      | $ | 315,325    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|                                                                                 
|SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:                                  |  |      |            |   |      |   |            |     
|Partnership distributions payable                                                 |  | $    | 351,517    |   |      | $ | 408,538    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Write-off of fully amortized deferred leasing costs                               |  | $    | 10,708     |   |      | $ | 36,947     |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



See
accompanying notes.





F-29



---



FUND III AND FUND IV ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2002, 2001, AND 2000



|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- |  | ------------------------------------------



Organization and Business



On March 27, 1991, Wells Real Estate Fund III, L.P. (Wells Fund III) entered into a joint venture with Wells Real Estate Fund
IV, L.P (Wells Fund IV) to form Fund III and Fund IV Associates (the Joint Venture). The general partners of Wells Fund III are Leo F. Wells, III and Wells Capital, Inc. The general partners of Wells Fund IV are Leo F. Wells,
III and Wells Partners, L.P., a private Georgia limited partnership.



The Joint Venture was created for the purpose of developing, constructing, and operating the Stockbridge Village Shopping Center, a 64,097 building located on 13.62 acres of real property in Stockbridge, Georgia. In July
1992, the Joint Venture also acquired the Reciprocal Group Building, a two-story office building containing approximately 43,000 square feet and located in Richmond, Virginia.



Use of Estimates



The preparation of the Joint Ventures financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Revenue Recognition



The Joint Ventures leases typically include renewal
options, escalation provisions and provisions requiring tenants to reimburse the Joint Venture for a pro rata share of operating costs incurred. All of the Joint Ventures leases are classified as operating leases, and the related rental
income, including scheduled rental rate increases (other than scheduled increases based on the Consumer Price Index) is recognized on a straight-line basis over the terms of the respective leases. Rental revenues collected in advance are recorded as
deferred rent in the accompanying balance sheets.



Allocation of Income and Distributions



Pursuant to the terms of the joint venture agreement, all income and distributions are allocated to Wells Fund III and Wells Fund IV in accordance with their respective ownership interests. Net cash from operations is distributed to
the joint venture partners on a quarterly basis.



Real Estate Assets



Real
estate assets are stated at cost less accumulated depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related assets. All repairs and maintenance expenditures are expensed as incurred.
Depreciation for buildings and improvements is calculated using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real estate asset.



F-30



---

FUND III AND FUND IV ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







Management
continually monitors events and changes in circumstances that could indicate that carrying amounts of real estate assets may not be recoverable. When indicators of potential impairment are present, management assesses the recoverability of the
assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future cash flows expected from the use and eventual disposition of the asset. In the event the expected undiscounted future cash
flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by
the Joint Venture to date.



Other Assets, net



As of December 31, 2002 and 2001, other
assets, net is comprised of the following items:



|                             |  | 2002 |         | 2001
|---------------------------- |  | ---- | ------- | ----
|Deferred leasing costs, net  |  | $    | 251,052 |     
|Refundable security deposits |  |      | 39,482  |     
|                             |  |      |         |     
|Total                        |  | $    | 290,534 |     
|                             |  |      |         |     



Deferred
leasing costs, net, reflect costs incurred to procure operating leases, which are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred leasing costs are presented net of accumulated amortization of
$322,581 and $285,554 as of December 31, 2002 and 2001, respectively. Refundable security deposits represent cash deposits received from tenants, the offset to which is included in accounts payable and refundable security deposits in the
accompanying balance sheets. Pursuant to the respective leases, the Joint Venture may apply such balances towards unpaid receivable balances or property damages, where applicable, or will refund such balances to the tenants upon the expiration of
the lease term.



Cash and Cash Equivalents



The Joint Venture considers all highly
liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of
investments in money market accounts.



Accounts Receivable, Net



Accounts receivable, net are comprised of tenant receivables and straight-line rent receivables. Management assesses the collectibility of accounts receivable on an ongoing basis and provides for allowances as such balances, or
portions thereof, become uncollectible. Allowances of $0 and $13,444 are included in accounts receivable, net, as of December 31, 2002 and 2001, respectively.



Income Taxes



The Joint Venture is not subject to federal or state income taxes; therefore, none have been provided for in the accompanying financial
statements. The partners of Wells Fund III and Wells Fund IV are required to include their respective share of profits and losses from the Joint Venture in their individual income tax returns.



