<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 Exchange Act of 1934

                   For the Fiscal Year Ended DECEMBER 31, 1997

                             Commission File Number
                                     0-18541

                       NATIONAL TAX CREDIT PARTNERS, L.P.

                        A CALIFORNIA LIMITED PARTNERSHIP

                  I.R.S. Employer Identification No. 95-4205231

       9090 WILSHIRE BOULEVARD, SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
        Registrant's Telephone Number, Including Area Code (310) 278-2191

      Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:

                                      NONE

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

                                    Yes      X     No       
                                            ---        ---

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


<PAGE>   2


PART I.

ITEM 1.  BUSINESS:

National Tax Credit Partners, L.P. ("NTCP" or the "Partnership") is a limited
partnership formed under the laws of the State of California on March 7, 1989.
The Partnership was formed to acquire limited partnership interests in separate
local limited partnerships ("Local Partnerships"), which own multifamily
apartment complexes that are eligible for low-income housing federal income tax
credits ("Housing Tax Credits"). On June 6, 1989, the Partnership offered 14,000
units consisting of 28,000 limited partnership interests and warrants to
purchase 14,000 additional limited partnership interests (collectively "Limited
Partnership Interests") through a public offering managed by PaineWebber
Incorporated (the "Selling Agent").

The general partner of NTCP (the "General Partner") is National Partnership
Investments Corp. ("NAPICO"), a California corporation. PaineWebber T.C., Inc.,
a Delaware corporation and an affiliate of PaineWebber Incorporated, is the
special limited partner of the Partnership (the "Special Limited Partner").
NAPICO is a wholly owned subsidiary of Casden Investment Corporation ("CIC"),
which is wholly owned by Alan I. Casden. The current members of NAPICO's Board
of Directors are Charles H. Boxenbaum, Bruce E. Nelson, Alan I. Casden and 
Henry C. Casden.

In general, an owner of a low-income housing apartment complex ("Apartment
Complex") is entitled to receive Housing Tax Credits in each year of a ten-year
period (the "Credit Period"). The Apartment Complex is subject to a 15-year
compliance period (the "Compliance Period") to preserve the Housing Tax Credits.
In addition to the Housing Tax Credits, tax credits are available for certain
rehabilitation expenditures incurred in improving certified historic structures
("Historic Tax Credits," and together with Housing Tax Credits are referred to
as "Tax Credits"). Tax Credits are available to the Limited Partners to reduce
their federal income tax liability. The ability of a Limited Partner to utilize
Tax Credits or allocated losses may be restricted by the passive activity loss
limitation and the general business tax credit limitation rules. NTCP invests in
Local Partnerships that each own an Apartment Complex that is eligible for (i)
Housing Tax Credits or (ii) in certain cases, Historic Tax Credits and, in some
cases, both. Several of the Local Partnerships also benefit from government
programs promoting low or moderate income housing.

The Partnership's investments in Local Partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate.
Neither the Partnership's investments nor the Apartment Complexes owned by the
Local Partnerships will be readily marketable, and there can be no assurance
that the Partnership will be able to dispose of its Local Partnership Interests,
or that the Local Partnerships will be able to dispose of their Apartment
Complexes, at the end of the Compliance Period. The value of the Partnership's
investments will be subject to changes in national and local economic
conditions, including substantial unemployment, which could adversely impact
vacancy levels, rental payment defaults and operating expenses. This, in turn,
could substantially increase the risk of operating losses for the Apartment
Complexes and the Partnership. The Apartment Complexes will be subject to loss
through foreclosure. In addition, each Local Partnership is subject to risks
relating to environmental hazards which might be uninsurable. Because the
Partnership's ability to control its operations will depend on these and other
factors beyond the control of the General Partner and the local general
partners, there can be no assurance that the Partnership operations will be
profitable or that the anticipated Tax Credits will be available to Limited
Partners.

The Apartment Complexes owned by the Local Partnerships in which NTCP has
invested were developed by the Local Operating General Partners (the "Local
Operating General Partners") who acquired the sites and applied for applicable
mortgages and subsidies, if any. NTCP became the principal limited partner in
these Local Partnerships pursuant to arm's-length negotiations with the Local
Operating General Partners. As a limited partner, NTCP's liability for
obligations of the Local Partnership is generally limited to its investment. The
Local Operating General Partner of the Local Partnership retains responsibility
for developing, constructing, maintaining, operating and managing the Apartment
Complex. Under certain circumstances, an affiliate of NAPICO or NTCP may act as
the Local Operating General Partner. An affiliate, National Tax Credit Inc.
("NTC") or another affiliate, is acting as a non-managing, administrative
general partner or special limited partner of each Local Partnership.



<PAGE>   3

During 1997, the Apartment Complexes in which NTCP had invested were
substanially rented.

The following is a schedule of the occupancy status as of December 31, 1997, of
the Apartment Complexes owned by Local Partnerships in which NTCP is a limited
partner.

          SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
                         IN WHICH NTCP HAS AN INVESTMENT
                                DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                       No. of               Units             Percentage of
Name & Location                         Units            Occupied              Total Units
---------------                         -----            --------              -----------
<S>                                    <C>               <C>                  <C> 
Apple Tree
Brigham City, UT                         24                  24                    100%

Blue Lake
Miami, FL                               106                  74                     70%

ComFed Qualified(1)
Omaha, NE                               116                 115                     99%

Concept I & II
Cleveland, OH                            40                  37                     93%

Countryview/Columbus
Columbus, OH                            152                 144                     95%

Dickens
Chicago, IL                              34                  34                    100%

Dynes
Cleveland, OH                            42                  39                     93%

Genoa Plaza
Genoa City, WI                           48                  46                     96%

Glenark
Woonsocket, RI                           67                  67                    100%

Grand Meadows
Grand Blanc, MI                          64                  59                     92%

Grinnell Park
Grinnell, IA                             24                  24                    100%
</TABLE>




<PAGE>   4




                SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
                   IN WHICH NTCP HAS AN INVESTMENT (CONTINUED)
                                DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                       No. of              Units               Percentage of
Name & Location                         Units            Occupied                Total Units
---------------                         -----            --------                -----------
<S>                                    <C>               <C>                   <C>
Hickory Green
Westland, MI                             59                  57                     97%

Holden Village
West Seattle, WA                         96                  92                     96%


Kimberly Court
Seward, AK                               24                  19                     79%

Meadows Apartments
Ypsilanti, MI                           114                 109                     96%

Mountain View - I
Sante Fe, NM                            120                 113                     94%

Mountain View - II
Sante Fe, NM                            159                 146                     92%

Newbury
Oak Creek, WI                           164                 146                     89%

North Liberty
North Liberty, IA                        24                  20                     83%

Paris Hotel
Denver, CO                               17                  17                    100%

Rolling Hills
Pottsgrove Township, PA                 232                 232                    100%

Rose City
Portland, OR                            264                 264                    100%

Summit I - Wallace
Philadelphia, PA                         17                  15                     94%

Summit II - Bergdoll
Philadelphia, PA                          9                   8                     89%

Summit III - Chandler
Philadelphia, PA                         25                  20                     80%
</TABLE>



<PAGE>   5



                SCHEDULE OF PROJECTS OWNED BY LOCAL PARTNERSHIPS
                   IN WHICH NTCP HAS AN INVESTMENT (CONTINUED)
                                DECEMBER 31, 1997


<TABLE>
<CAPTION>
                                       No. of              Units              Percentage of
Name & Location                         Units            Occupied              Total Units
---------------                         -----            --------              -----------
<S>                                    <C>               <C>                  <C>
Terrace Gardens
Lemon Grove, CA                         150                 149                     99%

Ticino
Seattle, WA                              45                  40                     89%

Torres de Plata I
Toa Alta, PR                             72                  72                    100%

Tyrone Elderly
Tyrone, PA                              100                  99                     99%

Victorian Park
Streamwood, IL                          336                 309                     92%

Vinton/Park School
Omaha, NE                                44                  42                     95%
                                      -----               -----

TOTAL                                 2,788               2,632                     94%
                                      =====               =====
</TABLE>



<PAGE>   6


ITEM 2. PROPERTIES:

Through its investments in Local Partnerships, NTCP holds interests in 31
Apartment Complexes. See Item 1 and Schedule for information pertaining to these
Apartment Complexes.

ITEM 3. LEGAL PROCEEDINGS:

As of December 31, 1997, NTCP's General Partner was a plaintiff or defendant in
several lawsuits. In addition, the Partnership is involved in the following
lawsuits arising from transactions in the ordinary course of business. In the
opinion of management and the General Partner, the claims will not result in any
material liability to the Partnership

Victorian Park Associates, which owns a 336-unit Apartment Complex located in
Illinois, defaulted on its mortgage in July 1991 principally because the
unaffiliated Local Operating General Partners failed to pay $800,000 of real
estate taxes required under their guarantees. On March 25, 1992, the Partnership
commenced litigation [National Tax Credit Partners, L.P. v. Havlick, Owings,
United Development et al., Case No. 92C2074 in the United States District Court
for the Northern District of Illinois Eastern Division] against the Local
Operating General Partners to enforce its rights. On November 13, 1992 the
Partnership was advised that a Chapter 11 petition in bankruptcy was filed by
the local operating general partners on behalf of the Local Partnership [In re:
Victorian Park Associates, Debtor, Case No. 92-B-25140, Chapter 11] and that the
lender, Patrician Mortgage ("Patrician"), had accelerated its mortgage. On
January 7, 1993, the Partnership obtained an order compelling the Local
Operating General Partners to perform under their Guarantees, which order was
reversed by the U.S. Court of Appeals for the Seventh Circuit. The Local
Operating General Partners' Seventh Amended Plan of Reorganization (the "Plan")
is now pending approval. Pursuant to the Plan, Patrician is required to reissue
and/or reduce the principal on the first mortgage bonds and the Local Operating
General Partners are required to (i) pay $1,000,000 cash to implement the Plan
and (ii) pay an agreed upon monthly guarantee payment. No assurances can be
given that the Plan will be successfuly implemented. As of December 31, 1997 and
1996, the Partnership's carrying value of the investment in the Victorian Local
Partnership (which represents approximately 5.7% of the Partnership's total
equity initially invested in Local Partnerships) was zero.


In December 1992, Tara Construction, the general contractor for Art Museum
properties (Summit I, II and III), commenced an action in the Court of Common
Pleas, Montgomery County, Pennsylvania Tara Construction v. NTCP et al., (Case
No. 92-23505) against the three Summit Local Partnerships, the Partnership, NTC,
the General Partner, PaineWebber Incorporated, and a PaineWebber affiliate,
seeking damages of approximately $600,000 allegedly due the general contractor
for work done in connection with the completion of construction plus damages for
alleged misrepresentations and punitive damages. The Partnership believes that
the general contractor's claims are barred and/or subject to offset and it has
filed responsive pleadings. The Partnership has not accrued any liability in the
accompanying financial statements as of December 31, 1997 and 1996. Tara
Construction's lawsuit has been dormant for more than three years. Occupancy
levels at the three related Local Partnerships, Summit I, II, and III (Wallace,
Bergdoll, and Chandler School located in Philadelphia) were 94%, 89%, and 80%,
respectively, at December 31, 1997, and the properties have been operating at a
deficit. The Summit I and III properties have approximately $187,000 in
outstanding property taxes (a portion of which could result in liens on the
properties), utility bills, and other trade payables. The local general partner
is currently attempting to negotiate discounted payments and/or payment plans
for these items which, if unsuccessful, could result in foreclosure proceedings
on all three properties. In 1996, the aggregate carrying value of the
investments in Summit I, Summit II and Summit III of approximately $2,290,000
was written off. Summit I, II and III represent 3.2%, 1.4% and 4.6%,
respectively, of NTCP's original portfolio investment.



<PAGE>   7



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

Not applicable.

PART II.

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

The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by PaineWebber Incorporated. It is not
anticipated that any active public market will develop for the purchase and sale
of any Limited Partnership Interest. Limited Partnership Interests may not be
transferred but can be assigned only if certain requirements in the Partnership
Agreement are satisfied. At December 31, 1997, there were 3,937 registered
holders of Limited Partnership Interests in NTCP. The Partnership was not
designed to provide cash distributions to Limited Partners in circumstances
other than refinancing or disposition of its investments in Local Partnerships
and then such distributions, if any, may be limited. Distributions have not been
made from the inception of the Partnership to December 31, 1997.




