<PAGE>   1

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                  FORM 10-K
                                ANNUAL REPORT


                    PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES AND EXCHANGE ACT OF 1934



  For the fiscal year ended December 31, 1997............... Commission file
                                                              number 0-13465
                                                                     -------


 NATIONAL HOUSING PARTNERSHIP REALTY FUND I (A MARYLAND LIMITED PARTNERSHIP)
 ---------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)



                           MARYLAND                  52-1358879   
                           --------                  ----------   
               (State or other Jurisdiction of    (I.R.S. Employer
                incorporation or organization)     Identification 
                                                        No.)      
                                                                  
              9200 KEYSTONE CROSSING, SUITE 500         46240     
              ---------------------------------         -----     
                       INDIANAPOLIS, IN              (Zip Code)   
                       ----------------                           
               (Address of principal executive                    
                           offices)                               
              

<TABLE>
<S>                                                              <C>
Registrant's telephone number, including area code:              (317) 817-7500
                                                                 --------------

Securities registered pursuant to Section 12(b) of the Act:      NONE
                                                                 ----

Securities registered pursuant to Section 12(g) of the Act:      11,519 LIMITED PARTNERSHIP INTERESTS
                                                                 ------------------------------------
</TABLE>



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 twelve 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 ninety days.
Yes   X    No
    -----     -----

The registrant is a partnership. Accordingly, no voting stock is held by
non-affiliates of the registrant.

Documents incorporated by reference.   NONE
                                       ----

<PAGE>   2



<TABLE>
<CAPTION>

                                    NATIONAL HOUSING PARTNERSHIP REALTY FUND I
                                         (A MARYLAND LIMITED PARTNERSHIP)
                                           1997 FORM 10-K ANNUAL REPORT


                                                 TABLE OF CONTENTS


                                                      PART I
                                                      ------

                                                                                               Page
                                                                                               ----
         <S>            <C>                                                                  <C>
         Item 1.        Business                                                                 2
         Item 2.        Properties                                                               6
         Item 3.        Legal Proceedings                                                        6
         Item 4.        Submission of Matters to a Vote of Security Holders                      6


                                                      PART II
                                                      -------

         Item 5.        Market for the Registrant's Partnership                                  7
                          Interests and Related Partnership Matters
         Item 6.        Selected Financial Data                                                  7
         Item 7.        Management's Discussion and Analysis of Financial
                          Condition and Results of Operations                                    8
         Item 8.        Financial Statements and Supplementary Data                             11
         Item 9.        Changes in and Disagreements with Accountants
                          on Accounting and Financial Disclosure                                31


                                                     PART III
                                                     --------

         Item 10.       Directors and Executive Officers of the Registrant                      32
         Item 11.       Executive Compensation                                                  34
         Item 12.       Security Ownership of Certain Beneficial
                          Owners and Management                                                 34
         Item 13.       Certain Relationships and Related Transactions                          34


                                                      PART IV
                                                      -------

         Item 14.       Exhibits, Financial Statement Schedules and
                          Reports on Form 8-K                                                   35
</TABLE>



                                       1
<PAGE>   3


                                    PART I

INTRODUCTION

      The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements in certain circumstances. Certain
information included in this Report and other Partnership filings
(collectively "SEC Filings") under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended (as well as information
communicated orally or in writing between the dates of such SEC Filings)
contains or may contain information that is forward looking, including
statements regarding the effect of government regulations. Actual results may
differ materially from those described in the forward looking statements and
will be affected by a variety of factors including national and local
economic conditions, the general level of interest rates, terms of
governmental regulations that affect the Partnership and interpretations of
those regulations, the competitive environment in which the properties owned
by the Local Limited Partnerships operate, the availability of working
capital and dispositions of properties owned by the Partnership.

Item 1.     Business

      National Housing Partnership Realty Fund I (A Maryland Limited
Partnership) (the Partnership) was formed under the Maryland Revised Uniform
Limited Partnership Act as of October 21, 1983. On May 25, 1984, the
Partnership commenced offering 20,000 limited partnership interests, at a
price of $1,000 per interest, through a public offering registered with the
Securities and Exchange Commission (the Offering). The Offering was managed
by Dean Witter Reynolds, Inc. and was terminated on November 29, 1984, with
subscriptions for 11,519 limited partnership interests.

      On June 3, 1997, Apartment Investment and Management Company, a Maryland 
corporation ("AIMCO" and, together with its subsidiaries and other controlled
entities, the "AIMCO Group"), acquired all of the issued and outstanding
capital stock of NHP Partners, Inc., a Delaware corporation ("NHP Partners"),
and the AIMCO Group acquired all of the outstanding interests in NHP Partners
Two Limited Partnership, a Delaware limited partnership ("NHP Partners Two").
The acquisitions were made pursuant to a Real Estate Acquisition Agreement,
dated as of May 22, 1997 (the "Agreement"), by and among AIMCO, AIMCO
Properties, L.P., a Delaware limited partnership (the "Operating Partnership"),
Demeter Holdings Corporation, a Massachusetts corporation ("Demeter"), Phemus
Corporation, a Massachusetts corporation ("Phemus"), Capricorn Investors, L.P.,
a Delaware limited partnership ("Capricorn"), J. Roderick Heller, III and NHP
Partners Two LLC, a Delaware limited liability company ("NHP Partners Two
LLC"). NHP Partners owns all of the outstanding capital stock of the National
Corporation for Housing Partnerships, a District of Columbia corporation
("NCHP"), which is the general partner of The National Housing Partnership, a
District of Columbia limited partnership ("NHP"). Together, NCHP and NHP
Partners Two own all of the outstanding partnership interests in NHP. NHP is
the general partner of National Housing Partnership Realty Fund I (a Maryland
Limited Partnership) (the "Registrant" or "Partnership"). As a result of these
transactions, the AIMCO Group has acquired control of the general partner of
the Registrant and, therefore, may be deemed to have acquired control of the
Registrant.

      The Original Limited Partner of the Partnership is 1133 Fifteenth
Street Associates, a District of Columbia limited partnership, whose general
partner is NHP and whose limited partners were key employees of NCHP at the
time the Partnership was formed. The Original Limited Partner holds a 1%
interest in the Partnership.

      The remaining 98% limited partnership interests in the Partnership are
held by the investors who subscribed to the Offering.

      In October 1997, NHP received a subpoena from the Inspector General of
the United States Department of Housing and Urban Development ("HUD")
requesting documents relating to any arrangement whereby NHP or any of its
affiliates provides or has provided compensation to owners of HUD multifamily
projects in exchange for or in connection with property management of a HUD
project. AIMCO believes that other owners and managers of HUD projects have
received similar subpoenas. Documents relating to certain of NHP's
acquisitions of property management rights for HUD projects may be responsive
to subpoenas. AIMCO and NHP are in the process of complying with the subpoena
and have provided certain documents to the Inspector General, without
conceding that they are responsive to the subpoena.  AMICO believes that
NHP's operations are in compliance, in all material


                                       2
<PAGE>   4

respects, with all laws, rules and regulations relating to HUD-assisted or
HUD-insured properties. Effective February 13, 1998, counsel for NHP and the
U.S. Attorney for the Northern District of California entered into a Tolling
agreement related to certain civil claims the government may have against NHP.
Although no action has been initiated against NHP or AIMCO or, to AIMCO's
knowledge, any owner of a HUD property managed by NHP or AIMCO, if any such
action is taken in the future, it could ultimately affect existing arrangements
with respect to HUD projects or otherwise have a material adverse affect on the
results of operations of AIMCO.

      The Partnership's business is to hold limited partnership interests in
ten limited partnerships (Local Limited Partnerships), each of which owns and
operates multi-family rental housing properties (Properties) which receive
one or more forms of assistance from the Federal Government.

      The Partnership acquired interests in the Local Limited Partnerships
from sellers who originally developed the Properties. In each instance, NHP
is the general partner of the Local Limited Partnership and the Partnership
is the principal limited partner. As a limited partner, the Partnership's
liability for obligations of the Local Limited Partnerships is limited to its
investment, and the Partnership does not exercise control over the activities
of the Local Limited Partnerships in accordance with the partnership
agreements.

      The Partnership's investment objectives are to:

      (1)   preserve and protect Partnership capital;

      (2)   provide current tax benefits to Limited Partners to the extent
            permitted by law, including, but not limited to, deductions that
            Limited Partners may use to offset otherwise taxable income from
            other sources;

      (3)   provide capital appreciation through increase in value of the
            Partnership's investments, subject to considerations of capital
            preservation and tax planning; and

      (4)   provide potential cash distributions from sales or refinancings
            of the Partnership's investments and, on a limited basis, from
            operations.

      The Partnership does not have any employees. Services are performed for
the Partnership by the General Partner and agents retained by it.

      The following is a schedule of the Properties owned by the Local
Limited Partnerships in which the Partnership is a limited partner:


           SCHEDULE OF PROPERTIES OWNED BY LOCAL LIMITED PARTNERSHIPS
      IN WHICH NATIONAL HOUSING PARTNERSHIP REALTY FUND I HAS AN INVESTMENT

<TABLE>
<CAPTION>
                                                        Units       
                                                      Authorized      Occupancy    
                                         Financed,    for Rental    Percentage for 
                                        Insured and   Assistance    the Year Ended 
 Property Name, Location and   Number   Subsidized      Under        December 31,  
       Partnership Name       of Units     Under     Section 8 (B)       1997      
       ----------------       --------     -----     -------------       ----      
<S>                         <C>          <C>         <C>             <C>
Fairmeadows                     200        (A)           90             99%
  Duncanville, Texas
  (Fairmeadows Limited
  Partnership)
Forest Green                    100        (A)           85             99%
  Gainesville, Florida
  (Forest Green Limited
  Partnership)
Howard F. Robbins Tower         191        (A)           183           100%
  Mayfield Heights, Ohio
  (Gates Mills I Limited
  Partnership)
</TABLE>


                                       3
<PAGE>   5

<TABLE>
<CAPTION>
                                                        Units       
                                                      Authorized      Occupancy    
                                         Financed,    for Rental    Percentage for 
                                        Insured and   Assistance    the Year Ended 
 Property Name, Location and   Number   Subsidized      Under        December 31,  
       Partnership Name       of Units     Under     Section 8 (B)       1997      
       ----------------       --------     -----     -------------       ----      
<S>                         <C>          <C>         <C>             <C>
Lakeview Apartments             100        (A)            95             98%
  Fresno, California
  (Griffith Limited
  Partnership)
Northgate Village               150        (A)            49             99%
  Columbus, Georgia
  (Northgate Village Limited
  Partnership)
Parker Square                   175        (A)           140             98%
  Houston, Texas
  (Southward Limited
  Partnership)
San Jose                        220        (A)           220            100%
  San Antonio, Texas
  (San Jose Limited
  Partnership)
Southridge                      232        (A)           174            100%
  Austin, Texas
  (Southridge Apartments
  Limited
  Partnership)
Talladega Downs                 100        (A)           100            100%
  Talladega, Alabama
  (Hurbell IV Limited
  Partnership)
Village Green                   100        (A)            77             92%
  Gainesville, Florida
  (Village Green Limited
  Partnership)
</TABLE>

(A)   The mortgage is insured by the Federal Housing Administration under the
      provisions of Section 236 of the National Housing Act.

(B)   Section 8 of Title II of the Housing and Community Development Act
      of 1974.

      Although each Local Limited Partnership in which the Partnership has
invested owns an apartment complex which must compete with other apartment
complexes for tenants, government mortgage interest and rent subsidies make
it possible to rent units to eligible tenants at below market rates. In
general, this insulates the Properties from market competition.

      The following table indicates the year within the Section 8 rent
subsidy contracts expire:

<TABLE>
<CAPTION>
                                        Subsidized Units   Subsidized Units
                                          Expiring as a     Expiring as a
                           Number      Percentage of Total  Percentage of
                          of Units      Subsidized Units     Total Units
                          --------      ----------------     -----------
<S>                        <C>                <C>                <C>
               1998          961               79%               61%
               1999           62                5%                4%
               2000           76                6%                5%
         Thereafter          114               10%                7%
                          ------             ----               ---

              Total        1,213              100%               77%
                           =====              ===                ==
</TABLE>

      Of the contracts above expiring during 1998, contracts for 837 units
expire on or prior to September 30, 1998. Congress has passed legislation
which will provide a one-year renewal contract to replace those contracts.
The contract covering the remaining 124 units expires in October, 1998. It is
uncertain whether this agreement, as well as the agreements expiring
subsequent to 1998, will be renewed, and if so, on what terms.



                                       4
<PAGE>   6

      For the past several years, various proposals have been advanced by the 
United States Department of Housing and Urban Development ("HUD"), Congress and
others proposing the restructuring of HUD's rental assistance programs under
Section 8 of the United States Housing Act of 1937 ("Section 8"), under which
1,213 units, 77 percent of the total units owned by the properties in which the
Partnership has invested, receive rental subsidies. On October 27, 1997, the
President signed into law the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (the "1997 Housing Act"). Under the 1997 Housing Act,
certain properties assisted under Section 8, with rents above market levels and
financed with HUD-insured mortgage loans, will be restructured by adjusting
subsidized rents to market levels, thereby potentially reducing rent subsidies,
and lowering required debt service costs as needed to ensure financial
viability at the reduced rents and rent subsidies. The 1997 Housing Act retains
project-based subsidies for most properties (properties in rental markets with
limited supply, properties serving the elderly, and certain other properties).
The 1997 Housing Act phases out project-based subsidies on selected properties
servicing families not located in rental markets with limited supply,
converting such subsidies to a tenant-based subsidy. Under a tenant-based
system, rent vouchers would be issued to qualified tenants who then could elect
to reside at properties of their choice, provided such tenants have the
financial ability to pay the difference between the selected properties'
monthly rent and the value of the vouchers, which would be established based on
HUD's regulated fair market rent for the relevant geographical areas. The 1997
Housing Act provides that properties will begin the restructuring process in
federal fiscal year 1999 (beginning October 1, 1998), and that HUD will issue
final regulations implementing 1997 Housing Act on or before October 27, 1998.
With respect to Housing Assistance Payments Contracts ("HAP Contracts")
expiring before October 1, 1998, Congress has elected to renew them for
one-year terms, generally at existing rents, so long as the properties remain
in compliance with the HAP Contracts. While the Partnership does not expect the
provisions of the 1997 Housing Act to result in a significant number of tenants
relocating from properties owned by the Local Limited Partnerships, there can
be no assurance that the provisions will not significantly affect the
operations of the properties of the Local Limited Partnerships. Furthermore,
there can be no assurance that other changes in Federal housing subsidy policy
will not occur. Any such changes could have an adverse effect on the operation
of the Partnership.

      Operations at all of the Properties were generally satisfactory during
the period.

      As discussed in Note 7 to the combined financial statements, eight of
the Local Limited Partnerships in which the Partnership has invested have
deferred acquisition notes due the original owner of each Property. With the
exception of Fairmeadows and Southridge, these notes are due between 1997 and
1999. These notes are secured by both the Partnership's and NHP's interests
in the Local Limited Partnerships. In the event of a default on the notes,
the noteholders would be able to assume NHP's and the Partnership's interests
in the Local Limited Partnerships.

      The Fairmeadows and Southridge notes were originally due on September
24, 1994 and October 18, 1994, respectively. On September 10, 1996, the
Fairmeadows and Southridge Limited Partnerships and the note holders entered
into Modification, Renewal and Extension of Liens Agreements (the
"Agreements") effective retroactively to December 31, 1995. The Agreements
extended the maturity of the Fairmeadows and Southridge notes to December 1,
2011. Interest on the notes continues to accrue at 10% and is due and payable
at maturity; provided, however, that minimum annual installments of interest
are paid on or before December 31 of each year, beginning December 31, 1995,
and continuing annually thereafter until December 31, 2010. The minimum
annual installments of interest have been paid on a timely basis for 1995,
1996 and 1997 under the terms of the Agreement (as discussed in Note 3 to the
Partnership's Financial Statements). Such minimum annual installments
increase each year beginning in 1997, by not less than 2.5% and not more than
5%, based on the Consumer Price Index for All Urban Consumers (CPI-U).

      Prior to December 31, 2010 and provided there then exists no default,
the Local Limited Partnerships shall have the right to make a discounted cash
payment in full payment and satisfaction of the notes. Such discounted cash
payments were specified as $450,000 and $500,000 for 1996 for Fairmeadows and
Southridge, respectively, and increase each year calculated as ten times the
minimum annual installment of interest due in that year (as discussed in Note
3 to the Partnership's Financial Statements).

      Griffith Limited Partnership has defaulted on its deferred acquisition
note and related accrued interest which became due on October 31, 1997, with
a balance of $2,619,623 at December 31, 1997, which raises substantial doubt
about the Local Limited Partnership's ability to continue as a going concern
with its present


                                       5
<PAGE>   7

ownership structure. The Local Limited Partnership's continued existence as a
going concern with its present ownership structure is dependent on the ability
to repay, refinance, restructure, or renegotiate this note. The general partner
is currently negotiating to extend the note and maintain ownership of the
property.

      Southward Limited Partnership and Northgate Village Limited Partnership
have deferred acquisition notes due on October 4, 1998 and July 26, 1999,
respectively, with balances of $3,525,458 and $2,270,380, respectively,
including accrued interest of $1,916,908 and $1,301,380 at December 31, 1997,
which raises substantial doubt about the Local Limited Partnerships' ability
to continue as going concerns with their present ownership structure. The
Local Limited Partnerships' continued existence as going concerns with their
present ownership structure is dependent on the ability to repay, refinance,
restructure, or renegotiate these notes. The general partner is currently
negotiating to extend the notes and maintain ownership of the properties.

      On October 2, 1995, Forest Green and Village Green Limited Partnerships
entered into a discount buyout agreement for early settlement of their
deferred acquisition notes and related accrued interest payable. The
agreements provide for a total buyout amount of $175,000 per Local Limited
Partnership, payable in two installments. The first installments of $120,000
each, which were applied against accrued interest on deferred acquisition
note payable, were paid upon execution of the agreements. The final
installments of $55,000 each were paid on May 1, 1996. The first installments
were paid with $104,395 and $40,375, respectively, in available surplus cash
and $15,605 and $79,625, respectively in proceeds from a Partnership loan.
The final installments were paid with $55,000 and $31,291, respectively, in
available surplus cash, and $23,709 in proceeds from partner loans. The
balance of the deferred acquisition notes payable and related accrued
interest of $1,367,660 and $1,378,734, respectively, were relieved and
recognized as an extraordinary gain in 1996 (see Note 3 to the Partnership's
Financial Statements).

      The following table details the Partnership's ownership percentages of
the Local Limited Partnerships and the cost of acquisition of such ownership.
All interests are limited partner interests. Also included is the total
mortgage encumbrance on each property for each of the Local Limited
Partnerships as of December 31, 1997.