F-31



---

FUND III AND FUND IV ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



Wells Fund III and Wells Fund IV entered into property management and leasing agreements with Wells Management Company, Inc. (Wells
Management), an affiliate of the general partners of Wells Fund III and Wells Fund IV. In consideration for management and leasing of the Joint Ventures properties, the Joint Venture will generally pay Wells Management fees equal to (a)
3% of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in
arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross
revenues, except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term.



The Joint Venture incurred management and leasing fees of $165,362, $168,643 and $134,283 for the years ended December 31, 2002, 2001 and
2000, respectively.



Wells Capital, Inc. and its
affiliates perform certain administrative services for the various Wells Real Estate Funds and joint ventures, such as accounting and other general administration, and incur the related expenses. Such expenses are allocated among these entities
based on time spent on each entity by individual personnel. During 2002, 2001 and 2000, the Joint Venture reimbursed $47,570, $35,541 and $39,875, respectively, to Wells Capital, Inc. and its affiliates for these services.



The general partners of Wells Fund III and Wells Fund IV are
also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may be in competition with the Joint Venture for
tenants in similar geographic markets.



|3. |  | RENTAL INCOME
|-- |  | -------------



The future minimum rental income due the Joint Venture under noncancelable operating leases at December 31, 2002 is as follows:



|Year ending December 31: |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|2006                     |  |  
|Thereafter               |  |  
|                         |  |  
|                         |  | $
|                         |  |  



Two
tenants contributed approximately 29% and 27% of rental income for the year ended December 31, 2002. In addition, two tenants will contribute approximately 41% and 34% of future minimum rental income.



|4. |  | Subsequent Event
|-- |  | ----------------



On March 18, 2003, the Joint Venture, along with three other Wells affiliated joint ventures, (collectively, the Seller,
defined below) entered into an agreement (the Agreement) to sell five real properties (the Sale Properties, defined below) located in Stockbridge, Georgia to an unrelated third-party (the Purchaser) for a gross
sales price of $23,750,000. Contemporaneously with the Purchasers execution



F-32



---

FUND III AND FUND IV ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







and
delivery of the Agreement to the Seller, the Purchaser paid a fully refundable earnest money deposit of $250,000 to the designated escrow agent. This transaction is currently subject to a due diligence period of 60 days, during which the Purchaser
has the right to terminate the Agreement. Accordingly, there are no assurances that this sale will close.



|(Collectively, the Seller) The Joint Ventures |  | Joint Venture Partners                                                 |  | Sale Properties                                                                                                                                                                               
|----------------------------------------------- |  | ---------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fund III and Fund IV Associates                 |  |  Wells Real Estate Fund III, L.P.  Wells Real Estate Fund IV, L.P.   |  | 1. Stockbridge Village Center A retail shopping center located in Stockbridge,
Georgia                                                                                                        
|                                               
|Fund V and Fund VI Associates                   |  |  Wells Real Estate Fund V, L.P.  Wells Real Estate Fund VI, L.P.     |  | 2. Stockbridge Village II Two retail buildings located in     Stockbridge, Georgia                                                                                                            
|                                               
|Fund VI and Fund VII Associates                 |  |  Wells Real Estate Fund VI, L.P.  Wells Real Estate Fund VII, L.P.   |  | 3. Stockbridge Village I Expansion A retail shopping center expansion located in
    Stockbridge, Georgia  4. Stockbridge
Village III Two retail buildings located in     Stockbridge, Georgia
|                                               
|Fund VII and Fund VIII Associates               |  |  Wells Real Estate Fund VII, L.P.  Wells Real Estate Fund VIII, L.P. |  | 5. Hannover Center A retail center located in Stockbridge,
Georgia                                                                                                                            