<PAGE>   8

ITEM 6. SELECTED FINANCIAL DATA:


<TABLE>
<CAPTION>
                                                                     Year Ended December 31,
                                    ----------------------------------------------------------------------------------------

                                        1997               1996               1995               1994               1993
                                    ------------       ------------       ------------       ------------       ------------
<S>                                 <C>                <C>                <C>                <C>                <C>         
Interest and other Income           $     51,975       $     99,016       $     75,125       $     54,226       $     38,446

Operating expenses                      (903,971)          (975,642)        (1,207,679)        (1,337,098)          (990,948)

Distributions from limited
partnership recognized
   as income                              18,381             37,532                 --                 --                 --

Equity in loss of limited
partnerships and
amortization of
acquisition costs                     (2,188,630)        (2,049,514)        (3,828,734)        (2,369,642)        (3,658,302)

Write-off of Local Partnership          (560,766)        (2,289,875)        (1,158,801)                --         (2,258,920)
                                    ------------       ------------       ------------       ------------       ------------

    Net loss                        $ (3,583,011)      $ (5,178,483)      $ (6,120,089)      $ (3,652,514)      $ (6,869,724)
                                    ============       ============       ============       ============       ============

Net loss per limited
partnership interest                $       (148)      $       (215)      $       (254)      $       (151)      $       (285)
                                    ============       ============       ============       ============       ============


Total assets                        $ 14,985,893       $ 17,946,325       $ 22,499,105       $ 27,390,138       $ 30,293,611
                                    ============       ============       ============       ============       ============

Investments in Local
Partnerships                        $ 14,370,207       $ 17,721,398       $ 21,923,823       $ 27,142,069       $ 29,141,967
                                    ============       ============       ============       ============       ============

Capital contributions payable       $    329,030       $    392,300       $    441,300       $         --       $         --
                                    ============       ============       ============       ============       ============

Accrued fees and expenses
due to partners                     $  4,727,721       $  3,996,221       $  3,266,521       $  2,503,091       $  1,878,419
                                    ============       ============       ============       ============       ============
</TABLE>



<PAGE>   9


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

Capital Resources

The Partnership received proceeds totaling $59,749,000 from the sale of Limited
Partnership Interests, pursuant to a registration statement filed on Form S-11,
which sale commenced in June 1989 and terminated in June 1990. This amount
includes $18,907,500 from the sale of 7,563 Additional Limited Partnership
Interests. The proceeds have been used to invest in local limited partnerships
("Local Partnerships"), which own and operate multifamily housing complexes
("Apartment Complexes") that are eligible for low income housing tax credits or,
in certain cases, historic rehabilitation tax credits. As a limited partner of
the Local Partnerships, the Partnership does not have authority over day-to-day
management of the Local Partnerships or their Apartment Complexes. The general
partners responsible for management of the Local Partnerships (the "Local
Operating General Partners") are in most cases not affiliated with the General
Partner of the Partnership. See, however, the discussion below concerning the
replacement of the local operating general partners of certain Local
Partnerships and the assumption of those management responsibilities by National
Tax Credit, Inc. ("NTC"), or other affiliates of the General Partner. The
Partnership has made capital contributions to 32 Local Partnerships (one of
which was foreclosed upon by the lender in 1995) representing a total investment
of approximately $44,811,000.

It is not expected that any of the Local Partnerships in which the Partnership
invested will generate cash from operations sufficient to provide distributions
to the Limited Partners. Such cash from operations, if any, would first be used
to meet operating expenses of the Partnership. The Partnership's investments are
not readily marketable and may be affected by adverse general economic
conditions which, in turn, could substantially increase the risk of operating
losses for the Apartment Complexes, the Local Partnerships and the Partnership.
These problems may result from a number of factors, many of which cannot be
controlled by the General Partner.

The General Partner has the right to cause distributions received by the
Partnership from the Local Partnerships (that would otherwise be available for
distributions as cash flow) to be dedicated to the increase or replenishment of
reserves at the Partnership level. The reserves are available to satisfy working
capital or operating expense needs of the Partnership (including payment of
partnership management fees) and will also be available to pay any excess
third-party costs or expenses incurred by the Partnership in connection with the
administration of the Partnership, the preparation of reports to the Limited
Partners and other investor servicing obligations of the Partnership. At the
discretion of the General Partner, reserves may be available for contributions
to the Local Partnerships.

The Partnership's unrestricted cash reserves as of December 31, 1997 were
approximately $541,000. In order to replenish NTCP's reserves, NTCP sold to the
local general partner an additional portion and further diluted its limited
partner interest in the Rose City local partnership during 1997. The local
general partner will, accordingly, be entitled to an increased allocation of
cash flow and proceeds from the sale or refinancing of the property. NTCP will
continue to receive its allocable portion of housing tax credits, subject to the
allocation made to the additional limited partner identified in a prior report,
through the ten year credit period. As a result of this transaction, NTCP
received $260,000 during 1997. In addition, NTCP sold to an unrelated party a
portion of its limited partner interest in the Countryview local partnership and
received $625,582 during 1997. The amounts received from these sales are traded
as reductions to the Partnership's investment balance in the local partnerships.

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



<PAGE>   10

Limited Partners), or (iii) the sale or disposition of Apartment Complexes.
There can be no assurance that any of such sources would be readily available in
sufficient proportions to fund the capital requirements of the Local
Partnerships. If such sources are not available, the Local Partnerships would
risk foreclosure on their Apartment Complexes if they were unable to renegotiate
the terms of their first mortgages and any other debt secured by the Apartment
Complexes, which would have significant adverse tax consequences to the Limited
Partners.

Liquidity

Each Local Partnership investment has been analyzed by the General Partner with
respect to its probable impact upon the Partnership's liquidity position. In
this regard, the General Partner took into account projected cash flow generated
from each Apartment Complex, the anticipated debt service requirements of the
existing financing and any restructuring or refinancing of such Apartment
Complex, and the division of cash flow in excess of debt service between the
Partnership and the local operating general partner.

Following an acquisition, adverse business or financial developments could
negatively impact cash flow and the Partnership's liquidity position. The
General Partner has attempted to obtain operating deficit guarantees from
certain local general partners to fund operating deficits for limited periods of
time. In addition, as discussed above the Partnership maintains reserves and the
Local Partnerships are expected to maintain working capital reserves independent
of those maintained by the Partnership to the extent that (i) the terms of
mortgage debt encumbering the Apartment Complexes or the terms of any government
assistance program so require, or (ii) the local general partner determines that
such reserves are necessary or advisable. Although reserves are to be maintained
at both the Partnership and Local Partnership levels, if such reserves and other
available income, if any, are insufficient to cover the Partnership's or any
Local Partnership's operating expenses and liabilities, it may be necessary to
accumulate additional funds from distributions received from Local Partnerships
which would otherwise be available for distribution to the Limited Partners, or
to liquidate the Partnership's investment in one or more Local Partnerships.

Reserves of the Partnership and reserves of the Local Partnerships may be
increased or decreased from time to time by the General Partner or the local
general partner, as the case may be, in order to meet anticipated costs and
expenses. The amount of cash flow available for distributions and/or sale as
refinancing proceeds, if any, which is available for distribution to the Limited
Partners may be affected accordingly.

Results of Operations

The Partnership was formed to provide various benefits to its Limited Partners
as discussed in Item 1. It is not expected that any of the Local Partnerships in
which the Partnership has invested will generate cash flow sufficient to provide
for distributions to Limited Partners. The Partnership accounts for its
investments in the Local Partnerships on the equity method, thereby adjusting
its investment balance by its proportionate share of the income or loss of the
Local Partnerships.

In general, in order to avoid recapture of Tax Credits, the Partnership does not
expect that it will voluntarily dispose of its Local Partnership Interests or
approve the sale by a Local Partnership of any Apartment Complex prior to the
end of the applicable 15-year Compliance Period (although earlier dispositions
of Historic Complexes may occur). Because of (i) the nature of the Apartment
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the inability of the
Partnership to directly cause the sale of Apartment Complexes by local general
partners, but generally only to require such local general partners to use their
respective best efforts to find a purchaser for the Apartment Complexes, it is
not possible at this time to predict whether the liquidation of substantially
all of the Partnership's assets and the disposition of the proceeds, if any, in
accordance with the Partnership Agreement will be able to be accomplished
promptly at the end of the 15-year Compliance Period. If a Local Partnership is
unable to sell an Apartment Complex, it is anticipated that the local general
partner will either continue to operate such Apartment Complex or take such
other actions as the local general partner believes to be in the best interest
of the Local Partnership. In addition, circumstances beyond the control of the
General Partner may occur during the Compliance Period which would require the
Partnership to approve the disposition of an Apartment Complex prior to the end
of the Compliance Period.



<PAGE>   11

Except for interim investments in highly liquid debt investments, the
Partnership's investments consist entirely of interests in other Local
Partnerships owning Apartment Complexes. Funds temporarily not required for such
investments in projects are invested in these highly liquid debt investments
earning interest income as reflected in the statement of operations. These
interim investments can be easily converted to cash to meet obligations as they
arise.

The Partnership, as a limited partner in the Local Partnerships in which it has
invested, is subject to the risks incident to the construction, management, and
ownership of improved real estate. The Partnership investments are also subject
to adverse general economic conditions, and accordingly, the status of the
national economy, including substantial unemployment and concurrent inflation,
could increase vacancy levels, rental payment defaults, and operating expenses,
which in turn, could substantially increase the risk of operating losses for the
Apartment Complexes. Certain of the Local Partnerships and their respective
Apartment Complexes are subject to litigation and operating problems. See Item 3
"Legal Proceedings" above and the information which follows.

The Meadows Apartments (the "Local Partnership") is a 114-unit building located
in Ypsilanti, Michigan. The first mortgage loan matured on May 15, 1996. After
the lender refused to negotiate an extension of the loan, the Local Partnership
filed Chapter 11 bankruptcy proceedings to avert foreclosure. A plan of
reorganization for the Local Partnership (the "Plan") was approved by the
bankruptcy court on December 16, 1996. Under the Plan, the existing loan in the
principal amount of $2,890,000, at an interest rate of 10%, was reduced to
$2,100,000 with an interest rate of 9%. In exchange, the lender received
one-third of NTCP's local partnership interest, including anticipated
allocations of housing tax credits in the amount of approximately $488,500. The
property operated at an occupancy level of 96% as of December 1997 and attained
break-even levels of operations during 1997. The Partnership's investment in
Meadows Apartments was zero at December 31, 1997 and 1996, as the investment was
written off in 1995.

Holden Village and Ticino Apartments, located in Seattle, Washington, maintained
average occupancy levels of 96% and 89%, respectively, and experienced operating
deficits of approximately $149,000 and $94,000, respectively, during 1997. The
high cost of servicing the debt is the largest contributing factor associated
with the deficit operations. In January 1998, NTCP was successful in negotiating
an interest rate reduction with the lender for each of the properties. Based on
the loan modifications, the operating performance of each property is expected
to improve substantially. The Partnership's total investment in Holden Village
and Ticino Apartments was approximately $1,306,000 and $1,533,000 at December
31, 1997 and 1996, respectively.

The Dynes Village Apartments complex is operating at a deficit and the first
mortgage loan encumbering the property was delinquent until it was brought
current by NTCP in November 1997. In addition, the property has been audited by
the IRS with respect to tenant qualifications performed by the prior local
operating general partner. The IRS has disqualified all future housing tax
credits based on what they consider non-compliance by the prior local operating
general partner. Finally, the property is budgeted to operate at a deficit
during 1998. As a result, the Partnership's investment in Dynes Village of
$560,766 at December 31, 1997 was written off during the year.

Pursuant to the terms of a workout, dated January 11, 1995 (the "Workout")
agreed between the parties relating to the resolution of an existing default
under the first mortgage loan encumbering Glenark Landing, an annual payment of
$30,000 is due in March 1998 to the Rhode Island Housing and Mortgage Finance
Corporation (the "Lender"). The Workout provides for additional payments of
$42,800 per year, for a five year term, totaling $214,000. The property incurred
significant accounts payable due to necessary repairs, consequently the property
has accrued payables in the amount of $70,000. The General Partner is
negotiating with the Lender for an extension of time to make the $30,000
payment. In addition, the General Partner is requesting a release of available
replacement reserves from the Lender to bring the accounts payable current. The
Partnership's investment in Glenark Landing was zero at December 31, 1997 and
1996.

