<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20529

                              ---------------------

                                    FORM 10-K

[X]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 (Fee Required)
               For the fiscal year ended December 31, 1997

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934.
               For the transition period from ___________ to __________.


                          Commission File No. 33-39238

                            ------------------------

                          TMP LAND MORTGAGE FUND, LTD.
                  A CALIFORNIA LIMITED PARTNERSHIP (Exact name
                   of registrant as specified in its charter)

         CALIFORNIA                                               33-0451040
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

801 NORTH PARKCENTER DRIVE, SUITE 235                                  92705
     SANTA ANA, CALIFORNIA                                           (ZIP CODE)

                                 (714) 836-5503
              (Registrant's telephone number, including area code)

                             ----------------------

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class                  Name of each exchange on which
 to be registered                    each class is to be registered
 ----------------                    ------------------------------
       N/A                                         N/A

Securities to be registered pursuant to Section 12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                      -------------------------------------
                                (Title of Class)

Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]  No [ ]


<PAGE>   2

                                     PART 1

                                     ITEM 1.
                                    BUSINESS
                                    --------

INTRODUCTION
------------

        TMP Land Mortgage Fund, Ltd., is a California Limited Partnership formed
in April, 1992, of which TMP Investments, Inc., a California corporation, and
TMP Properties, a California general Partnership, are the General Partners (the
"General Partners").The Partnership was formed principally to make short-term
loans to unaffiliated parties secured by first trust deeds on unimproved
properties, primarily in the Inland Empire area of Southern California, and to
provide cash distributions on a current basis to the Limited Partners, primarily
from interest earned on the mortgage loans. The Partnership is not a mutual fund
or any other type of investment company within the meaning of, and is not
subject to regulations under, the Investment Company Act of 1940. As of December
31, 1997, twelve loans had been made by the Partnership.

        Beginning April 22, 1992, the Partnership was engaged in the offering of
up to 20,000 units of limited Partnership Units ("Units") at a purchase price of
$1000 per Unit pursuant to a Registration Statement on Form S-11. On April 22,
1994, the Partnership had received and accepted subscriptions of 15,715 Units,
representing total subscription proceeds in the amount of $15,715,000, and the
offering was closed. Upon the conclusion of the offering, all of the
subscription proceeds had been committed to the mortgage loan investments
described below and working capital reserves.

        The Partnership was organized to originate and make loans secured by
first deeds of trust (commonly known as "mortgages") on unimproved real
properties primarily in the Inland Empire area of Southern California, which is
located approximately 60 miles east of the city of Los Angeles and 40 miles
north of the City of San Diego. Twelve loans were made for terms of between 6
months and 36 months. The Partnership does not intend to make any further loans
other than those described below. Each loan was made to an unaffiliated borrower
who (i) paid a fee or "points" to obtain the loan, (ii) established a reserve
that would secure the payment of the interest for the interim term of the loan,
and (iii) was to pay the entire principal amount of the loan in one lump sum
payment, commonly referred to as a "balloon" payment, at the end of the loan
term. Each loan was made to an unaffiliated borrower who (i) used the proceeds
of the loan to purchase or refinance a property the General Partners believe has
development potential; (ii) "predevelop" the property by obtaining zoning and
other governmental approvals needed to permit construction of single or
multi-family residences or commercial buildings on the property ("predevelopment
work") and (iii) on completion of the predevelopment work, will either sell the
property to developers or contractors or obtain new financing on the property.

        It was intended that the Partnership's loans would be repaid from the
proceeds either of the sale or a refinancing of the property by the borrower.
The Partnership does not participate in any profit that the borrower may realize
on the sale or refinancing of the property. Instead, the Partnership would
receive from the proceeds of the sale or refinancing, the principal amount of
the Partnership's loan and any interest that had been earned, but not paid,
through the date of sale or refinancing.

        As a consequence of adverse changes in market conditions and other
factors, nine of the twelve loans made by the Partnership to date have been
foreclosed upon. In the event of foreclosure, the property securing the loan is
put up for public sale approximately four to six months after initiation of
foreclosure proceedings and is sold to the highest bidder. The sales proceeds
then are paid to the first mortgagee, which would be the Partnership, until the
principal amount of its loan, earned but unpaid interest, and foreclosure costs
are repaid. Any surplus then remaining is paid to the borrower. If no one offers
a cash price sufficient to enable the Partnership to recover
its investment, the Partnership, as first mortgagee, is entitled to acquire the
property in exchange for cancellation of the amounts owned by the borrower. In
that event, the General Partners' strategy is to complete any predevelopment
work not completed by the Borrower and to attempt to sell the property for a
price that would at least enable the Partnership to recover
<PAGE>   3
its investment in the property. To date, the Partnership has acquired each of
the properties on which it has foreclosed.

        The Partnership's investment in a foreclosed property generally consists
of all amounts owing by the borrower to the Partnership that were secured by the
Partnership's mortgage at the time it acquired the property, the amounts
expended to acquire and then to complete predevelopment of the property and,
unless paid out of the gross proceeds of sale, any expenses incurred to sell the
property. Any cash proceeds in excess of the investment will be distributed to
the Partners.

        The Partnership will be terminated as soon as practicable following
liquidation of the Partnership assets and distributions of cash to the Partners.
However, the Partnership will not be terminated until mortgage loans made by it
have been repaid and all properties and other assets owned by it have been sold
and payment of the purchase price for those assets is received or converted into
cash. At this time, it is unlikely that the Partnership will be terminated
within the next twelve months.

        DEVELOPMENT POTENTIAL OF UNDERLYING PROPERTIES. The Partnership made
loans to borrowers seeking to acquire or refinance, predevelop and then sell,
undeveloped properties in the Inland Empire to developers and contractors. In
most cases, the repayment of the Partnership's loans will depend on the ability
of the borrower (or the Partnership if a foreclosure occurs) to sell or
refinance the property after predevelopment work is completed. Accordingly, one
of the critical factors that affect the ability of the Partnership to achieve
its investment objectives is the potential value and salability of the
properties which secure repayment of the Partnership's loans or which the
Partnership has acquired through foreclosure.

        Each loan made by the Partnership is secured by a first mortgage. In the
event of a foreclosure sale, if the property is sold for at least the amount
owed to the Partnership, the entire sales proceeds must be paid to the
Partnership, as first mortgagee, before any proceeds may be paid to anyone else.
If there are no other purchasers, or the other purchase offers made at the
foreclosure sale are not sufficient to pay off the amounts owed to the
Partnership, as first mortgagee the Partnership is entitled to acquire the
property in exchange for cancellation of the amounts owed by the borrower. Under
applicable laws, on any such acquisition, any other mortgages, liens or
encumbrances on the property will be automatically terminated and the
Partnership will own the property free and clear and will have no payment
obligations thereafter, other than (i) the costs of completing any
predevelopment work not completed by the borrower; and (ii) property taxes that
are assessed against the property after the Partnership's acquisition of the
property; and (iii) in some instances special assessment district taxes which
are assessed against the property.

        There may be circumstances in which, despite a default, the General
Partners will choose not to initiate foreclosure proceedings immediately. For
example, there may be ongoing sales negotiations or a refinancing may be in
process that would be disrupted by the initiation of foreclosure proceeding or
the General Partners may conclude that the borrower-owner is better able to
complete predevelopment and to sell the property than the Partnership. There
also may be instances in which the General Partners choose not to purchase a
property at the foreclosure sale, even though the Partnership might sustain a
partial or even total loss of the investment on the loan. For example, it may be
preferable to accept a cash purchase offer for the property which is less than
the amount owed on the loan, but which would enable the Partnership to recover
immediately, in cash, the substantial portion of its investment in the loan.
There could also be circumstances in which environmental problems on a property
discovered after loan is made, would make it prudent for the Partnership not to
acquire a property. However, the General Partners believe such a circumstance
would be a rare occurrence.

        POSSIBLE CHANGES IN MORTGAGE LOAN POLICIES. The General Partners reserve
the right, without the consent of the Limited Partners, to alter the proposed
policies for mortgage investments to the extent that the General Partners
believe that variation from the policies will be in the best interests of the
Partnership.


<PAGE>   4

                    EXPANSION OF PRIMARY BUSINESS OBJECTIVES
                    ----------------------------------------

        To offset the potential for loss on the resale of the properties taken
back in foreclosure, the General Partners, in December of 1995, determined that
it would be in the best interest of the Partnership to use Partnership reserves
to engage in a joint venture with an unrelated company, Steadfast HSC, LLC, to
acquire the Hollywood Studio Club Apartments ("HSC"), a 243 unit apartment
complex in Hollywood, California for $6,325,000. In March 1997, HSC was sold for
$8,600,000. Based on an investment of $854,474, the Partnership received a
preferential return of approximately $168,000 and profits of approximately
$489,000.