F-33



---



FUND III AND FUND IV ASSOCIATES

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2002



|                               |  |              |  | Initial Cost |           |                            |   | Gross Amount at Which Carried at December 31, 2002 |  |      |           |                            |   |                          |  |      
|------------------------------ |  | ------------ |  | ------------ | --------- | -------------------------- | - | -------------------------------------------------- |  | ---- | --------- | -------------------------- | - | ------------------------ |  | -----
|Description                    |  | Encumbrances |  | Land         |           | Buildings and Improvements |   | Costs Capitalized Subsequent To Acquisition        |  | Land |           | Buildings and Improvements |   | Construction in Progress |  | Total
|STOCKBRIDGE VILLAGE CENTER (a) |  | None         |  | $            | 2,551,645 |                            | $ | 0                                                  |  | $    | 8,003,084 |                            | $ | 2,758,193                |  | $    
|RECIPROCAL GROUP BUILDING (b)  |  | None         |  |              | 529,546   |                            |   | 4,158,223                                          |  |      | 1,395,194 |                            |   | 573,582                  |  |      
|                               |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |      
|Total                          |  |              |  | $            | 3,081,191 |                            | $ | 4,158,223                                          |  | $    | 9,398,278 |                            | $ | 3,331,775                |  | $    
|                               |  |              |  |              |           |                            |   |                                                    |  |      |           |                            |   |                          |  |      



|(a) |  | A retail shopping center located in Stockbridge, Georgia
|--- |  | --------------------------------------------------------

|(b) |  | The A two-story office building located in Richmond, Virginia
|--- |  | -------------------------------------------------------------

|(c) |  | Depreciation lives used for buildings are 25 years. Depreciation lives used for land improvements are 20 years.
|--- |  | ---------------------------------------------------------------------------------------------------------------





F-34



---



FUND III AND
FUND IV ASSOCIATES

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2002



|                             |  | Cost |            | Accumulated Depreciation
|---------------------------- |  | ---- | ---------- | ------------------------
|BALANCE AT DECEMBER 31, 1999 |  |      | 15,547,290 |                         
|                            
|2000 additions               |  |      | 305,527    |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2000 |  |      | 15,852,817 |                         
|                            
|2001 additions               |  |      | 719,893    |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER31, 2001  |  |      | 16,572,710 |                         
|                            
|2002 additions               |  |      | 64,983     |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER31, 2002  |  | $    | 16,637,693 |                         
|                             |  |      |            |                         



F-35



---

REPORT OF INDEPENDENT AUDITORS



The Partners

Fund IV and Fund V Associates:



We have audited the accompanying balance sheets of Fund IV and Fund V
Associates, a Georgia Joint Venture, as of December 31, 2002 and 2001, and the related statements of income, partners capital, and cash flows for each of the three years in the period ended December 31, 2002. Our audit also included the
financial statement schedule listed in the index at Item 15(a). These financial statements and schedule are the responsibility of the Joint Ventures management. Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.



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



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Fund IV and Fund V Associates at December 31, 2002 and 2001, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



/s/ Ernst & Young LLP



Atlanta, Georgia

March 18, 2003





F-36



---

Fund IV and Fund V Associates

(A Georgia Joint Venture)



Balance Sheets

December 31, 2002 and 2001





|                                                                                                      |  | 2002 |            | 2001
|----------------------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Assets                                                                                                |  |      |            |     
|Real estate assets, at cost:                                                                          |  |      |            |     
|Land                                                                                                  |  | $    | 2,011,534  |     
|Building and improvements, less accumulated depreciation of $4,262,645 in 2002 and
$3,710,357 in 2001 |  |      | 7,531,090  |     
|Construction in progress                                                                              |  |      | 75,997     |     
|                                                                                                      |  |      |            |     
|Total real estate assets                                                                              |  |      | 9,618,621  |     
|Cash and cash equivalents                                                                             |  |      | 304,906    |     
|Accounts receivable                                                                                   |  |      | 89,916     |     
|Other assets, net                                                                                     |  |      | 110,776    |     
|                                                                                                      |  |      |            |     
|Total assets                                                                                          |  | $    | 10,124,219 |     
|                                                                                                      |  |      |            |     
|Liabilities and Partners
Capital                                                                     |  |      |            |     
|Liabilities:                                                                                          |  |      |            |     
|Accounts payable and refundable security deposits                                                     |  | $    | 176,801    |     
|Partnership distributions payable                                                                     |  |      | 144,263    |     
|Deferred rent                                                                                         |  |      | 30,756     |     
|Due to affiliates                                                                                     |  |      | 0          |     
|                                                                                                      |  |      |            |     
|Total liabilities                                                                                     |  |      | 351,820    |     
|                                                                                                      |  |      |            |     
|Partners capital:                                                                                    |  |      |            |     
|Fund IV                                                                                               |  |      | 3,680,957  |     
|Fund V                                                                                                |  |      | 6,091,442  |     
|                                                                                                      |  |      |            |     
|Total partners capital                                                                               |  |      | 9,772,399  |     
|                                                                                                      |  |      |            |     
|Total liabilities and partners capital                                                               |  | $    | 10,124,219 |     
|                                                                                                      |  |      |            |     



See
accompanying notes.