Pursuant to the terms of a loan workout relating to the Blue Lake Local
Partnership, dated March 25, 1995 (the "Workout"), NTCP is required to
contribute an additional $541,300 to the local partnership over a ten year
period. In exchange, the debt service on the property is payable out of net cash
flow. During 1997 and 1996, approximately $63,000 and $49,000,



<PAGE>   12

respectively, was paid by NTCP to the local partnership under the Workout. The
Partnership's investment in Blue Lake was zero at December 31, 1997 and 1996.

The Partnership accounts for its investments in the Local Partnerships on the
equity method, thereby adjusting its investment balance by its proportionate
share of the income or loss of the Local Partnerships. The equity in loss of
Local Partnerships is higher in 1995, compared to 1997 and 1996, because losses,
for certain Local Partnerships where the investment balances had previously been
reduced to zero, are not recognized. However, during 1995, the Partnership
agreed to contribute $556,300 to a Local Partnership with a zero investment
account, which resulted in additional losses of $556,300 being recognized. Other
Local Partnerships with positive investment accounts also recognized higher
losses in 1995 as compared to 1997 and 1996. In addition, Dynes Village, the
Summits and the Meadows Apartments were written off in 1997, 1996 and 1995,
respectively, as discussed above.

Distributions received from Local Partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.

Operating expenses consist primarily of recurring general and administrative
expenses and professional fees for services rendered to the Partnership. In
addition, an annual partnership management fee in an amount equal to 0.5% of
invested assets is payable to the General Partner and Special Limited Partner.
The management fee represents the annual recurring fee which will be paid to the
General Partner for its continuing management of Partnership affairs. The
decrease in legal fees for the year ended December 31, 1997, as compared to 1996
and 1995, is due to higher legal fees in 1996 and 1995 associated with the final
settlement of litigation involving the Blue Lake, Dynes and Glenark Local
Partnerships as well as legal fees being paid in connection with the Victorian
Park bankruptcy, and legal fees incurred in connection with various securities
matters.

The Partnership has assessed the potential impact of the Year 2000 computer
systems issue on its operations. The Partnership believes that no significant
actions are required to be taken by the Partnership to address the issue and
that the impact of the Year 2000 computer systems issue will not materially
affect the Partnership's future operating results or financial condition.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:

The Financial Statements and Supplementary Data are listed under Item 14.

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

Not applicable.



<PAGE>   13



                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                              FINANCIAL STATEMENTS,
                          FINANCIAL STATEMENT SCHEDULES
                  AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                                DECEMBER 31, 1997






<PAGE>   14

                       [DELOITTE & TOUCHE LLP LETTERHEAD]



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Partners of
National Tax Credit Partners, L.P.
(A California limited partnership)

We have audited the accompanying balance sheets of National Tax Credit Partners,
L.P. (a California limited partnership) as of December 31, 1997 and 1996, and
the related statements of operations, partners' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 1997. Our
audits also included the financial statement schedules listed in the index on
item 14. These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain investee limited partnerships, the investments in which are reflected in
the accompanying financial statements using the equity method of accounting. The
investments in these investee limited partnerships represent 40 percent and 35
percent of total assets as of December 31, 1997 and 1996, respectively, and the
equity in the net loss of these partnerships represents 44 percent, 55 percent
and 37 percent of the total net loss of the Partnership for the years ended
December 31, 1997, 1996 and 1995, respectively, and represent a substantial
portion of the investee information in Note 2 and the financial statement
schedules. The financial statements of these investee limited partnerships were
audited by other auditors. Their reports have been furnished to us and our
opinion, insofar as it relates to the amounts included for those limited
partnerships, is based solely on the reports of the other auditors.

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

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


DELOITTE & TOUCHE LLP

Los Angeles, California
April 8, 1998

<PAGE>   15

[ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT


To the Partners
Countryview Columbus, Ltd.


We have audited the balance sheets of COUNTRYVIEW COLUMBUS, LTD. as of December
31, 1997 and 1996 and the related statements of operations, changes in
partners' equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Countryview Columbus, Ltd. as
of December 31, 1997 and 1996 and the results of its operations, changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

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

/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------

Chicago, Illinois
March 11, 1998

     
<PAGE>   16
                               [HSW&E LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT


To the Partners
Genoa Plaza, Limited Partnership
West Des Moines, Iowa


      We have audited the accompanying balance sheets of GENOA PLAZA, LIMITED
PARTNERSHIP as of December 31, 1997 and 1996, and the related statements of
operations, partners' equity (deficit) and cash flows for the years 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 audits.

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

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Genoa Plaza, Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

      In accordance with Government Auditing Standards, we have also issued our
reports dated January 13, 1998 on our consideration of Genoa Plaza, Limited
Partnership' internal control and on its compliance with laws and regulations.


                               /s/ HUMISTON, SKOKAN, WARREN & EICHENBERGER, P.C.
                               -------------------------------------------------

January 13, 1998

West Des Moines, Iowa



                                       1

<PAGE>   17
              [HUMISTON, SKOKAN, WARREN & EICHENGERGER LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT


To the Partners
Genoa Plaza, Limited Partnership
West Des Moines, Iowa

     We have audited the accompanying balance sheets of GENOA PLAZA, LIMITED 
PARTNERSHIP as of December 31, 1996 and 1995, and the related statements of
operations, partners' equity (deficit) and cash flows for the years then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion of these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Genoa Plaza, Limited
Partnership as of December 31, 1996 and 1995 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.



/s/ HUMISTON, SKOKAN, WARREN & EICHENGERGER, P.C.
-------------------------------------------------

January 10, 1997
West Des Moines, Iowa


                                       1


<PAGE>   18

                        [PLANTE & MORAN, LLP LETTERHEAD]



                          Independent Auditor's Report



To the Partners
Grand Meadows II Limited Dividend
Housing Association Limited Partnership

We have audited the accompanying balance sheet of Grand Meadows II Limited
Dividend Housing Association Limited Partnership (a Michigan limited
partnership) MSHDA Development No. 827, as of December 31, 1997, 1996, and 1995,
and the related statements of profit and loss, partners' equity, and cash flows
for the years 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 audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Grand Meadows II Limited
Dividend Housing Association Limited Partnership as of December 31, 1997, 1996,
and 1995, and its profit and loss, partners' equity, and its cash flows for the
years then ended, in conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 9, 1998, on our consideration of the Partnership's internal
controls and a report dated January 9, 1998, on its compliance with laws and
regulations.


                                                         /s/ PLANTE & MORAN, LLP
                                                         -----------------------

January 9, 1998

East Lansing, Michigan 48826-2500


<PAGE>   19

                               [HSW&E LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT

To the Partners
Grinnell Park Apartments, Limited Partnership
West Des Moines, Iowa


      We have audited the accompanying balance sheets of GRINNELL PARK
APARTMENTS, LIMITED PARTNERSHIP as of December 31, 1997 and 1996, and the
related statements of operations, partners' equity (deficit) and cash flows for
the years 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 audits.

      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 provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Grinnell Park Apartments,
Limited Partnership as of December 31, 1997 and 1996 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.


                               /s/ HUMISTON, SKOKAN, WARREN & EICHENBERGER, P.C.
                               -------------------------------------------------

January 14, 1998

West Des Moines, Iowa

<PAGE>   20

              [HUMISTON, SKOKAN, WARREN & EICHENBERGER, LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Grinnell Park Apartments, Limited Partnership
West Des Moines, Iowa


      We have audited the accompanying balance sheets of GRINNELL PARK
APARTMENTS, LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the
related statements of operations, partners' equity (deficit) and cash flows for
the years 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 audits.

      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 provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Grinnell Park Apartments,
Limited Partnership as of December 31, 1996 and 1995 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.


                               /s/ HUMISTON, SKOKAN, WARREN & EICHENBERGER, P.C.
                               -------------------------------------------------

January 10, 1997


West Des Moines, Iowa



<PAGE>   21
[LOGO]

ALTSCHULER, MELVOIN AND GLASSER LLP                            Chicago
Certified Public Accountants and Consultants                   Los Angeles
                                                               New York 
                                                               Tampa
                                                               Washington, D.C.
                          INDEPENDENT AUDITORS' REPORT

To the Partners
Hickory Green Limited Partnership

We have audited the balance sheets of HICKORY GREEN LIMITED PARTNERSHIP as of
December 31, 1997 and 1996 and the related statements of operations, changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hickory Green Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations,
changes in partners' equity and cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.

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

Altschuler, Melvoin and Glasser LLP
Chicago, Illinois
February 21, 1998

35 South Wacker Drive, Suite 2600, Chicago, Illinois 60606-7494
312-207-2809 Fax 312-207-2954 http://www.amgnet.com

Associated Worldwide With Summit International Associates, Inc.
 
<PAGE>   22


                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT

To the Partners
Holden Village Associates

We have audited the balance sheets of HOLDEN VILLAGE ASSOCIATES as of December
31, 1997 and 1996 and the related statements of operations, changes in partners'
equity and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Holden Village Associates as of
December 31, 1997 and 1996 and the results of its operations, changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

The financial statements have been prepared assuming the Partnership will
continue as a going concern. As described in Note 6, insufficient cash flows and
recurring losses from operations raise substantial doubt about the Project's
ability to continue as a going concern. Management's plans regarding these
matters are described in Note 6. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

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

                                         /s/ ALTSCHULER, MELVOIN AND GLASSER LLP
                                         ---------------------------------------


Los Angeles, California
March 5, 1998



<PAGE>   23

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT


To the Partners of
Holden Village Associates


We have audited the accompanying balance sheets of HOLDEN VILLAGE ASSOCIATES (a
limited partnership) as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners, equity and cash flows for the
years 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 audits.

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 provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Holden village Associates as of
December 31, 1996 and 1995, and the results of its operations, changes in its
partners' equity, and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. Insufficient cash flows and
recurring losses from operations raise substantial doubt about the Partnership's
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 6. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




                                       2.
<PAGE>   24



Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The additional 1996 financial data, listed in the
Table of Contents, are presented for the purpose of additional analysis and are
not a required part of the financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the 1996 financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.


                                         /s/ ALTSCHULER, MELVOIN AND GLASSER LLP
                                         ---------------------------------------

Los Angeles, California

March 7, 1997





                                       3.
<PAGE>   25

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT



To the Partners
Mountain View Limited Partnership

We have audited the balance sheets of MOUNTAIN VIEW LIMITED PARTNERSHIP as of
December 3 1, 1997 and 1996 and the related statements of operations, changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mountain View Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations,
changes in partners' equity and cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally accepted accounting
principles.

Our audits were conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The additional financial data are presented for the
purpose of additional analysis and are not a required part of the financial
statements. Such information has been subjected to the auditing procedures
applied in the audits of the financial statements arid, in our opinion, is
fairly stated in all material respects in relation to the financial statements
taken as a whole.


/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------

Los Angeles, California

March 5, 1998



<PAGE>   26

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT



To the Partners of
Mountain View Limited Partnership


We have audited the accompanying balance sheets of MOUNTAIN VIEW LIMITED
PARTNERSHIP as of December 31, 1996 and 1995, and the related statements of
operations, changes in partners' equity and cash flows for the years 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 audits.

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 provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of mountain View Limited
Partnership as of December 31, 1996 and 1995, and its results of operations,
changes in partners' equity, and cash flows for the years then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the financial
statements, taken as a whole. The additional 1996 financial data, listed in the
Table of Contents, are presented for the purpose of additional analysis and are
not a required part of the financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the 1996 financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.


/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------


Los Angeles, California
February 17, 1997



<PAGE>   27

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT



To the Partners
Mountain View Limited Partnership II

We have audited the balance sheets of MOUNTAIN VIEW LIMITED PARTNERSHIP II as of
December 31, 1997 and 1996 and the related statements of operations, changes in
partners' equity and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mountain View Limited
Partnership II as of December 31, 1997 and 1996 and the results of its
operations, changes in partners' equity and cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.

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


/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------


Los Angeles, California
February 10, 1998


<PAGE>   28

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]


                          INDEPENDENT AUDITORS' REPORT



To the Partners of
Mountain View Limited Partnership II


We have audited the accompanying balance sheets of MOUNTAIN VIEW LIMITED
PARTNERSHIP II as of December 31, 1996 and 1995, and the related statements of
operations, changes in partners' equity and cash flows for the years 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 audits.