<TABLE>
<CAPTION>
                    NHP Realty                                Deferred
                      Fund I       Cost of                   Acquisition
                    Percentage    Ownership   Mortgage        Notes and
   Partnership       Interest     Interest      Notes     Accrued Interest
   -----------       --------     --------      -----     ----------------
<S>                   <C>       <C>         <C>             <C>       
Fairmeadows L.P.        99%      $1,090,611   $1,872,895      $5,211,942
Forest Green L.P.       99%         419,918      923,194             -
Gates Mills I L.P.      98%       1,560,737    2,166,098       6,199,775
Griffith L.P.           99%         631,329      972,855       2,619,623
Northgate Village L.P.  99%         620,869    1,341,747       2,270,380
Southward L.P.          99%         916,991    1,491,798       3,525,458
San Jose L.P.           99%       1,155,959    1,969,204       3,963,917
Southridge Apts. L.P.   99%       1,343,517    2,184,348       5,169,178
Hurbell IV L.P.         99%         372,361    1,038,694       1,416,898
Village Green L.P.      99%         429,704      820,532             -
</TABLE>

Item 2.     Properties

            See Item 1 for the real estate owned by the Partnership through the
ownership of limited partnership interests in Local Limited Partnerships.

Item 3.     Legal Proceedings

            The Partnership is not involved in any material legal proceedings.

Item 4.     Submission of Matters to a Vote of Security Holders

            No matters were submitted.


                                       6
<PAGE>   8

                                   PART II
Item 5.     Market for the Registrant's Partnership Interests and Related
Partnership Matters

      (a)   Interests in the Partnership were sold through a public offering
            managed by Dean Witter Reynolds, Inc. There is no established
            market for resale of interests in the Partnership. Accordingly,
            an investor may be unable to sell or otherwise dispose of his or
            her interest in the Partnership.

      (b)   As of December 31, 1997, there were 1,111 registered holders of
            limited partnership interests (in addition to 1133 Fifteenth
            Street Associates - See Item 1).

      (c)   No cash dividends or distributions have been declared from the
            inception of the Partnership to December 31, 1997.

Item 6.      Selected Financial Data

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                         -----------------------------------------------------------------------
                                             1997          1996              1995          1994          1993
                                             ----          ----              ----          ----          ----
                                                        As Restated (C)
<S>                                      <C>            <C>            <C>            <C>            <C>      
Share of (losses) profits from Local
    Limited Partnerships (A)             $   (27,003)   $    20,779    $         -    $         -    $         -


Other revenue and expenses:
    Interest income                            3,926         25,430         38,532          1,097          1,421
    Loss on investment in Local
      Limited Partnerships                         -              -        (95,230)        (2,300)      (295,200)

    Distributions in excess of
      investment in Local Limited
      Partnerships                            13,785         95,573         65,099         91,746         20,600
    Partnership operating expenses          (137,021)      (140,957)      (135,627)      (139,341)      (134,575)
                                         -----------    -----------    -----------    -----------    -----------

Net (loss) profit before extraordinary
    item                                    (146,313)           825       (127,226)       (48,798)      (407,754)
Extraordinary item - share of gain on
  extinguishment of debt                           -      1,763,685              -              -              -
                                         -----------    -----------    -----------    -----------    -----------

Net (loss) profit                        $  (146,313)   $ 1,764,510    $  (127,226)   $   (48,798)   $  (407,754)
                                         ===========    ===========    ===========    ===========    ===========

(Loss) profit per unit of limited
   partnership interest based on units
   outstanding during the period         $       (12)   $       150(B) $       (11)   $        (4)   $       (35)
                                         ===========    ===========    ===========    ===========    ===========

Total assets, at December 31             $ 1,807,058    $ 1,870,129    $    12,313    $    47,636    $    86,538
                                         ===========    ===========    ===========    ===========    ===========

Cash distributions per unit of
   limited partnership interest          $         -    $         -    $         -    $         -    $         -
                                         ===========    ===========    ===========    ===========    ===========
</TABLE>

 (A)  The Partnership holds limited partnership interests in the Local
      Limited Partnerships, and since its liability for obligations is
      limited to its original investment, its investment account is not
      reduced below zero (creating a liability) for the investments in Local
      Limited Partnerships. As a result, during 1997, 1996, 1995, 1994 and
      1993, $1,500,538, $2,184,536, $1,751,781, $1,604,334 and $3,186,365,
      respectively, of losses from eight, eight, eight, ten, and ten Local
      Limited Partnerships have not been recognized by the Partnership.

                                       7
<PAGE>   9

 (B)  Profit of $150 per limited partnership interest attributed solely to
      extraordinary gain.

  C)  See Note 8 to the financial statements for discussion of restatement of
      the 1996 financial statements.

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

      The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements in certain circumstances. Certain
information included in this Report and other Partnership filings
(collectively "SEC Filings") under the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended (as well as information
communicated orally or in writing between the dates of such SEC Filings)
contains or may contain information that is forward looking, including
statements regarding the effect of government regulations. Actual results may
differ materially from those described in the forward looking statements and
will be affected by a variety of factors including national and local
economic conditions, the general level of interest rates, terms of
governmental regulations that affect the Partnership and interpretations of
those regulations, the competitive environment in which the properties owned
by the Local Limited Partnerships operate, the availability of working
capital and dispositions of properties owned by the Partnership.

Liquidity and Capital Resources

      The Properties in which the Partnership has invested, through its
investments in the Local Limited Partnerships, receive one or more forms of
assistance from the Federal Government. As a result, the Local Limited
Partnerships' ability to transfer funds either to the Partnership or among
themselves in the form of cash distributions, loans or advances is generally
restricted by these government assistance programs. These restrictions,
however, are not expected to impact the Partnership's ability to meet its
cash obligations.

      As discussed in Note 7 to the combined financial statements, eight of
the Local Limited Partnerships in which the Partnership has invested have
deferred acquisition notes due the original owner of each Property. With the
exception of Fairmeadows and Southridge, these notes are due between 1997 and
1999. These notes are secured by both the Partnership's and NHP's interests
in the Local Limited Partnerships. In the event of a default on the notes,
the noteholders would be able to assume NHP's and the Partnership's interests
in the Local Limited Partnerships.

      The Fairmeadows and Southridge notes were originally due on September
24, 1994 and October 18, 1994, respectively. On September 10, 1996, the
Fairmeadows and Southridge Limited Partnerships and the note holders entered
into Modification, Renewal and Extension of Liens Agreements (the
"Agreements") effective retroactively to December 31, 1995. The Agreements
extended the maturity of the Fairmeadows and Southridge notes to December 1,
2011. Interest on the notes continues to accrue at 10% and is due and payable
at maturity; provided, however, that minimum annual installments of interest
are paid on or before December 31 of each year, beginning December 31, 1995,
and continuing annually thereafter until December 31, 2010. The minimum
annual installments of interest have been paid on a timely basis for 1995,
1996 and 1997 under the terms of the Agreement (as discussed in Note 3 to the
Partnership's Financial Statements). Such minimum annual installments
increase each year beginning in 1997, by not less than 2.5% and not more than
5%, based on the Consumer Price Index for All Urban Consumers (CPI-U).

      Prior to December 31, 2010 and provided there then exists no default,
the Local Limited Partnerships shall have the right to make a discounted cash
payment in full payment and satisfaction of the notes. Such discounted cash
payments were specified as $450,000 and $500,000 for 1996 for Fairmeadows and
Southridge, respectively, and increase each year calculated as ten times the
minimum annual installment of interest due in that year (as discussed in
Note 3 to the Partnership's Financial Statements).

      Griffith Limited Partnership has defaulted on its deferred acquisition 
note and related accrued interest which became due on October 31, 1997, with a
balance of $2,619,623 at December 31, 1997, which raises substantial doubt
about the Local Limited Partnership's ability to continue as a going concern
with its present


                                       8
<PAGE>   10

ownership structure. The Local Limited Partnership's continued existence as a
going concern with its present ownership structure is dependent on the ability
to repay, refinance, restructure, or renegotiate this note. The general partner
is currently negotiating to extend the note and maintain ownership of the
property.

      Southward Limited Partnership and Northgate Village Limited Partnership
have deferred acquisition notes due on October 4, 1998 and July 26, 1999,
respectively, with balances of $3,525,458 and $2,270,380, respectively,
including accrued interest of $1,916,908 and $1,301,380 at December 31, 1997,
which raises substantial doubt about the Local Limited Partnerships' ability
to continue as going concerns with their present ownership structure. The
Local Limited Partnerships' continued existence as going concerns with their
present ownership structure is dependent on the ability to repay, refinance,
restructure, or renegotiate these notes. The general partner is currently
negotiating to extend the notes and maintain ownership of the properties.

      On October 2, 1995, Forest Green and Village Green Limited Partnerships
entered into a discount buyout agreement for early settlement of their
deferred acquisition notes and related accrued interest payable. The
agreements provide for a total buyout amount of $175,000 per Local Limited
Partnership, payable in two installments. The first installments of $120,000
each, which were applied against accrued interest on deferred acquisition
note payable, were paid upon execution of the agreements. The final
installments of $55,000 each were paid on May 1, 1996. The first installments
were paid with $104,395 and $40,375, respectively, in available surplus cash
and $15,605 and $79,625, respectively in proceeds from a Partnership loan.
The final installments were paid with $55,000 and $31,291, respectively, in
available surplus cash, and $23,709 in proceeds from partner loans. The
balance of the deferred acquisition notes payable and related accrued
interest of $1,367,660 and $1,378,734, respectively, were relieved and
recognized as an extraordinary gain in 1996 (see Note 3 to the Partnership's
Financial Statements).

      During 1996 and 1995, the Partnership advanced $23,472 and $95,230 to
one and two Local Limited Partnerships to fund the early settlement of their
deferred acquisition notes. During 1997, no advances were made by the
Partnership to Local Limited Partnerships. Repayments of advances of $2,639,
$36,612 and zero and accrued interest of $3,004 , $24,277 and $37,561 were
received from one, two and one Local Limited Partnerships during 1997, 1996
and 1995, respectively.

      During 1997, 1996 and 1995, the General Partner advanced $124,368,
$178,562 and $39,049 to ten, five and six Local Limited Partnerships to fund
partnership entity expenses, including expenses incurred relating to
potential sales or refinancing under the Low Income Housing Preservation and
Resident Homeownership Act of 1990 (LIHPRHA). During 1997, 1996 and 1995,
three, two and one Local Limited Partnerships made payments of principal of
$13,961, $25,415 and $6,927 and interest of $5,622, $2,587 and $1,749,
respectively. At December 31, 1997 and 1996, the balance owed to NHP by ten
and eight Local Limited Partnerships was $326,072 and $215,665, respectively.
Interest on these advances is charged at a rate equal to the Chase Manhattan
Bank prime interest rate plus 2%. Chase Manhattan Bank prime was 8.5% at
December 31, 1997.

      Net cash used in operations for the year ended December 31, 1997 was
$35,111 compared to cash provided by operations for the year ended December
31, 1996 of $38,786 and to $47,950 in 1995. The decrease in cash from
operations from 1996 to 1997 was a result of a decrease in distributions in
excess of investment in and interest received on advances to Local Limited
Partnerships during 1997. The decrease in cash from operations from 1995 to
1996 was a result of an increase in operating expenses paid during 1996.

      Distributions received in excess of investment in Local Limited
Partnerships represent the Partnership's proportionate share of the excess
cash available for distribution from the Local Limited Partnerships. As a
result of the use of the equity method of accounting for the Partnership's
investment in Local Limited Partnerships, investment carrying values for each
of the Local Limited Partnerships has decreased to zero. Cash distributions
received are recorded in revenues as distributions received in excess of
investment in Local Limited Partnerships. Cash distributions of $11,146,
$70,918 and $53,142 were received from one, three and two Local Limited
Partnerships during the years ended December 31, 1997, 1996 and 1995,
respectively. The receipt of these distributions in future years is dependent
on the operations of the underlying properties of the Local Limited
Partnerships.

      Cash and cash equivalents amounted to $26,125 at December 31, 1997. The
ability of the Partnership to meet its on-going cash requirements, in excess
of cash on hand at December 31, 1997, is dependent on


                                       9
<PAGE>   11

distributions from recurring operations received from the Local Limited
Partnerships, and proceeds from the sales or refinancings of the underlying
properties. Total distributions received from Local Limited Partnerships
decreased to $11,146 in 1997 from $70,918 which was an increase from $53,142 in
1995. Cash on hand at December 31, 1997, coupled with projected distributions
from Local Limited Partnerships should provide sufficient capital to fund the
Partnership's operations during 1998.

      During 1996, the General Partner advanced $9,911 to the Partnership to
pay operating expenses. During 1997, repayments of principal and interest of
$3,596 and $2,047, respectively were made by the Partnership to the General
Partner. No repayments were made by the Partnership during 1996. Interest is
charged on borrowing at the Chase Manhattan Bank prime interest rate plus 2%.
Chase Manhattan Bank prime was 8.5% at December 31, 1997. Interest expensed
for the years ended December 31, 1997 and 1996 was $1,203 and $844,
respectively, which is included in other operating expenses on the
Partnership's Statement of Operations.

      As of December 31, 1997, the Partnership owes the General Partner
$829,964 for administrative and reporting services performed. During the
years ended December 31, 1997, 1996 and 1995, no payments were made by the
Partnership to the General Partner for administrative and reporting services.
This payment was made with distributions received from the Local Limited
Partnerships. There is no guarantee that the Local Limited Partnerships will
generate future surplus cash sufficient to distribute to the Partnership in
amounts adequate to repay administrative and reporting fees owed; rather, the
payment of the unpaid administrative and reporting fees and other advances to
the General Partner will most likely result from the sale or refinancing of
the underlying properties of the Local Limited Partnerships, rather than
through recurring operations.

Results of Operations

      As further discussed in Note 8 to the financial statements, the
Partnership's 1996 financial statements have been restated. In summary, Net
Profit and Investment in and Advances to Local Limited Partnerships increased
by $979,652 as a result of the restatement. References to 1996 amounts in the
following discussion are the restated amounts.

      The Partnership has invested as a limited partner in Local Limited
Partnerships which operate ten rental housing properties. Due to the use of
the equity method of accounting as discussed in Note 1 to the Partnership's
financial statements, to the extent the Partnership still has a carrying
basis in a respective Local Limited Partnership, results of operations would
be impacted by the Partnership's share of the profits or losses of the Local
Limited Partnerships. As of December 31, 1995, the Partnership had no
carrying basis in any of the Local Limited Partnerships and reflected no
share of losses for Local Limited Partnerships in 1995. However, during the
year ended December 31, 1996, Forest Green and Village Green Limited
Partnerships completed discounted buyout agreements for early settlement of
their deferred acquisition notes and related accrued interest payable,
resulting in gains of $1,367,660 and $1,378,734, respectively, for the two
Local Limited Partnerships. As a result, the Partnership has recorded its
share of profit and gain on extinguishment of debt of $20,779 and $1,763,685,
respectively, net of previously unrecorded losses of $918,193, in the two
Local Limited Partnerships for the year ended December 31, 1996. The
Partnership has recorded its share of losses of $27,003 in the two Local
Limited Partnerships for the year ended December 31, 1997.

      The Partnership realized a net loss of $146,313 for the year ended
December 31, 1997, compared to a net profit before extraordinary item of $825
for the year ended December 31, 1996. Net loss per unit of limited
partnership interest was $12 compared to a net profit per unit of $150 for
the 11,519 units outstanding for both periods. The increase in net loss
before extraordinary item was primarily due to the change in share of profits
and losses from Local Limited Partnerships and a decrease in distributions
received in excess of investment in and advances to Local Limited
Partnerships and interest received on advances to Local Limited Partnerships.
Additionally, the Partnership recognized a gain from extinguishment of debt
of $1,763,685 due to the early settlement of the deferred acquisition notes
for Village Green and Forest Green during the year ended December 31, 1996.
There was no such gain recognized during the year ended December 31, 1997.

      The Partnership did not recognize $1,500,538 of its allocated share of
losses from eight Local Limited Partnerships for the year ended December 31,
1997, as the Partnership's net carrying basis in them was reduced to zero in
a prior year (see Note 3 to the Partnership's financial statements). The
Partnership's share of profits and losses from the Local Limited
Partnerships, if not limited to its investment account balance, would have
changed 


                                       10
<PAGE>   12

by $2,046,964 between years. The decrease was due primarily to the gain on
extinguishment of debt recognized by two Local Limited Partnerships during 1996,
partially offset by an impairment loss on rental property recognized by one
Local Limited Partnership during 1996 (as discussed in Note 3 to the
Partnership's financial statements). No such extraordinary gain or impairment
loss was recognized during 1997.

      The Partnership realized a net profit before extraordinary item of $825
for the year ended December 31, 1996, compared to a net loss of $127,226 for
the year ended December 31, 1995. Net profit per unit of limited partnership
interest was $150 compared to a net loss per unit of $11 for the 11,519 units
outstanding for both periods. The increase in net profit before extraordinary
item was primarily due to the increases in share of profits from Local
Limited Partnerships, distributions received in excess of investment in and
advances to Local Limited Partnerships and interest income. Additionally, the
Partnership recognized a gain from extinguishment of debt of $1,763,685 due
to the early settlement of the deferred acquisition notes for Village Green
and Forest Green during the year ended December 31, 1996. There was no such
gain recognized during the year ended December 31, 1995.

      The Partnership did not recognize $2,184,536 of its allocated share of
losses from eight Local Limited Partnerships for the year ended December 31,
1996, as the Partnership's net carrying basis in them was reduced to zero in
a prior year (see Note 3 to the Partnership's financial statements). The
Partnership's share of profits from the Local Limited Partnerships, if not
limited to its investment account balance, would have increased $2,366,434
between years. The increase was due primarily to the gain on extinguishment
of debt recognized by two Local Limited Partnerships during 1996, partially
offset by an impairment loss on rental property recognized by one Local
Limited Partnership during 1996 (as discussed in Note 3 to the Partnership's
financial statements). No such extraordinary gain or impairment loss was
recognized during 1995.


Item 8.     Financial Statements and Supplementary Data

      The financial statements and supplementary schedule of the Partnership
are included on pages 12 through 30 of this report.




                                       11
<PAGE>   13







Independent Auditors' Report



To The Partners of
   National Housing Partnership Realty Fund I
Indianapolis, IN


We have audited the accompanying statements of financial position of National
Housing Partnership Realty Fund I (the Partnership) as of December 31, 1997
and 1996, and the related statements of operations, partners' equity
(deficit), and cash flows for each of the three years in the period ended
December 31, 1997, and the schedule listed in the Index at Item 14. These
financial statements and schedule are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits. We did not audit the financial
statements of Hurbell IV Limited Partnership and Gates Mills I Limited
Partnership (investees of the Partnership) for the years ended December 31,
1997, 1996 and 1995. The Partnership's equity in the net assets of these
investees has been reduced to zero in accordance with the equity method of
accounting. The accompanying statement of operations includes $11,146,
$21,342 and $29,506 of revenue from distributions in excess of investment from
these two investees for the years ended December 31, 1997, 1996 and 1995,
respectively. The financial statements do not include any equity, or other
earnings or losses from these investees for the years ended December 31,
1997, 1996 and 1995. The financial statements of these investees were audited
by other auditors whose reports thereon have been furnished to us, and our
opinion, insofar as it relates to amounts included for these investees, is
based solely upon the reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, such
financial statements present fairly, in all material respects, the financial
position of the Partnership as of December 31, 1997 and 1996, and the results
of its operations and cash flows for each of the three years in the period
ended December 31, 1997 in conformity with generally accepted accounting
principles. Also, in our opinion, based on our audits and the reports of
other auditors, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.

