1997 Annual Report
                       [Silver Screen logo]



                                      F-1
<PAGE>


(c)1998 Silver Screen Management Services, Inc.
Design: Pentagram

SILVER SCREEN MANAGEMENT
SERVICES, INC.

Officers:                                      Directors:
---------                                      ----------

Roland W. Betts                                Paul Bagley
President and Chief Executive Officer          New York, New York

Tom A. Bernstein                               Tom A. Bernstein
Executive Vice President                       New York, New York

Barbara Stubenrauch                            Roland W. Betts
Senior Vice President                          New York, New York

Richard S. Kasof                               John Tommasini
First Vice President                           New York, New York

Dana Thayer                                    William Turchyn, Jr.
First Vice President                           New York, New York

Liz A. Brevetti
Vice President

Keith Champagne
Vice President

Evelyn Halley
Vice President

Stuart A. Sheinbaum
Director of Investor Relations

Conchetta S. Mayfield
Director of Operations

Paul Rindone
Director of Operations





                                      F-2
<PAGE>


                              LETTER TO INVESTORS

Dear Limited Partners:

     Silver  Screen  Partners  IV  distributed  over  $16  million  for the four
quarters of 1997, bringing total distributions since the Partnership's inception
in 1988 to $595 million. This represents total distributions of $747.19 per $500
unit.  Of the $595  million,  approximately  62% is return of capital and 38% is
income.

     During  1997,  the  majority  of  Partnership  revenue  came from  sales of
merchandise  related to "The  Little  Mermaid"  and  "Beauty and the Beast." Our
other  animated  film,  "The  Rescuers  Down Under,"  produced  revenue from the
foreign home video  market.  "Pretty  Woman"  contributed  revenue from the U.S.
syndication  and foreign  free  television  markets.  "Blame It on the  Bellboy"
generated  additional revenue in the form of the final Revenue Shortfall Payment
to the Partnership.

     Partnership revenue in the future is expected to be generated from the 1997
U.S. theatrical re-release of "The Little Mermaid", as well as from the proceeds
of the Disney buyout of the Silver Screen  IV-Disney  Joint Venture.  As always,
distributions  depend on the amount of revenue generated each quarter,  and will
fluctuate accordingly. There may be quarters when no distributions will be paid.

     Between now and the dissolution of the  Partnership,  current  expectations
are  that,   after   expenses,   Silver  Screen   Partners  IV  will  distribute
approximately  $280 to $310 per unit to  investors  (this  amount  includes  all
anticipated future quarterly distributions and the buyout proceeds from Disney).
The closing of the  purchase  by Disney is  scheduled  to occur on November  30,
1998. The final  distribution  and dissolution of the Partnership is expected to
take place on or before December 31, 1998. These figures and dates represent our
best estimates as of today.

     Tax  information  for preparing your 1997 income tax returns will be mailed
to you by March  15. In the  meantime,  our  Investor  Relations  Department  is
available to assist you with any questions you may have.

Sincerely,


/s/ Roland W. Betts
--------------------
Roland W. Betts
President


/s/ Tom S. Bernstein
--------------------
Tom S. Bernstein
Executive Vice President

January 23, 1998



                                      F-3
<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

To the Partners
Silver Screen Partners IV, L.P.

     We have audited the  accompanying  balance sheets of Silver Screen Partners
IV,  L.P. (a limited  partnership)  as of  December  31, 1997 and 1996,  and the
related  statements of operations,  partners' equity, and cash flows for each of
the  three  years  in the  period  ended  December  31,  1997.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted  our audits in accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
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 Silver Screen Partners IV,
L.P. (a limited  partnership)  at December 31, 1997 and 1996, and the results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  December  31,  1997 in  conformity  with  generally  accepted  accounting
principles.

                                       /s/ Ernst & Young LLP


New York, New York
January 20, 1998


                                      F-4
<PAGE>


                      F I N A N C I A L   S T A T E M E N T S

                                 BALANCE SHEETS

December 31, 1997 and 1996                               1997             1996
--------------------------                          ------------    ------------
ASSETS

CURRENT ASSETS:
Cash ...........................................    $    132,879    $    314,835
Temporary investments (at cost, plus accrued
  interest, which approximates market) .........       7,180,956      25,794,708
                                                    ------------    ------------
Total current assets ...........................       7,313,835      26,109,543
Investment in Joint Venture ....................      70,121,760      74,211,904
                                                    ------------    ------------
                                                    $ 77,435,595    $100,321,447
                                                    ============    ============
LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES:
Due to managing general partner ................    $     35,696    $      4,960
Accrued unincorporated business tax ............         126,157         153,419
Overhead fees payable ..........................            --        23,839,420
                                                    ------------    ------------
Total current liabilities ......................         161,853      23,997,799
Partners' Equity:
General partners ...............................            --              --
Limited partners ...............................      77,273,742      76,323,648
                                                    ------------    ------------
Total partners' equity .........................      77,273,742      76,323,648
                                                    ------------    ------------
                                                    $ 77,435,595    $100,321,447
                                                    ============    ============



                       See notes to financial statements.