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 provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mountain View Limited
Partnership II as of December 31, 1996 and 1995, and its results of operations,
changes in partners, equity and cash flows for the years then ended in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the financial
statements, taken as a whole. The additional 1996 financial data, listed in the
Table of Contents, are presented for the purpose of additional analysis and are
not a required part of the financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the 1996 financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.


/s/ ALTSCHULER, MELVOIN AND GLASSER LLP
---------------------------------------


Los Angeles, California
February 17, 1997



<PAGE>   29

                               [HSW&E LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT

To the Partners
North Liberty Park, Limited Partnership
Nest Des Moines, Iowa


      We have audited the accompanying balance sheets of NORTH LIBERTY PARK,
LIMITED PARTNERSHIP as of December 31, 1997 and 1996, and the related statements
of operations, partners' equity (deficit) and cash flows for the years 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 audits.

      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 provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of North Liberty Park, Limited
Partnership as of December 31, 1997 and 1996 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.


/s/ HUMISTON, SKOKAN, WARREN & EICHENBERGER P.C.
------------------------------------------------


January 9, 1998
West Des Moines, Iowa



                                       1

<PAGE>   30

              [HUMISTON, SKOKAN, WARREN & EICHENBERGER LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT


To the Partners
North Liberty Park, Limited Partnership
West Des Moines, Iowa


      We have audited the accompanying balance sheets of NORTH LIBERTY PARK,
LIMITED PARTNERSHIP as of December 31, 1996 and 1995, and the related statements
of operations, partners' equity (deficit) and cash flows for the years 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 audits.

      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 provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of North Liberty Park, Limited
Partnership as of December 31, 1996 and 1995 and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.



/s/ HUMISTON, SKOKAN, WARREN & EICHENBERGER P.C.
------------------------------------------------


January 9, 1997
West Des Moines, Iowa



                                       1

<PAGE>   31

              [BERNSTEIN SIMPSON GILBERT & MOROWITZ LLC LETTERHEAD]


                          Independent Auditor's Report


To the Partners
Rolling Hills Apts. Ltd.
Pottsgrove Township, Pa.

We have audited the accompanying balance sheets of Rolling Hills Apts. Ltd. (a
limited partnership), Pa. Project No. PHFA No. 61 as of December 31, 1997 and
1996, and the related statements of income, changes in partners' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Rolling Hills Apts. Ltd.'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 the 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.



<PAGE>   32



In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rolling Hills Apts. Ltd. Pa.
Project No. PHFA No. 61 as of December 31, 1997 and 1996, and the results of its
operations, changes in partners, deficit and cash flows for the years then ended
in conformity with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report (shown
on pages 15 to 31) are presented for the purposes of additional analysis and are
not a required part of the financial statements of Rolling Hills Apts. Ltd. Pa.
Project No. PHFA No. 61. 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 financial
statements taken as a whole.


Respectfully submitted,


/s/ BERNSTEIN SIMPSON GILBERT & MOROWITZ LLC
--------------------------------------------
BERNSTEIN, SIMPSON, GILBERT AND MOROWITZ, LLC



Atlantic City, N.J.
February 9, 1998



<PAGE>   33

              [BERNSTEIN SIMPSON GILBERT & MOROWITZ LLC LETTERHEAD]



                          Indenendent Auditor's Report


To the Partners
Rolling Hills Apts. Ltd.
Pottsgrove Township, Pa.


We have audited the accompanying balance sheets of Rolling Hills Apts. Ltd. (a
limited partnership), HUD Project No. PHFA No. 61 as of December 31, 1996 and
1995, and the related statements of income, changes in partners' deficit and
cash flows for the years then ended. These financial statements are the
responsibility of the Rolling Hills Apts. Ltd.'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 the 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.



<PAGE>   34


In our opinion, the statements referred to above present fairly, in all material
respects, the financial position of Rolling Hills Apts. Ltd. HUD Project No.
PHFA No. 61 as of December 31, 1996 and 1995, and the results of its operations,
changes in partners' deficit and Cash f1ows for the years then ended in
conformity with generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the financial
statements taken as a whole. The supporting data included in the report (shown
on pages 15 to 31) are presented for the purposes of additional analysis and are
not a required part of the financial statements of Rolling Hills Apts. Ltd.
Project No. PHFA No. 61. 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 financial
statements taken as a whole.


Respectfully submitted,


/s/ BERNSTEIN SIMPSON GILBERT & MOROWITZ LLC
--------------------------------------------
BERNSTEIN, SIMPSON, GILBERT AND MOROWITZ, LLC


Atlantic City, N.J.
February 8, 1997



<PAGE>   35

                [TORRES LLOMPART, SANCHEZ RUIZ & CO LETTERHEAD]



              INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS


PARTNERS
TORRES DEL PLATA I LIMITED PARTNERSHIP
SAN JUAN, PUERTO RICO

We have audited the accompanying balance sheets of Torres del Plata I Limited
Partnership as of December 31, 1997 and 1996, and the related statements of
operations, partners' equity, and cash flows for the years 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 audits.

We conducted our audits in accordance with generally accepted auditing standards
and Government Auditing Standards, issued by the Comptroller General of the
United States and the US Department of Agriculture, Farmers Home Administration
Audit Program Handbook, issued in December 1989. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statements presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Torres del Plata I Limited
Partnership as of December 31, 1997 and 1996, and the results of its operations,
changes in partners' equity and its cash flows for the years then ended in
conformity with generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 28, 1998, on our consideration of the Partnership's internal
control structure and a report dated January 28, 1998 on its compliance with
laws, regulations, contracts, loan covenants and agreements.

                                          /s/ TORRES LLOMPART, SANCHEZ RUIZ & CO
                                          --------------------------------------



January 28, 1998
License No. 169
San Juan, Puerto Rico

Stamp number 1462219 was affixed
to the original of this report.



<PAGE>   36

                [TORRES LLOMPART, SANCHEZ RUIZ & CO LETTERHEAD]



              INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS


PARTNERS
TORRES DEL PLATA I LIMITED PARTNERSHIP
SAN JUAN, PUERTO RICO

We have audited the accompanying balance sheet of Torres del Plata I Limited
Partnership as of December 31, 1996, and the related statements of operations,
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Torres del Plata I Limited Partnership as
of December 31, 1995, were audited by other auditors whose report dated January
22, 1996, expressed an unqualified opinion on those statements.

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 statements
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 Torres del Plata I Limited
Partnership as of December 31, 1996, and the results of its operations, changes
in partners' equity and cash flows for the year then ended in conformity with
generally accepted accounting principles.

In accordance with Government Auditing Standards, we have also issued a report
dated January 23, 1997, on our consideration of the Partnership's internal
control structure and a report dated January 23, 1997 on its compliance with
laws, regulations, contracts, loan covenants and agreements.

                                          /s/ TORRES LLOMPART, SANCHEZ RUIZ & CO
                                          --------------------------------------

January 23, 1997
License No. 169
San Juan, Puerto Rico

Stamp number 1392913 was
affixed to the original of this report.





<PAGE>   37



                          INDEPENDENT AUDITORS' REPORT


TO THE PARTNERS OF
TERRACE GARDENS LIMITED PARTNERSHIP,
A CALIFORNIA LIMITED PARTNERSHIP:



We have audited the accompanying balance sheets of Terrace Gardens Limited
Partnership, a California Limited Partnership, as of December 31, 1997 and 1996,
and the related statements of operations, changes in partners' equity (deficit)
and cash flows for the years 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 audits.

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 provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Terrace Gardens Limited
Partnership, a California Limited Partnership, as of December 31, 1997 and 1996,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.




San Diego, California
January 23, 1998



<PAGE>   38

                [ALTSCHULER, MELVOIN AND GLASSER LLP LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT

To the Partners
100 Sixth Avenue Associates, Limited Partnership
aka Ticino Apartments

We have audited the balance sheets of 100 SIXTH AVENUE ASSOCIATES, LIMITED
PARTNERSHIP AKA TICINO APARTMENTS as of December 31, 1997 and 1996 and the
related statements of operations, changes in partners' equity and cash flows for
each of the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of 100 Sixth Avenue Associates,
Limited Partnership as of December 31, 1997 and 1996 and the results of its
operations, changes in partners' equity and cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.

The financial statements have been prepared assuming the Partnership will
continue as a going concern. As described in Note 6, insufficient cash flows and
recurring losses from operations raise substantial doubt about the Project's
ability to continue as a going concern. Management's plans regarding these
matters are described in Note 6. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

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

                                         /s/ ALTSCHULER, MELVOIN AND GLASSER LLP
                                         ---------------------------------------


Los Angeles, California
March 5, 1998



<PAGE>   39

                    [BLACKMAN & ASSOCIATES, P.C. LETTERHEAD]



                          INDEPENDENT AUDITORS' REPORT


To the Partners
Vinton/Park School Apartments
  Limited Partnership
Omaha, Nebraska


We have audited the accompanying balance sheets of Vinton/Park School Apartments
Limited Partnership (a Nebraska Limited Partnership) as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital
accounts and cash flows for the years ended December 31, 1997, 1996 and 1995.

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 our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Vinton/Park School Apartments
Limited Partnership at December 31, 1997 and 1996 and the results of its
operations, changes in partners' capital accounts and cash flows for the years
ended December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.

                                                 /s/ BLACKMAN & ASSOCIATES, P.C.
                                                 -------------------------------


Omaha, Nebraska
January 23, 1998

<PAGE>   40
                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                           DECEMBER 31, 1997 AND 1996


<TABLE>
<CAPTION>
                                                                   1997             1996
                                                               -----------      -----------
<S>                                                            <C>              <C>        
                         ASSETS
INVESTMENTS IN LIMITED PARTNERSHIPS
    (Notes 1 and 2)                                            $14,370,207      $17,721,398

CASH AND CASH EQUIVALENTS (Note 1)                                 540,686          149,927

RESTRICTED CASH                                                     75,000           75,000
                                                               -----------      -----------

TOTAL ASSETS                                                   $14,985,893      $17,946,325
                                                               ===========      ===========


             LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:
Accrued fees and expenses due to partners (Notes 4 and 7)      $ 4,727,721      $ 3,996,221
Capital contributions payable (Note 3)                             329,030          392,300
Accounts payable and accrued expenses                              224,703          270,354
                                                               -----------      -----------
                                                                 5,281,454        4,658,875


CONTINGENCIES (Note 6)


PARTNERS' EQUITY                                                 9,704,439       13,287,450
                                                               -----------      -----------

TOTAL LIABILITIES AND PARTNERS' EQUITY                         $14,985,893      $17,946,325
                                                               ===========      ===========
</TABLE>



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



<PAGE>   41


                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF OPERATIONS
             FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                  1997              1996              1995
                                              -----------       -----------       -----------
<S>                                           <C>               <C>               <C>        
INTEREST AND OTHER INCOME                     $    51,975       $    99,016       $    75,125
                                              -----------       -----------       -----------

OPERATING EXPENSES:
     Management fees - partners (Note 4)          692,956           692,956           692,955
     Legal and accounting                          66,790           132,991           374,878
     General and administrative (Note 4)          144,225           149,695           139,846
                                              -----------       -----------       -----------

         Total operating expenses                 903,971           975,642         1,207,679
                                              -----------       -----------       -----------

LOSS FROM PARTNERSHIP OPERATIONS                 (851,996)         (876,626)       (1,132,554)

WRITE-OFF OF INVESTMENT IN
     LIMITED PARTNERSHIP (Note 2)                (560,766)       (2,289,875)       (1,158,801)

DISTRIBUTIONS FROM LIMITED
     PARTNERSHIPS  RECOGNIZED
     AS  INCOME                                    18,381            37,532                --

EQUITY IN LOSS OF LIMITED
     PARTNERSHIPS AND AMORTIZATION
     OF ACQUISITION COSTS (Note 2)             (2,188,630)       (2,049,514)       (3,828,734)
                                              -----------       -----------       -----------

NET LOSS                                      $(3,583,011)      $(5,178,483)      $(6,120,089)
                                              ===========       ===========       ===========

NET LOSS PER LIMITED
     PARTNERSHIP INTEREST (Note 1)            $      (148)      $      (215)      $      (254)
                                              ===========       ===========       ===========
</TABLE>



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



<PAGE>   42


                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                   STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995