                            MORTGAGE LOAN INVESTMENTS
                            -------------------------

        As of December 31, 1997, the Partnership had made twelve mortgage loans.
The status of such loans and other relevant information are summarized below.

PR EQUITIES, LTD. LOANS
-----------------------

        The Partnership made two loans ("Loan 1" and "Loan 2") to PR Equities,
Ltd., a California limited partnership. The loans were secured by first trust
deeds on property under predevelopment in San Jacinto, Riverside County,
California. Loan 1 was secured by a first deed of trust on 304 tentative map
lots in 5 separate tracts in Phase II of the Rancho San Jacinto master-planned
community located in the City of San Jacinto, California. Phase 1, consisting of
six parcels and 797 single family dwelling lots, was sold to merchant builders.
Loan 2 was secured by a first deed of trust on two tracts containing 148
tentative map lots which also are part of Phase II of the Rancho San Jacinto
master-planned community. These properties received approval of tentative tract
maps which, upon final approval, would divide them into lots suitable for
construction of single family residences. All of the properties are located east
of Hewitt Street and north of Washington Avenue in San Jacinto, Riverside
County, in Southern California.

        The Partnership foreclosed on the property securing these loans during
1995 and now owns the property. The current outstanding payments due as a result
of the Mello-Roos tax assessment against the Partnership's lots taken back in
foreclosure is over $2,000,000. This debt, plus the continuing tax accrual makes
the property unsaleable in the current real estate market. The City of San
Jacinto received the overall appraisal of the properties in the CFD during the
first week of July. The low land values reflected in the appraisal confirmed the
General Partners opinion that the bonds should be restructured, the overall
bonded indebtedness and the annual debt service should be reduced. A meeting was
held in September with the property owners and the bond holders, and as a result
of this meeting, the City of Rancho San Jacinto has hired an independent bond
advisor to negotiate the restructuring terms with the bond holders. The City
Council of Rancho San Jacinto is attempting to include the current home owners
with the land owners and developers in the negotiations for the proposed bond
reduction and restructuring. Based on the outcome of the negotiations, the
General Partners will make a definitive decision on whether to proceed with a
program to build homes on the property.

        While the General Partners are pursuing these options, the City has been
forced by the terms of the bonds to schedule a sale of the property for
delinquent bond assessments. This sale requires the buyer to pay the full unpaid
assessment, penalties, interest and assume the full amount of the remaining
assessment and make all future payments as they come due. The cost of completion
of the lots, if added to remaining unpaid assessment, exceeds what the market
will bear today. For that reason, the General Partners do not expect to see
anyone offer to buy at the sale. The General Partners plan to redeem the 92 lots
if it appears that someone else may buy the property.

        The General Partners anticipate that construction of homes on a portion
of the property will make the remainder of the property more attractive to other
builders.

<PAGE>   5

FRAME LOAN
----------

        The Partnership made a third loan ("Loan 3") to Richard D. Frame, an
individual. Loan 3 was secured by a first trust deed to property under
predevelopment in Temecula, Riverside County, California. This loan matured on
February 8, 1994. The loan was extended to April 20, 1994, at which time the
Partnership received payment in full. Part of the proceeds were reloaned in the
Peppertree and Rockfield loans. The balance was added to Partnership reserves.

SUNSET CROSSING LOAN
--------------------

        The Partnership made their fourth loan ("Loan 4") to Sunset Crossing I,
a California Limited partnership. Loan 4 was secured by a first trust deed to
property under predevelopment in Banning, Riverside County, California. In
August of 1994, this loan defaulted.

        The property now owned by the Partnership through the default on Loan 4
is located at the southwest corner of the intersection of Interstate Freeway 10
and Sunset Avenue in Banning, Riverside County, California. The property
consists of 42.47 acres; five acres are currently zoned commercial and the
balance is industrial.

        Since the Partnership foreclosed on the property in August of 1994, the
General Partners have contacted Wal-Mart, the City of Banning, and two Wal-Mart
Shopping Center Developers to determine the extent of continued interest in the
property. TMP Land Mortgage Fund is trying to have the City extend the Sales Tax
Revenue Sharing measure adopted when the loan was made, in the hope that
Wal-Mart will acquire and develop part of the property. The General Partners
have been told that Wal-Mart believes the property will not be ready for
development for another 12 -18 months in light of current market conditions, but
indicates that it remains interested in the property.

FOX-OLSON LOAN
--------------

        The Partnership's fifth loan ("Loan 5") was made to Marilyn Fox-Olson,
an individual. Loan 5 is secured by a first deed of trust on 10.84 acres of land
in Sun City/Menifee Valley, Riverside County.

        Loan 5 was secured by a first trust deed to 10.84 acres of commercially
zoned land at the northeast corner of Newport Road and Bradley Road in the
unincorporated area of Riverside County known as Sun City/Menifee Valley. The
property is well-suited for a shopping center with a supermarket anchor and a
corner pad for either a gas station or a fast food restaurant. The Borrower has
such a site plan approved by the Riverside County Planning Commission, but that
approval has now expired. The intersection of Newport and Bradley Roads is
controlled by a traffic signal and is about a mile west of the I-215 Freeway.

        Adjacent to the south of the subject property is a large proposed
mixed-use project with an approved Specific Plan called Menifee Meadows. That
project, if built, will include condominiums, apartments, single-family
residences, an office park, retail center, and parks. A new elementary school
was opened there in 1991.

        The current zoning for the subject property is C-1/C-P (General retail
and commercial). The soils report is favorable for development. No faults exist
on or near the property. The site has about 389 feet of frontage on Newport
Road, for which the County has formed an assessment district to widen and
improve to six lanes of traffic to accommodate the current and future traffic.
Newport Road will be a major east-west arterial road connecting the I-15 and
I-215 Freeways. A Phase 1 Environmental (toxic) study was performed by a
qualified engineer and the site is clean of hazardous wastes. The site is
vacant, raw land that has never been developed. The topography is level, with a
very gentle slope down to the north. All utilities are available to the site.
<PAGE>   6
        The Partnership took title to this property in November of 1994. The
property is listed for sale at $1,550,000.

ENVIRONMENTAL DEVELOPMENT, LTD.
-------------------------------

        The Partnership's sixth loan ("Loan 6") was to Environmental
Development, Ltd., a California Limited Partnership. Loan 6 was secured by a
first trust deed to property under predevelopment in San Diego, California.

        The Borrower defaulted on the loan in October of 1994. An extension
agreement was signed by Borrower, wherein the Partnership agreed to extend the
term of the loan to May 1, 1995. Borrower was to make all monthly interest
payments, with points and servicing fees added to the principal of the loan.
However, on March 1, 1995, the Borrower defaulted in the payment of interest
due, and the Partnership filed of Notice of Default and subsequently accepted
Deed in Lieu of foreclosure on the property and now holds title to the property.

        This property is approximately 52 acres of residentially zoned land at
the southeast quadrant of State Route 905 and Interstate 805 Freeways in the
Otay Mesa area of the City of San Diego. The existing zoning is A1-10 (0-5 units
per acre). The topography is gentle to moderate slopes, mostly southwest facing,
providing distant (approximately 5 miles) white water views of the Pacific
Ocean, San Diego Bay, and the San Diego downtown skyline. The site is only three
miles north of the Mexican border crossing a San Ysidro.

        The 52 acres are a portion of the 78.3 acre Remington Hills Precise
Plan, designed for low to moderate priced single-family homes, with no
multi-family or commercial. The Precise Plan and tentative map has been
processed and approved. An Environmental Impact Report is required, with most of
the studies completed. Sewer and water is within 200 feet of the site, with
adequate capacity. Natural gas and electricity are also available. The subject
52 acre portion of Remington Hills is designed so it can be developed first and
stand alone from the remaining portion. The Environmental Impact Report was
approved in 1995.

        The tentative map for 181 lots was approved on July 18, 1995, after 5
years of processing. The General Partners have determined that construction of
homes will achieve the highest return to the Partnership. The determination is
based in part on the results of a market feasibility study commissioned by the
Partnership for The Meyers Group, and also in part on the terms of a Joint
Venture Agreement with TMP Homes that will direct the major portion of all sales
proceeds and profits to the Partnership. A Joint Venture has been formed and
actual construction is expected to commence in early 1998.

FOX-OLSON LOAN #2
-----------------

        On June 17, 1993, the Partnership funded it seventh mortgage loan,
("Loan 7") to Marilyn Fox-Olson. Loan #7 was funded on June 17, 1993 and was due
on December 17, 1994. At that time, the Borrower went into default and the
Partnership initiated foreclosure proceedings. Title to this property reverted
to the Partnership on March 29, 1995. The General Partners are making every
effort to market this property and have been approached by several investors
expressing interest in acquiring this property.