As discussed in Note 8, the accompanying 1996 financial statements have been
restated.





Deloitte & Touche LLP
McLean, VA
March 3, 1998



                                       12
<PAGE>   14



                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                        STATEMENTS OF FINANCIAL POSITION


<TABLE>
<CAPTION>
                                                       December 31,
                                                --------------------------
                                                   1997            1996
                                                   ----            ----
                                                              (As Restated,
                                                               See Note 8)

                                    ASSETS
                                    ------

<S>                                             <C>            <C>        
Cash and cash equivalents (Note 2)              $    26,125    $    62,193
Investments in and advances to Local Limited
 Partnerships (Note 3)                            1,780,933      1,807,936
                                                -----------    -----------

                                                $ 1,807,058    $ 1,870,129
                                                ===========    ===========

                  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
                  ------------------------------------------


Liabilities:
   Administrative and reporting
    fees payable to General Partner (Note 4)    $   829,964    $   743,572
   Due to General Partner (Note 4)                    6,315          9,911
   Accrued interest on partner loans (Note 4)           -              844
   Accrued expenses                                  40,210         38,920
                                                -----------    -----------

                                                    876,489        793,247
                                                -----------    -----------

Partners' equity (deficit):
   General Partner - The National
    Housing Partnership (NHP)                       (86,059)       (84,596)
   Original Limited Partner -
    1133 Fifteenth Street Associates                (90,959)       (89,496)
   Other Limited Partners - 11,519
    investment units                              1,107,587      1,250,974
                                                -----------    -----------

                                                    930,569      1,076,882
                                                -----------    -----------
                                                $ 1,807,058    $ 1,870,129
                                                ===========    ===========
</TABLE>

                      See notes to financial statements.


                                       13
<PAGE>   15


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                        Years Ended December 31,
                                               ----------------------------------------
                                                   1997           1996           1995
                                                   ----           ----           ----
                                                             (As Restated,
                                                              See Note 8)
<S>                                            <C>            <C>            <C>
REVENUES:
    Share of profits from Local Limited
      Partnerships (Note 3)                    $       -      $    20,779    $       -
    Interest income                                    922          1,153            971
    Interest received on advances to Local
      Limited Partnerships (Note 3)                  3,004         24,277         37,561
    Distributions in excess of investment in
      Local Limited Partnership (Note 3)            13,785         95,573         65,099
                                               -----------    -----------    -----------


                                                    17,711        141,782        103,631
                                               -----------    -----------    -----------
COSTS AND EXPENSES:
    Share of losses from Local Limited
      Partnerships (Note 3)                         27,003            -              -
    Loss on investment in Local Limited
      Partnerships (Note 3)                            -              -           95,230
    Administrative and reporting fees to
      General Partner (Note 4)                      86,392         86,392         86,392
    Interest expense on loan from
      General Partner (Note 4)                       1,203            844            -
    Other operating expenses                        49,426         53,721         49,235
                                               -----------    -----------    -----------

                                                   164,024        140,957        230,857
                                               -----------    -----------    -----------

NET (LOSS) PROFIT BEFORE EXTRAORDINARY
   ITEM                                           (146,313)           825       (127,226)

EXTRAORDINARY ITEM - SHARE OF GAIN ON
   EXTINGUISHMENT OF DEBT (Note 3)                     -        1,763,685            -
                                               -----------    -----------    -----------
NET (LOSS) PROFIT                              $  (146,313)   $ 1,764,510    $  (127,226)
                                               ===========    ===========    ===========

ALLOCATION OF NET (LOSS) PROFIT:
    General Partner - NHP                      $    (1,463)   $    17,645    $    (1,272)
    Original Limited Partner -
      1133 Fifteenth Street Associates              (1,463)        17,645         (1,272)
    Other Limited Partners - 11,519
      investment units                            (143,387)     1,729,220       (124,682)
                                               -----------    -----------    -----------

                                               $  (146,313)   $ 1,764,510    $  (127,226)
                                               ===========    ===========    ===========

NET (LOSS) PROFIT PER LIMITED PARTNERSHIP
    INTEREST (Note 3)
      Before extraordinary item                $       (12)   $        -     $       (11)
      Extraordinary item                               -              150            -
                                               -----------    -----------    -----------

       Net (loss) profit                       $       (12)   $       150    $       (11)
                                               ===========    ===========    ===========
</TABLE>

                      See notes to financial statements.


                                       14

<PAGE>   16


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                               The
                                            National          1133
                                             Housing        Fifteenth         Other
                                           Partnership        Street         Limited
                                              (NHP)         Associates       Partners        Total
                                           -----------     -----------     -----------     -----------
<S>                                        <C>             <C>             <C>             <C>
Equity (deficit) at
   January 1, 1995                         $  (100,969)    $  (105,869)    $  (353,564)    $  (560,402)

Net loss                                        (1,272)         (1,272)       (124,682)       (127,226)
                                           -----------     -----------     -----------     -----------

Equity (deficit) at
   December 31, 1995                          (102,241)       (107,141)       (478,246)       (687,628)

Net profit (As restated, see Note 8)            17,645          17,645       1,729,220       1,764,510
                                           -----------     -----------     -----------     -----------

Equity (deficit) at December 31,
   1996 (As restated, see Note 8)              (84,596)        (89,496)      1,250,974       1,076,882

Net loss                                        (1,463)         (1,463)       (143,387)       (146,313)
                                           -----------     -----------     -----------     -----------

Equity (deficit) at
   December 31, 1997                       $   (86,059)    $   (90,959)    $ 1,107,587     $   930,569
                                           ===========     ===========     ===========     ===========

Percentage interest at
   December 31,1995,
   1996 and 1997                                     1%              1%             98%
                                           -----------     -----------     -----------

                                                    (A)             (B)             (C)
                                           ===========     ===========     ===========
</TABLE>

(A)   General Partner

(B)   Original Limited Partner

(C)   Consists of 11,519 investment units held by 1,113 investors, each unit
represents a .0085% ownership interest.


                      See notes to financial statements.

                                       15

<PAGE>   17


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                               ------------------------------------------------
                                                                   1997           1996            1995
                                                                   ----           ----            ----
                                                                                  (As Restated,
                                                                                   See Note 8)
<S>                                                          <C>            <C>            <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
    Interest received                                          $       922    $     1,153    $       971
    Interest received on advances to Local Limited
      Partnerships                                                   3,004         24,277         37,561
    Distributions in excess of investment
      in Local Limited Partnerships                                 11,146         70,918         53,142
    Interest paid on loan from General Partner                      (2,047)           -              -
    Operating expenses paid                                        (48,136)       (57,562)       (43,724)
                                                               -----------    -----------    -----------

    Net cash (used in) provided by operating activities            (35,111)        38,786         47,950
                                                               -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Advances to Local Limited Partnerships                             -          (23,472)       (95,230)
    Repayment of advances to Local Limited Partnerships              2,639         36,612            -
                                                               -----------    -----------    -----------


    Net cash provided by (used in) investing activities              2,639         13,140        (95,230)
                                                               -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Advances from General Partner                                      -            9,911            -

    Repayment of loans to General Partner                           (3,596)           -              -
                                                               -----------    -----------    -----------


    Net cash (used in) provided by financing activities             (3,596)         9,911            -
                                                               -----------    -----------    -----------

NET (DECREASE) INCREASE IN CASH AND CASH
   EQUIVALENTS                                                     (36,068)        61,837        (47,280)

CASH AND CASH EQUIVALENTS, BEGINNING
   OF YEAR                                                          62,193            356         47,636
                                                               -----------    -----------    -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                         $    26,125    $    62,193    $       356
                                                               ===========    ===========    ===========

RECONCILIATION OF NET (LOSS) PROFIT TO NET CASH
   (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net (loss) profit                                              $  (146,313)   $ 1,764,510    $  (127,226)
                                                               -----------    -----------    -----------
Adjustments to reconcile net (loss) profit to net cash
  (used in) provided by operating activities:
   Share of gain on extinguishment of debt                             -       (1,763,685)           -
   Share of losses (profits) from Local Limited Partnerships        27,003        (20,779)           -
   Repayment of advances to Local Limited Partnerships              (2,639)       (36,612)           -
   Loss on investment in Local Limited Partnerships                    -              -           95,230
   Increase in administrative and reporting
    fees payable to General Partner                                 86,392         86,392         86,392
   Decrease (increase) in distribution receivable                      -           11,957        (11,957)
   (Decrease) increase in accrued interest
    on partner loans                                                  (844)           844            -
   Increase (decrease) in accrued expenses                           1,290         (3,841)         5,511
                                                               -----------    -----------    -----------

      Total adjustments                                            111,202     (1,725,724)       175,176
                                                               -----------    -----------    -----------

   Net cash (used in) provided by operating activities         $   (35,111)   $    38,786    $    47,950
                                                               ===========    ===========    ===========
</TABLE>

                      See notes to financial statements.

                                       16

<PAGE>   18


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS



1.    SUMMARY OF PARTNERSHIP ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      Organization

      National Housing Partnership Realty Fund I (the Partnership) is a
limited partnership organized under the laws of the State of Maryland under
the Maryland Revised Uniform Limited Partnership Act on October 21, 1983. The
Partnership was formed for the purpose of raising capital by offering and
selling limited partnership interests and then investing in limited
partnerships (Local Limited Partnerships), each of which owns and operates an
existing rental housing project which is financed and/or operated with one or
more forms of rental assistance or financial assistance from the U.S.
Department of Housing and Urban Development (HUD). On May 25, 1984, inception
of operations, the Partnership began raising capital and acquiring interests
in Local Limited Partnerships.

      The General Partner was authorized to raise capital for the Partnership
by offering and selling not more than 20,000 limited partnership interests at
a price of $1,000 per interest. During 1984, the sale of interests was closed
after the sale of 11,519 interests to limited partners.

      During 1984, the Partnership acquired limited partnership interests of
99% in nine Local Limited Partnerships and 98% in one Local Limited
Partnership. Each Local Limited Partnership was organized to acquire and
operate an existing rental housing project.

      On June 3, 1997, Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" and, together with its subsidiaries and other
controlled entities, the "AIMCO Group"), acquired all of the issued and
outstanding capital stock of NHP Partners, Inc., a Delaware corporation ("NHP
Partners"), and the AIMCO Group acquired all of the outstanding interests in
NHP Partners Two Limited Partnership, a Delaware limited partnership ("NHP
Partners Two"). The acquisitions were made pursuant to a Real Estate
Acquisition Agreement, dated as of May 22, 1997 (the "Agreement"), by and
among AIMCO, AIMCO Properties, L.P., a Delaware limited partnership (the
"Operating Partnership"), Demeter Holdings Corporation, a Massachusetts
corporation ("Demeter"), Phemus Corporation, a Massachusetts corporation
("Phemus"), Capricorn Investors, L.P., a Delaware limited partnership
("Capricorn"), J. Roderick Heller, III and NHP Partners Two LLC, a Delaware
limited liability company ("NHP Partners Two LLC"). NHP Partners owns all of
the outstanding capital stock of the National Corporation for Housing
Partnerships, a District of Columbia corporation ("NCHP"), which is the
general partner of The National Housing Partnership, a District of Columbia
limited partnership ("NHP"). Together, NCHP and NHP Partners Two own all of
the outstanding partnership interests in NHP. NHP is the general partner of
National Housing Partnership Realty Fund I (a Maryland Limited Partnership)
(the "Registrant" or "Partnership"). As a result of these transactions, the
AIMCO Group has acquired control of the general partner of the Registrant
and, therefore, may be deemed to have acquired control of the Registrant.

      The Original Limited Partner of the Partnership is 1133 Fifteenth
Street Associates, whose limited partners were key employees of NCHP at the
time the Partnership was formed and whose general partner is NHP.

      Significant Accounting Policies

      The financial statements of the Partnership are prepared on the accrual
basis of accounting. Direct costs of acquisition, including acquisition fees
and reimbursable acquisition expenses paid to the General Partner, have been
capitalized as investments in the Local Limited Partnerships. Other fees and
expenditures of the Partnership are recognized as expenses in the period the
related services are performed.

      Investments in Local Limited Partnerships are accounted for using the
equity method and thus are carried at cost plus the Partnership's share of the


                                       17
<PAGE>   19

                  NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                            A LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS

                                  (CONTINUED)


Local Limited Partnerships' profits less the Partnership's share of the Local
Limited Partnerships' losses and distributions (see Note 3). An investment
account is maintained for each of the limited partnership investments and losses
are not recognized once an investment account has decreased to zero. Cash
distributions are limited by the Regulatory Agreements between the Local Limited
Partnerships and HUD to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent years
if future operations provide surplus cash in excess of current requirements.
Distributions received from Local Limited Partnerships in which the
Partnership's investment account has decreased to zero are recorded as revenue
in the year they are received. Advances to Local Limited Partnerships are
included with Investments in Local Limited Partnerships to the extent that the
advances are not temporary advances of working capital.

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

      For purposes of the Statements of Cash Flows, the Partnership considers
all highly liquid debt instruments purchased with original maturities of
three months or less to be cash equivalents.

2.    CASH AND CASH EQUIVALENTS

      Cash and cash equivalents consist of the following:

<TABLE>
<CAPTION>
                                          December 31,
                                        -----------------
                                          1997      1996
                                          ----      ----
<S>                                     <C>       <C>    
Cash in demand accounts                 $   351   $ 1,335
Money market account                     25,774    60,858
                                        -------   -------
                                        $26,125   $62,193
                                        =======   =======
</TABLE>


3.    INVESTMENTS IN AND ADVANCES TO LOCAL LIMITED PARTNERSHIPS

      The Partnership owns a 98% limited partnership interest in Gates Mills
I Limited Partnership and 99% limited partnership interests in nine other
Local Limited Partnerships: Fairmeadows Limited Partnership, Forest Green
Limited Partnership, Griffith Limited Partnership, Northgate Village Limited
Partnership, Southward Limited Partnership, San Jose Limited Partnership,
Southridge Apartments Limited Partnership, Hurbell IV Limited Partnership and
Village Green Limited Partnership. Since the Partnership, as a limited
partner, does not exercise control over the activities of the Local Limited
Partnerships in accordance with the partnership agreements, these investments
are accounted for using the equity method. Thus, the investments are carried
at cost plus the Partnership's share of the Local Limited Partnerships'
profits less the Partnership's share of the Local Limited Partnerships'
losses and distributions. However, since the Partnership is not legally
liable for the obligations of the Local Limited Partnerships, or is not
otherwise committed to provide additional support to them, it does not
recognize losses once its investment in each of the individual Local Limited
Partnerships, increased for its share of profits, reduced for its share of
losses and cash distributions, reaches zero. As of December 31, 1995,
investments in all ten of the Local Limited Partnerships had been reduced to
zero. However, during 1996, Forest Green and Village Green Limited
Partnerships completed discounted buyout agreements for early settlement of
their deferred acquisition notes and related accrued interest payable,
resulting in gains of $1,367,660 and


                                       18
<PAGE>   20

                  NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                            A LIMITED PARTNERSHIP

                        NOTES TO FINANCIAL STATEMENTS

                                  (CONTINUED)


$1,378,734, respectively, for the two Local Limited Partnerships. As a result,
the Partnership has recorded its share of profits and gain on extinguishment of
debt, net of previously unrecorded losses of $918,193, in the two Local Limited
Partnerships which amounted to $20,779 and $1,763,685, respectively, for the
year ended December 31, 1996. Its share of net losses from both Local Limited
Partnerships was $27,003 for the year ended December 31, 1997. The Partnership
did not recognize $1,500,538, $2,184,536 and $1,751,784 of losses from eight,
eight and ten Local Limited Partnerships during 1997, 1996 and 1995,
respectively. As of December 31, 1997 and 1996, the Partnership has not
recognized $15,810,513 and $14,309,975, respectively, of its allocated share of
cumulative losses from the Local Limited Partnerships in which its investment is
zero.

      Advances made by the Partnership to the individual Local Limited
Partnerships are considered part of the Partnership's investment in Local
Limited Partnerships. When advances are made, they are charged to operations
as a loss on investment in the Local Limited Partnership using previously
unrecognized cumulative losses. As discussed above, due to the cumulative
losses incurred by the Local Limited Partnerships, the aggregate balance of
investments in and advances to Local Limited Partnerships has been reduced to
zero at December 31, 1997 and 1996, for eight Local Limited Partnerships. To
the extent these advances are repaid by the Local Limited Partnerships in the
future, the repayments will be credited as distributions and repayments
received in excess of investment in Local Limited Partnerships. These
advances remain due and payable to the Partnership. Interest is calculated at
the Chase Manhattan prime rate plus 2% (10.5% at December 31, 1997). Payment
of principal and interest is contingent upon the Local Limited Partnerships
having available surplus cash, as defined by HUD regulations, from operations
or from refinancing or sale of the Local Limited Partnership properties.

      During 1996 and 1995, the Partnership advanced $23,472 and $95,230 to
one and two Local Limited Partnerships to fund the early settlement of their
deferred acquisition notes. During 1997, the Partnership made no advances for
working capital purposes. Repayments of advances of $2,639, $36,612 and zero
and accrued interest of $3,004, $24,277 and $37,561 were received from one,
two and one Local Limited Partnership during 1997, 1996 and 1995,
respectively. At December 31, 1997, the Partnership's working capital
advances to Local Limited Partnerships amounted to $376,951.

      Summaries of the combined financial position of the aforementioned
Local Limited Partnerships as of December 31, 1997 and 1996, and the combined
results of operations for each of the three years in the period ended
December 31, 1997, are provided on the following page.