<TABLE>
<CAPTION>
                                      Special
                                      Limited           General           Limited
                                      Partners          Partners          Partners              Total
                                    ------------      ------------       ------------       ------------
<S>                                 <C>               <C>                <C>                <C>         
PARTNERS' EQUITY (DEFICIENCY),
        January 1, 1995             $      1,000      $   (272,963)      $ 24,857,985       $ 24,586,022

      Net loss for 1995                       --           (61,201)        (6,058,888)        (6,120,089)
                                    ------------      ------------       ------------       ------------

PARTNERS' EQUITY (DEFICIENCY),
      December 31, 1995                    1,000          (334,164)        18,799,097         18,465,933

      Net loss for 1996                       --           (51,785)        (5,126,698)        (5,178,483)
                                    ------------      ------------       ------------       ------------

PARTNERS' EQUITY (DEFICIENCY),
      December 31, 1996                    1,000          (385,949)        13,672,399         13,287,450

      Net loss for 1997                       --           (35,830)        (3,547,181)        (3,583,011)
                                    ------------      ------------       ------------       ------------

PARTNERS' EQUITY (DEFICIENCY),
      December 31, 1997             $      1,000      $   (421,779)      $ 10,125,218       $  9,704,439
                                    ============      ============       ============       ============
</TABLE>



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




<PAGE>   43



                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


<TABLE>
<CAPTION>
                                                                    1997              1996              1995
                                                                -----------       -----------       -----------
<S>                                                             <C>               <C>               <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net  loss                                                   $(3,583,011)      $(5,178,483)      $(6,120,089)
    Adjustments to reconcile net loss to net cash
      used in operating activities:
    Equity in losses of limited partnerships
      and amortization of acquisition costs                       2,188,630         2,049,514         3,828,734
    Write-off of investee partnership                               560,766         2,289,875         1,158,801
    Increase in:
      Accrued fees and expenses due to partners                     731,500           729,700           763,430
      Accounts payable and accrued expenses                         (45,651)          (54,997)           24,326
                                                                -----------       -----------       -----------

    Net cash used in operating activities                          (147,766)         (164,391)         (344,798)
                                                                -----------       -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Investments in investee partnerships:
    Capital contributions and advances to ( recovery from)
      limited partnerships                                          494,576          (223,816)          112,749
    Capitalized acquisition costs and fees                              305                --            (2,745)
    Distributions recognized as a return of capital                 106,914            86,852           120,707
    Increase (decrease) in capital contributions payable            (63,270)          (49,000)          441,300
    Decrease in other assets                                             --                --            16,894
                                                                -----------       -----------       -----------

    Net cash provided by (used in) investing activities             538,525          (185,964)          688,905
                                                                -----------       -----------       -----------

NET INCREASE (DECREASE) IN CASH AND
    CASH EQUIVALENTS                                                390,759          (350,355)          344,107

CASH AND CASH EQUIVALENTS,
    beginning of year                                               149,927           500,282           156,175
                                                                -----------       -----------       -----------

CASH AND CASH EQUIVALENTS,
     end of year                                                $   540,686       $   149,927       $   500,282
                                                                ===========       ===========       ===========
</TABLE>



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



<PAGE>   44


                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Organization

  National Tax Credit Partners, L.P. (the "Partnership") was formed under the
  California Revised Limited Partnership Act and organized on March 7, 1989. The
  Partnership was formed to invest primarily in other limited partnerships which
  own and operate multifamily housing complexes that are eligible for low income
  housing tax credits or, in certain cases, for historic rehabilitation tax
  credits. The general partner of the Partnership (the "General Partner") is
  National Partnership Investments Corp., a California corporation ("NAPICO").
  Casden Investment Corporation owns 100% of NAPICO's stock. The special limited
  partner of the Partnership (the "Special Limited Partner") is PaineWebber
  T.C., Inc., a Delaware corporation.

  The Partnership originally registered 14,000 units, consisting of 28,000
  Limited Partnership Interests ("LPI"), and warrants to purchase a maximum of
  14,000 Additional Limited Partnership Interests ("ALPI"). The term of the
  offering expired in June 1990, at which date the Partnership raised
  $59,749,000 from the sale of 16,336 LPI and warrants representing 7,563 ALPI.

  The General Partner has a 1% interest in operating profits and losses of the
  Partnership. The limited partners will be allocated the remaining 99% interest
  in proportion to their respective investments.

  The Partnership shall continue in full force and effect until December 31,
  2029, unless terminated prior to that, pursuant to the partnership agreement
  or law.

  Upon total or partial liquidation of the Partnership or the disposition or
  partial disposition of a project or project interest and distribution of the
  proceeds, the General Partner will be entitled to a property disposition fee
  as mentioned in the partnership agreement. The limited partners will have a
  priority item equal to their invested capital plus a 10% priority return as
  defined in the partnership agreement. This property disposition fee may accrue
  but shall not be paid until the limited partners have received distributions
  equal to 100% of their capital contributions plus the 10% priority return.

  Use of Estimates

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

  Method of Accounting for Investments in Limited Partnerships

  The investments in limited partnerships are accounted for using the equity
  method. Acquisition, selection and other costs related to the acquisition of
  the projects acquired are capitalized as part of the investment accounts and
  are being amortized on a straight line basis over the estimated lives of the
  underlying assets, which is generally 30 years.



                                       5

<PAGE>   45


                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

  Net Loss Per Limited Partnership Interest

  Net loss per limited partnership interest was computed by dividing the limited
  partners' share of net loss by the number of limited partnership interests
  outstanding during the year. The number of limited partnership interests was
  23,899 for all years presented.

  Cash and Cash Equivalents

  The Partnership considers all highly liquid debt instruments purchased with an
  original maturity of three months or less to be cash equivalents.

  Impairment of Long-Lived Assets

  The Partnership reviews long-lived assets to determine if there has been any
  permanent impairment whenever events or changes in circumstances indicate that
  the carrying amount of the asset may not be recoverable. If the sum of the
  expected future cash flows is less than the carrying amount of the assets, the
  Partnership recognizes an impairment loss.

2.    INVESTMENTS IN LIMITED PARTNERSHIPS

  The Partnership holds limited partnership interests in 31 local limited
  partnerships (the "Local Partnerships"). As a limited partner of the Local
  Partnerships, the Partnership does not have authority over day-to-day
  management of the Local Partnerships or their properties (the "Apartment
  Complexes"). The general partners responsible for management of the Local
  Partnerships (the "Local Operating General Partners") are not affiliated with
  the General Partner of the Partnership, except as discussed below.

  At December 31, 1997, the Local Partnerships own residential projects
  consisting of 2,788 apartment units.

  The Partnership, as a limited partner in each Local Partnership, is generally
  entitled to 99 percent of the operating profits and losses of the Local
  Partnerships. National Tax Credit, Inc. (NTC), an affiliate of the General
  Partner, serves either as a special limited partner or non-managing
  administrative general partner in which case it receives .01 percent of
  operating profits and losses of the Local Partnership, or as the Local
  Operating General Partner of the Local Partnership in which case it is
  entitled to .09 percent of operating profits and losses of the Local
  Partnership. The Partnership is also generally entitled to receive 50 percent
  of the net cash flow generated by the Apartment Complexes, subject to
  repayment of any loans made to the Local Partnerships (including loans
  provided by NTC or an affiliate), repayment for funding of development deficit
  and operating deficit guarantees by the Local Operating General Partners or
  their affiliates (excluding NTC and its affiliates), and certain priority
  payments to the Local Operating General Partners other than NTC or its
  affiliates.

  The Partnership's allocable share of losses from Local Partnerships are
  recognized in the financial statements until the related investment account is
  reduced to a zero balance. Losses incurred after the investment account is
  reduced to zero are not recognized. The cumulative amount of the unrecognized
  equity in losses of unconsolidated limited partnerships was approximately
  $14,981,471 and $13,934,000 as of December 31, 1997 and 1996, respectively.



                                       6

<PAGE>   46

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

 Distributions from the Local Partnerships are accounted for as a return of
 capital until the investment balance is reduced to zero or to a negative amount
 equal to further capital contributions required. Subsequent distributions
 received will be recognized as income.

 The following is a summary of the investments in and advances to Local
 Partnerships and reconciliation to the Local Partnerships accounts:

<TABLE>
<CAPTION>
                                                                                1997               1996
                                                                            ------------       ------------
<S>                                                                         <C>                <C>         
         Investment balance, beginning of year                              $ 17,721,398       $ 21,923,823
         Capital contributions to (recovery from) limited partnerships          (494,576)           223,816
         Capitalized acquisition costs and fees (Note 3)                            (305)                --
         Equity in loss of limited partnerships                               (2,059,308)        (1,893,223)
         Write off of investee partnership                                      (560,766)        (2,289,875)
         Amortization of capitalized acquisition costs and fees                 (129,322)          (156,291)
         Distributions recognized as a return of capital                        (106,914)           (86,852)
                                                                            ------------       ------------

         Investment balance, end of year                                    $ 14,370,207       $ 17,721,398
                                                                            ============       ============
</TABLE>


 In 1997, the Partnership received approximately $886,000 from the sale of a
 portion of its limited partner interest in two Local Partnerships.

 The difference between the investment per the accompanying balance sheets at
 December 31, 1997 and 1996, and the equity per the Local Partnerships' combined
 financial statements is due primarily to cumulative unrecognized equity in
 losses of certain Local Partnerships the Partnership's recording of capital
 contributions payable to the Local Partnerships in its investment balance and
 costs capitalized to the investment account.

 Victorian Park

 Victorian Park Associates, which owns a 336-unit Apartment Complex located in
 Illinois, defaulted on its mortgage in July 1991 principally because the
 unaffiliated Local Operating General Partners failed to pay $800,000 of real
 property taxes required under their guarantees. On March 25, 1992, the
 Partnership commenced litigation against the Local Operating General Partners
 to enforce its rights. On November 13, 1992 the Partnership was advised that a
 Chapter 11 petition in bankruptcy was filed by the Local Operating General
 Partners on behalf of the Local Partnership and that the lender, Patrician
 Mortgage ("Patrician"), had accelerated its mortgage. On January 7, 1993, the
 Partnership obtained an order compelling the Local Operating General Partners
 to perform under their Guarantees, which order was reversed by the U.S. Court
 of Appeals for the Seventh Circuit. The Local Operating General Partners'
 Seventh Amended Plan of Reorganization (the "Plan") is now pending approval.
 Pursuant to the Plan, Patrician is required to reissue and/or reduce the
 principal on the first mortgage bonds and the Local Operating General Partners
 are required to (i) pay $1,000,000 cash to implement the Plan and (ii) pay an
 agreed upon monthly guarantee payment. No assurances can be given that the Plan
 will be successfully implemented. As of December



                                       7

<PAGE>   47

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997



2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

 31, 1997 and 1996, the Partnership's carrying value of the investment in the
 Victorian Local Partnership (which represents approximately 5.7 percent of the
 Partnership's total equity initially invested in Local Partnerships) was zero.

 Summit I, II and III

 The general contractor for three related Local Partnerships, Summit I, Summit
 II and Summit III, initiated a lawsuit in December 1992 against the Local
 Partnerships and the Partnership seeking damages in the amount of approximately
 $600,000 allegedly due pursuant to the respective general contracts plus
 damages for alleged misrepresentations and punitive damages. The Partnership
 believes that the general contractor's claims are barred and/or subject to
 offset and it has filed responsive pleadings. The Partnership has not accrued
 any liability in the accompanying financial statements as of December 31, 1997
 and 1996. The lawsuit has been dormant for more than three years. Occupancy
 levels at the three related Local Partnerships, Summit I, II, and III (Wallace,
 Bergdoll, and Chandler School located in Philadelphia) were 94%, 89%, and 80%,
 respectively, at December 31, 1997, and the properties have been operating at a
 deficit. The Summit I and III properties have approximately $187,000 in
 outstanding property taxes (a portion of which could result in liens on the
 properties), utility bills, and other trade payables. The local general partner
 is currently attempting to negotiate discounted payments and/or payment plans
 for these items which, if unsuccessful, could result in foreclosure proceedings
 on all three properties. In 1996, the aggregate carrying value of the
 investments in Summit I, Summit II and Summit III of approximately $2,290,000
 was written off. Summits I, II and III represent 3.2%, 1.4% and 4.6%,
 respectively, of NTCP's original portfolio investment.