F-37



---

Fund IV and Fund V Associates

(A Georgia Joint Venture)



Statements of Income

For the Years Ended December 31, 2002, 2001 and 2000



|                                |  | 2002 |           | 2001 |   | 2000     
|------------------------------- |  | ---- | --------- | ---- | - | ---------
|Revenues:                       |  |      |           |      |   |          
|Rental income                   |  | $    | 1,771,231 |      | $ | 2,113,934
|Reimbursement income            |  |      | 187,690   |      |   | 174,201  
|Interest income                 |  |      | 6,307     |      |   | 8,618    
|Other income                    |  |      | 428       |      |   | 330      
|                                |  |      |           |      |   |          
|                                |  |      | 1,965,656 |      |   | 2,297,083
|                                |  |      |           |      |   |          
|Expenses:                       |  |      |           |      |   |          
|Depreciation                    |  |      | 552,288   |      |   | 516,534  
|Management and leasing fees     |  |      | 184,697   |      |   | 232,632  
|Operating costs                 |  |      | 838,357   |      |   | 861,954  
|Joint Venture administration    |  |      | 85,845    |      |   | 47,647   
|Legal and accounting            |  |      | 11,723    |      |   | 17,414   
|                                |  |      |           |      |   |          
|                                |  |      | 1,672,910 |      |   | 1,676,181
|                                |  |      |           |      |   |          
|Net income                      |  | $    | 292,746   |      | $ | 620,902  
|                                |  |      |           |      |   |          
|Net income allocated to Fund IV |  | $    | 110,268   |      | $ | 233,875  
|                                |  |      |           |      |   |          
|Net income allocated to Fund V  |  | $    | 182,478   |      | $ | 387,027  
|                                |  |      |           |      |   |          



See
accompanying notes.





F-38



---

Fund IV and Fund V Associates

(A Georgia Joint Venture)



Statements of Partners Capital

For the Years Ended December 31, 2002, 2001 and 2000



|                           |  | Fund IV |           |   | Fund V |   |           | Total Partners Capital | 
|-------------------------- |  | ------- | --------- | - | ------ | - | --------- | ----------------------- | 
|Balance, December 31, 1999 |  | $       | 4,232,634 |   |        | $ | 7,031,998 |                         | 
|                          
|Net income                 |  |         | 205,660   |   |        |   | 340,338   |                         | 
|Partnership contributions  |  |         | 16,686    |   |        |   | 0         |                         | 
|Partnership distributions  |  |         | (390,017  | ) |        |   | (645,420  | )                       | 
|                           |  |         |           |   |        |   |           |                         | 
|Balance, December 31, 2000 |  |         | 4,064,963 |   |        |   | 6,726,916 |                         | 
|                          
|Net income                 |  |         | 233,875   |   |        |   | 387,027   |                         | 
|Partnership distributions  |  |         | (392,001  | ) |        |   | (648,704  | )                       | 
|                           |  |         |           |   |        |   |           |                         | 
|Balance, December 31, 2001 |  |         | 3,906,837 |   |        |   | 6,465,239 |                         | 
|                          
|Net income                 |  |         | 110,268   |   |        |   | 182,478   |                         | 
|Partnership distributions  |  |         | (336,148  | ) |        |   | (556,275  | )                       | 
|                           |  |         |           |   |        |   |           |                         | 
|Balance, December 31, 2002 |  | $       | 3,680,957 |   |        | $ | 6,091,442 |                         | 
|                           |  |         |           |   |        |   |           |                         | 



See
accompanying notes.