                                       19
<PAGE>   21


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)

                           COMBINED FINANCIAL POSITION
                        OF THE LOCAL LIMITED PARTNERSHIPS

<TABLE>
<CAPTION>
                                                            December 31,
                                                    ----------------------------
                                                        1997             1996
                                                        ----             ----
<S>                                                 <C>             <C>         
Assets:
   Land                                             $  3,559,204    $  3,559,204
   Buildings and improvements,
     net of accumulated
     depreciation of  $13,731,485 and $12,552,675
     and impairment loss of $455,845 in 1996          25,505,976      26,387,491
   Other assets                                        3,938,782       3,493,725
                                                    ------------    ------------

                                                    $ 33,003,962    $ 33,440,420
                                                    ============    ============

Liabilities and Partners' Deficit:
   Liabilities:
    Mortgage notes payable                          $ 14,781,365    $ 15,338,234
    Acquisition notes payable                         12,806,307      12,806,307
    Other liabilities                                 20,337,092      18,658,852
                                                    ------------    ------------

                                                      47,924,764      46,803,393

Partners' Deficit:
   National Housing Partnership Realty Fund I        (14,642,571)    (13,103,884)
   Other partners                                       (278,231)       (259,089)
                                                    ------------    ------------

                                                    $ 33,003,962    $ 33,440,420
                                                    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                         COMBINED RESULTS OF OPERATIONS
                        OF THE LOCAL LIMITED PARTNERSHIPS

                                               Years Ended December 31,
                                        -----------------------------------------
                                            1997           1996           1995
                                            ----           ----           ----

<S>                                     <C>            <C>            <C>        
Revenue                                 $ 7,581,257    $ 7,661,926    $ 7,462,834
                                        -----------    -----------    -----------

Expenses:
   Operating expenses                     6,404,183      6,347,244      5,824,032
   Financial expenses                       229,440        256,233        283,438
   Interest on acquisition notes          1,315,263      1,661,141      2,075,693
   Depreciation                           1,178,810      1,166,244      1,147,876

   Impairment loss on rental property           -          455,845            -
                                        -----------    -----------    -----------

    Total expenses                        9,127,696      9,886,707      9,331,039
                                        -----------    -----------    -----------

   Net loss before extraordinary item    (1,546,439)    (2,224,781)    (1,868,205)
   Gain on extinguishment of debt               -        2,746,394            -
                                        -----------    -----------    -----------

   Net (loss) profit                    $(1,546,439)   $   521,613    $(1,868,205)
                                        ===========    ===========    ===========
</TABLE>



                                       20
<PAGE>   22

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


      The combined financial statements of the Local Limited Partnerships are
prepared on the accrual basis of accounting. Each Local Limited Partnership
was formed during 1984 for the purpose of acquiring and operating a rental
housing project originally organized under Section 236 of the National
Housing Act. During the year ended December 31, 1997, all of the projects
received a substantial amount of rental assistance from HUD.

      The following table indicates the year within the Section 8 rent
subsidy contracts expire:

<TABLE>
<CAPTION>
                                        Subsidized Units  Subsidized Units
                                          Expiring as a     Expiring as a
                           Number      Percentage of Total  Percentage of
                          of Units      Subsidized Units     Total Units
                          --------      ----------------     -----------
<S>                        <C>               <C>               <C>
               1998          961               79%               61%
               1999           62                5%                4%
               2000           76                6%                5%
         Thereafter          114               10%                7%
                          ------             ----               ---

              Total        1,213              100%               77%
                           =====              ===                ==
</TABLE>

      Of the contracts above expiring during 1998, contracts for 837 units
expire on or prior to September 30, 1998. Congress has passed legislation
which will provide a one-year renewal contract to replace those contracts.

      The contract covering the remaining 124 units expires in October, 1998.
It is uncertain whether this agreement, as well as the agreements expiring
subsequent to 1998, will be renewed, and if so, on what terms.

      For the past several years, various proposals have been advanced by the
United States Department of Housing and Urban Development ("HUD"), Congress
and others proposing the restructuring of HUD's rental assistance programs
under Section 8 of the United States Housing Act of 1937 ("Section 8"), under
which 1,213 units, 77 percent of the total units owned by the properties in
which the Partnership has invested, receive rental subsidies. On October 27,
1997, the President signed into law the Multifamily Assisted Housing Reform
and Affordability Act of 1997 (the "1997 Housing Act"). Under the 1997
Housing Act, certain properties assisted under Section 8, with rents above
market levels and financed with HUD-insured mortgage loans, will be
restructured by adjusting subsidized rents to market levels, thereby
potentially reducing rent subsidies, and lowering required debt service costs
as needed to ensure financial viability at the reduced rents and rent
subsidies. The 1997 Housing Act retains project-based subsidies for most
properties (properties in rental markets with limited supply, properties
serving the elderly, and certain other properties). The 1997 Housing Act
phases out project-based subsidies on selected properties servicing families
not located in rental markets with limited supply, converting such subsidies
to a tenant-based subsidy. Under a tenant-based system, rent vouchers would
be issued to qualified tenants who then could elect to reside at properties
of their choice, provided such tenants have the financial ability to pay the
difference between the selected properties' monthly rent and the value of the
vouchers, which would be established based on HUD's regulated fair market
rent for the relevant geographical areas. The 1997 Housing Act provides that
properties will begin the restructuring process in federal fiscal year 1999
(beginning October 1, 1998), and that HUD will issue final regulations
implementing 1997 Housing Act on or before October 27, 1998. With respect to
Housing Assistance Payments Contracts ("HAP Contracts") expiring before
October 1, 1998, Congress has elected to renew them for one-year terms,
generally at existing rents, so long as the properties remain in compliance
with the HAP Contracts. While the Partnership does not expect the provisions
of the 1997 Housing Act to result in a significant number of tenants
relocating from properties owned by the Local Limited Partnerships, there can
be no assurance that the provisions will not significantly affect the
operations of the properties of the Local Limited Partnerships. Furthermore,
there can be no assurance that other changes in Federal housing subsidy
policy will not occur. Any such changes could have an adverse effect on the
operation of the Partnership.


                                       21
<PAGE>   23
                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


      Depreciation of the buildings and improvements for eight of the Local
Limited Partnerships is computed on a straight-line method, assuming a
50-year life from the date of initial occupancy at the time of construction
or after substantial rehabilitation of the building, and depreciation of
equipment is calculated using accelerated methods over estimated useful lives
of 5 to 27 years. Depreciation for one of the Local Limited Partnerships is
computed using the straight-line method, assuming a 30-year life and a 30%
salvage value, while depreciation for another Local Limited Partnership is
computed using the straight-line method assuming a 40-year life.

      The mortgage notes payable are insured by the Federal Housing
Administration (FHA) and collateralized by first deeds of trust on the rental
properties. The notes bear interest at rates ranging from 7% to 8.5% per
annum. However, FHA makes subsidy payments directly to the mortgage lender
reducing the monthly principal and interest payments of the project owner to
an effective interest rate of 1% over the forty-year term of the notes. The
liability of the Local Limited Partnerships under the mortgage notes is
limited to the underlying value of the real estate collateral plus other
amounts deposited with the lenders.

      Deferred acquisition notes of $12,806,307 at December 31, 1997 and
1996, bear simple interest at rates of 9% or 10% per annum. These notes are
collateralized by security interests in all partnership interests of the
Local Limited Partnerships. Neither principal nor interest are payable
currently, except for the Griffith, Fairmeadows and Southridge acquisition
notes which are discussed below; all principal and accrued interest are
payable upon the earlier of the sale, transfer, or refinancing of the project
or maturity of the notes. Notes for two Local Limited Partnerships,
Fairmeadows and Southridge, matured in 1994, but were renewed and extended in
1996. Other notes mature during 1998 and 1999.

      The Fairmeadows and Southridge deferred acquisition notes matured on
September 24, 1994 and October 18, 1994, respectively. On September 10, 1996,
the Fairmeadows and Southridge Limited Partnerships and the holders of the
acquisition notes entered into a Modification, Renewal and Extension of Note
and Lien Agreement (the "Agreements") for each of these two properties
effective retroactively to December 31, 1995. Simultaneous with the execution
of the Agreements, the General Partner made loans in the amount of $33,314 to
the Fairmeadows Local Limited Partnerships and $37,338 to the Southridge
Local Limited Partnership to cover interest payments to the note holders of
$20,000 for Fairmeadows and $24,000 for Southridge, as well as additional
fees required to be paid third parties to accomplish these transactions. The
Agreements extend the term of the acquisition notes through December 1, 2011,
provided that minimum annual interest installments are paid on or before
December 31 of each year beginning in 1996. The 1996 annual interest
installments, in the amount of $45,000 for Fairmeadows and $50,000 for
Southridge paid prior to December 31, 1996, will increase each year by the
amount of the Consumer Price Index for All Urban Consumers, but no more than
5% and no less than 2.5%. The 1997 annual interest installments, in the
amount of $46,530 for Fairmeadows and $51,700 for Southridge were paid prior
to December 31, 1997. Any failure to pay the annual interest payments
required under the provisions of the Agreements will result in a default of
the acquisition notes, enabling the holders of the notes to proceed to
foreclosure. Prior to December 31, 2010, and provided there is no default,
the Local Limited Partnerships shall have the right to make a discounted cash
payment in full payment and satisfaction of the notes. Such discounted cash
payments were specific as $450,000 for Fairmeadows and $500,000 for
Southridge for 1996 and increase each year calculated as ten times the
minimum annual installment of interest due in that year. The balances of the
deferred acquisition notes at December 31, 1997, were $1,848,750 and
$2,166,725 with accrued interest of $3,363,192 and $3,002,453 for Fairmeadows
and Southridge, respectively. There can be no assurance that the Local
Limited Partnerships will have sufficient cash or that the General Partner
will loan additional cash to the Local Limited Partnerships, if necessary, to
make the annual installment payments required under the Agreements. The
failure to make the required payments may result in a loss of interest in
these Local Limited Partnerships, which may result in the partners incurring
adverse tax consequences.



                                       22
<PAGE>   24
                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


      On October 2, 1995, Village Green and Forest Green Limited Partnerships
entered into Note Purchase and Sale Agreements ("Agreements") for the
discounted purchase of the deferred acquisition notes due to the original
owners of these Properties. The Agreements require two installment payments
totaling $175,000 for the purchase of each of the notes. The initial
installment payments of $120,000 each were made upon execution of the
Agreements. The final installments of $55,000 each were paid on May 1, 1996.

      The Forest Green Local Limited Partnership paid the final installment
with surplus cash generated during 1995. The final installment for the
Village Green Local Limited Partnership was made with $21,201 of surplus cash
generated during 1995 and by obtaining loans from the Partnership and the
General Partner of $23,472 and $237, respectively during 1996. As a result of
the payment of the final installments, the balances of the total deferred
acquisition notes payable and related accrued interest have been reduced to
zero, resulting in gains on extinguishment of debt of $1,367,660 and
$1,378,734 for Forest Green and Village Green Limited Partnerships,
respectively, for the year ended December 31, 1996.

      Griffith Limited Partnership has defaulted on its deferred acquisition
note and related accrued interest which became due on October 31, 1997, with
a balance of $2,619,623 at December 31, 1997, which raises substantial doubt
about the Local Limited Partnership's ability to continue as a going concern
with its present ownership structure. The Local Limited Partnership's
continued existence as a going concern with its present ownership structure
is dependent on the ability to repay, refinance, restructure, or renegotiate
this note. The General Partner is currently negotiating to extend the note
and maintain ownership of the property.

      Southward Limited Partnership and Northgate Village Limited Partnership
have deferred acquisition notes due on October 4, 1998 and July 26, 1999,
respectively, with balances of $3,525,458 and $2,270,380, respectively,
including accrued interest of $1,916,908 and $1,301,380 at December 31, 1997,
which raises substantial doubt about the Local Limited Partnerships' ability
to continue as going concerns with their present ownership structure. The
Local Limited Partnerships' continued existence as going concerns with their
present ownership structure is dependent on the ability to repay, refinance,
restructure, or renegotiate these notes. The general partner is currently
negotiating to extend the notes and maintain ownership of the properties.

      In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(the "Statement") effective for financial statements for fiscal years
beginning after December 15, 1995. Adoption of this Statement during the year
ended December 31, 1996 required an impairment loss to be recognized if the
sum of estimated future cash flows (undiscounted and without interest
charges) is less than the carrying amount of rental property. The impairment
loss would be the amount by which the carrying value exceeds the fair value
of the rental property. If the rental property is to be disposed of, fair
value is calculated net of costs to sell.

      The Hurbell IV Limited Partnership recorded an impairment loss of
$455,845, which is the difference between fair value and the cost (net of
accumulated depreciation) of its rental property. Fair value has been
determined by dividing the estimated annual cash flow by an assumed cap rate
of 11 percent. These assets were evaluated for impairment as a result of an
analysis of cash flows and future operating plans of the Local Limited
Partnership. Because of inherent uncertainties in estimating cash flows and
fair values, it is at least reasonably possible that actual results will vary
from these estimates. This impairment loss had no impact on the Partnership's
results of operations, since its investment in Hurbell IV Limited Partnership
had been reduced to zero in a prior year.




                                       23
<PAGE>   25

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


      Additionally, regardless of whether an impairment loss of an individual
property has been recorded or not, the carrying value of each of the rental
properties may still exceed their fair market value as of December 31, 1997.
Should a Local Limited Partnership be forced to dispose of any of its
properties, it could incur a loss.

4.    TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES OF THE GENERAL
      PARTNER

      The Partnership accrued administrative and reporting fees payable to
the General Partner of $86,392 annually during 1997, 1996, and 1995. No
payments for such fees were made to the General Partner in 1997, 1996 and
1995. As of December 31, 1997 and 1996, the Partnership owed $829,964 and
$743,572, respectively, to the General Partner for accrued administrative and
reporting fees.

      During 1996, the General Partner advanced $9,911 to the Partnership to
pay operating expenses. During 1997, repayments of principal and interest of
$3,596 and $2,047, respectively were made by the Partnership to the General
Partner. No repayments were made by the Partnership during 1996. Interest is
charged on borrowing at the Chase Manhattan Bank prime interest rate plus 2%.
Chase Manhattan Bank prime was 8.5% at December 31, 1997. Interest accrued
for the years ended December 31, 1997 and 1996 was $1,203 and $844,
respectively, which is included in other operating expenses on the
Partnership's Statement of Operations.

              An affiliate of the General Partner, NHP Management Company
("NHPMC"), formerly a wholly owned subsidiary of NHP Incorporated ("NHPI"),
is the project management agent for the projects operated by eight of the
Local Limited Partnerships. During May 1997, AIMCO acquired approximately 51%
of the voting stock of NHPI. An additional 3% of the voting stock was
acquired by AIMCO in August 1997. On December 8, 1997, the NHPI stockholders
elected to merge with AIMCO.  After the merger, NHPMC became a wholly owned
subsidiary of AIMCO. NHPMC and other affiliates of NCHP earned $812,257,
$775,238 and $756,629 from the Local Limited Partnerships for management fees
and other services provided to the Local Limited Partnerships during 1997,
1996 and 1995, respectively. In 1996, NHPI paid an affiliate of NHP
approximately $80,000 to secure the rights to manage Fairmeadows and
Southridge for the year ended December 31, 1997. At December 31, 1997 and
1996, amounts due NHPMC and unpaid by the Local Limited Partnership amounted
to $58,061and $57,915, respectively.

      Personnel working at the project sites, which are managed by NHPMC,
were employees of NHPI during the period January 1, 1996 through December 8,
1997 and became employees of NHPMC (as a successor employer) as of December
8, 1997 and, therefore, the projects reimbursed NHPI and NHPMC for the actual
salaries and related benefits. At December 31, 1996, trade payables include
$5,314 due to NHPI. At December 31, 1995, trade payables include $60 due to
NCHP. Total reimbursements earned for salaries and benefits for the years
ended December 31, 1997, 1996 and 1995, were approximately $875,000, $896,000
and $795,000, respectively. Additionally, at December 31, 1997, trade
payables include $11,281 due to NHPMC.

      An affiliate of the Local Partner of one of the Local Limited
Partnerships provides management services for the property owned by the Local
Limited Partnership. During 1997, 1996 and 1995, they received $69,797,
$71,308 and $69,977, respectively, for these services. Additionally, in 1997,
1996 and 1995, $8,130 $6,456 and $4,949, respectively, was paid to another
affiliate of this Local Partner for painting services.

5.    INCOME TAXES

      The Partnership is not taxed on its income. The partners are taxed in
their individual capacities upon their distributive share of the
Partnership's taxable income or loss and are allowed the benefits to be
derived from off-setting their distributive share of the tax losses against
taxable income from other sources subject to passive loss 



                                       24
<PAGE>   26

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


limitations. The taxable income or loss differs from amounts included in the
statements of operations because different methods are used in determining the
losses of the Local Limited Partnerships as discussed below. The tax loss is
allocated to the partner groups in accordance with Section 704(b) of the
Internal Revenue Code and therefore is not necessarily proportionate to the
interest percentage owned.

      For Federal income tax purposes, the ten Local Limited Partnerships
compute depreciation of the buildings and improvements using the Accelerated
Cost Recovery System (ACRS) and the Modified Accelerated Cost Recovery System
(MACRS). Rent received in advance is included as income in determining the
taxable income or loss for Federal income tax purposes, while, for financial
statement purposes, the amount is considered a liability. In addition,
interest expense on the acquisition notes payable by the Local Limited
Partnerships is computed for Federal income tax purposes using the economic
accrual method; while for financial statement purposes interest is computed
using a simple interest rate. The Partnership's allocable share of losses
from the Local Limited Partnerships is not recognized for financial statement
purposes when its investment account is decreased to zero while, for income
tax purposes, losses continue to be recognized. Other differences result from
the allocation of tax losses in accordance with Section 704(b) of the
Internal Revenue Code.

      A reconciliation follows:

<TABLE>
<CAPTION>
                                                              Years Ended December 31,
                                                    -----------------------------------------
                                                        1997           1996           1995
                                                        ----           ----           ----

<S>                                                 <C>            <C>            <C>         
   Net (loss) profit per financial statements       $  (146,313)   $ 1,764,510    $  (127,226)
   Timing differences in determining losses of
    Local Limited Partnerships:
       Depreciation                                    (536,161)      (695,626)      (850,217)
       Interest on acquisition notes payable             81,537        238,731       (186,609)
       Rents received in advance                         (1,508)         4,632            191
       Losses in excess of financial statement
        investment amount                            (1,512,416)           -       (1,795,796)
       Income less than the previously unrecorded
        losses                                              -       (1,362,519)           -

       Accrued interest on partner loans                 87,394         44,840         24,387
       Other                                             71,181        196,664         74,606
       Income due to cancellation of debt                   -        7,774,719            -

       Basis reduction in lieu of cancellation of
         debt income                                        -         (851,114)           -

       Impairment loss on rental property                   -          396,000            -
                                                    -----------    -----------    -----------

   Profit (loss) per tax return                     $ 1,956,286    $ 7,510,837    $(2,860,664)
                                                    ===========    ===========    ===========
</TABLE>

      As discussed in Note 3, three of the Local Limited Partnerships in
which the Partnership has invested may not be able to continue as going
concerns. Should a Local Limited Partnership not continue as a going concern,
or the Partnership itself not continue as a going concern (see Note 7), there
could be adverse tax consequences to the partners in the Partnership. The
impact of the tax consequences is dependent upon each partner's individual
tax situation.



                                       25
<PAGE>   27

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


6.    ALLOCATION OF RESULTS OF OPERATIONS, CASH DISTRIBUTIONS AND GAINS AND
      LOSSES FROM SALES OR REFINANCING

      Cash received by the Partnership from the sale or refinancing of any
underlying property of the Local Limited Partnerships, after payment of the
applicable mortgage debt and the payment of all expenses related to the
transaction is to be distributed in the following manner in accordance with
Realty Fund I's Partnership Agreement.

      First, to the General Partner for any unrepaid loans to the Partnership
      and any unpaid fees (other than disposition and refinancing fees);

      Second, to the establishment of any reserves which the General Partner
      deems reasonably necessary for contingent, unmatured or unforeseen
      liabilities or obligations of the Partnership.