                                      F-5
<PAGE>


                      F I N A N C I A L   S T A T E M E N T S

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31, 1997, 1996, 1995          1997          1996         1995
--------------------------------------------     --------      --------     --------
<S>                                           <C>           <C>           <C>
Revenues:

Income from Joint Venture .................   $14,716,819   $77,285,458   $ 9,531,277
Interest income ...........................       256,120     2,633,888     2,604,893
                                              -----------   -----------   -----------
                                               14,972,939    79,919,346    12,136,170
Costs and expenses:
General and administrative ................       467,289     3,209,723     4,078,150
                                              -----------   -----------   -----------
Income before income tax ..................    14,505,650    76,709,623     8,058,020
Unincorporated business tax ...............          --       1,148,519          --
                                              -----------   -----------   -----------
Net income ................................   $14,505,650   $75,561,104   $ 8,058,020
                                              ===========   ===========   ===========
Net income allocated to:
General partners ..........................   $ 1,450,565   $ 2,908,830   $    80,580
Limited partners ..........................    13,055,085    72,652,274     7,977,440
                                              -----------   -----------   -----------
                                              $14,505,650   $75,561,104   $ 8,058,020
                                              ===========   ===========   ===========
Net income per a $500 limited partnership
  unit (based on 800,000 units outstanding)   $     16.32   $     90.82   $      9.97
                                              ===========   ===========   ===========
Cash distribution per $500 limited
   partnership unit .......................   $     15.25   $    131.50   $     75.00
                                              ===========   ===========   ===========

</TABLE>

                       See notes to financial statements.



                         STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
                                                  General          Limited
Years ended December 31, 1997, 1996 and 1995      Partners         Partners             Total
--------------------------------------------    -----------      -----------      ------------
<S>                                            <C>             <C>               <C>
Partners' equity, January 1, 1995 .......      $      --       $ 165,350,987     $ 165,350,987
Net income, 1995 ........................           80,580         7,977,440         8,058,020
Distributions, 1995 .....................         (606,060)      (60,000,000)      (60,606,060)
Allocation under Treasury Regulation
  Section 1.704 - 1(b) ..................          525,480          (525,480)             --
                                               -----------     -------------     -------------
Partners' equity, December 31, 1995 .....             --         112,802,947       112,802,947
Net income, 1996 ........................        2,908,830        72,652,274        75,561,104
Distributions, 1996 .....................       (6,840,403)     (105,200,000)     (112,040,403)
Allocation under Treasury Regulation
  Section 1.704 - 1(b) ..................        3,931,573        (3,931,573)             --
                                               -----------     -------------     -------------
Partners' equity, December 31, 1996 .....             --          76,323,648        76,323,648
Net income, 1997 ........................        1,450,565        13,055,085        14,505,650
Distributions, 1997 .....................       (1,355,556)      (12,200,000)      (13,555,556)
Allocation under Treasury Regulation
  Section 1.704 - 1(b) ..................          (95,009)           95,009              --
                                               -----------     -------------     -------------
Partners' equity, December 31, 1997 .....      $      --       $  77,273,742     $  77,273,742
                                               ===========     =============     =============

</TABLE>

                       See notes to financial statements.