F-39



---

Fund IV and Fund V Associates

(A Georgia Joint Venture)



Statements of Cash Flows

For the Years Ended December 31, 2002, 2001 and 2000



|                                                                                  |  | 2002 |            |   | 2001 |   |            | 2000 | 
|--------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | ---- | 
|Cash flows from operating activities:                                             |  |      |            |   |      |   |            |      | 
|Net income                                                                        |  | $    | 292,746    |   |      | $ | 620,902    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |      |            |   |      |   |            |      | 
|Depreciation                                                                      |  |      | 552,288    |   |      |   | 516,534    |      | 
|Amortization of deferred leasing costs                                            |  |      | 45,918     |   |      |   | 53,622     |      | 
|Changes in assets and liabilities:                                                |  |      |            |   |      |   |            |      | 
|Accounts receivable                                                               |  |      | 129,204    |   |      |   | 36,616     |      | 
|Other assets, net                                                                 |  |      | 831        |   |      |   | (11,923    | )    | 
|Accounts payable and refundable security deposits                                 |  |      | 82,248     |   |      |   | 28,560     |      | 
|Deferred rent                                                                     |  |      | 30,756     |   |      |   | 0          |      | 
|Due to affiliates                                                                 |  |      | (40,809    | ) |      |   | (13,858    | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Total adjustments                                                                 |  |      | 800,436    |   |      |   | 609,551    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash provided by operating activities                                         |  |      | 1,093,182  |   |      |   | 1,230,453  |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from investing activities:                                             |  |      |            |   |      |   |            |      | 
|Investments in deferred leasing costs                                             |  |      | 0          |   |      |   | (29,140    | )    | 
|Investment in real estate                                                         |  |      | (114,134   | ) |      |   | (105,007   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in investing activities                                             |  |      | (114,134   | ) |      |   | (134,147   | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash flows from financing activities:                                             |  |      |            |   |      |   |            |      | 
|Contributions from joint venture partners                                         |  |      | 0          |   |      |   | 0          |      | 
|Distributions to joint venture partners                                           |  |      | (1,013,279 | ) |      |   | (1,036,759 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net cash used in financing activities                                             |  |      | (1,013,279 | ) |      |   | (1,036,759 | )    | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Net (decrease) increase in cash and cash equivalents                              |  |      | (34,231    | ) |      |   | 59,547     |      | 
|Cash and cash equivalents, beginning of year                                      |  |      | 339,137    |   |      |   | 279,590    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Cash and cash equivalents, end of year                                            |  | $    | 304,906    |   |      | $ | 339,137    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES:                                  |  |      |            |   |      |   |            |      | 
|Partnership distributions payable                                                 |  | $    | 144,263    |   |      | $ | 265,119    |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 
|Write-off of accounts receivable                                                  |  | $    | 43,143     |   |      | $ | 0          |      | 
|                                                                                  |  |      |            |   |      |   |            |      | 



See
accompanying notes.





F-40



---

FUND IV AND FUND V ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2002, 2001 AND 2000







|1. |  | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- |  | ------------------------------------------



Organization and Business



On April 14, 1992, Wells Real Estate Fund IV, L.P. (Wells Fund IV) and Wells Real Estate Fund V, L.P (Wells Fund
V) entered into an agreement to form Fund IV and Fund V Associates (the Joint Venture). The general partners of Wells Fund IV and Wells Fund V are Leo F. Wells, III and Wells Partners, L.P., a private Georgia limited partnership.



The Joint Venture was formed for the purpose of
developing, constructing and operating commercial real properties. On September 14, 1992, the Joint Venture acquired 2.655 acres of real property in Stockbridge, Georgia for the purpose of constructing two substantially identical two-story office
buildings containing approximately 17,847 rentable square feet each, known as the Village Overlook Property. On June 8, 1992, the Joint Venture acquired 5.676 acres of real property located in Jacksonville, Florida for the purpose of developing,
constructing, and operating a four-story office building containing approximately 87,600 square feet, known as the IBM Jacksonville Building.



Use of Estimates



The preparation of the Joint Ventures financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.



Revenue Recognition



The Joint Ventures leases typically include renewal
options, escalation provisions and provisions requiring tenants to reimburse the Joint Venture for a pro rata share of operating costs incurred. All of the Joint Ventures leases are classified as operating leases, and the related rental
income, including scheduled rental rate increases (other than scheduled increases based on the Consumer Price Index) is recognized on a straight-line basis over the terms of the respective leases. Rental revenues collected in advance are recorded as
deferred rent.