        Loan #7 is secured by a first deed of trust on 45 lots of residential
land and a 1.84 acre commercial site located in Menifee, California. The
Partnership, together with TMP Homes, has formed a Joint Venture to build homes
on this site, with the major portion of the profit from the sale of the homes
going to the Partnership. TMP Homes is attempting to procure a construction loan
for the project.
<PAGE>   7
SINGLETARY LOAN
---------------

        On October 12, 1993, the Partnership funded it eighth mortgage loan
("Loan 8"). The loan was secured by a first deed of trust on 96 acres of
industrial/commercial land located in the unincorporated area of Riverside
County known as Rubidoux. The loan came due on April 12, 1995. The borrower
sought to extend the loan, and did pay extension fees and additional interest
for several months. However, the Partnership was forced to file a Notice of
Default when the borrower ceased making payments. The Borrower filed for
personal bankruptcy in order to forestall foreclosure proceedings. After months
of negotiations, the borrower was able to procure additional financing and paid
the loan in full, with all interest owing, on December 13, 1995. This allowed
for a distribution of $2,200,000 to all limited partners.

LAMONTE LOAN
------------

        On October 25, 1993 the Partnership funded its ninth loan ("Loan 9")
secured by a first deed of trust on 6.54 acres of commercial land located in the
City of Simi Valley, County of Ventura, California.

        This loan bore an interest rate of 12.5%. To facilitate payment,
Borrower deposited an amount equal to twelve months interest due on the loan in
a segregated bank account at Frontier Bank, La Palma, California. This
represents the last twelve months interest. The first six months of interest was
paid by Ventura Pacific Capital Group, a developer who has an Option Agreement
and Ground Lease Agreement with the LaMontes on the subject property. Ventura
Pacific was paying Mr. and Mrs. LaMonte $18,400 per month the ground lease. The
monthly payment on the loan from the Borrowers is $12,708 and Ventura Pacific
paid that portion of the Ground Lease directly to the Partnership for the first
six months of the loan term.

        The principal amount of the Loan matured on April 25, 1995. After the
Partnership filed a Notice of Default, the borrower transferred the property to
a wholly owned corporation and had the corporation file a Chapter 11 proceeding
to delay a foreclosure. The Partnership succeeding in having the Bankruptcy
Court remove the stay after a contestual Law and Motion Proceeding. The borrower
then filed a state court action asking the court for a temporary injunction
based on alleged irregularities during the foreclosure process. The Partnership
acquired the property through foreclosure in April 1996.

        Loan 9 is secured by a first trust deed to 6.54 acres in the City of
Simi Valley, County of Ventura, California. The property is part of the Royal
Madeira Specific Plan area that consists of approximately 29.1 gross acres of
undeveloped land. The property is zoned commercial/recreational (C-R) which
allows for limited commercial uses that provide for the development of
recreational, entertainment and associated retail and service activities.

        Ventura Pacific Capital Group VIII, a California Limited Partnership,
has proposed to develop the property in conjunction with the adjacent 6.8 acres
which Ventura Pacific Capital Group currently owns. To that end, significant
engineering and other entitlement work has been completed which includes an
approved development plan for a recreational facility, including an ice rink,
and also for an Albertsons Grocery store, Sav-On Drug and related shop space
users. the previous debtor is attempting, through litigation, to set aside the
foreclosure. The judge has refused to dismiss the petition filed by the General
Partners to remove the lis pendens and end the lawsuit. A cash offer to purchase
the property was received from Lucky's Food Stores in the amount of $1.6
million. Acceptance is delayed until clear title can be achieved.
<PAGE>   8
GREGORY P. LANSING AND JANICE A. LANSING, TTEES OF THE GPLJAL FAMILY TRUST
--------------------------------------------------------------------------

        On March 23, 1994, the Partnership funded it tenth loan ("Loan 10")
secured by a first deed of trust on 28.42 acres of land located in the City of
Murietta, County of Riverside, California.

        The collateral for this Loan was approximately 28.42 acres of
commercially zoned land at the northwest corner of Murietta Hot Springs Road and
Jefferson Avenue in the City of Murietta in the western part of Riverside
County, California.

        The loan was repaid on September 5, 1995. Proceeds were added to cash
reserves of the Partnership.

ROCKFIELD LOAN
--------------

        On June 1, 1994, the Partnership funded its eleventh loan, ("Loan 11")
secured by a first deed of trust on 41 residential lots in Rancho Cucamonga,
County of Riverside, California.

        This loan was in participation with TMP Mortgage Income Plus, Ltd., a
private syndication of which TMP Investments, Inc. and TMP Properties also serve
as General Partners. The total loan of $250,000 was funded $100,000 by TMP Land
Mortgage Fund, Ltd. and $150,000 by TMP Mortgage Income Plus, Ltd.

        The principal amount of the Loan was due and payable in a lump sum or
"balloon" payment on March 1, 1995. After several extensions of the due date,
the Borrower defaulted and the property was foreclosed on January 15, 1996. the
Partnership has sold it interest in the property to TMP Mortgage Income Plus,
Ltd. for the amount of its participation in the loan, as well as monies which
the Partnership has advanced to pursue development of this property. TMP
Mortgage Income Plus, Ltd. has entered into a joint venture with TMP Homes to
build homes on the 29 lots that secured this loan.

PEPPERTREE LAND COMPANY LOAN
----------------------------

        On June 28, 1994, the Partnership funded it twelfth loan, ("Loan 12")
secured by a first deed of trust on 193 single family residential lots and a
third trust deed on 73 single family residential lots and 15 acres
office/professional use land in Fallbrook, San Diego County, California.

        The principal amount of the Loan is due and payable, in a lump sum
payment 12 months from the date of the funding of the loan, which was June 28,
1995. However, the loan agreement called for an extension of an additional 6
months by written notice to the Lender within 30 days of the due date of the
Note. The interest impound was for the full 18 months and provided that should
the borrower repay the loan within the 12 month period, all unused interest
should be returned to Borrower.

        The collateral for this loan is a First Trust Deed on 193 single family
residential lots; and a third Trust Deed on 73 single family residential lots
and a Third Trust Deed on approximately 15 acres of office/professional use land
in Fallbrook, California.

        The property is known as Peppertree Park, which has been entitled with
an approved General Plan Amendment, Specific Plan, Tentative Map and a major Use
Permit for the following uses:

     (1)    Residential              (104 single family lots)

     (2)    Office/Professional      (14.88 acres)

     (3)    Retail Commercial        (sold to Vons on October 7, 1993)

     (4)    On-site amenities        (lake, park and hiking trails)
<PAGE>   9
        The property which is securing the Loan made by the Partnership is
residential and office/professional land. It is expected that property taxes on
the land will be approximately $30,000 annually. Infrastructure and grading is
proceeding and home construction could begin in mid 1997.

        The borrower has completed the engineering for Phase 1 of Unit 1 and
Phase II and is currently seeking construction financing to repay the
Partnership loan. The loan matured on December 28, 1995. However, the borrower
has requested a 90 day extension with additional interest and mortgage servicing
fees. The Partnership received $1,500,000 in cash as a repayment, and retains a
$500,000 interest in the property as an investor from which the Partnership will
receive a participation in profits from the development of single family homes.


                                     ITEM 2.
                                     -------
                                   PROPERTIES
                                   ----------

        The Partnership has acquired nine properties through foreclosure since
inception. All of those properties have been fully disclosed in Item 1, Business
of the Partnership.


                                     ITEM 3.
                                     -------
                                LEGAL PROCEEDINGS
                                -----------------

        The Partnership has been named as a defendant in two lawsuits by Albert
and Helen LaMonte, Borrowers in Loan #9, referred to above, and by Southpointe
Corporation, their shell corporation utilized to take title to the property and
file bankruptcy proceedings under Chapter 11 of the Bankruptcy Court.

        One lawsuit alleges conspiracy and fraud on behalf of the Partnership.
The General Partners believe the suit to be frivolous filed solely for the
purpose of delaying the foreclosure sale.

        The other lawsuit is attempting to set aside the foreclosure that
occurred in April 1996. The General Partners believe the suit to be frivolous as
well. Both lawsuits are filed in the County of Ventura and are state court cases
This suit is set to go to trial April 7, 1997.