 Meadows

 The Meadows Apartments (the "Local Partnership") is a 114-unit building located
 in Ypsilanti, Michigan. The first mortgage loan matured on May 15, 1996. After
 the lender refused to negotiate an extension of the loan, the Local Partnership
 filed Chapter 11 bankruptcy proceedings to avert foreclosure. A plan of
 reorganization for the Local Partnership (the "Plan") was approved by the
 bankruptcy court on December 16, 1996. Under the Plan, the existing loan in the
 principal amount of $2,890,000, at an interest rate of 10%, was reduced to
 $2,100,000 with an interest rate of 9%. In exchange, the lender received
 one-third of NTCP's local partnership interest, including anticipated
 allocations of housing tax credits in the amount of approximately $488,500. The
 property operated at an occupancy level of 96% as of December 1997, and
 attained break-even levels of operations during 1997. As of December 31, 1997
 and 1996, the Partnership's carrying value of the investment in the Meadows
 Apartments was zero, as the investment was written off in 1995.

 Glenark

       Pursuant to the terms of a workout, dated January 11, 1995 (the
 "Workout") agreed between the parties relating to the resolution of an existing
 default under the first mortgage loan encumbering Glenark Landing, an annual
 payment of $30,000 is due in March 1998 to the Rhode Island Housing and
 Mortgage Finance Corporation (the "Lender"). The Workout provides for
 additional payments of $42,800 per year, for a five year term, totaling
 $214,000. The property incurred significant accounts payable due to necessary
 repairs, consequently the property



                                       8

<PAGE>   48

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


2.     INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

 has accrued payables in the amount of $70,000. The General Partner is
 negotiating with the Lender for an extension of time to make the $30,000
 payment. In addition, the General Partner is requesting a release of available
 replacement reserves from the Lender to bring the accounts payable current. The
 Partnership's investment in Glenark was zero at December 31, 1997 and 1996.

 Holden Village & Ticino Apartments

 Holden Village and Ticino Apartments, located in Seattle, Washington,
 maintained average occupancy levels of 96% and 89%, respectively, and
 experienced operating deficits of approximately $151,000 and $95,000,
 respectively, during 1997. The high cost of servicing the debt is the largest
 contributing factor associated with the deficit operations. In January 1998,
 NTCP was successful in negotiating an interest rate reduction with the lender
 for each of the properties. Based on the loan modifications, the operating
 performance of each property is expected to improve substantially. The
 Partnership's total investment in Holden Village and Ticino Apartments was
 approximately $1,306,000 and $1,533,000 at December 31, 1997 and 1996,
 respectively.

 Dynes Village

 The Dynes Village Apartments complex is operating at a deficit and the first
 mortgage loan encumbering the property was delinquent until it was brought
 current by NTCP in November 1997. In addition, the property has been audited by
 the IRS with respect to tenant qualifications performed by the prior local
 operating general partner. The IRS has disqualified all future housing tax
 credits based on what they consider non-compliance by the prior local operating
 general partner. Finally, the property is budgeted to operate at a deficit
 during 1998. As a result, the Partnership's investment in Dynes Village of
 $560,766 at December 31, 1997 was written off during the year.

 Blue Lake

 Pursuant to the terms of a loan workout, dated March 25, 1995 (the "Workout"),
 NTCP is required to contribute an additional $541,300 to the local partnership
 over a ten year period. In exchange, the debt service on the property is
 payable out of net cash flow. During 1997 and 1996, approximately $63,000 and
 $49,000, respectively, was paid by NTCP to the local partnership under the
 Workout (see Note 3). The Partnership's investment in Blue Lake at December 31,
 1997 and 1996 was zero.

 Rose City

 During 1997, the Oregon Housing and Community Services Department
 ("Department") inspected Rose City Village Limited Partnership's compliance
 with the low-income housing credit provisions of the Internal Revenue Code, and
 determined that the Partnership was not in compliance. The Department filed
 Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance, with the
 Internal Revenue Service. Management believes the instances of noncompliance
 are now corrected; however, as of the date of this report, resolution of this
 matter by the Department and the Internal Revenue Service is still outstanding.
 The effect, if any, of the noncompliance on the financial statements of the
 Partnership cannot be determined at this date. The Partnership's investment in
 Rose City at December 31, 1997 was $685,558.



                                       9

<PAGE>   49

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

 Selected financial information from the combined financial statements of the
 Local Partnerships at December 31, 1997 and 1996 and for each of the three
 years in the period ended December 31, 1997 is as follows:

                                 Balance Sheets
<TABLE>
<CAPTION>
                                                                 1997              1996
                                                              ---------         ---------
                                                                     (in thousands)
<S>                                                           <C>               <C>      
          Land and buildings, net                             $ 102,994         $ 105,915
                                                              =========         =========

          Total assets                                        $ 109,481         $ 112,540
                                                              =========         =========

          Mortgages payable secured by real property          $  87,811         $  88,936
                                                              =========         =========

          Total liabilities                                   $ 107,169         $ 106,966
                                                              =========         =========

          Equity of National Tax Credit Partners, L.P.        $  (3,216)        $     651
                                                              =========         =========

          Equity of other partners                            $   5,529         $   4,924
                                                              =========         =========
</TABLE>

                            Statements of Operations

<TABLE>
<CAPTION>
                                                    1997             1996             1995
                                                  --------         --------         --------
                                                                 (in thousands)

<S>                                               <C>              <C>              <C>     
     Total revenues                               $ 18,087         $ 17,624         $ 17,015
                                                  ========         ========         ========

     Interest expense                             $  7,687         $  7,608         $  8,173
                                                  ========         ========         ========

     Depreciation                                 $  4,269         $  4,371         $  4,546
                                                  ========         ========         ========

     Total expenses                               $ 21,546         $ 33,530         $ 21,750
                                                  ========         ========         ========

     Net loss                                     $ (3,459)        $(15,906)        $ (4,735)
                                                  ========         ========         ========

     Net loss allocable to the Partnership        $ (3,466)        $(15,436)        $ (4,584)
                                                  ========         ========         ========
</TABLE>



                                       10

<PAGE>   50

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


2.      INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)

 An affiliate of the General Partner is the Local Operating General Partner in
 sixteen of the Local Partnerships included above, and another affiliate
 receives property management fees of approximately 5 percent of gross revenues
 from two of these Local Partnerships. The following sets forth the significant
 combined data for the Local Partnerships in which an affiliate of the General
 Partner was the Local Operating General Partner, reflected in the accompanying
 financial statements using the equity method of accounting:

<TABLE>
<CAPTION>
                                                  1997             1996              1995
                                                --------         --------         --------
                                                              (in thousands)
<S>                                             <C>              <C>              <C>      
     Total assets                               $ 48,987         $ 50,550
                                                ========         ========

     Total liabilities                          $ 48,133         $ 47,939
                                                ========         ========

     Equity (Deficiency) of National Tax
        Credit Partners, L.P.                   $ (3,177)        $   (986)
                                                ========         ========

     Equity of other partners                   $  4,030         $  3,597
                                                ========         ========

     Total revenue                              $  7,503         $  7,475         $  7,275
                                                ========         ========         ========

     Net loss                                   $ (1,971)        $ (8,140)        $ (2,932)
                                                ========         ========         ========
</TABLE>

3.   CAPITAL CONTRIBUTIONS PAYABLE

 Capital contributions payable represents $70,000 due annually, until paid in
 full, for the investment in the Blue Lake Local Partnership. The capital
 contributions payable are unsecured and non-interest bearing.

4.   RELATED-PARTY TRANSACTIONS

 Under the terms of the Restated Certificate and Agreement of the Limited
 Partnership, the Partnership is obligated to the General Partner and the
 Special Limited Partner for the following fees:

 (a)    An annual Partnership management fee in an annual amount equal to 0.5
        percent of invested assets (as defined in the partnership agreement) is
        payable to the General Partner and Special Limited Partner. Partnership
        management fees expensed were $692,956, $692,956 and $692,955 for 1997,
        1996 and 1995, respectively. At December 31, 1997 and 1996, $4,727,721
        and $3,996,221, respectively, was due the General Partner and Special
        Limited Partner.

 (b)    A property disposition fee is payable to the General Partner in an
        amount equal to the lesser of (i) one-half of the competitive real
        estate commission that would have been charged by unaffiliated third
        parties providing comparable services in the area where the apartment
        complex is located, or (ii) 3 percent of the sales price received in
        connection with the sale or disposition of the apartment complex or
        local partnership interest, but in no event will the property
        disposition fee and all amounts payable to unaffiliated real estate
        brokers in connection with any such sale exceed in the aggregate, the
        lesser of the competitive rate (as



                                       11

<PAGE>   51

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997



4.      RELATED-PARTY TRANSACTIONS (CONTINUED)

        described above) or 6 percent of such sale price. Receipt of the
        property disposition fee will be subordinated to the distribution of
        sale or refinancing proceeds by the Partnership until the limited
        partners have received distributions from sale or refinancing proceeds
        in an aggregate amount equal to (i) their 10 percent priority return for
        any year not theretofore satisfied (as defined in the partnership
        agreement) and (ii) an amount equal to the aggregate adjusted investment
        (as defined in the partnership agreement) of the limited partners. No
        disposition fees have been paid.

 (c)    The Partnership reimburses certain expenses to the General Partner. The
        reimbursement due to the General Partner was $38,544, $36,744 and
        $35,079 during 1997, 1996 and 1995, respectively, and included in
        general and administrative expenses.

 NTC is the Local Operating General Partner in sixteen of the Partnership's 31
 Local Partnerships. In addition, NTC is either a special limited partner or a
 non-managing, administrative general partner in each Local Partnership.

 An affiliate of the General Partner is responsible for the on-site property
 management for two Local Partnerships (Note 2). The Local Partnerships paid the
 affiliate property management fees of $67,157, $65,049 and $68,800 in 1997,
 1996 and 1995, respectively.

5.      INCOME TAXES

 No provision has been made for income taxes in the accompanying financial
 statements since such taxes, if any, are the liability of the individual
 partners. The major differences in tax and financial statement losses result
 from the use of different bases and depreciation methods for the properties
 held by the Local Partnerships. Additional differences in tax and financial
 losses arises when financial statement losses are not recognized after the
 investment balance has been reduced to zero or to a negative amount equal to
 further capital contributions required.

6.      CONTINGENCIES

 The General Partner of the Partnership is a plaintiff in various lawsuits and
 has also been named as a defendant in other lawsuits arising from transactions
 in the ordinary course of business. In addition, the Partnership is involved in
 several suits. In the opinion of management and the General Partner, the claims
 will not result in any material liability to the Partnership (Note 2).

 The Partnership has assessed the potential impact of the Year 2000 computer
 systems issue on its operations. The Partnership believes that no significant
 actions are required to be taken by the Partnership to address the issue and
 that the impact of the Year 2000 computer systems issue will not materially
 affect the Partnership's future operating results or financial condition.



                                       12

<PAGE>   52

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                       (a California limited partnership)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


7.      FAIR VALUE OF FINANCIAL INSTRUMENTS

 Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
 Value of Financial Instruments," requires disclosure of fair value information
 about financial instruments, when it is practicable to estimate that value. The
 operations generated by the investee limited partnerships, which account for
 the Partnership's primary source of funds, are subject to various government
 rules, regulations and restrictions which make it impracticable to estimate the
 fair value of the accrued fees due to partners. The carrying amount of other
 assets and liabilities reported on the balance sheets that require such
 disclosure approximates fair value due to their short-term maturity.

8.      FOURTH-QUARTER ADJUSTMENT

 The Partnership's policy is to record its equity in the loss of limited
 partnerships on a quarterly basis using estimated financial information
 furnished by the various local operating general partners. The equity in loss
 reflected in the accompanying annual financial statements is based primarily
 upon audited financial statements of the investee limited partnerships. The
 increase, in equity in loss of approximately $536,269, between the estimated
 nine-month equity in loss and the actual 1997 year end equity in loss has been
 recorded in the fourth quarter.