                                      F-6
<PAGE>


                      F I N A N C I A L   S T A T E M E N T S

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31, 1997, 1996 and 1995                1997             1996             1995
--------------------------------------------          -------------    -------------    -------------
<S>                                                   <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................   $  14,505,650    $  75,561,104    $   8,058,020
Adjustments to reconcile net income to net
 cash provided by operating activities:
   Decrease (increase) in accrued
     interest receivable ..........................         136,716          (10,131)         245,769
   Charge on overhead fee payable .................          13,244        2,296,670        2,646,998
   Net change in operating assets and liabilities:
    Increase (decrease) in due to
      managing general partner ....................          30,736          (55,768)          53,013
    (Decrease) increase in accrued
      unincorporated business tax .................         (27,262)         153,419             --
    Decrease in other liabilities .................            --           (100,000)            --
    Increase in overhead fee payable ..............            --               --              9,308
    Drawing on overhead fee .......................     (23,852,664)      (4,000,000)      (5,050,000)
                                                      -------------    -------------    -------------
Net cash (used in) provided by operating activities      (9,193,580)      73,845,294        5,963,108
                                                      -------------    -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions received from Joint Venture
 in excess of equity in income ....................            --               --         34,920,896
Decrease (increase) in investment in Joint Venture        4,090,144       21,479,408          (78,566)
Net sales of temporary investments, with
    maturities of three months or less, net .......      18,477,036       16,638,031       16,913,875
                                                      -------------    -------------    -------------
Net cash provided by investing activities .........      22,567,180       38,117,439       51,756,205
                                                      -------------    -------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners .........................     (13,555,556)    (112,040,403)     (60,606,060)
                                                      -------------    -------------    -------------
Net cash used in financing activities .............     (13,555,556)    (112,040,403)     (60,606,060)
                                                      -------------    -------------    -------------
Net decrease in cash ..............................        (181,956)         (77,670)      (2,886,747)
Cash, beginning of year ...........................         314,835          392,505        3,279,252
                                                      -------------    -------------    -------------
Cash, end of year .................................   $     132,879    $     314,835    $     392,505
                                                      =============    =============    =============
</TABLE>
                       See notes to financial statements.



                                      F-7
<PAGE>

                  NOTES TO FINANCIAL STATEMENTS


1.   ORGANIZATION

Silver Screen Partners IV, L.P. ("the  Partnership")  was formed on December 16,
1987 as a Delaware  limited  partnership and began  operations on June 16, 1988.
The Partnership  formed a Joint Venture with The Walt Disney Company  ("Disney")
for the purpose of financing  (in whole or in part),  producing,  acquiring  and
exploiting all feature-length theatrical motion pictures selected for production
by Disney until the  Partnership's  funds were fully committed.  The Partnership
was  obligated to use its best efforts to provide to the Joint  Venture funds in
an amount equal to 150% of the gross proceeds of the offering.  The  Partnership
met this  obligation  through the use of a  revolving  credit  facility  and the
reinvestment of Partnership  funds. The Partnership  provided  financing for the
Joint  Venture's  films,  while Disney was  responsible  for the development and
production or acquisition decisions on behalf of the Joint Venture in connection
with the films.

     Silver Screen Management  Services,  Inc., a Delaware  corporation,  is the
managing   general   partner  ("MGP")  of  the  Partnership  and  has  exclusive
responsibility  for  the  management  of the  business  and the  affairs  of the
Partnership.  Roland W. Betts,  the President and principal  shareholder  of the
MGP, is the individual general partner of the Partnership.

     The   Partnership   Agreement   provides  that  all  profits,   losses  and
distributable cash  ("Proceeds"),  are allocated 99% to the limited partners and
1% to the general  partners until the Partnership  has satisfied  certain tests.
Thereafter,  all Proceeds will be allocated 90% to the limited  partners and 10%
to the general partners until additional tests have been satisfied.  Thereafter,
Proceeds  will be allocated  80% to the limited  partners and 20% to the general
partners.  Cash  generated by net gain from sale, as defined,  will be allocated
85% to the limited  partners  and 15% to the general  partners  once the general
partners have  recovered an aggregate of 15% of the total cash  generated by net
gain from sale. The Partnership Agreement provides for the special allocation of
income and gain, in accordance with Treasury Regulation Section  1.704-1(b),  to
eliminate any capital account deficit created through cash  distributions to the
general  partners.  This special  allocation has a reverse effect in 1997 with a
reverse  allocation of $95,009 and special allocation in 1996 and 1995 amounting
to $3,931,573 and $525,480 respectively, which represents $0.12, $4.91 and $0.66
per $500 limited  partnership  unit,  respectively.  Cash  distributions  to the
limited partners are allocated pro rata according to the capital accounts of the
respective limited partners.




                                      F-8
<PAGE>

2.   SUMMARY OF SIGNIFICANT  ACCOUNTING POLICIES

Income taxes: No provision has been made for income taxes except for the City of
New York unincorporated business tax since the income or loss of the Partnership
is  required  to be reported  by the  respective  partners  on their  income tax
returns (see Note 7).