                                     ITEM 5
                                     ------
      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
      ---------------------------------------------------------------------

MARKET INFORMATION
------------------

        As of December 31, 1997, there were approximately 982 record holders of
Units of Limited Partnership interest, representing total subscription of 15,715
units and subscription proceeds in the amount of $15,715,000. As of such date,
all of the subscription proceeds had been committed to the mortgage loan
investments described in Item 7 and working capital reserves. There is no other
class of security outstanding or authorized. There has not been, and currently
there does not exist, any established public trading market for the Units.
Accordingly, to the General Partners' knowledge, there was no trading activity
during the fiscal year ended December 31, 1995. In 1996, 75 Units were traded at
between $315 and $400 per Unit.
<PAGE>   10
CASH DISTRIBUTIONS
------------------

        Total interest received on mortgage loans from inception to December 31,
1997 was $3,657,666 and other income from deposits and other sources has been
received in the amount of $309,853. Also during 1996 the Peppertree loan was
repaid in the form of $1,500,000 in cash and a 20% interest in a 163.33 acre
project named Village One that is valued at $500,000. Total distributions to
investors from such income and loan repayments were made in 1996 of $682,571. In
1997, the Partnership's received net proceeds from the sale of an apartment
building for its investment in Steadfast HSC, LLC and distributed $2,232,364 to
investors. Total distributions to investors since inception have been
$8,013,602.


                                     ITEM 6.
                                     -------
                             SELECTED FINANCIAL DATA
                             -----------------------

        The following table summarized selected financial data of the
Partnership for the years ended December 31, 1997, 1996, 1995, 1994, and 1993
and should be read in conjunction with the more detailed financial statements
contained in Item 8, below.


<TABLE>
<CAPTION>
                              1997            1996            1995           1994            1993
<S>                       <C>             <C>             <C>             <C>             <C>
Interest Income           $    20,313     $   152,734     $   804,573     $ 1,253,631     $ 1,272,295
Other Income                    4,970         154,163          15,262           4,528               0
Total Income              $ 1,052,133     $   306,897     $   819,835     $ 1,258,159     $ 1,272,295
Net Income                $ 1,021,002     $   304,926     $   694,035     $   748,442     $ 1,214,371
Net Income Per Unit       $        64     $        19     $        44     $        47     $        83
Distribution Per Unit     $       141     $        43     $       160     $        77     $        86
Total Assets              $15,803,972     $15,868,401     $14,385,542     $15,606,951     $14,614,432
</TABLE>

----------
Based on 15,715, 15,715, 15,715, 15,715 and 14,461 Units outstanding at December
31, 1997, 1996, 1995, 1994, 1993, respectively.


                                     ITEM 7.
                                     -------
           MANAGEMENT'S DISCUSSION AND ANALYSES OF FINANCIAL CONDITION
           -----------------------------------------------------------
                           AND RESULTS OF OPERATIONS
                           -------------------------

RESULTS OF OPERATIONS
---------------------

        During the period from inception (November 15, 1991) through April 22,
1994, the Partnership was engaged in the formation of the Partnership, the sale
of Units of Limited partnership Interest and the investment of the subscription
proceeds in mortgage loan investments. On April 22, 1994, the offering and sale
of limited Partnership units ceased. As of April 22, 1994, a total of 15,715
Units had been sold by the Partnership for total proceeds of $15,715,000. Excess
proceeds from the sale of units were invested in interest-bearing reserve
accounts. During 1995, the revenues received were interest income earned on
mortgage loans and interest income earned on funds held in reserve. During 1996,
the Partnership received approximately $146,000 of revenues from the investment
in a 243 unit apartment complex in addition to the above revenue sums. During
1997, the Partnership received revenues from the sale of investment and land
totaling $1,026,850.

        The Partnership was formed principally to make short-term loans to
unaffiliated parties secured by first trust deeds on unimproved properties,
primarily in the Inland Empire area of Southern California. As of December 31,
1996, twelve loans had been made by the Partnership. Three loans had been repaid
and seven loans had defaulted and the Partnership had repossessed the property.
See "Item 1 - Business" subcaption "Mortgage Loan Investments."
<PAGE>   11
        As of December 31, 1997, the Partnership had cash on hand of $786,576.
All other proceed from the offering had been invested in Loans or working
capital reserves, or had been used in foreclosure proceeds or maintaining the
foreclosed properties for the Partnership. Also during December, 1996, the
Partnership invested $854,474 in a 243-unit apartment complex in the Los Angeles
area which, was sold in 1997 for a profit of $521,110,as well as investments in
five single family developments in the Southern California area.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

        From inception to December 31, 1997, the Partnership received a total of
$15,715,000 in gross proceeds from the sale of limited partnership units. During
the period from inception through December 31, 1997, the Partnership made a
total of twelve mortgage loans for a total expenditure of $15,615,000. Three
loans, in the total amount of $4,825,000 was repaid during the fiscal year
ending December 31, 1995.

        The Partnership raised a total of $8,334,000, $6,127,000, and $1,254,000
during the calender years ended December 31, 1992, 1993, and 1994, respectively.
The offering was closed on April 22, 1994 and no additional subscriptions were
accepted after that date.

        The Partnership made loans of $4,870,000, $7,420,000, and $2,725,000
during the calender years ended December 31, 1992, 1993, and 1994, respectively.
Of the twelve loans made, nine loans totaling $10,190,000 were foreclosed upon
and three loans totaling $4,825,000 were repaid. Proceeds from loan repayments
were either reinvested, added to Partnership reserves, or distributed to
investors.

        The Partnership does not intend to make any new land loans with existing
or future Partnership cash. At December 31, 1997, the Partnership had
development agreements with TMP Homes, an affiliated company, to develop single
family homes on three of the properties the Partnership has acquired through
foreclosure. In addition, the Partnership had a $500,000 investment in a single
family development that resulted from the Peppertree loan. The Partnership was
repaid $1,500,000 of the $2,000,000 loan in cash with the remaining $500,000 as
an investment in the project. The Partnership may incur indebtedness from
nonaffiliated financial institutions in order to complete any development for
projects in which the Partnership is involved.

        The nine loans that were foreclosed upon and are owned by the
Partnership produce no income stream. Accordingly, the Partnership is not making
distributions to investors except from the sale proceeds of Partnership assets.
Partnership cash reserves are being used to fund the operating cash needs of the
Partnership. As of December 31, 1997, the Partnership had sufficient cash
reserves for the next twelve months. In the event the Partnership needs
additional cash for operations, it may also subject Partnership properties it
has acquired through foreclosure to mortgage indebtedness.

        The two PR Equities properties that were foreclosed upon have
substantial Mello-Roos taxes that the Partnership does not have the cash to pay,
nor is it in the best interest of the Partnership to pay. The General Partners
are attempting to have the Mello-Roos bonds restructured (See Mortgage Loan
Investments section), however, there is no assurance that this can be
accomplished.

        Aside from the foregoing, the Partnership knows of no demands,
commitments, events, or uncertainties which might affect its liquidity or
capital resources in any material way.
<PAGE>   12
                                     ITEM 8.
                                     -------
                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                   -------------------------------------------

The following financial statements are filed as part of the Form 10K:

<TABLE>
<CAPTION>
                                                                              Page No
                                                                              -------
<S>                                                                             <C>
        (I) For the fiscal years ended December 31, 1997, 1996, and 1995

               Independent Auditors' Report                                     FS-1

               Balance Sheets of December 31, 1997 and 1996                     FS-2

               Statements of Income for the years ended
                      December 31, 1997,1996 and 1995                           FS-3

               Statements of Partners' Capital for the years ended
                      December 31, 1997, 1996, 1995 and 1994                    FS-4

               Statements of Cash Flow for the years ended
                      December 31, 1997, 1996, 1995                             FS-5

               Notes to Financial Statements                                    FS-6

               Financial Statements Schedules                                   FS-13
</TABLE>

All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Financial Statements and
Notes thereto.


                                    PART III
                                    --------


                                    ITEM 10.
                                    --------
                        DIRECTORS AND EXECUTIVE OFFICERS
                        --------------------------------

        The Partnership has no employees and no directors or executive officers.
Management of the Partnership is provided by the General Partners.

        TMP Properties, a California general partnership, and TMP Investments,
Inc., a California corporation, are the General Partners of the Partnership. TMP
Properties was formed on July 14, 1978. TMP Properties' principal business has
been the acquisition of undeveloped land and the coordination of activities
necessary to add value to such land, primarily through the predevelopment
process. It has syndicated numerous private real estate limited partnerships,
and eight public real estate limited partnerships. All of the properties
purchased by such partnerships were located in the State of California except
for one (an office building) which was located in Oklahoma City, Oklahoma. Each
of such limited partnerships involved a specified real property program in which
TMP Properties was the general partner. In addition, TMP Properties has been and
will continue to be engaged in property management, assets management, real
estate accounting, budgetary services and partnership management on behalf of
existing limited partnership and limited partnerships which it sponsors in the
future. The general partners of TMP Properties are William O. Passo, Anthony W.
Thompson and Scott E. McDaniel.
<PAGE>   13
        TMP Investments, Inc., a California corporation, was formed on December
12, 1984. TMP Investments, Inc. acts as loan servicer for the Partnership,
maintaining records with respect to, and billing and collecting payments on, the
loans made by the Partnership. As compensation for such services, TMP has
received a monthly loan servicing fee from each borrower, and not the
Partnership, in an amount up to 1/8th of 1% of the outstanding principal amount
of the borrower's loan. See "Compensation to the General Partners and their
Affiliates." TMP Investments also performs administrative, bookkeeping and
clerical services for the Partnership. The principals of TMP Investments, Inc.
are William O. Passo and Anthony W. Thompson.