Allocation of Income and
Distributions



iPursuant to the terms of the
joint venture agreement, all income and distributions are allocated to Wells Fund IV and Wells Fund V in accordance with their respective ownership interests. Net cash from operations is distributed to the joint venture partners on a quarterly
basis.



Real Estate Assets



Real estate assets are stated at cost less accumulated
depreciation. Major improvements and betterments are capitalized when they extend the useful lives of the related assets. All repairs and maintenance expenditures are expensed as incurred. Depreciation for buildings and improvements is



F-41



---

FUND IV AND FUND V ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000







calculated
using the straight-line method over 25 years. Tenant improvements are amortized over the life of the related lease or real estate asset.



Management continually monitors events and changes in circumstances that could indicate that carrying amounts of real estate assets may
not be recoverable. When indicators of potential impairment are present, management assesses the recoverability of the assets by determining whether the carrying value of the real estate assets will be recovered through the undiscounted future cash
flows expected from the use and eventual disposition of the asset. In the event the expected undiscounted future cash flows do not exceed the carrying value, management adjusts the real estate assets to the fair value and recognizes an impairment
loss. Management has determined that there has been no impairment in the carrying value of real estate assets held by the Joint Venture to date.



Other Assets, net



As of December 31, 2002 and 2001, other assets, net is comprised of the following items:



|                             |  | 2002 |         | 2001
|---------------------------- |  | ---- | ------- | ----
|Deferred leasing costs, net  |  | $    | 57,410  |     
|Refundable security deposits |  |      | 49,091  |     
|Utility deposits             |  |      | 4,275   |     
|                             |  |      |         |     
|Total                        |  | $    | 110,776 |     
|                             |  |      |         |     



Deferred
leasing costs, net reflect costs incurred to procure operating leases, which are capitalized and amortized on a straight-line basis over the terms of the related leases. Deferred leasing costs include accumulated amortization of $326,106 and
$323,331 as of December 31, 2002 and 2001, respectively. Refundable security deposits represent cash deposits received from tenants, the offset to which is included in accounts payable and refundable security deposits in the accompanying balance
sheets. Pursuant to the respective leases, the Joint Venture may apply such balances towards unpaid receivable balances or property damages, where applicable, or will refund such balances to the tenants upon the expiration of the lease term.



Cash and Cash Equivalents



The Joint Venture considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash and short-term investments. Short-term investments are stated at cost, which approximates fair value, and consist of investments in
money market accounts.



Accounts Receivable



Accounts receivable are comprised of tenant
receivables and straight-line rent receivables. Management assesses the collectibility of accounts receivable on an ongoing basis and provides for allowances as such balances, or portions thereof, become uncollectible. No such allowances have been
recorded as of December 31, 2002 or 2001.



Income Taxes



The Joint
Venture is not subject to federal or state income taxes; therefore, none have been provided for in the accompanying financial statements. The partners of Wells Fund IV and Wells Fund V are required





F-42



---

FUND IV AND FUND V ASSOCIATES

(A Georgia Joint Venture)



NOTES TO FINANCIAL STATEMENTS (Continued)



DECEMBER 31, 2002, 2001 AND 2000





to include
their respective share of profits and losses from the Joint Venture in their individual income tax returns.



|2. |  | RELATED-PARTY TRANSACTIONS
|-- |  | --------------------------



Wells Fund IV and Wells Fund V entered into property management and leasing agreements with Wells Management Company, Inc. (Wells
Management), an affiliate of the general partners of Wells Fund IV and Wells Fund V. In consideration for management and leasing of the Joint Ventures properties, the Joint Venture will generally pay Wells Management fees equal to (a) 3%
of the gross revenues for management and 3% of the gross revenues for leasing (aggregate maximum of 6%) plus a separate fee for the one-time lease-up of newly constructed properties in an amount not to exceed the fee customarily charged in
arms-length transactions by others rendering similar services in the same geographic area for similar properties or (b) in the case of commercial properties which are leased on a long-term net basis (ten or more years), 1% of the gross
revenues, except for initial leasing fees equal to 3% of the gross revenues over the first five years of the lease term.



The Joint Venture incurred management and leasing fees of $184,697, $232,632 and $269,653 for the years ended December 31, 2002, 2001 and
2000, respectively.