3.   TEMPORARY INVESTMENTS

Temporary investments consisted of the following:

                         1997           1996
                     --------      ---------
Commercial
  paper ........  $ 7,180,956    $25,794,708
                  ===========    ===========


All  commercial  paper is rated by Standard & Poor's A1 or A1+.

1997  commercial  paper matured  between  January 8 and January 23, 1998 and had
interest rates ranging from 5.55% to 5.63%.

1996  commercial  paper matured  between  January 2 and January 23, 1997 and had
interest rates ranging from 5.25% to 5.38%.


4.   INVESTMENT IN JOINT VENTURE

The Partnership  entered into a Letter  Agreement ("the Buyout  Agreement") with
Disney dated  September 11, 1995  providing for the sale to Disney of all of the
Partnership's  interest in the Joint Venture.  The Buyout Agreement provides for
the payment of the purchase price of  $330,000,000,  in cash (subject to certain
adjustments with respect to revenues  received from the exploitation of animated
films).  Closing  is  scheduled  to  occur  on  November  30,  1998  subject  to
satisfaction of certain customary conditions. In addition to the purchase price,
the Buyout  Agreement  provides  that Buena Vista  Pictures  Distribution,  Inc.
("BV") will continue to account for and make payments to the Joint  Venture,  as
required by the Distribution  Agreement for all revenues  received by BV through
April 30, 1998.



                                      F-9
<PAGE>


     As a result of the Buyout  Agreement,  the Partnership began using the cost
method  of  accounting   starting  January  1,  1996.  Under  the  cost  method,
distributions  received are recognized as income and investments will be reduced
in proportion to the actual cash  received to ultimate  revenues  expected to be
received.

     The  investment  in the  Disney-Silver  Screen IV Joint Venture (the "Joint
Venture") was accounted  for using the equity  method of  accounting.  Under the
equity method, the investment was initially recorded at cost, and was thereafter
increased by additional investments,  adjusted by the Partnership's share of the
Joint Venture's  results of operations,  and reduced by  distributions  received
from the Joint Venture. The Joint Venture's fiscal year ends September 30, while
the  Partnership's  fiscal  year  ends  December  31.  The  1995  statements  of
operations reflect the Joint Venture's results of operations for its fiscal year
ended September 30, 1995.

For each Joint  Venture  film,  all revenues  received by the Joint  Venture are
allocated and  distributed  first to the Partnership and Disney in proportion to
their  respective  investments in the budgeted or acquisition  cost of each film
until each has recovered  its  investment;  second,  net of  participations,  to
Disney until it recovers any amounts paid for cost overruns; and thereafter, net
of  participations,  75% to the Partnership and 25% to Disney  (adjusted for any
Disney  investment in the film other than cost overruns)  until the  Partnership
has received an amount equal to 150% of its investment;  and thereafter, 62 1/2%
to the Partnership and 37 1/2% to Disney (adjusted for any Disney  investment in
the film other than cost overruns).

The  condensed  statements  of income for the Joint  Venture  for the year ended
September 30, 1995 were as follows:


                                                                        1995
                                                                   ------------
Revenues ....................................................      $ 83,979,513
Amortization of film production costs .......................       (57,665,111)
Participation expense .......................................        (7,594,341)
Net income ..................................................      $ 18,720,061
                                                                   ============

The Partnership's share of the September 30, 1995 net income was $9,531,277.



                                      F-10
<PAGE>


     Films  costs  include  production  costs,  a 17.5%  overhead  charge on the
budgeted  film cost  (payable  13.5% to Disney and 4% to the MGP), a development
fee of $500,000  for each film payable to Disney,  and  interest on  development
costs, as contractually  defined,  payable to Disney.  Film production costs are
charged to  earnings on an  individual  film basis in the ratio that the current
year's revenues bear to Joint Venture management's estimate of ultimate revenues
to be received from all sources.  See Note 6 with respect to the Joint Venture's
distribution agreement.

     Film  costs are  stated at the lower of cost or  estimated  net  realizable
value on an individual film basis. Revenue forecasts for all motion pictures are
continually  reviewed by Joint Venture  management and revised when warranted by
changing conditions. When estimates of ultimate revenues to be received indicate
that a motion picture will result in an ultimate loss,  additional  amortization
is provided to reduce the film to its net realizable value.

     All of the  Joint  Venture's  motion  pictures  are  completed,  have  been
released,  and are currently in secondary  markets (home video,  pay television,
free television, and syndication).  Based on Joint Venture management's ultimate
revenue  estimates at September 30, 1996, all unamortized  film production costs
will be amortized during the next year.