        The individual partners of TMP Properties are listed below, together
with information regarding their employment experience and background.

        WILLIAM O. PASSO, 56, is a director and the President of TMP
Investments, Inc. He practiced law for 18 years, has been a licensed real estate
broker since 1974 and holds registered representative and general principals
securities licenses through the National Association of Securities Dealers, Inc.
Mr. Passo received his Juris Doctorate Degree from UCLA School of Law in 1967.
He has been a senior partner first of Passo, Yates and Nissen until 1975, then
of Passo & Davis until March 1983 when he resigned from the partnership to take
a leading role in the management of the affairs of TMP Properties. Mr. Passo has
been involved in public and private real-estate syndication since 1970, and has
acted as principal, investor, general partner, and counsel in real estate
transactions involving apartments, office buildings, agricultural groves and
unimproved land. Mr. Passo is a director and officer of William O. Passo, Inc.
d.b.a. TMP Management, a property management company, and an officer of TMP
Capital Corp., an NASD registered broker-dealer.

        SCOTT E. MCDANIEL, 51, is a general partner of TMP Properties. He is a
graduate of the US Naval Academy at Annapolis, majoring in engineering. Mr.
McDaniel is a California licensed general contractor and has been a licensed
California real estate broker since 1976. He was the founder and president of
Scott E. McDaniel, Inc. (dba Regal Realty). Mr. McDaniel has developed office
complexes and industrial space in Southern California and has personally
brokered over $125 million of real estate since 1982. Through an affiliated
company, DeVille Construction Co., Inc., Mr. McDaniel has directed general
contracting operations in Southern California since 1982.

        ANTHONY W. "TONY" THOMPSON, 51, is Director and Vice President of TMP
Investments, Inc. A graduate of Sterling College in 1969, with a Bachelors
Degree in Science and Economics, Mr. Thompson holds the professional designation
of Charter Life underwriter and chartered Financial Consultant from the American
College. Mr. Thompson is a registered principal with the NASD and is a principal
in TMP Capital Corp., a NASD registered Broker Dealer. Mr. Thompson has been
involved in the securities and the real estate investment fields since 1970, and
a General Partner of TMP since its formation in 1978. Mr. Thompson's primary
responsibility is marketing TMP offerings through the broker-dealer community.

        In addition to being a General Partner of the Partnership, TMP
Properties, and some of its affiliates, has been and continues to be a general
partner of other limited partnerships. If any such other limited partnerships'
assets should become insufficient to meet Partnership obligations, TMP
Properties, as a general partner of such other limited partnerships, might be
subject to liabilities on behalf of such partnerships.
<PAGE>   14
                                    ITEM 11.
                                    --------
                             EXECUTIVE COMPENSATION
                             ----------------------

        During the period since the formation of the Partnership (November 15,
1991) through the fiscal year ended December 31, 1997, the Partnership paid no
fees to the General Partners. The General Partners did receive collectively
$22,322 during the fiscal year ended December 31, 1997 as their share of
Partnership distributions. (See Item 13. "Certain Relationships and Related
Transactions".) The Partnership has no officers or employees and, therefore,
paid no other compensation other than that paid to the General Partners as
indicated above.


                                    ITEM 12.
                                    --------
         SECURITY OWNERSHIP OR CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

        As of December 31, 1997 the Partnership has 15,715 units of Limited
Partnership interest (the "Units") issued and outstanding. To the knowledge of
the General Partners, no person beneficially owns more than 5% of the Units. The
following table sets forth the number of Units beneficially owned as of December
31, 1997 by each officer, director and general partner of the General Partners
and by all such persons as a group.

<TABLE>
<CAPTION>
                                      Number of           Percent of
Name of Beneficial Owner                Units               Class
------------------------                -----               -----
<S>                                     <C>                 <C>
William O. Passo                          1                 .012%

All officers, directors and general
partners as a group (1 person
including the above)                      1                 .012%
</TABLE>


                                    ITEM 13.
                                    --------
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                 ----------------------------------------------

TRANSACTIONS WITH AFFILIATES
----------------------------

        TMP Capital Corp., a California corporation which is an affiliate of the
General Partners, is the Managing Broker-Dealer for the offer and sale of the
Units. TMP Capital Corp. is a member firm of the National Association of
Securities Dealers, Inc. The Managing Broker-Dealer was established to provide
underwriting, wholesaling, and other securities related services to partnerships
sponsored by the General Partners. The directors and executive officers of TMP
Capital Corp. are: Anthony W. Thompson, President and Director, and William O.
Passo, secretary, vice-president, and director. (See Item 10 "Directors and
Executive Officers" for information regarding Messrs. Thompson and Passo).


        The following information summarizes the forms and estimated amounts of
compensation (some of which involve cost reimbursements) to be paid either by
the Partnership, or others, to the General Partners and their Affiliates. None
of these fees were determined by arm's length negotiations. Except as disclosed
below, neither the General Partner nor any of their affiliates, directors,
officers, employees, agents, or counselors are participating, directly or
indirectly, in any other compensation or remuneration with respect to the
offering.


<PAGE>   15

                        OFFERING AND ORGANIZATIONAL STAGE
                        ---------------------------------

<TABLE>
<CAPTION>
                                                                          Estimated Dollar
Form of Compensation                                                         Amount of
   and Recipient             Description of Payment                         Compensation
   -------------             ----------------------                         ------------
<S>                          <C>                                        <C>
Selling Commissions (TMP     At no expense to the Partnership, up to    $100,000 - $105,000 if
Capital Corp. and            a maximum of 10% Gross Proceeds,           the minimum number of
Soliciting Dealers)          a minimum of 8% of which will be           Units are sold;
                             reallocated to participating               $2,000,000 to $2,100,000
                             Soliciting Dealers (which may include      if the maximum number
                             TMP Capital Corp.) on Units sold by        of Units are sold.
                             them.  Up to an additional 0.5% may
                             be paid to Soliciting Dealers (which
                             may include TMP Capital Corp.) for
                             due diligence activities.  All such
                             amounts will be payable by TMP
                             Realty, Inc. ("TMP Realty"), a
                             licensed real estate broker and an
                             Affiliate of the General Partners.  It
                             is anticipated that most of the Units
                             will be sold through Soliciting Dealers;
                             the actual amount of selling commissions
                             payable to TMP Capital Corp. will depend
                             on the number of Units sold by it.

Reimbursement of             At no expense to the Partnership,          Not determinable
Organizational Expenses      Organizational Expenses such as            at this time.
(General Partners)           advertising, mailing, printing costs,
                             clerical expenses, legal and accounting
                             fees will be paid by TMP Realty, an
                             Affiliate of the General Partners.

Reimbursement of Loan        The General Partners will be reimbursed    Not determinable
Expenses (General Partners)  for all out of pocket expenses, if any,    at this time.
                             directly related to the loans which may
                             be made by the Partnership, including
                             actual interest incurred on all funds
                             advanced for the benefit of the
                             Partnership, and the following expenses
                             which typically will be paid by the
                             Borrower; escrow expenses, title fees,
                             extension payments, appraisal fees,
                             expenses of feasibility and other studies
                             performed by third parties unaffiliated
                             with the General Partners and similar
                             expenses but not to include the General
                             Partners' overhead, salaries, travel or
                             like expenses.
</TABLE>


<PAGE>   16

                         OPERATING AND LIQUIDATION STAGE
                         -------------------------------

<TABLE>
<CAPTION>
                                                                          Estimated Dollar
Form of Compensation                                                         Amount of
   and Recipient             Description of Payment                         Compensation
   -------------             ----------------------                         ------------
<S>                          <C>                                        <C>
Loan Servicing Fee           For servicing the loans made by the        About $14,700 per year if
(General Partners)           Partnership, the General Partners will     the minimum of 1,000
                             receive a monthly Loan Servicing Fee that  Units are sold, or
                             will be charged to and be paid by each     $294,000 per year if all
                             borrower in an amount up to 1/8 of 1% of   20,000 Units are sold.
                             the outstanding principal amount of this
                             mortgage loan.