Wells Capital, Inc., and
affiliate of Wells Partners, L.P., and its affiliates perform certain administrative services for the various Wells Real Estate Funds and joint ventures, such as accounting and other general administration, and incur the related expenses. Such
expenses are allocated among these entities based on time spent on each entity by individual personnel. During 2002, 2001 and 2000, the Joint Venture reimbursed $85,845, $47,647 and $40,841, respectively, to Wells Capital, Inc., and its affiliates
for these services.



The general partners of
Wells Fund IV and Wells Fund V are also general partners of other Wells Real Estate Funds. As such, there may exist conflicts of interest where the general partners in their capacity as general partners of other Wells Real Estate Funds may be in
competition with the Joint Venture for tenants in similar geographic markets.



|3. |  | RENTAL INCOME
|-- |  | -------------



The future minimum rental income due the Joint Venture under noncancelable operating leases at December 31, 2001 is as follows:



|Year ending December 31: |  |  
|------------------------ |  | -
|2003                     |  | $
|2004                     |  |  
|2005                     |  |  
|2006                     |  |  
|2007                     |  |  
|Thereafter               |  |  
|                         |  |  
|                         |  | $
|                         |  |  



One
tenant contributed approximately 59% of rental income for the year ended December 31, 2002. In addition, one tenant will contribute approximately 11% of future minimum rental income.



F-43



---



FUND IV AND FUND V ASSOCIATES

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION



DECEMBER 31, 2002



|                              |  |              |  | Initial Cost |           |                            |   | Gross Amount at Which Carried at December 31, 2002 |  |      |            |                            |   |                          |  |      
|----------------------------- |  | ------------ |  | ------------ | --------- | -------------------------- | - | -------------------------------------------------- |  | ---- | ---------- | -------------------------- | - | ------------------------ |  | -----
|Description                   |  | Encumbrances |  | Land         |           | Buildings and Improvements |   | Costs Capitalized Subsequent To Acquisition        |  | Land |            | Buildings and Improvements |   | Construction in Progress |  | Total
|VILLAGE OVERLOOK PROPERTY (a) |  | None         |  | $            | 479,386   |                            | $ | 0                                                  |  | $    | 4,242,187  |                            | $ | 512,344                  |  | $    
|IBM JACKSONVILLE BUILDING (b) |  | None         |  |              | 1,384,751 |                            |   | 0                                                  |  |      | 7,774,942  |                            |   | 1,499,190                |  |      
|                              |  |              |  |              |           |                            |   |                                                    |  |      |            |                            |   |                          |  |      
|Total                         |  |              |  | $            | 1,864,137 |                            | $ | 0                                                  |  | $    | 12,017,129 |                            | $ | 2,011,534                |  | $    
|                              |  |              |  |              |           |                            |   |                                                    |  |      |            |                            |   |                          |  |      

---

|(a) |  | The Village Overlook Property consists of a 17,847-square-foot medical building completed in March 1993 and a nearly identical medical office building completed in
April 1994.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | The IBM Jacksonville Building is a four-story, 88,600-square-foot office building located in Jacksonville, Florida.
|--- |  | -------------------------------------------------------------------------------------------------------------------

|(c) |  | Depreciation lives used for buildings are 25 years. Depreciation lives used for land improvements are 20 years.
|--- |  | ---------------------------------------------------------------------------------------------------------------





F-44



---

FUND IV AND FUND V ASSOCIATES

(A Georgia Joint Venture)



SCHEDULE IIIREAL ESTATE AND ACCUMULATED DEPRECIATION



DECEMBER 31, 2002







|                             |  | Cost |            | Accumulated Depreciation
|---------------------------- |  | ---- | ---------- | ------------------------
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 1999 |  | $    | 13,547,852 |                         
|                            
|2000 additions               |  |      | 114,273    |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER 31, 2000 |  |      | 13,662,125 |                         
|                            
|2001 additions               |  |      | 105,007    |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER31, 2001  |  |      | 13,767,132 |                         
|                            
|2002 additions               |  |      | 114,134    |                         
|                             |  |      |            |                         
|BALANCE AT DECEMBER31, 2002  |  | $    | 13,881,266 |                         
|                             |  |      |            |                         



F-45