     Participations  represent  a  participant's  share  of a  motion  picture's
profits  as  contractually   defined.  An  ultimate   participation  expense  is
determined for each motion picture using ultimate  revenues.  Revenue  forecasts
for all motion  pictures are reviewed by Joint Venture  management  and ultimate
participation expense is revised when warranted.  Ultimate participation expense
is charged to earnings  on an  individual  film basis in the ratio that  current
year's  revenues  bear to Joint  Venture  management's  estimate of the ultimate
revenues  to be  received  from  all  sources.  Pursuant  to the  Joint  Venture
agreement,  Disney is entitled to a participation in the profits of all animated
films.




                                      F-11
<PAGE>


5.   OVERHEAD FEES PAYABLE

The  Partnership   Agreement   provides  that  overhead  fees  received  by  the
Partnership  for the benefit of the MGP (see Note 4) will remain on account with
the Partnership with the  understanding  that the MGP may draw from such account
from  time to time,  in  order  to  cover  its  actual  operating  expenses  not
reimbursed  from other  sources.  Such  amounts are  included  in the  temporary
investments  and  earn  interest  which  accrues  to the  Partnership.  The fees
remaining on account will earn 10% per annum (compounded quarterly) for the MGP.
The amount included in general and  administrative  expenses for the years ended
December  31, 1996 and 1995 is  $2,296,670  and  $2,646,997,  respectively.  The
balance of $23,852,664 of such overhead fee was paid on January 2, 1997.


6.  AGREEMENT WITH RELATED PARTIES

The Joint  Venture  entered  into a  distribution  agreement  with  Buena  Vista
Pictures Distribution, Inc. ("Buena Vista), a wholly-owned subsidiary of Disney.
The  agreement  provides  that the Joint  Venture grant Buena Vista a license to
distribute  all the  Joint  Venture's  films in all media  throughout  the world
through  December 31, 1998.  The  distribution  agreement  provides  that if the
revenues  received by the Joint  Venture for a Joint Venture film were less that
100% of the film's budgeted film cost or acquisition cost, as defined,  actually
expended,  then, five years after the release of that film,  Buena Vista, to the
extent it  retained  revenues  from that  film,  would pay the Joint  Venture an
additional  amount (the "Revenue  Shortfall  Payment")  sufficient to return the
budgeted film cost or acquisition cost actually  expended.  If revenues retained
by  Buena  Vista  are  not  sufficient  to  return  the  budgeted  film  cost or
acquisition cost, then the Joint Venture will receive 100% of the gross receipts
(net of certain  distribution  costs)  until the Joint  Venture has  received an
amount equal to the unreimbursed  portion of the revenue shortfall.  Buena Vista
will be  entitled  to  recoup  any  Revenue  Shortfall  Payments  from the Joint
Venture's  share of film  revenue  from such film  after the Joint  Venture  has
recouped its investment.  The Partnership  received Revenue  Shortfall  Payments
during the years  ended  December  31,  1997 and 1996 of $6.4  million and $87.0
million,  respectively.  Disney  guaranteed  Buena  Vista's  obligation  to make
Revenue Shortfall Payments.




                                      F-12
<PAGE>


7.  UNINCORPORATED BUSINESS TAX

On September 30, 1996, the Partnership received an assessment from New York City
regarding  unincorporated  business  tax  covering  all periods  from  inception
through December 31, 1995 of $1,095,100 (including interest). This liability was
paid on the date of assessment.


================================================================================
                                                                       Unaudited


Value per unit based on annual appraisal
----------------------------------------

The appraised  value per unit based upon  projected cash flow as of December 31,
1997 is $320. The appraised value does not consider the time value of money.


Cash distributions
------------------

The Partnership  made two  distributions  in 1997 totaling $15.25 or 3% per $500
unit.  Cumulative  distributions  through December 31, 1997 totaled $742 or 148%
per unit.


Availability of Form 10-K
-------------------------

A copy  of the  Partnership's  Annual  report  to the SEC on  Form  10-K  may be
obtained  without  charge by  writing  to the  Partnership,  c/o  Silver  Screen
Management  Services,  Inc.,  Chelsea  Piers-Pier 62, Suite 300, New York, N.Y.,
10011


                                      F-13
<PAGE>



Silver Screen Management Services, Inc.
Chelsea Piers-Pier 62
Suite 300 New York, NY 10011
(212) 336-6700


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