      Third, to the Limited Partners until the Limited Partners have received
      a return of their capital contributions, after deduction for prior cash
      distributions from sales or refinancing, but without deduction for
      prior cash distributions from operations;

      Fourth, to the Limited Partners, until each Limited Partner has
      received an amount equal to a cumulative noncompounded 6% annual return
      on its capital contribution, after deduction of (a) an amount equal to
      50% of the tax losses allocated to the Limited Partner and (b) prior
      cash distributions from operations and prior cash distributions from
      sales or refinancing;

      Fifth, to the General Partner until the General Partner has received a
      return of its capital contribution, after deduction for prior cash
      distributions from sales or refinancing, but without deduction for
      prior cash distributions from operations;

      Sixth, to the General Partner for disposition and refinancing fees,
      including prior disposition and refinancing fees which have been
      accrued but are unpaid;

      Seventh, to the partners with positive capital accounts to bring such
      accounts to zero; and

      Finally, 85% of the remaining sales proceeds to the Limited Partners
      and 15% to the General Partner.

      Net income or loss from operations of the Partnership is allocated 98%
to the Limited Partners, 1% to the General Partner and 1% to the Original
Limited Partner. Cash distributions from operations, after payment of certain
obligations including reimbursement on a cumulative basis of direct expenses
incurred by the General Partner or its affiliate in managing the properties
and payment of annual cumulative administrative and reporting fees, is
distributed 98% to the Limited Partners, 1% to the General Partner and 1% to
the Original Limited Partner.

      Gain for federal income tax purposes realized in the event of
dissolution of the Partnership or upon sale of interests in a Local Limited
Partnership or underlying property will be allocated in the following manner:

      First, to the Limited Partners in an amount up to the negative balances
      of the capital accounts of Limited Partners in the same proportion as
      each Limited Partner's negative capital account bears to such aggregate
      negative capital accounts;

      Second, to the General Partner in an amount up to the General Partner's
      negative capital account, if any;

                                       26
<PAGE>   28

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


      Third, to the Limited Partners up to the aggregate amount of capital
      contributions of the Limited Partners, after deduction for prior cash
      distributions from sales or refinancing, but without deduction for
      prior cash distributions from operations, in the same proportion that
      each Limited Partner's capital contribution bears to the aggregate of
      all Limited Partners' capital contributions;

      Fourth, to the Limited Partners, until each Limited Partner has been
      allocated an amount equal to a cumulative noncompounded 6% annual
      return on its capital contribution, after deduction of (a) an amount
      equal to 50% of the tax losses allocated to the Limited Partner and (b)
      prior cash distributions from operations and prior cash distributions
      from sales or refinancing;

      Fifth, to the General Partner up to the aggregate amount of capital
      contributions made by the General Partner, after deduction for prior
      cash distributions from sales or refinancing, but without deduction for
      prior cash distributions from operations; and

      Finally, 85% of the remaining gain to the Limited Partners and 15% to
      the General Partner.

      Losses for federal income tax purposes realized in the event of
dissolution of the Partnership or upon sale of interests in a Local Limited
Partnership or underlying property will be allocated 85% to the Limited
Partners and 15% to the General Partner.


7.    FUTURE OPERATIONS AND CASH FLOWS

      In recent years, the Partnership has incurred operating expenses,
exclusive of amounts due to the General Partner, in excess of operating
revenues. Should cash and cash equivalents on hand, coupled with future
distributions from the Local Limited Partnerships not be adequate to fund
operating expenses, the Partnership may need other sources of funding such as
loans from the General Partner. However, the General Partner is under no
obligation to provide such loans.

      The Partnership's continued existence as a going concern is dependent
upon maintaining positive cash flows from operations, obtaining additional
capital from partners, or borrowing additional funds. NHP intends to manage
the Partnership prudently so as to produce positive cash flows from its
operations.


8.    RESTATEMENT OF DECEMBER 31, 1996 FINANCIAL STATEMENTS

      Subsequent to the issuance of the Partnership's 1996 financial
statements, the Partnership's management determined that its share of
extraordinary gain from the extinguishment of debt recorded in the statement
of operations was incorrectly calculated due to a clerical error.

      As a result, the 1996 financial statements have been restated from the
amounts previously reported to properly report the Partnership's share of
extraordinary gain and its Investment in and Advances to Local Limited
Partnerships.



                                       27
<PAGE>   29

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                                   (Continued)


         The effects of the restatement are as follows:

<TABLE>
<CAPTION>
                                                          As Previously      As
                                                             Reported     Restated
                                                             --------     --------

<S>                                                         <C>          <C>       
                  At December 31, 1996
                  --------------------

                  Investments in and advances to
                    Local Limited Partnerships              $  828,284   $1,807,936
                                                            ==========   ==========

                  Partners' equity                          $   97,230   $1,076,882
                                                            ==========   ==========


                  For the Year Ended December 31, 1996
                  ------------------------------------

                  Extraordinary item - share of gain on
                    extinguishment of debt                  $  784,033   $1,763,685
                                                            ==========   ==========

                  Net profit                                $  784,858   $1,764,510
                                                            ==========   ==========

                  Net profit per Limited Partnership unit   $       67   $      150
                                                            ==========   ==========
</TABLE>


                              ********************


                                       28
<PAGE>   30



                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I
                              A LIMITED PARTNERSHIP
            SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION OF
        LOCAL LIMITED PARTNERSHIPS I WHICH NHP REALTY FUND I HAS INVESTED
                                DECEMBER 31, 1997



<TABLE>
<CAPTION>
                                   Initial Cost to Local         Cost Capitalized       Gross Amount at which Carried at Close
                                    Limited Partnership      Subsequent to Acquisition                 of Period
                                 -----------------------------------------------------------------------------------------------
                                                                                                                                 
                                                                                                                                 
                                                Buildings                   Carrying                   Buildings                 
                                                   and                        Cost                        and                    
Partnership Name   Encumbrances     Land      Improvements   Improvements  Adjustments     Land      Improvements    Total (2)(3)
-------------------------------------------------------------------------------------------------------------------------------- 
<S>                 <C>         <C>           <C>            <C>           <C>          <C>          <C>            <C>          
Fairmeadows
  Limited
  Partnership          (1)       $   650,000  $ 4,807,825    $   853,231   $         -  $   650,000  $ 5,661,056    $ 6,311,056  

Forest Green
  Limited
  Partnership          (1)           170,000    2,062,075        285,546             -      170,000    2,347,621      2,517,621  

Gates Mills I
  Limited
  Partnership          (1)           668,500    6,058,342         42,658             -      668,500    6,101,000      6,769,500  

Griffith Limited
  Partnership          (1)           270,000    2,623,687        354,923   (1,000,000)      270,000    1,978,610      2,248,610  

Northgate
  Village
  Limited              
  Partnership          (1)           220,500    2,952,548        532,162      (16,796)      203,704    3,484,710      3,688,414  

Southward
  Limited
  Partnership          (1)           220,000    4,109,695        496,255     (900,000)      220,000    3,705,950      3,925,950  

San Jose Limited
  Partnership          (1)           440,000    4,728,658      1,238,021             -      440,000    5,966,679      6,406,679  

Southridge
  Apartments
  Limited              
  Partnership          (1)           700,000    5,613,128        680,242             -      700,000    6,293,370      6,993,370  

Hurbell IV
  Limited
  Partnership          (1)           100,000    2,159,021        152,137   (1,038,504)      100,000    1,272,654      1,372,654  

Village Green
  Limited
  Partnership          (1)           137,000    2,096,097        329,714             -      137,000    2,425,811      2,562,811  
                                 ------------------------------------------------------------------------------------------------
TOTAL,
December 31, 1997                $ 3,576,000  $37,211,076    $ 4,964,889   $(2,955,300) $ 3,559,204  $39,237,461    $42,796,665  
                                 ================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                        Life upon  
                                                           which   
                                                       depreciation 
                                                        in latest   
                                                       statement of
                 Accumulated                            operations  
                 Depreciation     Date of    Date       is computed  
Partnership Name      (3)     Construction Acquired      (years)    
--------------------------------------------------------------------
<S>               <C>          <C>         <C>         <C>
Fairmeadows
  Limited
  Partnership     $ 1,949,696     1970        9/84        5-50

Forest Green
  Limited
  Partnership         848,342     1972        8/84        5-50

Gates Mills I
  Limited
  Partnership       1,887,502     1972       10/84        5-30

Griffith Limited
  Partnership         921,135     1973       11/84        5-50

Northgate
  Village
  Limited           
  Partnership       1,212,544     1973        7/84        5-50

Southward
  Limited
  Partnership       1,481,460     1972       10/84        5-50

San Jose Limited
  Partnership       2,274,422     1970        9/84        5-50

Southridge
  Apartments
  Limited         
  Partnership       2,121,567     1970       10/84        5-50

Hurbell IV
  Limited
  Partnership         152,994     1974       11/84        5-40

Village Green
  Limited
  Partnership         881,823     1971        8/84        5-50
                  ------------
TOTAL,
December 31, 1997 $13,731,485
                  ============
</TABLE>

                           See notes to Schedule III.


                                       29
<PAGE>   31



                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                     NOTES TO SCHEDULE III - REAL ESTATE AND

                    ACCUMULATED DEPRECIATION OF LOCAL LIMITED

              PARTNERSHIPS IN WHICH NHP REALTY FUND I HAS INVESTED

                                DECEMBER 31, 1997



<TABLE>
<CAPTION>
(1)      Schedule of Encumbrances

                                                                                    Deferred
                                                                                   Acquisition
                                                                                      Notes
                                                              Mortgage             and Accrued
         Partnership Name                                       Notes               Interest            Total
         ----------------                                       -----               --------            -----

<S>                                                        <C>                   <C>                <C>         
         Fairmeadows Limited Partnership                   $  1,872,895          $  5,211,942       $  7,084,837

         Forest Green Limited Partnership                       923,194                 -                923,194

         Gates Mills I Limited Partnership                    2,166,098             6,199,775          8,365,873

         Griffith Limited Partnership                           972,855             2,619,623          3,592,478

         Northgate Village Limited Partnership                1,341,747             2,270,380          3,612,127

         Southward Limited Partnership                        1,491,798             3,525,458          5,017,256

         San Jose Limited Partnership                         1,969,204             3,963,917          5,933,121

         Southridge Apartments Limited Partnership            2,184,348             5,169,178          7,353,526

         Hurbell IV Limited Partnership                       1,038,694             1,416,898          2,455,592

         Village Green Limited Partnership                      820,532                 -                820,532
                                                            -----------           -----------        -----------

            TOTAL - December 31, 1997                       $14,781,365           $30,377,171        $45,158,536
                                                            ===========           ===========        ===========
</TABLE>


(2)  The aggregate cost of land for Federal income tax purposes is
     $3,252,204 and the aggregate costs of buildings and improvements for
     Federal income tax purposes is $42,099,293. The total of the
     above-mentioned items is $45,351,497.


                                       30
<PAGE>   32


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                              A LIMITED PARTNERSHIP

                     NOTES TO SCHEDULE III - REAL ESTATE AND

                    ACCUMULATED DEPRECIATION OF LOCAL LIMITED

              PARTNERSHIPS IN WHICH NHP REALTY FUND I HAS INVESTED

                                DECEMBER 31, 1997

                                   (CONTINUED)



<TABLE>
<CAPTION>
(3)       Reconciliation of real estate
          -----------------------------

                                                          Years Ended December 31,
                                               -------------------------------------------
                                                    1997          1996             1995
                                                    ----          ----             ----
<S>                                            <C>            <C>             <C>         
         Balance at beginning of period        $ 42,499,370   $ 42,966,532    $ 42,335,903
                                                                                          
         Improvements during the period             297,295        571,342         630,629
                                                                                          
         Impairment loss on rental property             -       (1,038,504)            -  
                                               ------------   ------------    ------------
                                                                                          
         Balance at end of period              $ 42,796,665   $ 42,499,370    $ 42,966,532
                                               ============   ============    ============
<CAPTION>


         Reconciliation of accumulated depreciation
         ------------------------------------------

                                                        Years Ended December 31,
                                               -------------------------------------------
                                                    1997          1996            1995
                                                    ----          ----            ----
<S>                                            <C>            <C>             <C>         
         Balance at beginning of period        $ 12,552,675   $ 11,969,090    $ 10,821,214

         Depreciation expense for the period      1,178,810      1,166,244       1,147,876

         Impairment loss on rental property             -         (582,659)            -
                                               ------------   ------------    ------------

         Balance at end of period              $ 13,731,485   $ 12,552,675    $ 11,969,090
                                               ============   ============    ============


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      None.
</TABLE>




                                       31
<PAGE>   33



                                    PART III


Item 10. Directors and Executive Officers of the Registrant

      (a), (b) and (c). The Partnership has no directors, executive officers or
      significant employees of its own.

      (a), (b), (c), (e) and (f). The names, ages, business experience and
      involvement in legal proceedings of the directors and executive officers
      of National Corporation for Housing Partnerships (NCHP), the sole general
      partner of The National Housing Partnership, the sole general partner of
      the Partnership, and certain of its affiliates, are as follows:

Directors of NCHP

      Six individuals comprise the Board of Directors of NCHP. Two directors
were appointed by the President of the United States, by and with the advice and
consent of the Senate.

      Terry Considine (age 50) was elected Chairman, Chief Executive Officer and
a Director of NCHP in 1997. Mr. Considine has been Chairman of the Board of
Directors and Chief Executive Officer of AIMCO since July 1994, and was
President until July 1997. He is the sole owner of Considine Investment Co. and
prior to July 1994 was owner of approximately 75% of Property Asset Management,
L.L.C., Limited Liability Company, a Colorado limited liability company, and its
related entities (collectively, "PAM"), one of the AIMCO Predecessors. On
October 1, 1996, Mr. Considine was appointed Co-Chairman and director of Asset
Investors Corp. and Commercial Asset Investors, Inc., two other public real
estate investment trusts, and appointed as a director of Financial Assets
Management, LLC, a real estate investment trust manager. Mr. Considine has been
involved as a principal in a variety of real estate activities, including the
acquisition, renovation, development and disposition of properties. Mr.
Considine has also controlled entities engaged in other businesses such as
television broadcasting, gasoline distribution and environmental laboratories.
Mr. Considine received a B.A. from Harvard College, a J.D. from Harvard Law
School and is admitted as a member of the Massachusetts Bar. He served as a
Colorado State Senator from 1987 - 1992 and in 1992 was the Republican nominee
for election to the United States Senate from Colorado.

      Peter K. Kompaniez (age 52) was elected Vice Chairman, President and a
Director of NCHP in 1997. Mr. Kompaniez has been Vice President and a Director
of AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of NHP and President of NHP Partners
since June 1997. Since September 1993, Mr. Kompaniez has owned 75% of PDI Realty
Enterprises, Inc., a Delaware corporation ("PDI"), one of AIMCO's predecessors,
and serves as its President and Chief Executive Officer. From 1986 to 1993, he
served as President and Chief Executive Officer of Heron Financial Corporation
("HFC"), a United States holding company for Heron International, N.V.'s real
estate and related assets. While at HFC, Mr. Kompaniez administered the
acquisition, development and disposition of approximately 8,150 apartment units
(including 6,217 units that have been acquired by AIMCO) and 3.1 million square
feet of commercial real estate. Prior to joining HFC, Mr. Kompaniez was a senior
partner with the law firm of Loeb and Loeb where he had extensive real estate
and REIT experience. Mr. Kompaniez received a B.A. from Yale College and a J.D.
from the University of California (Boalt Hall).

      Susan R. Baron (age 46) is an attorney specializing in conventional and
government-assisted real estate development and finance in the residential and
commercial markets. From 1978 to 1993 she was with the Washington, D.C. law firm
of Dunnells, Duvall & Porter. Ms. Baron serves on the of Seeds of Peace Advisory
Board and is a past president of the National Leased Housing Association. She
was appointed to the Board of Directors by the President of the United States in
September 1994 to complete a term expiring in October 1994 and continues to
serve until the appointment of a successor.

      Alan A. Diamonstein (age 66) has been a member of the Virginia House of
Delegates since 1967, currently serving as Chairman of the General Laws
Committee and a member of the standing committees on Appropriations, Education
and Rules. He is Chairman of the Virginia Housing Study Commission and is a
member of the Peninsula Board of Advisors for Signet Bank, the
Jamestown-Yorktown Board of Trustees, as well as a 


                                       32
<PAGE>   34

number of educational and civic organizations. Mr. Diamonstein is the senior
partner in the law firm of Diamonstein, Becker and Staley. He was appointed to
the Board of Directors by the President of the United States in October 1994 and
continues to serve until the appointment of a successor.

      Leeann Morein (age 43) was elected Senior Vice President Investor Services
and a Director of NCHP in 1997. Ms Morein has served as Senior Vice President
Investor Services AIMCO since November 1997. Ms. Morein has served as Secretary
of AIMCO since July 1994 and from July 1994 until October 1997 also served as
Chief Financial Officer. From September 1990 to March 1994, Ms. Morein served as
Chief Financial Officer of the real estate subsidiaries of California Federal
Bank, including the general partner of CF Income Partners, L.P., a
publicly-traded master limited partnership. Ms. Morein joined California Federal
in September 1988 as Director of Real Estate Syndications Accounting and became
Vice President--Financial Administration in January 1990. From 1983 to 1988, Ms.
Morein was Controller of Storage Equities, Inc., a real estate investment trust,
and from 1981 to 1983, she was Director of Corporate Accounting for Angeles
Corporation, a real estate syndication firm. Ms. Morein worked on the audit
staff of Price Waterhouse from 1979 to 1981. Ms. Morein received a B.A. from
Pomona College and is a Certified Public Accountant.

      Thomas W. Toomey (age 37) was elected Executive Vice President Finance and
Administration and a Director of NCHP in 1997. Mr. Toomey has served as Senior
Vice President--Finance and Administration of AIMCO since January 1996 and was
promoted to Executive Vice President--Finance and Administration in March 1997.
From 1990 until 1995, Mr. Toomey served in a similar capacity with Lincoln
Property Company ("LPC") as Vice President/Senior Controller and Director of
Administrative Services of Lincoln Property Services where he was responsible
for LPC's computer systems, accounting, tax, treasury services and benefits
administration. From 1984 to 1990, he was an audit manager with Arthur Andersen
& Co. where he served real estate and banking clients. From 1981 to 1983, Mr.
Toomey was on the audit staff of Kenneth Leventhal & Company. Mr. Toomey
received a B.S. in Business Administration/Finance from Oregon State University
and is a Certified Public Accountant.

EXECUTIVE OFFICERS

      The current executive officers of NCHP and a description of their
principal occupations in recent years are listed below.

      Terry Considine (age 50). See "Directors of NCHP."

      Peter K. Kompaniez (age 52). See "Directors of NCHP."

      Leeann Morein (age 43). See "Directors of NCHP."

      Thomas W. Toomey (age 37). See "Directors of NCHP."