Broker Loan Placement        TMP Realty, a licensed real estate broker  If all 20,000 Units were
Fee (Licensed Real Estate    and an Affiliate of the General Partners,  sold, then on the Initial
Broker Affiliated with       had contracted with the Partnership to     Funding of the Loans and
General Partners)            use its best efforts to obtain qualified   after paying Selling
                             borrowers and to assist in negotiating     Commissions and
                             loan terms. TMP Realty will be             Organizational Expenses,
                             entitled to charge the borrowers a loan    TMP would retain up to
                             origination or extension fee (Broker       $1,903,000 of Points; and
                             Loan Placement Fee) for such services.     on the next $11,200,000
                             TMP Realty may retain the amount           of loans made (from re-
                             by which the Broker Loan Placement         payments of Initial
                             Fees received on all loans until the       Loans), TMP Realty
                             aggregate amount of loans made by          would retain $1,008,000
                             the Partnership equals the Gross           of the Points. On any
                             Proceeds of this offering (the "Initial    loans made thereafter,
                             Loans" or the "Initial Funding of          the Partnership would
                             Loans") exceeds the sum of Selling         receive 50% of the Points
                             Commissions and the Organizational         and TMP Realty would
                             Expenses. On all loans made there-         receive 50% subject to
                             after, TMP Realty may retain 50% of        subordination to the
                             any Broker Placement Fee, 25% will         Limited Partners'
                             be remitted to the Partnership, until      Priority Return.
                             TMP Realty has satisfied it obligation
                             to pay, out of the Borrower Loan
                             Placement Fees, Selling Commissions
                             and the due diligence fees. On all loans
                             made thereafter, TMP Realty may retain
                             50% of any Broker Loan Placement Fees,
                             and the remaining 50% will be remitted
                             to the Partnership; provided, however,
                             that TMP Realty's right to retain it 50%
                             portion shall be subordinated to a
                             cumulative noncompounded return of 8%
                             per annum to the Limited Partners on their
                             Adjusted Capital Contributions.
</TABLE>


<PAGE>   17

<TABLE>
<CAPTION>
                                                                          Estimated Dollar
Form of Compensation                                                         Amount of
   and Recipient             Description of Payment                         Compensation
   -------------             ----------------------                         ------------
<S>                          <C>                                           <C>
Interest in Partnership      1% interest in all Partnership allocation     Not determinable at this
Allocation of each Material  Net Income, net loss, and Distributions       time.
Item (General Partners)      of Distributable Cash from Operations.

Subordinated Participation   A 24% interest in allocation of Net           Not determinable at this
(General Partners)           Income and Distributions of Cash              time.
                             from Loan Repayments or from the Sale or
                             Refinancing of a property acquired through
                             foreclosure or otherwise, all subordinated
                             to a return of all the Limited Partners of
                             8% per annum on their Adjusted Capital
                             Contributions.

Subordinated Real Estate     Real Estate commissions with respect          Not determinable at this
Commission (General          to the sale of any properties acquired        time.
Partners or an Affiliate)    through foreclosure or otherwise,
                             which are equal to the lessor of: (1) 3%
                             of the gross sales price of a property
                             equal to one-half the normal and
                             competitive rate charged by unaffiliated
                             parties, but such payment shall be
                             subordinated to a return of all of the
                             Limited partners' Capital Contributions,
                             plus a non-compounded return to the
                             Limited Partners of 8% per annum on their
                             Adjusted Capital Contributions.
</TABLE>

(1)     The amount of the Broker Loan Fees to be received by TMP Realty will
        depend on (i) the dollar amount of Units sold in this offering; (ii) the
        duration or term of the loans made by the Partnership; and (iii) market
        conditions which will affect the points that can be charged. Based on
        the assumptions that $20,000,000 of Units are sold, the duration of all
        of the loans is 36 months, and the points charged are equal to 1/2% of
        the loan amount per month, on the Initial Funding of Loans TMP Realty
        would receive points of $3,528,000. However, TMP Realty will pay
        $1,500,000 of that amount as Selling Commissions and due diligence fees,
        and approximately $125,000 for Organization and Offering Expenses, which
        would result in compensation to TMP Realty of $1,903,000 or about 9.5%
        of the Gross Proceeds of the Offering. On the next $11,200,000 of loans
        made, after payment of the remaining Selling Commissions, TMP Realty
        would retain Broker Loan Fees of $1,008,000, assuming all such Loans are
        made for 36 month terms. However, based on their experience, the General
        Partners believe that most loans will be made for 12-to-24 month terms
        and, therefore, on the Initial Funding of Loans, the points that would
        be paid and TMP Realty's compensation would be substantially lower (see
        note (2) below). If only $1,000,000 of Units are sold, assuming loans
        are made for 36 month terms and points of 1/2% per month are paid, TMP
        Realty would receive points aggregating $176,400 on the Initial Funding
        of Loans, but would be obligated to pay Selling Commissions and
        Organization and Offering Expenses aggregating approximately $200,000.

(2)     Based on the experience and knowledge of the market conditions, the
        General Partners do not believe it to be a realistic assumption that all
        loans will be of 36 months' duration. Land loans most often are made for
        periods ranging from 12-to-24 months and the General Partners believe
        that the term of the loans will average about 18 months. If the
        Partnership were funded at $20,000,000 in Gross Proceeds, and assuming
        the term of the loans made averages 18 months, resulting in the payment
        by borrowers of an average of 9 points, the Partnership would not
        participate in the points paid on the first $19,600,000 of loans made.
        Such points would total $1,764,000, would be used by TMP Realty to pay
        Selling Commissions, due diligence fees and Organization and other
        Offering Expenses. The Partnership would receive 25%, or approximately
        $600,000, of the points (or a total of approximately $2,400,000) on

<PAGE>   18

        approximately the next $26,667,000 of loans made (with repaid principal
        or by loan extensions); and would receive at least 50% of points on all
        loans made thereafter.

(3)     Points, like interest, represent a cost to the borrower for a loan. As a
        result, it may be possible to obtain more points from borrowers by
        decreasing the rate of interest charged on a loan. An increase in points
        in exchange for a reduction in interest rates would increase the
        compensation that would be received by TMP Realty. For this reason, the
        General Partners have placed a ceiling on the points that may be charged
        on loans at 1/2% per month, which is comparable to the points charged by
        other mortgage lenders on similar loans being made in Southern
        California. In addition, borrowers ordinarily will resist increases in
        points because points must be paid in advance; however, for tax
        purposes, points may not be deducted when paid. Finally, to compete with
        other mortgage lenders the Partnership will have to keep its mortgage
        terms, including points, in line with those offered by other mortgage
        lenders.

(4)     A Limited Partner's Adjusted Capital Contribution is the amount the
        Limited Partner paid for his or her Units, reduced by any cash
        distributions the source of which is other than interest or fees on
        loans made by the Partnership. See Item 1, "BUSINESS", subcaption
        "Distributions, Net Income and Net Loss".

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

        (a) For a listing of financial statements, reference is made to Item 8
included in this Form 10K.

        (b) Exhibits:

             3 & 4   Amended and Restated Agreement of Limited Partnership
                     incorporated by reference to Exhibit 4.1 filed in Form
                     S-11, SEC File No. 33-39238 on April 13, 1992.

             10      Material contracts are incorporated by reference as
                     follows:

                     Incorporated by reference to Amendment No. 1 as filed
                     with the SEC on September 14, 1992.

                     10.1.1  Loan Agreement - PR Equities Loan (Loan #1)

                     10.1.2  Promissory Note - PR Equities Loan (Loan #1)

                     10.1.3  Deed of Trust - PR Equities Loan (Loan #1)

                     10.2.1  Loan Commitment - PR Equities Loan (Loan #2)

                     10.3.1  Loan Agreement - Frame Loan (Loan #3)

                     10.3.2  Promissory Note - Frame Loan (Loan #3)

                     10.3.3  Deed of Trust - Frame Loan (Loan #3)

                     10.4.1  Loan Agreement - Sunset Crossing Loan (Loan #4)

                     10.4.2  Promissory Note - Sunset Crossing Loan (Loan #4)

                     10.4.3  Deed of Trust - Sunset Crossing Loan (Loan #4)

                     10.4.4  Personal Guaranty - Sunset Crossing Loan (Loan #4)

                     10.4.5  Promissory Note - Bank Loan for Bridge Financing -
                             Sunset Crossing Loan (Loan #4)


<PAGE>   19

                     Incorporated by reference to Amendment No. 3 as filed
                     with the SEC on February 24, 1993.