                                       13

<PAGE>   53


                   NATIONAL TAX CREDIT PARTNERS, L.P. SCHEDULE
                    INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------------------------------------------------------------------
                         BALANCE                   CAPITALIZED                 EQUITY      AMORTIZATION     BALANCE       CAPITAL
  LIMITED              JANUARY 1,      CAPITAL     ACQUISITION     CASH        INCOME     OF CAPITALIZED  DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS              1997      CONTRIBUTIONS     COSTS    DISTRIBUTIONS   (LOSS)       ACQ. COSTS       1997         PAYABLE
------------           -----------  -------------  ----------- ------------- -----------  -------------- ------------- -------------
<S>                    <C>           <C>              <C>        <C>          <C>            <C>           <C>             <C>
Apple Tree             $   173,648   $                $          $  (1,900)   $   (13,161)   $  (1,418)    $   157,169     $
Blue Lake                        0                                                      0             0              0
ComFed                           0                                                      0             0              0
Concept I & II             140,282                                                 (2,035)       (6,318)       131,929
Countryview Columbus     2,230,431    (625,582)                                  (125,113)      (13,007)     1,466,729
Dickens                    117,438                                               (117,438)            0              0
Dynes Village              630,428      53,900                                   (671,696)      (12,632)             0
Genoa Plaza                152,794                                  (3,779)       (17,122)         (529)       131,364
Glenark                          0      36,400                                    (36,400)            0              0
Grand Meadows              996,605                                                (93,388)       (3,812)       899,405
Grinnell Park              119,821                                                 (7,823)         (215)       111,783
Hickory Green              432,097                                                (32,574)       (5,279)       394,244
Holden Village             944,835      22,000                                   (149,437)       (7,597)       809,801
Kimberly Court             173,339                                  (1,724)       (43,541)       (1,663)       126,411
The Meadows                      0     262,492                                   (262,492)            0              0
Mountain View I          1,057,747                                  (6,000)       (77,667)       (7,990)       966,090
Mountain View II         1,417,710                                  (3,000)       (98,004)       (7,990)     1,308,716
Newbury Place            2,431,711     (10,000)                                  (287,676)      (14,698)     2,119,337
North Liberty Park          34,268                                                (23,246)         (917)        10,105
Paris Hotel                330,589                                                (24,603)       (2,834)       303,152
Rolling Hills              777,946                                 (49,445)      (602,763)       (8,800)       116,938
Rose City                  604,078    (260,000)                     (1,750)       347,171        (3,941)       685,558
Summit I                         0       2,354                                     (2,354)
Summit II                        0      10,023                                    (10,023)
Summit III                       0       5,837                                     (5,837)
Torres de Plata I          141,674                                  (6,450)       (89,064)         (832)        45,328
Terrace Gardens          1,975,852                                               (107,346)      (13,253)     1,855,253
Ticino                     588,003       8,000         (305)                      (94,176)       (5,006)       496,516
Tyrone Elderly             959,066                                 (32,866)        48,100        (5,188)       969,112
Victorian Park                   0                                                                                   0
Vinton Park School       1,291,036                                                (20,366)       (5,403)     1,265,267
                      ------------   ---------        -----      ---------    -----------     ----------   -----------      -----

                      $ 17,721,398   $(494,576)       $(305)     $(106,914)   $(2,620,074)     (129,322)   $14,370,207      $   0
                      ============   =========        =====      =========    ===========     ==========   ===========      =====  
</TABLE>

<PAGE>   54


                       NATIONAL TAX CREDIT PARTNERS, L.P.              SCHEDULE
                    INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS        (CONTINUED)
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             AMORTIZATION                 CAPITAL
                           BALANCE       CAPITAL    CAPITALIZED      CASH         EQUITY          OF         BALANCE      CONTRI-
  LIMITED                 JANUARY 1,    CONTRIBU-   ACQUISITION    DISTRIBU-      INCOME     CAPITALIZED   DECEMBER 31,   BUTIONS
PARTNERSHIPS                 1996         TIONS        COSTS         TIONS        (LOSS)      ACQ. COSTS      1996        PAYABLE
------------            -------------   ---------   -----------    ---------   -----------   ------------  ------------   --------
<S>                     <C>            <C>          <C>            <C>          <C>           
Apple Tree               $   182,313    $              $           $ (1,900)   $    (5,347)   $  (1,418)   $   173,648    $
Blue Lake                          0                                                     0            0              0     392,300
ComFed                             0                                                     0            0              0
Concept I & II               250,778                                              (104,178)      (6,318)       140,282
Countryview Columbus       2,215,062     104,187                                   (75,811)     (13,007)     2,230,431
Dickens                      266,437                                              (145,751)      (3,248)       117,438
Dynes Village                756,218                                              (113,158)     (12,632)       630,428
Genoa Plaza                  173,424                                               (20,101)        (529)       152,794
Glenark                            0      34,200                                   (34,200)           0              0
Grand Meadows              1,085,626                                               (85,209)      (3,812)       996,605
Grinnell Park                127,321                                                (7,285)        (215)       119,821
Hickory Green                528,049        (369)                                  (90,304)      (5,279)       432,097
Holden Village             1,084,955      43,911                                  (176,434)      (7,597)       944,835
Kimberly Court               219,210                                 (1,724)       (42,484)      (1,663)       173,339
The Meadows                        0     (28,880)                                   28,880            0              0
Mountain View I            1,146,496                                               (80,759)      (7,990)     1,057,747
Mountain View II           1,531,416                                              (105,715)      (7,991)     1,417,710
Newbury Place              2,572,173      18,254                                  (144,018)     (14,698)     2,431,711
North Liberty Park            56,746                                               (21,561)        (917)        34,268
Paris Hotel                  354,293                                 (4,000)       (16,870)      (2,834)       330,589
Rolling Hills              1,185,549                                (49,445)      (349,358)      (8,800)       777,946
Rose City                    585,697                                (23,333)        45,655       (3,941)       604,078
Summit I                     607,899      17,950                                  (617,772)      (8,077)             0
Summit II                  1,055,009                                            (1,047,145)      (7,864)             0
Summit III                   632,737                                              (624,958)      (7,779)             0
Torres de Plata I            257,288                                 (6,450)      (108,332)        (832)       141,674
Terrace Gardens            2,117,731                                              (128,626)     (13,253)     1,975,852
Ticino                       655,731      34,563                                   (97,285)      (5,006)       588,003
Tyrone Elderly               924,479                                                39,775       (5,188)       959,066
Victorian Park                     0                                                     0            0              0
Vinton Park School         1,351,186                                               (54,747)      (5,403)     1,291,036
                        ------------    --------      ---          --------    -----------    ---------    -----------   --------

                         $21,923,823    $223,816       $0          $(86,852)   $(4,183,098)   $(156,291)   $17,721,398   $392,300
                        ============    ========      ===          ========    ===========    =========    ===========   ========
</TABLE>
<PAGE>   55


                      NATIONAL TAX CREDIT PARTNERS SCHEDULE
7                   INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS           SCHEDULE
                  YEARS ENDED DECEMBER 31, 1997,1996, AND 1995

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------------------------------------------------------------------------
                     BALANCE                                  CAPITALIZED      EQUITY      AMORTIZATION     BALANCE      CAPITAL
  LIMITED          JANUARY 1,      CAPITAL     ACQUISITION       CASH          INCOME     OF CAPITALIZED  DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS          1995     CONTRIBUTIONS      COSTS      DISTRIBUTIONS     (LOSS)       ACQ. COSTS        1995         PAYABLE
---------------   -----------  -------------  ------------  ---------------  -----------  --------------  ------------  ------------
<S>               <C>             <C>           <C>             <C>          <C>            <C>            <C>           <C>
Apple Tree        $   193,325     $             $               $  (1,900)   $    (7,694)   $  (1,418)    $   182,313
Blue Lake                   0       556,300                                     (556,300)                           0    $441,300
Cigar Factory          14,781                                                          0      (14,781)              0
ComFed                183,875      (265,000)                                      87,000       (5,875)              0
Concept I & II        299,542          (747)                                     (41,699)      (6,318)        250,778
Countryview
 Columbus           2,519,287      (113,629)                                    (177,589)     (13,007)      2,215,062
Dickens               376,032                                                   (106,347)      (3,248)        266,437
Dynes Village         759,523        10,794                                       (1,467)     (12,632)        756,218
Genoa Plaza           206,561                                                    (32,608)        (529)        173,424
Glenark                     0       140,937                                     (140,937)           0               0
Grand Meadows       1,200,010                                                   (110,572)      (3,812)      1,085,626
Grinnell Park         135,807                                                     (8,271)        (215)        127,321
Hickory Green         633,802       (44,130)                                     (56,344)      (5,279)        528,049
Holden Village      1,172,070        44,369                                     (123,887)      (7,597)      1,084,955
Kimberly Court        235,814                                      (1,724)       (13,217)      (1,663)        219,210
The Meadows         1,389,894       (17,470)                                  (1,362,806)      (9,618)              0
Mountain View I     1,272,704                                                   (110,924)     (15,284)      1,146,496
Mountain View II    1,664,259                                                   (132,146)        (697)      1,531,416
Newbury Place       2,848,257      (107,172)                                    (154,214)     (14,698)      2,572,173
North Liberty
 Park                  74,162                                                    (16,499)        (917)         56,746
Paris Hotel           377,332                                      (4,000)       (16,205)      (2,834)        354,293
Rolling Hills       1,546,696                                     (50,000)      (302,347)      (8,800)      1,185,549
Rose City             956,200      (380,000)                      (40,000)        53,438       (3,941)        585,697
Summit I            1,137,112        29,652      2,721                          (553,555)      (8,031)        607,899
Summit II           1,156,577                                                    (93,704)      (7,864)      1,055,009
Summit III          1,052,290                       24                          (411,798)      (7,779)        632,737
Torres de 
 Plata I              362,643                                      (6,550)       (97,973)        (832)        257,288
Terrace Gardens     2,323,555                                                   (192,571)     (13,253)      2,117,731
Ticino                709,720        33,347                                      (82,330)      (5,006)        655,731
Tyrone Elderly        925,779                                     (16,533)        20,421       (5,188)        924,479
Victorian Park              0                                                          0            0               0
Vinton Park 
 School              1,414,460                                                    (57,871)      (5,403)      1,351,186
                  ------------    ----------    ------          ---------    -----------   ----------     -----------    --------

                  $27,142,069     $(112,749)    $2,745          $(120,707)   $(4,801,016)   $(186,519)    $21,923,823    $441,300
                  ============    ==========    ======          =========    ===========   ==========     ===========    ========
</TABLE>


                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                     
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      

                      
                      



<PAGE>   56


                                                                      SCHEDULE
                                                                     (Continued)

                       NATIONAL TAX CREDIT PARTNERS, L.P.
                    INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995



NOTES:    1.    Equity in losses represents the Partnership's allocable share of
                the net loss from the Local Partnerships for the year. Equity in
                losses of the Local Partnerships will be recognized until the
                investment balance is reduced to zero or a negative balance
                equal to further commitments by the Partnership.

          2.    Cash distributions from the Local Partnerships are treated as a
                return of the investment and reduce the investment balance until
                such time as the investment is reduced to zero or a negative
                balance equal to further commitments by the Partnership.
                Distributions subsequently received will be recognized as
                income.