      Joel F. Bonder (age 49) was appointed Executive Vice President, General
Counsel and Secretary of NCHP and AIMCO effective with the NHP merger. Prior to
joining AIMCO, Mr. Bonder served as Senior Vice President and General Counsel of
NCHP since April 1994. Mr. Bonder also served as Vice President and Deputy
General Counsel from June 1991 to March 1994, as Associate General Counsel from
1986 to 1991, and as Assistant General Counsel from 1985 to 1986. From 1983 to
1985, he was with the Washington, D.C. law firm of Lane & Edson, P.C. From 1979
to 1983, Mr. Bonder practiced with the Chicago law firm of Ross and Hardies.

      Steven D. Ira (age 47) has served as Executive Vice President of NCHP
since 1997 and of AIMCO since 1994. From 1987 until July 1994, he served as
President of PAM. Prior to merging his firm with PAM in 1987, Mr. Ira acquired
extensive experience in property management. Between 1977 and 1981 he supervised
the property management of over 3,000 apartment and mobile home units in
Colorado, Michigan, Pennsylvania and Florida, and in 1981 he joined with others
to form the property management firm of McDermott, Stein and Ira. Mr. Ira served
for several years on the National Apartment Manager Accreditation Board and is a
former president of the National Apartment Association and the Colorado
Apartment Association. Mr. Ira is the sixth individual elected to the Hall of
Fame of the National Apartment Association in its 54-year history. He holds a
Certified Apartment Property Supervisor (CAPS) and a Certified Apartment Manager
designation from the National Apartment 


                                       33
<PAGE>   35

Association, a Certified Property Manager (CPM) designation from the National
Institute of Real Estate Management (IREM) and he is a member of the Boards of
Directors of the National Multi-Housing Council, the National Apartment
Association and the Apartment Association of Metro Denver. Mr. Ira received a
B.S. from Metropolitan State College in 1975.

      David L. Williams (age 52) has served as Executive Vice
President--Operations of NCHP and AIMCO since 1997. Prior to joining AIMCO, Mr.
Williams was Senior Vice President of Operations at Evans Withycombe
Residential, Inc. from January 1996 to January 1997. Previously, he was
Executive Vice President at Equity Residential Properties Trust from October
1989 to December 1995. He has served on National Multi-Housing Council Boards
and NAREIT committees. Mr. Williams Also served as Senior Vice President of
Operations and Acquisitions of US Shelter Corporation from 1983 to 1989. Mr.
Williams has been involved in the property management, development and
acquisition of real estate properties since 1973. Mr. Williams received his B.A.
in education and administration from the University of Washington in 1967.

      Troy D. Butts (age 33) has served as Senior Vice President and Chief
Financial Officer of NCHP and AIMCO since November 1997. Prior to joining AIMCO,
Mr. Butts served as a Senior Manager in the audit practice of the Real Estate
Services Group for Arthur Andersen LLP in Dallas, Texas. Mr. Butts was employed
by Arthur Andersen LLP for ten years and his clients were primarily
publicly-held real estate companies, including office and multi-family real
estate investment trusts. Mr. Butts holds a Bachelor of Business Administration
degree in Accounting from Angelo State University and is a Certified Public
Accountant.

      (d) There is no family relationship between any of the foregoing directors
and executive officers.

Item 11.  Executive Compensation

      National Housing Partnership Realty Fund I has no officers or directors.
However, as outlined in the prospectus, various fees and reimbursements are paid
to the General Partner and its affiliates. Following is a summary of such fees
paid or accrued during the year ended December 31, 1997:

      (i)   Administrative and reporting fees of $86,392 accrued during the year
            but not yet paid to the General Partner for managing the affairs of
            the Partnership and for investor services.

      (ii)  Annual partnership administration fee of $75,000, payable but not
            yet paid, to the General Partner for its services as General Partner
            of the Local Limited Partnerships. Payments of $75,997 were made in
            1997.

      (iii) An affiliate of the General Partner, NHP Management Company (NHPMC)
            is the project management agent for the Properties operated by the
            Local Limited Partnerships. During 1997, NHPMC and other affiliates
            of NCHP earned $812,257 for management fees and other services
            provided to the Local Limited Partnerships. At December 31, 1997,
            $11,281 was due to NHPMC.

      (iv)  In 1997, personnel working at the project sites which were managed
            by NHPMC were NHPI employees, and therefore the project reimbursed
            NHPI for the actual salaries and related benefits. Total
            reimbursements for salaries and benefits earned for the year ended
            December 31, 1997, was approximately $875,000.

Item 12. Security Ownership of Certain Beneficial Owners and Management

      1133 Fifteenth Street Associates, a Maryland Limited Partnership, whose
general partner is NHP and whose limited partners were key employees of NCHP at
the time the Partnership was formed, owns a 1% interest in the Partnership.

Item 13. Certain Relationships and Related Transactions

      The Partnership has had no material transactions or business relationships
with NHP or its affiliates except as described in Items 8, 10, and 11, above.



                                       34
<PAGE>   36


                                     PART IV


Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

      (a)  Documents filed as part of this report:

           1. Financial statements

              The financial statements, notes, and reports listed below are
              included herein:


<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----
                       <S>                                                                      <C>   
                       Independent Auditors' Report                                                12 
                       Statements of Financial Position, December 31, 1997 and                     13 
                         1996                                                                         
                       Statements of Operations for the Years Ended                                   
                         December 31, 1997, 1996, and 1995                                         14 
                       Statements of Partners' Equity (Deficit) for the Years                         
                         Ended December 31, 1997, 1996, and 1995                                   15 
                       Statements of Cash Flows for the Years Ended                                   
                         December 31, 1997, 1996, and 1995                                         16 
                       Notes to Financial Statements                                               17 
                       Schedule III - Real Estate and Accumulated Depreciation                        
                         of Local Limited Partnerships in which NHP Realty                            
                         Fund I has invested, December 31, 1997                                    29 
</TABLE>

            2.    Financial statement schedules

                  Financial statement schedules for the Registrant:

                  Schedule III is included in the financial statements listed
                  under Item 14(a)(1) above. All other schedules have been
                  omitted as the required information is inapplicable or the
                  information is presented in the financial statements or
                  related notes.

                  Financial statements required by Regulation S-X which are
                  excluded from the annual report of shareholders by Rule
                  14a-3(b): See 3 below.




                                       35
<PAGE>   37


            3.    Exhibits

                  The following combined financial statements of the Local
                  Limited Partnerships in which the Partnership has invested are
                  included as an exhibit to this report and are incorporated
                  herein by reference:

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----
                       <S>                                                                       <C>  
                       Independent Auditors' Report                                                39 
                       Combined Statements of Financial Position, December 31,                        
                         1997 and 1996                                                             46 
                       Combined Statements of Operations for the Years Ended                          
                         December 31, 1997, 1996, and 1995                                         47 
                       Combined Statements of Partners' Equity (Deficit) for the                      
                         Years Ended December 31, 1997, 1996, and 1995                             48 
                       Combined Statements of Cash Flows for the Years Ended                          
                         December 31, 1997, 1996, and 1995                                         49 
                       Notes to Combined Financial Statements                                      51 
</TABLE>


      (b)   Reports on Form 8-K

            None.



                                       36
<PAGE>   38


                                   SIGNATURES


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

                National Housing Partnership Realty Fund I
                By:  The National Housing Partnership, its sole general partner
                By:  National Corporation for Housing Partnerships, its sole
                     general partner




April 14, 1998                             /s/ Troy D. Butts
--------------                             -----------------
Date                                       Troy D. Butts
                                           Senior Vice President and Chief
                                           Financial Officer



      Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:




April 14, 1998                            /s/ Troy D. Butts
--------------                            -----------------
Date                                      Troy D. Butts
                                          Senior Vice President and Chief
                                          Financial Officer






                                       37
<PAGE>   39

<TABLE>
<S>                                       <C>
April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Terry Considine, Director



April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Susan R. Baron, Director



April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Peter K. Kompaniez, Director



April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Leeann Morein, Director



April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Thomas W. Toomey, Director



April 14, 1998                                         *
--------------                            --------------------------------
Date                                      Alan A. Diamonstein, Director
</TABLE>




      This registrant is a limited partnership whose sole general partner, The
National Housing Partnership, is also a limited partnership. The sole general
partner of The National Housing Partnership is National Corporation for Housing
Partnerships. The persons indicated are Directors of National Corporation for
Housing Partnerships. Powers of Attorney are on file in Registration Statement
No. 33-1141 and as Exhibit 24 to the Partnership's Form 10-K for the fiscal year
ended December 31, 1997. Other than the Form 10-K report, no annual report or
proxy materials have been sent to security holders.


               *By Troy D. Butts pursuant to Power of Attorney.



                              /s/ Troy D. Butts
                              -----------------


                                       38
<PAGE>   40



Independent Auditors' Report



To The Partners of
   National Housing Partnership Realty Fund I
Indianapolis, IN

We have audited the accompanying combined statements of financial position of
the Local Limited Partnerships in which National Housing Partnership Realty Fund
I (the Partnership) holds a limited partnership interest as of December 31, 1997
and 1996, and the related combined statements of operations, partners' deficit,
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 did not audit the financial statements of
Hurbell IV Limited Partnership and Gates Mills I Limited Partnership (two of the
ten Local Limited Partnerships) for the years ended December 31, 1997, 1996 and
1995 which statements represent total assets constituting 22% of combined total
assets at December 31, 1997 and 1996 and net operating losses constituting 26%,
1% and 15% of combined net operating loss before extraordinary item for each of
the three years in the period ended December 31, 1997. The financial statements
of these two Local Limited Partnerships were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it relates to
amounts included for these Local Limited Partnerships, is based solely on the
reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, such
financial statements present fairly, in all material respects, the combined
financial position of the Local Limited Partnerships in which National Housing
Partnership Realty Fund I holds a limited partnership interest as of December
31, 1997 and 1996, and the combined results of their operations and cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.




Deloitte & Touche LLP
McLean, VA
March 3, 1998



                                       39
<PAGE>   41





Independent Auditor's Report


Partners
Hurbell IV Limited Partnership -
  Talladega Downs
Vienna, VA

We have audited the accompanying statement of financial position of Hurbell IV
Limited Partnership (Talladega Downs), A Limited Partnership. FHA Project No.
062-44054-LD, as of December 31, 1997, and the related statements of profit and
loss (on HUD Form No. 92410), changes in partners' equity (deficit), and cash
flows for the year then ended. These financial statements are the responsibility
of the partnership's management. Our responsibility is to express an opinion of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
and Government Auditing Standards, issued by the Comptroller General of 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 financial statements referred to above present fairly, in
all material respects, the financial position of Hurbell IV Limited Partnership
(Talladega Downs), A Limited Partnership, at December 31, 1997, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 25, 1997 on our
consideration of the partnership's internal control structure, on its compliance
with laws and regulations applicable to the basic financial statements, the
major HUD programs, and Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information, as referred
to in the Table of Contents, is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.



Russell, Thompson, Butler & Houston
Mobile, Alabama
January 16, 1998


                                       40
<PAGE>   42





Independent Auditor's Report


Partners
Hurbell IV Limited Partnership -
  Talladega Downs
Vienna, VA

We have audited the accompanying statement of financial position of Hurbell IV
Limited Partnership (Talladega Downs), A Limited Partnership. FHA Project No.
062-44054-LD, as of December 31, 1996, and the related statements of profit and
loss (on HUD Form No. 92410), changes in partners' equity (deficit), and cash
flows for the year then ended. These financial statements are the responsibility
of the partnership's management. Our responsibility is to express an opinion of
the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
and Government Auditing Standards, issued by the Comptroller General of 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 financial statements referred to above present fairly, in
all material respects, the financial position of Hurbell IV Limited Partnership
(Talladega Downs), A Limited Partnership, at December 31, 1996, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

As discussed in Note K to the financial statements, in 1996 the Partnership
changed its method of accounting for the impairment of long-lived assets.

In accordance with Government Auditing Standards and the Consolidated Audit
Guide for Audits of HUD Programs issued by the U.S. Department of Housing and
Urban Development, we have also issued reports dated January 25, 1997 on our
consideration of the partnership's internal control structure, on its compliance
with laws and regulations applicable to the basic financial statements, the
major HUD programs, and Affirmative Fair Housing.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information, as referred
to in the Table of Contents, is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.



Russell, Thompson, Butler & Houston
Mobile, Alabama
January 25, 1997





                                       41
<PAGE>   43




Independent Auditor's Report


Partners
Hurbell IV Limited Partnership -
  Talladega Downs
Reston, VA

We have audited the accompanying statement of financial position of Hurbell IV
Limited Partnership (Talladega Downs), A Limited Partnership, FHA Project No.
062-44054-LD, as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), changes in partners' equity (deficit), and cash
flows for the year then ended. These financial statements are the responsibility
of the partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
Government Auditing Standards, issued by the Comptroller General of the United
States, and the Consolidated Audit Guide for Audits of HUD Programs, issued by
the U.S. Department of Housing and Urban Development, Office of Inspector
General, in July 1993. 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 financial statements referred to above present fairly, in
all material respects, the financial position of Hurbell IV Limited Partnership
(Talladega Downs), a Limited Partnership, at December 31, 1995, and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information, as referred
to in the Table of Contents, is presented for purposes of additional analysis
and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.




Russell, Thompson, Butler & Houston
Mobile, Alabama
January 20, 1996



                                       42
<PAGE>   44





Independent Auditor's Report


Partners
Gates Mills I Limited Partnership
Washington, D.C.


We have audited the accompanying statement of financial position of Gates Mills
I Limited Partnership, An Ohio Limited Partnership, F.H.A. Project No.:
042-44062-LDP, as of December 31, 1997, and the related statements of profit and
loss (on HUD Form No. 92410), partners' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 financial statements referred to above present fairly, in
all material respects, the financial position of Gates Mills I Limited
Partnership as of December 31, 1997, and the results of its operations, changes
in partners' deficit and cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information, as referred to in the
Table of Contents, is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements, and in our opinion, the supplemental information is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 23,
1997, on our consideration of Gates Mills I Limited Partnership's internal
control structure and on its compliance with specific requirements applicable to
major HUD programs, affirmative fair housing, and laws and regulations
applicable to the financial statements.


Reznick Fedder & Silverman
Bethesda, Maryland
January 23 ,1998




                                       43
<PAGE>   45




Independent Auditors' Report


Partners
Gates Mills I Limited Partnership
Washington, D.C.


We have audited the accompanying statement of financial position of Gates Mills
I Limited Partnership, An Ohio Limited Partnership, F.H.A. Project No.:
042-44062-LDP, as of December 31, 1996, and the related statements of profit and
loss (on HUD Form No. 92410), partners' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 financial statements referred to above present fairly, in
all material respects, the financial position of Gates Mills I Limited
Partnership as of December 31, 1996, and the results of its operations, changes
in partners' deficit and cash flows for the year then ended, in conformity with
generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information, as referred to in the
Table of Contents, is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the audit procedures applied in the audit of the basic financial
statements, and in our opinion, the supplemental information is fairly stated in
all material respects in relation to the basic financial statements taken as a
whole.

In accordance with Government Auditing Standards, and the Consolidated Audit
Guide for Audits of HUD Programs, we have also issued reports dated January 23,
1997, on our consideration of Gates Mills I Limited Partnership's internal
control structure and on its compliance with specific requirements applicable to
major HUD programs, affirmative fair housing, and laws and regulations
applicable to the financial statements.


Reznick Fedder & Silverman
Bethesda, Maryland
January 23 ,1997



                                       44
<PAGE>   46





Independent Auditors' Report


Partners
Gates Mills I Limited Partnership
Washington, D.C.

We have audited the accompanying statement of financial position of Gates Mills
I Limited Partnership, An Ohio Limited Partnership, FHA Project No.
042-44062-LDP, as of December 31, 1995, and the related statements of profit and
loss (on HUD Form No. 92410), partners' deficit and cash flows for the year then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of 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 financial statements referred to above present fairly, in
all material respects, the financial position of Gates Mills I Limited
Partnership as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental information, as referred to in the
Table of Contents, is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, the supplemental information is fairly stated,
in all material respects, in relation to the basic financial statements taken as
a whole.




Reznick Fedder & Silverman
Bethesda, Maryland
January 30, 1996



                                       45
<PAGE>   47



                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I
                           LOCAL LIMITED PARTNERSHIPS
                    COMBINED STATEMENTS OF FINANCIAL POSITION


<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                     --------------------------------------
                                                                         1997                        1996
                                                                         ----                        ----
                                                       ASSETS
                                                       ------

<S>                                                                 <C>                        <C>         
Cash and cash equivalents                                           $    332,578               $    450,278

Accounts receivable (Note 3)                                             265,941                     98,352

Tenants' security deposits held in trust funds                           236,385                    228,185

Prepaid taxes and insurance                                               67,413                     65,099

Deposits                                                                  42,025                     40,825

Mortgage escrow deposits (Note 6)                                      2,994,440                  2,610,986

Rental property, net (Notes 2, 5 and 10)                              29,065,180                 29,946,695
                                                                     -----------                -----------

                                                                    $ 33,003,962               $ 33,440,420
                                                                     ===========                ===========

<CAPTION>
                                      LIABILITIES AND PARTNERS' DEFICIT
                                      ---------------------------------
<S>                                                                 <C>                        <C>         
Accounts payable and accrued expenses:
   Trade payables                                                  $     662,539              $     524,700
   Accrued real estate taxes                                             354,442                    225,371
   Due to management agent - NHPMC (Note 11)                              58,061                     57,915
   Accrued interest on mortgage notes                                      2,834                      5,499
   Due to partners (Note 8)                                            1,088,351                    981,580
   Accrued interest on partner loans (Note 8)                            345,092                    258,114
                                                                   -------------              -------------

                                                                       2,511,319                  2,053,179

Tenants' security deposits payable                                       236,317                    225,749

Deferred income                                                           18,592                     25,993

Deferred acquisition notes payable (Note 7)                           12,806,307                 12,806,307

Accrued interest on deferred acquisition notes (Note 7)               17,570,864                 16,353,931

Mortgage notes payable (Note 6)                                       14,781,365                 15,338,234

Partners' deficit                                                    (14,920,802)               (13,362,973)
                                                                     -----------                -----------

                                                                    $ 33,003,962               $ 33,440,420
                                                                     ===========                ===========
</TABLE>


                   See notes to combined financial statements.