                     10.7.1  Loan Agreement - PR Equities Loan (Loan #2)

                     10.7.2  Promissory Note - PR Equities Loan (Loan #2)

                     10.7.3  Deed of Trust - PR Equities Loan (Loan #2)

                     10.10.1 Loan Agreement - Fox-Olson Loan (Loan #5)

                     10.10.2 Promissory Note - Fox-Olson Loan (Loan #5)

                     10.10.3 Deed of Trust - Fox-Olson Loan (Loan #5)

                     10.11.1 Loan Agreement - Environmental Development, Ltd.
                             (Loan #6)

                     10.11.2 Promissory Note - Environmental Development, Ltd.
                             (Loan #6)

                     10.11.3 Deed of Trust - Environmental Development Ltd.
                             (Loan #6)

                     Incorporated by reference to Amendment No. 6 as filed
                     with the SEC on September 14, 1993:

                     10.8.4  Modification of Promissory Note - Frame Loan (Loan
                             #3)

                     10.12.1 Loan Agreement - Fox-Olson Loan 2 (Loan #7)

                     10.12.2 Promissory Note - Fox-Olson Loan 2 (Loan #7)

                     10.12.3 Deed of Trust - Fox-Olson Loan 2 (Loan #7)

                     Incorporated herein by reference to Exhibits A through H
                     filed with the Registrant's Current Report on Form 8-K,
                     dated October 12, 1993, SEC File No. 0-19933:

                     10.13.1 Loan Agreement - Singletary Loan (Loan #8)

                     10.13.2 Promissory Note - Singletary Loan (Loan #8)

                     10.13.3 Deed of Trust - Singletary Loan (Loan #8)

                     10.14.1 Loan Agreement - LaMonte Loan (Loan #9)

                     10.14.2 Promissory Note - LaMonte Loan (Loan #9)

                     10.14.3 Deed of Trust - LaMonte Loan (Loan #9)

                     10.14.4 Subordination, Non-disturbance and Attornment
                             Agreement - LaMonte Loan (Loan #9)

                     10.14.5 Consent to and Subordination of Deed of Trust -
                             LaMonte Loan (Loan #9)

                     27      Financial Data Schedule
<PAGE>   20

                                   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.

        Dated March 19, 1998.

                                  TMP LAND MORTGAGE FUND, LTD.
                                  a California Limited Partnership

                                  by TMP INVESTMENTS, INC.,
                                  a California corporation as co-general Partner


                                  By    /s/  WILLIAM O. PASSO
                                     -------------------------------------------
                                   William O. Passo, President


                                  By    /s/  ANTHONY W. THOMPSON
                                     -------------------------------------------
                                     Anthony W. Thompson,
                                     Executive Vice President



                                   By   /s/  RICHARD T. HUTTON, JR.
                                     -------------------------------------------
                                     Richard T. Hutton, Jr., Controller



                                  and TMP PROPERTIES, a California General
                                  Partnership as co-general Partner



                                   By   /s/  WILLIAM O. PASSO
                                     -------------------------------------------
                                     William O. Passo



                                   By   /s/  ANTHONY W. THOMPSON
                                     -------------------------------------------
                                     Anthony W. Thompson



                                   By   /s/  SCOTT E. MCDANIEL
                                     -------------------------------------------
                                     Scott E. McDaniel
<PAGE>   21

                          TMP LAND MORTGAGE FUND, LTD.
                       (A CALIFORNIA LIMITED PARTNERSHIP)


                              FINANCIAL STATEMENTS

                           DECEMBER 31, 1997 AND 1996

<PAGE>   22



                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)

                              Financial Statements
                           December 31, 1997 and 1996



                                Table of Contents
                                -----------------


<TABLE>
<S>                                                                  <C>
Independent Auditor's Report.......................................      1

Balance Sheets.....................................................      2

Statements of Income...............................................      3

Statements of Partners' Capital....................................      4

Statements of Cash Flows...........................................      5

Notes to Financial Statements......................................   6-12

Supplementary Information..........................................  13-18
</TABLE>


<PAGE>   23

                 [BALSER, HOROWITZ, FRANK & WAKELING LETTERHEAD]

                          Independent Auditor's Report
                          ----------------------------


To the Partners
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership


We have audited the accompanying balance sheets of TMP Land Mortgage Fund, Ltd.
(A California Limited Partnership) as of December 31, 1997 and 1996, and the
related statements of income, partners' capital and cash flows for the years
ended December 31, 1997, 1996 and 1995. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TMP Land Mortgage Fund, Ltd. (A
California Limited Partnership) as of December 31, 1997 and 1996, and the
results of its operations and cash flows for the years ended December 31, 1997,
1996 and 1995 in conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information contained
in Schedules I and II is presented for purposes of additional analysis and is
not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is stated fairly in all material respects in
relation to the basic financial statements taken as a whole.

Balser, Horowitz, Frank & Wakeling

BALSER, HOROWITZ, FRANK & WAKELING
    An Accountancy Corporation

Santa Ana, California
February 3, 1998

                                      FS-1
<PAGE>   24

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                                 Balance Sheets
                           December 31, 1997 and 1996


<TABLE>
<CAPTION>
                                     Assets
                                     ------
                                                       1997             1996
                                                       ----             ----
<S>                                               <C>              <C>
Cash                                              $    786,576     $    131,405

Other receivable                                        15,201              200

Mortgage loans on real estate (Schedule I)                   0                0

Investments                                          2,165,625        2,797,666

Properties held for sale (Schedule II)              12,836,570       12,939,130
                                                  ------------     ------------

    Total assets                                  $ 15,803,972     $ 15,868,401
                                                  ============     ============

                       Liabilities and Partners' Capital
                       ---------------------------------

Accounts payable                                  $          0     $          0

Due to affiliates                                       29,294           23,885

Accrued expenses                                     3,824,166        2,682,642
                                                  ------------     ------------

    Total liabilities                                3,853,460        2,706,527
                                                  ------------     ------------

Partners' capital (deficit)

  General partners                                     (37,697)         (25,585)

  Limited partners, 20,000 equity units
   authorized, 15,715 units outstanding
   at December 31, 1997 and 1996                    11,988,209       13,187,459
                                                  ------------     ------------

  Total partners' capital                           11,950,512       13,161,874
                                                  ------------     ------------

  Total liabilities and partners' capital         $ 15,803,972     $ 15,868,401
                                                  ============     ============
</TABLE>

             See Accompanying Notes and Independent Auditor's Report

                                      FS-2
<PAGE>   25

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                              Statements of Income
              For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                                1997        1996         1995
                                                ----        ----         ----
<S>                                         <C>          <C>          <C>
Revenue:

  Mortgage loan interest income             $        0   $  152,734   $  697,431
  Bank deposit interest income                  20,313        3,552       19,142
  Investment income                              1,370      146,011       11,662
  Gain on sale of land                         505,740            0            0
  Gain on sale of investment                   521,110            0            0
  Other income                                   3,600        4,600        3,600
                                            ----------   ----------   ----------

    Total revenue                            1,052,133      306,897      731,835
                                            ----------   ----------   ----------

Expenses:

  Accounting and legal                          14,448        1,020       18,352
  Advertising                                        0            0          642
  California Franchise Tax                         800          800          800
  Loan administration                                0          151            0
  Office expenses                                4,017            0        3,044
  Postage and printing                           2,779            0        5,502
  Secretarial and bookkeeping support            9,087            0        9,460
                                            ----------   ----------   ----------

    Total expenses                              31,131        1,971       37,800
                                            ----------   ----------   ----------

Net income                                  $1,021,002   $  304,926   $  694,035
                                            ==========   ==========   ==========

Allocation of net income:

  General partners, in the aggregate        $   10,210   $    3,049   $    6,940
                                            ==========   ==========   ==========
  Limited partners, in the aggregate        $1,010,792   $  301,877   $  687,095
                                            ==========   ==========   ==========
  Limited partners, per equity unit         $       64   $       19   $       44
                                            ==========   ==========   ==========
</TABLE>

             See Accompanying Notes and Independent Auditor's Report

                                      FS-3
<PAGE>   26

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                         Statements of Partners' Capital
              For the Years Ended December 31, 1997, 1996 and 1995


<TABLE>
<CAPTION>
                                    General       Limited
                                    Partners      Partners         Total
                                    --------      --------         -----
<S>                                 <C>         <C>             <C>
Partner's capital (deficit),
   December 31, 1994                $ (3,352)   $ 15,388,300    $ 15,384,948

Net income for 1995                    6,940         687,095         694,035

Distributions to partners in 1995    (25,396)     (2,514,068)     (2,539,464)
                                    --------    ------------    ------------

Partner's capital (deficit),
   December 31, 1995                $(21,808)   $ 13,561,327    $ 13,539,519

Net income for 1996                    3,049         301,877         304,926

Distributions to partners in 1996     (6,826)       (675,745)       (682,571)
                                    --------    ------------    ------------

Partner's capital (deficit),
   December 31, 1996                 (25,585)     13,187,459      13,161,874

 Net income for 1997                  10,210       1,010,792       1,021,002

Distributions to partners in 1997    (22,322)     (2,210,042)     (2,232,364)
                                    --------    ------------    ------------

Partner's capital (deficit),
   December 31, 1997                 (37,697)     11,988,209      11,950,512
                                    ========    ============    ============
</TABLE>

Distributions to Limited Partners, per equity unit, for 1997, 1996 and 1995 were
$141, $43 and $160, respectively, as determined by dividing the distributions to
partners for the year by the number of units outstanding at the end of the year.