<PAGE>   57
                                                                    SCHEDULE III


                       NATIONAL TAX CREDIT PARTNERS, L.P.
                    REAL ESTATE AND ACCUMULATED DEPRECIATION
                 OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
                         IN WHICH NTCP HAS INVESTMENTS
                               DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                                                   BUILDINGS,
                                                                                  FURNISHINGS   
                                                                                  & EQUIPMENT       TOTAL LAND 
                                      NUMBER      OUTSTANDING                    AMOUNT CARRIED    AND BUILDINGS
                                        OF          MORTGAGE                       AT CLOSE OF     FURNISHINGS &    ACCUMULATED
PARTNERSHIP/LOCATION                  UNITS          LOAN            LAND           PERIOD           EQUIPMENT      DEPRECIATION
--------------------------------------------------------------------------------------------------------------------------------

<S>                                   <C>         <C>             <C>             <C>              <C>              <C>
Apple Tree Associates                     24      $   892,872     $    74,000     $  1,173,575     $  1,247,575     $   247,069
  Brigham City, UT
Art Museum - Summit I (Wallace)           17        1,595,160               0                0                0               0
  Philadelphia, PA
Art Museum - Summit II (Bergdoll)          9           66,824               0                0                0               0
  Philadelphia, PA
Art Museum - Summit III (Chandler)        25        2,391,333               0                0                0               0   
  Philadelphia, PA
Blue Lake                                106        4,750,000         335,000        1,654,521        1,989,521         210,479
  Miami, FL
ComFed Qualified Housing Limited         116        2,176,892         385,467        4,160,750        4,546,217       1,407,810  
  Partnership III
Concept I & II Limited Partnership        40        1,556,304         131,600        2,440,871        2,572,471         617,894
  Cleveland, OH
Countryview Columbus Limited             152        3,976,538         320,000        7,290,177        7,610,177       1,403,156
  Columbus, OH
Dickens Associates II                     34        1,272,916         105,000        2,299,724        2,404,724         474,180
  Chicago, IL
Dynes Village Associates Limited          42          766,438          65,000        2,576,987        2,641,987         627,721
  Cleveland, OH
Genoa Plaza Limited Partnership           48        1,331,347          98,024        1,673,067        1,771,091         368,292
  Genoa City, WI
Glenark Associates Limited                67        3,911,140          45,525        7,047,086        7,092,611       1,710,171  
  Woonsocket, RI
Grand Meadows II Limited                  64        1,921,225         112,000        3,447,520        3,559,520         707,216
  Grand Blanc, MI
Grinnel Park Limited                      24          607,788          48,400          778,972          827,372         172,848
  Grinnel, PA
Hickory Green Limited Partnership         59        1,454,832         215,000        2,688,685        2,903,685         733,922
  Westland, MI
Holden Village Limited Partnership        96        2,490,117         280,000        4,179,848        4,459,848       1,242,341
  West Seattle, WA
Kimberly Court                            24        1,483,643         233,900        1,750,750        1,984,650         377,579
  Seward, AK
The Meadows Limited Partnership          114        2,085,173         123,900        1,943,184        2,067,084          99,684
  Ypsilanti, MI
Mountain View Limited I                  120        2,743,150         685,819        4,181,840        4,867,659         911,311
  Lawrence, MA
Mountain View Limited II                 159        3,946,434         866,212        5,191,215        6,057,427       1,114,070
  Lawrence, MA
Newbury Limited Partnership              164        3,723,721         739,882        8,025,649        8,765,531       1,609,788
  Oak Creek, WI
North Liberty Park Limited                24          603,657          47,811          729,137          776,948         185,346
  North Liberty, IA
Paris Hotel Limited Partnership           17          876,254         179,160        1,673,902        1,853,062         338,419
  Denver, CO
Rolling Hills Apts. Limited              232        5,126,420         800,000       11,453,473       12,253,473       2,493,828
  Pottsgrove Township, PA
Rose City                                264        5,985,000         463,955        9,415,289        9,879,244       2,454,241
  Portland, OR
Terrace Gardens Limited Partnership      150        5,175,499       1,522,369        8,061,143        9,583,512       2,602,926
  Lemon Grove, CA
Ticino Apts. Limited Partnership          45        1,370,546         101,066        2,129,970        2,231,036         452,617
  Seattle, WA
Torres de Plata I                         72        3,024,427         161,280        3,720,726        3,882,006         927,677
  Toa Alta, PR
Tyrone Elderly Limited Partnership       100        3,252,536         100,000        4,740,670        4,840,670         984,747
  Tyrone, PA
Victorian Park                           336       16,537,820       1,737,727       17,517,369       19,255,096       6,828,994
  Streamwood, IL
Vinton/Park School Apts. Limited          44          715,450         145,500        2,663,751        2,809,251         435,178
  Omaha, NE
                                   --------------------------------------------------------------------------------------------
TOTAL                                  2,788      $87,811,456     $10,123,597     $124,609,851     $134,733,448     $31,739,504
                                   ============================================================================================
</TABLE>
<PAGE>   58


                                                                    SCHEDULE III
                                                                     (Continued)



              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                           HELD BY LOCAL PARTNERSHIPS
                          IN WHICH NTCP HAS INVESTMENTS
                                DECEMBER 31, 1997

NOTES:            1.   Each Local Partnership has developed and now owns and
                       operates an Apartment Complex. Substantially all project
                       costs, including construction period interest expense,
                       were capitalized by the Local Partnerships.

                  2.   Depreciation is provided for by various methods over the
                       estimated useful lives of the Apartment Complexes. The
                       estimated composite useful lives of the buildings are
                       generally from 25 to 40 years.

                  3.   Investments in property and equipment:


<TABLE>
<CAPTION>
                                                                     Buildings,
                                                                    Furnishings,
                                                  Land               Equipment               Total
                                             -------------         -------------         -------------
<S>                                          <C>                   <C>                   <C>          
     Balance, January 1, 1995                $  10,511,308         $ 141,331,474         $ 151,842,782

     Net dispositions during the year             (106,961)           (2,579,242)           (2,686,203)
                                             -------------         -------------         -------------

     Balance, December 31, 1995                 10,404,347           138,752,232           149,156,579

     Net dispositions during the year              (48,350)          (13,726,709)          (13,775,059)
                                             -------------         -------------         -------------

     Balance, December 31, 1996                 10,355,997           125,025,523           135,381,520

     Net disposition during the year              (232,400)             (415,672)             (648,072)
                                             -------------         -------------         -------------

     Balance, December 31, 1997              $  10,123,597         $ 124,609,851         $ 134,733,448
                                             =============         =============         =============
</TABLE>



<PAGE>   59


                                                                    SCHEDULE III
                                                                     (Continued)


                       NATIONAL TAX CREDIT PARTNERS, L.P.
              REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
                           HELD BY LOCAL PARTNERSHIPS
                          IN WHICH NTCP HAS INVESTMENTS
                                DECEMBER 31, 1997



<TABLE>
<CAPTION>
                                                                 Buildings,
                                                                Furnishings
ACCUMULATED DEPRECIATION:                                      And Equipment
                                                               -------------
<S>                                                             <C>        
     Balance, January 1, 1995                                   $22,359,093

     Net additions during the year                                3,538,116
                                                                -----------

     Balance, December 31, 1995                                  25,897,209

     Net additions during the year                                3,569,691
                                                                -----------

     Balance, December 31, 1996                                  29,466,900

     Net additions during the year                                2,272,604
                                                                -----------

     Balance, December 31, 1997                                 $31,739,504
                                                                ===========
</TABLE>



<PAGE>   60


PART III.

ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:

NATIONAL TAX CREDIT PARTNERS, L.P. (the "Partnership") has no directors or
executive officers of its own.

National Partnership Investments Corp. ("NAPICO" or the "Managing General
Partner") is a wholly-owned subsidiary of Casden Investment Corporation, an
affiliate of The Casden Company. The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.

CHARLES H. BOXENBAUM, 68, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.

Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.

Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.

BRUCE E. NELSON, 46, President and a director of NAPICO.

Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.

From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his Bachelor
of Arts degree from the University of Wisconsin and is a graduate of the
University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.

ALAN I. CASDEN, 52, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.

Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Company. Prior to that,
he was the President and chairman of Mayer Group, Inc., which he joined in 1975.
He is also chairman of Mayer Management, Inc., a real estate management firm.
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.



<PAGE>   61



Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern California. He holds a
Bachelor of Science degree and a Masters in Business Administration degree from
the University of Southern California.

HENRY C. CASDEN, 54, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.

Mr. Casden has been President and Chief Operating Officer of The Casden Company,
as well as a director of NAPICO since February 1988. He became secretary of both
companies in late 1994. From 1982 to 1988, Mr. Casden was of counsel and a
partner in the Los Angeles law firm of Troy, Casden & Gould. From 1978 to 1981,
he was of counsel and a partner in the Los Angeles law firm of Loeb & Loeb. From
1972 to 1978, Mr. Casden was a member of the Beverly Hills law firm of Fink &
Casden, Professional Corporation.

Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.

BOB SCHAFER, 56, Senior Vice President and Corporate Controller.

Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years.

Mr. Schafer is a member of the California Society of Certified Public
Accountants. He holds a Bachelor of Science degree in accounting from Woodbury
University, Los Angeles.

PATRICIA W. TOY, 68, Senior Vice President - Communications and Assistant
Secretary.

Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.

MARK L. WALTHER, 37, Executive Vice President, General Counsel and Assistant
Secretary.

Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.

NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.



<PAGE>   62

ITEM 11.  MANAGEMENT REMUNERATION AND TRANSACTIONS:

National Tax Credit Partners, L.P. has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to the General Partner and Special
Limited Partner for the following fees:

(a)  An annual partnership management fee in an amount equal to 0.5 percent of
     invested assets (as defined) is payable to the General Partner and Special
     Limited Partner. For the years ended December 31, 1997, 1996 and 1995,
     $692,956, $692,956 and $692,955, respectively, has been incurred.

(b)  A property disposition fee is payable to the General Partner in an amount
     equal to the lesser of (i) one-half of the competitive real estate
     commission that would have been charged by unaffiliated third parties
     providing comparable services in the area where the Apartment Complex is
     located, or (ii) 3 percent of the sale price received in connection with
     the sale or disposition of the Apartment Complex or Local Partnership
     Interest, but in no event will the Property Disposition Fee and all amounts
     payable to unaffiliated real estate brokers in connection with any such
     sale exceed in the aggregate the lesser of the competitive rate (as
     described above) or 6 percent of such sale price. Receipt of the Property
     Disposition Fee will be subordinated to the distribution of Sale or
     Refinancing Proceeds by the Partnership until the Limited Partners have
     received distributions of Sale or Refinancing Proceeds in an aggregate
     amount equal to (i) their 10 percent Priority Return for any year not
     theretofore satisfied and (ii) an amount equal to the aggregate adjusted
     investment (as defined) of the limited partners. No disposition fees have
     been paid.

(c)  The Partnership reimburses certain expenses to the General Partner. For the
     years ended December 31, 1997, 1996 and 1995, $38,544, $36,744 and $35,079,
     respectively, has been paid.

(d)  An affiliate of the General Partner is responsible for the on-site property
     management for two Local Partnerships. The Local Partnerships paid the
     affiliate property management fees of $67,157, $65,049, $68,800 in 1997,
     1996 and 1995, respectively.

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

(a)  Security Ownership of Certain Beneficial Owners

The General Partner owns all of the outstanding general partnership interests of
NTCP; no person is known to own beneficially in excess of 5 percent of the
outstanding Limited Partnership Interests.

(b)  None of the officers or directors of the General Partner own directly or
     beneficially any Limited Partnership Interests in NTCP.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:

The Partnership has no officers, directors, or employees of its own. All of its
affairs are managed by the General Partner, National Partnership Investments
Corp. , and the Special Limited Partner, PaineWebber T.C., Inc. The transactions
with the Special Limited Partner are primarily in the form of fees paid by the
Partnership to the General Partner for services rendered to the Partnership, as
discussed in Item 11 and in the notes to the accompanying financial statements.



<PAGE>   63




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

REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS.

FINANCIAL STATEMENTS

Report of Independent Public Accountants.

Balance Sheets as of December 31, 1997 and 1996.

Statements of Operations for the years ended December 31, 1997, 1996 and 1995.

Statements of Partners' Equity (Deficiency) for the years ended December 31,
1997, 1996 and 1995.

Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995.

Notes to Financial Statements.

FINANCIAL STATEMENT SCHEDULES APPLICABLE TO NATIONAL TAX CREDIT PARTNERS, L.P.
AND THE LIMITED PARTNERSHIPS IN WHICH NATIONAL TAX CREDIT PARTNERS, L.P. HAS
INVESTMENTS

Schedule - Investments in Local Limited Partnerships, December 31, 1997, 1996
and 1995.

Schedule III - Real Estate and Accumulated Depreciation, December 31, 1997.

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

EXHIBITS

 (3) Articles of incorporation and bylaws: The registrant is not incorporated.
The Partnership Agreement was filed with Form S-11 Registration #33-27658
incorporated herein by reference.

 (10) Material contracts: The registrant is not party to any material contracts,
other than the Restated Certificate and Agreement of Limited Partnership dated
March 7, 1989 previously filed and which is hereby incorporated by reference.

REPORTS ON FORM 8-K

No reports on Form 8-K were filed during the year ended December 31, 1997.



<PAGE>   64



                                   SIGNATURES


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


NATIONAL TAX CREDIT PARTNERS, L.P.

By:      NATIONAL PARTNERSHIP INVESTMENTS CORP.
         General Partner


/s/ CHARLES H. BOXENBAUM
----------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer


/s/ BRUCE E. NELSON
----------------------------------
Bruce E. Nelson
Director and President


/s/ ALAN I. CASDEN
----------------------------------
Alan I. Casden
Director


/s/ HENRY C. CASDEN
----------------------------------
Henry C. Casden
Director


/s/ BOB E. SCHAFER
----------------------------------
Bob E. Schafer
Senior Vice President of Finance