                                       46
<PAGE>   48


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                        COMBINED STATEMENTS OF OPERATIONS



<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                               ------------------------------------------------
                                                                    1997             1996               1995
                                                                    ----             ----               ----
<S>                                                          <C>               <C>               <C>        
REVENUES:
    Rental income (Note 4)                                     $ 7,284,670       $ 7,295,408       $ 7,213,519
    Interest income                                                103,931            96,025           121,956
    Other income                                                   192,656           270,493           127,359
                                                               -----------       -----------       -----------

                                                                 7,581,257         7,661,926         7,462,834
                                                               -----------       -----------       -----------

EXPENSES:
    Administrative expenses (Note 11)                              455,549           478,333           445,966
    Operating and maintenance expenses                           3,132,640         2,974,069         2,751,798
    Management and other services from
      related party (Note 11)                                      812,257           775,238           756,629
    Salaries and related benefits to
      related party (Note 11)                                      875,290           896,130           794,572
    Depreciation (Note 2)                                        1,178,810         1,166,244         1,147,876
    Taxes and insurance                                          1,053,447         1,148,474         1,000,067
    Financial expenses - primarily interest (Note 6)               204,221           213,086           242,692
    Interest on acquisition notes (Note 7)                       1,315,263         1,661,141         2,075,693
    Annual partnership administrative fees to
      General Partner (Note 8)                                      75,000            75,000            75,000
    Impairment loss on rental property (Note 10)                     -               455,845             -
    Other entity expenses                                           25,219            43,147            40,746
                                                               -----------       -----------       -----------

                                                                 9,127,696         9,886,707         9,331,039
                                                               -----------       -----------       -----------

NET LOSS BEFORE EXTRAORDINARY ITEM                              (1,546,439)       (2,224,781)       (1,868,205)

EXTRAORDINARY ITEM - GAIN ON
   EXTINGUISHMENT OF DEBT                                            -             2,746,394             -
                                                               -----------       -----------       -----------

NET (LOSS) PROFIT                                             $ (1,546,439)      $   521,613       $(1,868,205)
                                                               ===========       ===========       ===========
</TABLE>

                   See notes to combined financial statements.


                                       47
<PAGE>   49


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                    COMBINED STATEMENTS OF PARTNERS' DEFICIT



<TABLE>
<CAPTION>
                                 National                   The
                                  Housing                National                Jeffrey
                                Partnership               Housing                  I.
                               Realty Fund I            Partnership             Friedman                Total
                               -------------            -----------             --------                -----
<S>                         <C>                      <C>                    <C>                 <C>          
Deficit at
   January 1, 1995             $(11,652,236)            $(204,575)             $(34,010)           $(11,890,821)

Net loss                         (1,847,011)              (18,681)               (2,513)             (1,868,205)

Distributions                       (65,099)                 (659)                 (122)                (65,880)
                              -------------           -----------             ---------           -------------

Deficit at
   December 31, 1995            (13,564,346)             (223,915)              (36,645)            (13,824,906)

Net profit (loss)                   519,423                 5,216                (3,026)                521,613

Distributions                       (58,961)                 (597)                 (122)                (59,680)
                              -------------           -----------             ---------           -------------

Deficit at
   December 31, 1996            (13,103,884)             (219,296)              (39,793)            (13,362,973)

Net loss                         (1,527,541)              (15,463)               (3,435)             (1,546,439)

Distributions                       (11,146)                 (122)                 (122)                (11,390)
                              -------------           -----------             ---------           -------------

Deficit at
   December 31, 1997           $(14,642,571)            $(234,881)             $(43,350)           $(14,920,802)
                              =============           ===========             =========           =============

Percentage interest at
   December 31, 1995,
   1996 and 1997                         (A)                  (B)                   (C)
                                         ===                  ===                   ===
</TABLE>


(A)   Holds a 98% limited partnership interest in Gates Mills I Limited
      Partnership and a 99% limited partnership interest in the nine remaining
      Local Limited Partnerships.

(B)   Holds a 1% general partnership interest in ten Local Limited Partnerships.

(C)   Holds a 1% limited partnership interest in Gates Mills I Limited
      Partnership.


                   See notes to combined financial statements.


                                       48
<PAGE>   50


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I
                           LOCAL LIMITED PARTNERSHIPS
                        COMBINED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                           Years Ended December 31,
                                                              -----------------------------------------------
                                                                    1997             1996             1995
                                                                    ----             ----             ----
<S>                                                          <C>              <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Rental receipts                                            $ 7,118,847      $ 7,219,204       $ 7,115,216
    Interest receipts                                               79,981          107,224           113,545
    Other receipts                                                 131,425          250,774           145,928
    Administrative expenses paid                                  (321,327)        (325,280)         (298,941)
    Administrative salaries paid (Note 11)                        (461,248)        (470,816)         (400,145)
    Management fees paid (Note 11)                                (679,379)        (648,240)         (657,060)
    Computer and accounting fees paid (Note 11)                    (78,339)         (83,378)          (77,684)
    Utilities paid                                              (1,555,418)      (1,534,842)       (1,384,518)
    Operating and maintenance expenses paid                     (1,494,095)      (1,352,748)       (1,377,259)
    Operating and maintenance payroll paid (Note 11)              (601,035)        (603,490)         (551,700)
    Real estate taxes paid                                        (373,047)        (763,415)         (412,255)
    Payroll taxes paid                                             (86,572)         (90,950)          (86,895)
    Miscellaneous taxes paid                                       (47,637)         (66,611)          (15,229)
    Property insurance paid                                       (265,555)        (226,847)         (201,675)
    Miscellaneous insurance paid                                  (152,483)        (158,253)         (174,094)
    Interest on mortgage notes paid                                (31,696)         (62,579)          (97,890)
    Mortgage insurance premium paid                                (74,375)         (77,398)          (79,255)
    Partnership administrative fee paid to General Partner         (75,997)         (76,444)          (52,500)
    Partnership entity expense paid                                 (1,786)          (5,124)             (752)
    Interest on partner loans paid                                  (8,883)         (26,864)          (39,310)
    Payment of accrued interest on deferred acquisition note       (51,800)        (225,724)         (144,770)
    Miscellaneous financial expenses paid                             (240)            (370)             (200)
                                                              ------------     ------------     -------------
      Net cash provided by rental operating activities             969,341          777,829         1,322,557

    Increase in accounts payable to managing agent                 120,589            -                 -
    (Increase) decrease in tenants' security deposits
      held in trust fund                                            (9,200)         (1,134)           18,220
    Increase (decrease) in tenants' security deposits payable       10,568           5,473           (13,406)
                                                              ------------     ------------     -------------
      Net cash provided by operating activities                  1,091,298          782,168         1,327,371
                                                              ------------     ------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of equipment                                         (303,162)        (585,683)         (552,612)
    Payments to mortgage escrow deposits                        (1,524,968)      (1,445,301)       (1,321,316)
    Disbursements from mortgage escrow deposits                  1,207,628        1,550,243         1,186,710
    Decrease (increase) in receivable from mortgagee                 8,074           89,208           (97,282)
    Interest earned on mortgage escrow deposits                    (66,115)         (80,648)          (69,515)
    Payment of deferred costs                                        -                -                 2,046
                                                              ------------     ------------     -------------
      Net cash used in investing activities                       (678,543)        (472,181)         (851,969)
                                                              ------------     ------------     -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments of principal on mortgage notes payable               (556,869)        (515,904)         (477,910)
    Distributions to partners                                      (11,390)         (59,680)          (65,880)
    Payment of fees relating to modification of deferred
      acquisition note                                               -              (31,673)            -
    Loans from General Partner                                      54,405          176,398             -
    Repayment of loans from partner                                (16,601)         (66,976)           (6,927)
                                                              ------------     ------------     -------------
      Net cash used in financing activities                       (530,455)        (497,835)         (550,717)
                                                              ------------     ------------     -------------

NET  DECREASE IN CASH AND
   CASH EQUIVALENTS                                               (117,700)        (187,848)          (75,315)

CASH AND CASH EQUIVALENTS,
   BEGINNING OF YEAR                                               450,278          638,126           713,441
                                                              ------------     ------------     -------------

CASH AND CASH EQUIVALENTS, END OF YEAR                        $    332,578     $    450,278      $    638,126
                                                              ============     ============     =============
</TABLE>

                   See notes to combined financial statements.


                                       49
<PAGE>   51


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                        COMBINED STATEMENTS OF CASH FLOWS

                                   (CONTINUED)


<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                                    -------------------------------------------
                                                                        1997           1996             1995
                                                                        ----           ----             ----
<S>                                                              <C>              <C>             <C>         
RECONCILIATION OF NET (LOSS) PROFIT TO NET CASH
    PROVIDED BY OPERATING ACTIVITIES:

      Net (loss) profit                                            $ (1,546,439)    $   521,613     $(1,868,205)
      Adjustments to reconcile net profit (loss) to net cash
        provided by operating activities:
         Depreciation                                                 1,178,810       1,166,244       1,147,876
         Extraordinary gain on extinguishment of deferred
           acquisition note principal and interest                        -          (2,746,394)          -
         Loss on reduction of carrying value of rental property           -             455,845           -
         Mortgagor entity expenses
           (primarily interest on acquisition notes)                  1,511,344       1,850,659       2,255,382
         (Increase) decrease in receivable from tenants, net             (1,970)            716           4,610
         (Increase) decrease in other receivables                       (53,790)          3,043           1,160
         (Increase) decrease in insurance proceeds receivable            (6,560)        (29,317)        111,963
         (Increase) decrease in receivable for FHA subsidy              (93,958)          6,154          (8,342)
         (Increase) decrease in interest receivable                     (19,385)         14,768          (6,811)
         (Increase) decrease in prepaid taxes and insurance              (2,314)           (545)          4,981
         Increase in deposits                                              (200)        (35,000)          -
         Decrease (increase) in deferred costs                            -               8,870          (7,706)
         Increase (decrease) in trade payables and accrued
           expenses                                                      26,914          44,864        (199,627)
         Decrease in accrued interest on mortgage notes                  (2,665)         (2,669)         (1,107)
         Increase (decrease) in accrued real estate taxes               129,071        (155,431)        106,900
         (Decrease) increase in management fee payable                   (3,650)         16,490          (1,522)
         (Decrease) increase in deferred income                          (7,401)         (7,925)         20,337
         Increase in accounts payable to managing agent                 120,589           -               -    
         (Increase) decrease in tenants' security deposits
           held in trust fund                                            (9,200)         (1,353)         18,022
         Increase (decrease) in tenants' security deposits payable       10,568           5,692         (13,208)
         Partnership administrative fee paid to General Partner         (75,997)        (76,444)        (52,500)
         Partnership entity expense paid                                 (1,786)         (5,124)           (752)
         Interest on partner loans paid                                  (8,883)        (26,864)        (39,310)
         Interest on acquisition note paid                              (51,800)       (225,724)       (144,770)
                                                                    -----------    ------------     -----------

    Total adjustments                                                 2,637,737         260,555       3,195,576
                                                                    -----------    ------------     -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES                           $ 1,091,298    $    782,168     $ 1,327,371
                                                                    ===========    ============     ===========
</TABLE>

                   See notes to combined financial statements.


                                       50
<PAGE>   52


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS


1.    SUMMARY OF PARTNERSHIP ORGANIZATION, BASIS OF COMBINATION AND SIGNIFICANT
      ACCOUNTING POLICIES

      Organization

      National Housing Partnership Realty Fund I (the Partnership) is a limited
partnership organized on October 21, 1983, under the laws of the State of
Maryland under the Maryland Revised Uniform Limited Partnership Act. The
Partnership was formed for the purpose of raising capital by offering and
selling limited partnership interests and then investing in Local Limited
Partnerships, each of which owns and operates an existing rental housing project
which is financed and/or operated with one or more forms of rental assistance or
financial assistance from the U.S. Department of Housing and Urban Development
(HUD). A substantial portion of each Local Limited Partnership is received from
the housing assistance agreements discussed in Note 3 below. On May 25, 1984,
inception of operations, the Partnership began raising capital and acquiring
interests in Local Limited Partnerships.

      During 1984, the Partnership acquired a 98% limited partnership interest
in Gates Mills I Limited Partnership and 99% limited partnership interests in
nine other Local Limited Partnerships, each of which was organized during 1984
to acquire and operate an existing rental housing project originally organized
under Section 236 of the National Housing Act. As a limited partner in these
Local Limited Partnerships, the Partnership does not exercise control over the
activities of the Local Limited Partnerships in accordance with the partnership
agreements.

      On June 3, 1997, Apartment Investment and Management Company, a Maryland
corporation ("AIMCO" and, together with its subsidiaries and other controlled
entities, the "AIMCO Group"), acquired all of the issued and outstanding capital
stock of NHP Partners, Inc., a Delaware corporation ("NHP Partners"), and the
AIMCO Group acquired all of the outstanding interests in NHP Partners Two
Limited Partnership, a Delaware limited partnership ("NHP Partners Two"). The
acquisitions were made pursuant to a Real Estate Acquisition Agreement, dated as
of May 22, 1997 (the "Agreement"), by and among AIMCO, AIMCO Properties, L.P., a
Delaware limited partnership (the "Operating Partnership"), Demeter Holdings
Corporation, a Massachusetts corporation ("Demeter"), Phemus Corporation, a
Massachusetts corporation ("Phemus"), Capricorn Investors, L.P., a Delaware
limited partnership ("Capricorn"), J. Roderick Heller, III and NHP Partners Two
LLC, a Delaware limited liability company ("NHP Partners Two LLC"). NHP Partners
owns all of the outstanding capital stock of the National Corporation for
Housing Partnerships, a District of Columbia corporation ("NCHP"), which is the
general partner of The National Housing Partnership, a District of Columbia
limited partnership ("NHP"). Together, NCHP and NHP Partners Two own all of the
outstanding partnership interests in NHP. NHP is the general partner of National
Housing Partnership Realty Fund I (a Maryland Limited Partnership) (the
"Registrant" or "Partnership"). As a result of these transactions, the AIMCO
Group has acquired control of the general partner of the Registrant and,
therefore, may be deemed to have acquired control of the Registrant.

      Basis of Combination

      The combined financial statements include the accounts of the following
ten Local Limited Partnerships in which the Partnership holds a limited
partnership interest.

      Fairmeadows Limited Partnership
      Forest Green Limited Partnership
      Gates Mills I Limited Partnership
      Griffith Limited Partnership
      Hurbell IV Limited Partnership
      Northgate Village Limited Partnership
      San Jose Limited Partnership
      Southridge Apartments Limited Partnership


                                       51
<PAGE>   53


                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)


      Southward Limited Partnership
      Village Green Limited Partnership

      Significant Accounting Policies

      The financial statements of the Local Limited Partnerships are prepared on
the accrual basis of accounting. For eight of the Local Limited Partnerships,
depreciation of the buildings and improvements is computed using the
straight-line method, assuming a 50-year life from the date of initial
occupancy, and depreciation of equipment is calculated using accelerated methods
over estimated useful lives of 5 to 27 years. Depreciation of the buildings and
improvements is computed using the straight-line method, assuming a 30-year life
and a 30% salvage value for one of the Local Limited Partnerships, while a
40-year life is assumed for the tenth Local Limited Partnership. Cash
distributions are limited by the Regulatory Agreement between the Local Limited
Partnerships and HUD to the extent of surplus cash as defined by HUD.
Undistributed amounts are cumulative and may be distributed in subsequent years
if future operations provide surplus in excess of current requirements.

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

      For purposes of the statements of cash flows, the Local Limited
Partnerships consider all highly liquid debt instruments purchased with initial
maturities of three months or less to be cash equivalents.

2.    CHANGE IN ESTIMATE

      During 1996, depreciation of the building owned by Hurbell IV Local
Limited Partnerships has been computed using the straight-line method, assuming
a 40-year life from the date of initial occupancy at the time of construction or
after substantial rehabilitation of the building. Depreciation of the building
in prior years was computed using the straight-line method, assuming a 50-year
life. This change in estimate did not have a significant impact on the
accompanying combined statement of operations.

3.    ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                                                   December 31,
                                                                        ----------------------------------
                                                                         1997                     1996
                                                                         ----                     ----
<S>                                                                     <C>                      <C>      
               Due from tenants                                        $  32,305                 $  26,691
               Rental assistance receivable (see Note 4)                 113,563                    19,605
               Accrued interest receivable                                27,746                     8,361
               Due from mortgagee                                          -                         8,074
               Insurance proceeds                                         47,985                    46,940
               Other                                                      62,367                     3,062
                                                                        --------                 ---------

                                                                         283,966                   112,733
               Less allowance for uncollectible accounts                 (18,025)                  (14,381)
                                                                        --------                 ---------

               Net accounts receivable                                  $265,941                 $  98,352
                                                                        ========                 =========
</TABLE>



                                       52
<PAGE>   54

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)



4.       HOUSING ASSISTANCE AGREEMENTS

         The Federal Housing Administration (FHA) has contracted with the ten
Local Limited Partnerships under Section 8 of Title II of the Housing and
Community Development Act of 1974, to make housing assistance payments to the
Local Limited Partnerships on behalf of qualified tenants. The terms of the
agreements are five years with either one or two five-year renewal options. The
agreements expire at various dates over the next six years. Each Local Limited
Partnership has an agreement in effect during 1997. The Local Limited
Partnerships received a total of $3,408,105, $3,542,254 and $3,467,209 in the
form of housing assistance payments during 1997, 1996 and 1995, respectively,
which is included in "Rental Income" on the combined statements of operations.

         The following table indicates the year within the Section 8 rent
subsidy contracts expire:

<TABLE>
<CAPTION>
                                                               Subsidized Units          Subsidized Units
                                                                 Expiring as a             Expiring as a
                                         Number               Percentage of Total          Percentage of
                                        of Units               Subsidized Units            Total Units
                                        --------               ----------------            -----------

<S>                                         <C>                       <C>                       <C>
                        1998                961                       79%                       61%
                        1999                 62                        5%                        4%
                        2000                 76                        6%                        5%
                  Thereafter                114                       10%                        7%
                                          -----                      ---                        -- 

                       Total              1,213                      100%                       77%
                                          =====                      ===                        == 
</TABLE>

         Of the contracts above expiring during 1998, contracts for 837 units
expire on or prior to September 30, 1998. Congress has passed legislation which
will provide a one-year renewal contract to replace those contracts.

         The contract covering the remaining 124 units expires in October, 1998.
It is uncertain whether this agreement, as well as the agreements expiring
subsequent to 1998, will be renewed, and if so, on what terms.

         For the past several years, various proposals have been advanced by the
United States Department of Housing and Urban Development ("HUD"), Congress and
others proposing the restructuring of HUD's rental assistance programs under
Section 8 of the United States Housing Act of 1937 ("Section 8"), under which
1,213 units, 77 percent of the total units owned by the properties in which the
Partnership has invested, receive rental subsidies. On October 27, 1997, the
President signed into law the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (the "1997 Housing Act"). Under the 1997 Housing Act,
certain properties assisted under Section 8, with rents above market levels and
financed with HUD-insured mortgage loans, will be restructured by adjusting
subsidized rents to market levels, thereby potentially reducing rent subsidies,
and lowering required debt service costs as needed to ensure financial viability
at the reduced rents and rent subsidies. The 1997 Housing Act retains
project-based subsidies for most properties (properties in rental markets with
limited supply, properties serving the elderly, and certain other properties).
The 1997 Housing Act phases out project-based subsidies on selected properties
servicing families not located in rental markets with limited supply, converting
such subsidies to a tenant-based subsidy. Under a tenant-based system, rent
vouchers would be issued to qualified tenants who then could elect to reside at
properties of their choice, provided such tenants have the financial ability to
pay the difference between the selected properties' monthly rent and the value
of the vouchers, which would be established based on HUD's regulated fair market
rent for the relevant geographical areas. The 1997 Housing Act provides that
properties will begin the restructuring process in federal fiscal year 1999
(beginning October 1, 1998), and that HUD will issue final regulations
implementing 1997 Housing Act on or before October 27, 1998. With respect to
Housing Assistance Payments Contracts ("HAP Contracts") expiring before October
1, 1998, Congress has elected to renew them for one-year terms, generally at
existing rents, so long as the properties remain in compliance with the HAP



                                       53
<PAGE>   55

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)


Contracts. While the Partnership does not expect the provisions of the 1997
Housing Act to result in a significant number of tenants relocating from
properties owned by the Local Limited Partnerships, there can be no assurance
that the provisions will not significantly affect the operations of the
properties of the Local Limited Partnerships. Furthermore, there can be no
assurance that other changes in Federal housing subsidy policy will not occur.
Any such changes could have an adverse effect on the operation of the
Partnership.

5.       RENTAL PROPERTY

         Rental property consists of the following:

<TABLE>
<CAPTION>
                                                                                 December 31,
                                                                     ------------------------------------
                                                                          1997                    1996
                                                                          ----                    ----
<S>                                                                <C>                     <C>          
               Land                                                 $   3,559,204           $   3,559,204
               Buildings and improvements                              34,433,769              34,433,769
               Equipment and furniture                                  4,803,692               4,506,397
                                                                     ------------            ------------

                                                                       42,796,665              42,499,370

               Less accumulated depreciation                          (13,731,485)            (12,552,675)
                                                                     ------------            ------------

               Net rental property                                   $ 29,065,180            $ 29,946,695
                                                                     ============            ============
</TABLE>

6.       MORTGAGE NOTES PAYABLE

         The mortgage notes payable are insured by FHA and collateralized by
first deeds of trust on the rental properties. The notes bear interest at rates
ranging from 7% to 8.5% per annum. However, FHA makes subsidy payments directly
to the mortgage lender reducing the monthly principal and interest payments of
the project owner to an effective interest rate of 1% over the forty-year term
of the notes. The liability of the Local Limited Partnerships under the mortgage
notes is limited to the underlying value of the real estate collateral, plus
other amounts deposited with the lenders.

         Under agreements with the mortgage lenders and FHA, the Local Limited
Partnerships are required to make monthly escrow deposits for taxes, insurance
and reserves for the replacement of project assets, and are subject to
restrictions as to operating policies, rental charges, operating expenditures
and distributions to partners.

         Approximate maturities of mortgage notes payable for the next five
years are as follows:

<TABLE>
<S>                                               <C>          
                            1998                  $     601,000
                            1999                        649,000
                            2000                        701,000
                            2001                        757,000
                            2002                        817,000
                      Thereafter                     11,256,000
                                                    -----------

                                                    $14,781,000
                                                    ===========
</TABLE>



                                       54
<PAGE>   56

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)



7.       DEFERRED ACQUISITION NOTES PAYABLE

         The deferred acquisition notes bear simple interest at rates of 9% and
10% per annum. These notes are nonrecourse and are collateralized by security
interests in all partnership interests of the Local Limited Partnerships. All
principal balances and accrued interest are payable upon the earlier of the
sale, transfer or refinancing of the projects, or the final maturity date of the
notes. The notes may be prepaid in whole or in part at any time without penalty.

         Maturities of deferred acquisition notes payable as of December 31,
1997, are as follows:

<TABLE>
<S>                                                      <C>      
              1997                                       1,199,396
              1998                                       1,608,550
              1999                                       5,982,886
              Thereafter                                 4,015,475
                                                       -----------

                                                       $12,806,307
                                                       ===========
</TABLE>

         The Fairmeadows and Southridge deferred acquisition note matured on
September 24, 1994 and October 18, 1994, respectively. On September 10, 1996,
the Fairmeadows and Southridge Limited Partnerships and the holders of the
acquisition notes entered into a Modification, Renewal and Extension of Note and
Lien Agreement (the "Agreements") for each of these two properties effective
retroactively to December 31, 1995. Simultaneous with the execution of the
Agreements, the General Partner made loans in the amount of $33,314 to the
Fairmeadows Local Limited Partnerships and $37,338 to the Southridge Local
Limited Partnership to cover interest payments to the note holders of $20,000
for Fairmeadows and $24,000 for Southridge, as well as additional fees required
to be paid third parties to accomplish these transactions. The Agreements extend
the term of the acquisition notes through December 1, 2011, provided that
minimum annual interest installments are paid on or before December 31 of each
year beginning in 1996. The 1996 annual interest installments, in the amount of
$45,000 for Fairmeadows and $50,000 for Southridge paid prior to December 31,
1996, will increase each year by the amount of the Consumer Price Index for All
Urban Consumers (CPI-U), but no more than 5% and no less than 2.5%. The 1997
annual interest installments, in the amount of $46,530 for Fairmeadows and
$51,700 for Southridge paid prior to December 31, 1997. Any failure to pay the
annual interest payments required under the provisions of the Agreements will
result in a default of the acquisition notes, enabling the holders of the notes
to proceed to foreclosure. Prior to December 31, 2010, and provided there is no
default, the Local Limited Partnerships shall have the right to make a
discounted cash payment in full payment and satisfaction of the notes. Such
discounted cash payments were specific as $450,000 for Fairmeadows and $500,000
for Southridge for 1996 and increase each year calculated as ten times the
minimum annual installment of interest due in that year. The balances of the
deferred acquisition notes at December 31, 1997, were $1,848,750 and $2,166,725
with accrued interest of $3,363,192 and $3,002,453 for Fairmeadows and
Southridge, respectively. There can be no assurance that the Local Limited
Partnerships will have sufficient cash or that the General Partner will loan
additional cash to the Local Limited Partnerships, if necessary, to make the
annual installment payments required under the Agreements. The failure to make
the required payments may result in a loss of interest in these Local Limited
Partnerships, which may result in the partners incurring adverse tax
consequences.

         On October 2, 1995, Village Green and Forest Green Limited Partnerships
entered into Note Purchase and Sale Agreements ("Agreements") for the discounted
purchase of the deferred acquisition notes due to the original owners of these
Properties. The Agreements require two installment payments totaling $175,000
for the purchase of each of the notes. The initial installment payments of
$120,000 each were made upon execution of the Agreements. The final installments
of $55,000 each were paid on May 1, 1996.



                                       55
<PAGE>   57

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)



         The Forest Green Local Limited Partnership paid the final installment
with surplus cash generated during 1995. The final installment for the Village
Green Local Limited Partnership was made with $21,201 of surplus cash generated
during 1995 and by obtaining loans from the Partnership and the General Partner
of $23,472 and $237, respectively during 1996. As a result of the payment of the
final installments, the balances of the total deferred acquisition notes payable
and related accrued interest have been reduced to zero, resulting in gains on
extinguishment of debt of $1,367,660 and $1,378,734 for Forest Green and Village
Green Limited Partnerships, respectively, for the year ended December 31, 1996.

         Griffith Limited Partnership has defaulted on its deferred acquisition
note and related accrued interest which became due on October 31, 1997, with a
balance of $2,619,623 at December 31, 1997, which raises substantial doubt about
the Local Limited Partnership's ability to continue as a going concern with its
present ownership structure. The Local Limited Partnership's continued existence
as a going concern with its present ownership structure is dependent on the
ability to repay, refinance, restructure, or renegotiate this note. The general
partner is currently negotiating to extend the note and maintain ownership of
the property.

         Southward Limited Partnership and Northgate Village Limited Partnership
have deferred acquisition notes due on October 4, 1998 and July 26, 1999,
respectively, with balances of $3,525,458 and $2,270,380, respectively,
including accrued interest of $1,916,908 and $1,301,380 at December 31, 1997,
which raises substantial doubt about the Local Limited Partnerships' ability to
continue as going concerns with their present ownership structure. The Local
Limited Partnerships' continued existence as going concerns with their present
ownership structure is dependent on the ability to repay, refinance,
restructure, or renegotiate these notes. The general partner is currently
negotiating to extend the notes and maintain ownership of the properties.

8.       DUE TO PARTNERS

         The Local Limited Partnerships accrued annual partnership
administration fees payable to the General Partner, The National Housing
Partnership (NHP), of $75,000 during 1997, 1996 and 1995, respectively. Payments
of these fees are made to NHP without interest from surplus cash available for
distribution to partners pursuant to HUD regulations. During 1997, 1996 and
1995, the Local Limited Partnerships paid $75,997, $76,444 and $52,500,
respectively. The accumulated fees owed to NHP are $385,328 and $386,325 at
December 31, 1997 and 1996, respectively.

         During 1997, 1996 and 1995, the General Partner advanced $124,368,
$178,562 and $39,049 to ten, five and six Local Limited Partnerships to fund
partnership entity expenses, including expenses incurred relating to potential
sales or refinancing under the Low Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPRHA). During 1997, 1996 and 1995, three, two and
one Local Limited Partnerships made payments of principal of $13,961, $25,415
and $6,927 and interest of $5,622, $2,587 and $1,749, respectively. At December
31, 1997 and 1996, the balance owed to NHP by ten and eight Local Limited
Partnerships was $326,072 and $215,665, respectively. Interest on these advances
is charged at a rate equal to the Chase Manhattan Bank prime interest rate plus
2%. Chase Manhattan Bank prime was 8.5% at December 31, 1997.

         During 1996 and 1995, the Partnership advanced $23,472 and $95,230 to
one and two Local Limited Partnerships to fund the early settlement of their
deferred acquisition notes. During 1997, the Partnership made no advances for
working capital purposes. Repayments of advances of $2,639, $36,612 and zero and
accrued interest of $3,004, $24,277 and $37,561 were received from one, two and
one Local Limited Partnership during 1997, 1996 and 1995, respectively. At
December 31, 1997 and 1996, the Partnership's working capital advances to Local
Limited Partnerships amounted to $376,951 and $379,590, respectively. Interest
is charged at the Chase Manhattan Bank rate of prime plus 2%. Chase Manhattan
Bank prime was 8.5% at December 31, 1997.



                                       56
<PAGE>   58

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)


         All advances and accumulated interest will be paid in conformity with
HUD and/or other regulator requirements and applicable partnership agreements.

9.       FEDERAL AND STATE INCOME TAXES

         The Local Limited Partnerships are not taxed on their income. The
partners are taxed in their individual capacities upon their distributive share
of the partnerships' taxable income or loss and are allowed the benefits to be
derived from offsetting their distributive share of the tax losses against
taxable income from other sources subject to passive loss rule limitations. The
taxable income or loss differs from amounts included in the statement of
operations primarily because of different methods used in determining
depreciation expense and interest on acquisition notes for tax purposes.

         For Federal income tax purposes, the Local Limited Partnerships compute
depreciation of the buildings and improvements using the Accelerated Cost
Recovery System (ACRS) and the Modified Accelerated Cost Recovery System
(MACRS). Rent received in advance is included as income in determining the
taxable income or loss for Federal income tax purposes; while for financial
statement purposes the amount is considered a liability. In addition, interest
expense on the acquisition notes payable by the Local Limited Partnerships is
computed for Federal income tax purposes using the economic accrual method;
while for financial statement purposes interest is computed using a simple
interest rate. Other differences result from the allocation of tax losses in
accordance with Section 704(b) of the Internal Revenue Code.

         A reconciliation follows:

<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                                               ----------------------------------------------- 
                                                                    1997             1996               1995
                                                                    ----             ----               ----

<S>                                                            <C>               <C>               <C>         
      Net (loss) profit per financial statements               $(1,546,439)      $   521,613       $(1,868,205)

      Depreciation                                                (543,103)         (693,592)         (870,916)
      Interest on acquisition notes payable                         81,466           240,462          (188,974)
      Rent received in advance                                      (1,515)            4,679               195
      Accrued interest on partner loans                             87,062            44,440            24,633
      Impairment loss on rental property                             -               400,000             -
      Income due to cancellation of debt                             -             7,853,252             -
      Basis reduction in lieu of cancellation of
        debt income                                                  -              (859,711)            -
      Other                                                        (22,432)           (6,870)           33,251
                                                               -----------        ----------       ----------- 

      (Loss) income per tax returns                            $(1,944,961)       $7,504,273       $(2,870,016)
                                                               ===========        ==========       =========== 
</TABLE>

10.      IMPAIRMENT LOSS ON RENTAL PROPERTY

         In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(the "Statement") effective for financial statements for fiscal years beginning
after December 15, 1995. Adoption of this Statement during the year ended
December 31, 1996 requires an impairment loss to be recognized if the sum of
estimated future cash flows (undiscounted and without interest charges) is less
than the carrying amount of rental property. The impairment loss would be the
amount by which the carrying value exceeds the fair value of the rental
property. If the rental property is to be disposed of, fair value is calculated
net of costs to sell.



                                       57
<PAGE>   59

                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)


         During 1996, the Hurbell IV Limited Partnership recorded an impairment
loss of $455,845, which is the difference between fair value and the cost (net
of accumulated depreciation) of its rental property. Fair value has been
determined by dividing the estimated annual cash flow by an assumed cap rate of
11 percent. These assets were evaluated for impairment as a result of an
analysis of cash flows and future operating plans of the Local Limited
Partnership. Because of inherent uncertainties in estimating cash flows and fair
values, it is at least reasonably possible that actual results will vary from
these estimates.

         Additionally, regardless of whether an impairment loss of an individual
property has been recorded or not, the carrying value of each of the rental
properties may still exceed their fair market value as of December 31, 1997.
Should a Local Limited Partnership be forced to dispose of any of its
properties, it could incur a loss.

11.      RELATED-PARTY TRANSACTIONS

         An affiliate of the General Partner, NHP Management Company ("NHPMC"),
formerly a wholly owned subsidiary of NHP Incorporated ("NHPI"), is the project
management agent for the projects operated by eight of the Local Limited
Partnerships under agreements which, subject to certain conditions, extend to
the year 2020. During May 1997, AIMCO acquired approximately 51% of the voting
stock of NHPI. An additional 3% of the voting stock was acquired by AIMCO in
August 1997. On December 8, 1997, the NHPI stockholders elected to merge with
AIMCO. After the merger, NHPMC became a wholly owned subsidiary of AIMCO. NHPMC
and other affiliates of NCHP earned $812,257, $775,238 and $756,629 from the
Local Limited Partnerships for management fees and other services provided to
the Local Limited Partnerships during 1997, 1996 and 1995, respectively. In
1996, NHPI paid an affiliate of NHP approximately $80,000 to secure the rights
to manage Fairmeadows and Southridge for the year ending December 31, 1997. At
December 31, 1997 and 1996, amounts due NHPMC and unpaid by the Local Limited
Partnership amounted to $58,061 and $57,915, respectively.

         Personnel working at the project sites, which are managed by NHPMC,
were employees of NHPI during the period January 1, 1996 through December 8,
1997 and became employees of NHPMC (as a successor employer) as of December 8,
1997 and, therefore, the projects reimbursed NHPI and NHPMC for the actual
salaries and related benefits. Prior to January 1, 1996, project employees were
employees of NCHP. At December 31, 1997 and 1996, trade payables include $11,281
and $5,314 due to NHPMC and NHPI, respectively. Total reimbursements earned for
salaries and benefits for the years ended December 31, 1997, 1996 and 1995, were
approximately $875,000, $896,000 and $795,000, respectively.

         An affiliate of the Local Partner of one of the Local Limited
Partnerships provides management services for the property owned by the Local
Limited Partnership. During 1997, 1996 and 1995, they received $69,797, $71,308
and $69,977, respectively, for these services. Additionally, in 1997, 1996 and
1995, $8,130 $6,456 and $4,949, respectively, was paid to another affiliate of
this Local Partner for painting services.

12.      FUTURE OPERATIONS AND CASH FLOWS

         As discussed in Note 7, eight of the Local Limited Partnerships in
which the Partnership has invested carry deferred acquisition notes due the
original owner of each property. With the exception of Fairmeadows and
Southridge Limited Partnerships, these notes are due between 1997 and 1999.
These notes are secured by both the Partnership's and the General Partner's
interests in the Local Limited Partnerships. In the event of a default on the
notes, the noteholders would be able to assume the Partnership's and the General
Partner's interests in the Local Limited Partnerships.

         Griffith Limited Partnership has defaulted on its deferred acquisition
note and related accrued interest which became due on October 31, 1997, with a
balance of $2,619,623 at December 31, 1997, which raises


                                       58
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                   NATIONAL HOUSING PARTNERSHIP REALTY FUND I

                           LOCAL LIMITED PARTNERSHIPS

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                   (CONTINUED)



substantial doubt about the Local Limited Partnership's ability to continue as a
going concern with its present ownership structure. The Local Limited
Partnership's continued existence as a going concern with its present ownership
structure is dependent on the ability to repay, refinance, restructure, or
renegotiate this note. The general partner is currently negotiating to extend
the note and maintain ownership of the property.

         Southward Limited Partnership and Northgate Village Limited Partnership
have deferred acquisition notes due on October 4, 1998 and July 26, 1999,
respectively, with balances of $3,525,458 and $2,270,380, respectively,
including accrued interest of $1,916,908 and $1,301,380 at December 31, 1997,
which raises substantial doubt about the Local Limited Partnerships' ability to
continue as going concerns with their present ownership structure. The Local
Limited Partnerships' continued existence as going concerns with their present
ownership structure is dependent on the ability to repay, refinance,
restructure, or renegotiate these notes. The general partner is currently
negotiating to extend the notes and maintain ownership of the properties.

13.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         FASB Statement No. 107, "Disclosures About Fair Value of Financial
Instruments," requires disclosure of fair value information about financial
instruments, when it is practicable to estimate that value. The mortgage notes
payable are insured by the FHA and are secured by the rental property. The
operations generated by the rental property are subject to various government
rules, regulations and restrictions which make it impracticable to obtain the
information to estimate the fair value of the mortgage note and the partner
loans and related accrued interest. For the deferred acquisition notes and
related accrued interest, a reasonable estimate of fair value could not be made
without incurring excessive costs. The carrying amount of other assets and
liabilities reported on the statement of financial position that require such
disclosure approximates fair value.

14.      NON-CASH INVESTING ACTIVITY

         During 1997, one of the Local Limited Partnerships incurred costs in
the aggregate of $78,488 for buildings and equipment which are included in trade
payables as of December 31, 1997. Included in trade payables as of December 31,
1996 is $84,355 of such costs incurred by three Local Limited Partnerships.

15.      CONTINGENCY

         In accordance with FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
the Local Limited Partnerships record impairment losses on their rental property
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
their carrying amount. The Local Limited Partnerships listed below, estimates of
cash flows anticipates that they will be able to successfully refinance,
restructure, or renegotiate their deferred acquisition note payable which are
due to 1999. If the Local Limited Partnerships are unsuccessful in these
efforts, the Local Limited Partnerships' estimate of undiscounted cash flows
will change resulting in the need to write-down the rental property to fair
value.

         Gates Mills I Limited Partnership
         Northgate Village Limited Partnership
         Southward Limited Partnership
         San Jose Limited Partnership
         Hurbell IV Limited Partnership



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