             See Accompanying Notes and Independent Auditor's Report

                                      FS-4
<PAGE>   27

                          TMP LAND MORTGAGE FUND, LTD.
                       (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 flow from operating activities:
  Net income                                        $ 1,021,002    $   304,926    $   694,035
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Decrease in accrued interest receivable                   0              0         91,902
    (Increase)  or decrease in other receivable         (15,001)        24,085        (24,285)
    Increase or (decrease) in accounts payable                0        (17,475)         1,298
    Increase in accrued expenses                      1,141,524      1,920,371        557,314
    Gain on sale of investment                         (521,110)             0              0
    Gain on sale of land                               (505,740)             0              0
    Increase or (decrease) in due to affiliates           5,410        (42,392)        65,408
                                                    -----------    -----------    -----------

      Net cash provided by operating activities       1,126,085      2,189,515      1,385,672
                                                    -----------    -----------    -----------

Cash flow provided by or (used in) investing
  activities:
    Proceeds from sale of investment                  1,725,096              0              0
    Proceeds from sale of land                        1,950,000              0              0
    Proceeds from maturity of loans receivable                0      1,500,000      4,950,000
    Acquisition of properties                        (1,341,700)    (2,085,600)    (2,832,068)
    Increase in investments                            (571,946)      (871,896)    (1,325,770)
                                                    -----------    -----------    -----------

      Net cash (used in) investing activities         1,761,450     (1,457,496)       792,162
                                                    -----------    -----------    -----------

Cash flow provided by or (used in) financing
  activities:
    Distributions to partners                        (2,232,364)      (682,571)    (2,539,464)
                                                    -----------    -----------    -----------

      Net cash provided by or (used in) financing
        activities                                   (2,232,364)      (682,571)    (2,539,464)
                                                    -----------    -----------    -----------

Net increase or (decrease) in cash                      655,171         49,448       (361,630)
Cash, beginning of year                                 131,405         81,957        443,587
                                                    -----------    -----------    -----------

Cash, end of year                                   $   786,576    $   131,405    $    81,957
                                                    ===========    ===========    ===========

Supplemental disclosures of cash flow
  information:

    Income taxes paid                               $       800    $       800    $       800
</TABLE>

Other disclosures:
------------------

Non-cash investing and financing activities during the year ended December 31,
1997 and 1996 consisted of acquiring land parcels through foreclosure
proceedings on loans receivable. Total outstanding loan balances of $0,
$1,320,000 and $2,125,000 for 1997, 1996 and 1995, respectively, were
transferred to properties held for sale.


             See Accompanying Notes and Independent Auditor's Report

                                      FS-5
<PAGE>   28

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996



Note 1 - Organization and summary of significant accounting policies

         Organization - TMP Land Mortgage Fund, Ltd., A California Limited
         Partnership (the "Partnership"), was formed on November 15, 1991 by TMP
         Properties and TMP Investments, Inc. (collectively referred to as the
         "General Partners"). The purpose of the Partnership is to raise capital
         and make short-term (generally one to three-year) loans to unaffiliated
         persons or entities secured by first trust deeds (mortgages) on
         unimproved real property primarily in the Inland Empire area of
         Southern California, and to provide cash distributions on a current
         basis to the partners, primarily from interest earned on the mortgage
         loans. No mortgage loans will be made with maturities beyond July 31,
         1997; and the general partners intend to cease making loans by January
         31, 1997 and to liquidate the Partnership's assets and dissolve the
         Partnership as soon as practicable thereafter. In accordance with
         certain provisions of the Partnership Agreement (the "Agreement"), the
         Partnership may be dissolved earlier than 1997.

         The General Partners manage and control the affairs of the Partnership,
         including having final approval of all loans and investments, and have
         ultimate authority for matters affecting the interest of the
         Partnership. All organization and offering expenses of the Partnership
         were paid by an affiliate of the General Partners.

         Accounting Method - The Partnership's policy is to prepare its
         financial statements on the accrual basis of accounting.

         Partners' Equity - The Partnership raised capital through a public
         offering of units at $1,000 per unit. The minimum offering size was
         1,000 units or $1,000,000. The maximum offering size was 20,000 units
         or $20,000,000. As of December 31, 1994, 15,715 units were sold for
         total capital contributions of $15,715,000. No contributions were
         accepted after April 21, 1994.

         The partnership agreement provides for two types of investments:
         Individual Retirement Accounts (IRA) and others. The IRA minimum
         purchase requirement is $2,000 and all others are a minimum purchase
         requirement of $5,000. The maximum liability of the limited partners is
         the amount of their capital contribution.

         Allocation of net income and net losses from operations - Net income
         from operations shall generally be allocated 99% to all limited
         partnership units, which will be further allocated among such units on
         a pro rata basis, and 1% to the general partners. Net losses shall be
         allocated to the partners with positive capital accounts, in accordance
         with the ratio of their positive capital account balances, until no
         partner has a positive capital account; and thereafter, net losses will
         be allocated 100% to the general partners.

                                      FS-6
<PAGE>   29

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996


Note 1 - Organization and summary of significant accounting policies (Continued)

         Allocation of profits and losses on sales of property - Profits and
         losses on sales of property (which would ordinarily be acquired, if at
         all, on foreclosure of a defaulted loan) will be allocated first to the
         limited partners, until they have received a cumulative, non-compounded
         8% per annum return on their adjusted capital contributions and then
         76% to the limited partners and 24% to the general partners. In the
         case of any losses that might be incurred on the sale of foreclosed
         property, such losses will be allocated first to any of the partners,
         whether general or limited, with positive balances in their capital
         accounts, until such time as no general or limited partner has a
         positive balance in his or her capital account. Thereafter, all losses
         on sales of foreclosed property will be allocated to the general
         partners.

         Distributions of cash from operations - Distributions of cash from
         operations, if any, will be made monthly within 30 days after the end
         of each calendar month, and shall be allocated 99% to the limited
         partners and 1% to the general partners. Distributions made during
         1997, 1996 and 1995 are shown on the accompanying statements of
         partners' capital.

         Cash from loan repayments and from sales or refinancing of property -
         Cash from loan repayments and from any sale or financing of a
         foreclosed property that is not reinvested in new mortgage loans or
         retained for operations of the Partnership will be distributed 99% to
         the limited partners and 1% to the general partners until the limited
         partners have received cumulative cash distributions in an aggregate
         amount equal to their capital contributions plus their priority return.
         Thereafter cash from loan repayments and from sales or refinancing will
         be distributed 24% to the general partners and 76% to the limited
         partners. A limited partner's priority return will be equal to a
         cumulative, but not compounded, return of 8% per annum on his or her
         adjusted capital contribution. A limited partner's adjusted capital
         contribution is the amount which the limited partner paid for his or
         her units, reduced by the amount of cash distributed to him or her
         other than cash from operations and cash from loan repayments or sales
         or financing that must be applied to satisfy the limited partners'
         priority return.

         Properties Held for Sale - Properties held for sale consist of
         unimproved land and are stated at the balances of the foreclosed loans
         plus carrying costs incurred since foreclosure. All costs associated
         with the acquisition of a property are capitalized. Additionally, the
         Partnership capitalizes all carrying costs which includes interest
         expense and property taxes. Such costs are added to the cost of the
         properties and are deducted from the sales prices to determine gains
         when properties are sold.

         Income Taxes - No provision for federal income taxes has been made in
         these financial statements as all profit and losses will flow through
         to the respective partners and are recognized on their income tax
         returns. However, the minimum California Franchise tax due by the
         Partnership at December 31, 1997, 1996 and 1995 was $800 per year.

                                      FS-7
<PAGE>   30

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996




Note 1 - Organization and summary of significant accounting policies (Continued)

         Allowance for Losses on Loans - In view of the relationship of the loan
         amounts to market values of the properties mortgaged, there is no
         provision for an allowance for losses on loans. Factors that could be
         considered in establishing the timing and amount of an allowance for
         losses would include the market value of the collateral compared to the
         loan balance, the borrower's ability to repay the loan and prospects
         for selling the collateral.

         Cash and Cash Equivalents - For the purpose of the statements of cash
         flows, the Partnership considers all highly liquid investments with a
         maturity of three months or less when purchased to be cash equivalents.
         During the normal course of its business, the Partnership accumulates
         cash and maintains deposits at various banks. Occasionally, the cash
         deposit at a particular bank may exceed the federally insured limit.
         Any accounting loss or cash requirement resulting from the failure of a
         bank would be limited to such excess amounts. Cash deposits in excess
         of the federally insured limits totaled $504,309 and $42,797 at
         December 31, 1997 and 1996, respectively.

         Estimates - In preparing financial statements in conformity with
         generally accepted accounting principles, management is required to
         make estimates and assumptions that affect the reported amounts of
         assets and liabilities and the disclosure of contingent assets and
         liabilities at the date of the financial statements and revenues and
         expenses during the reporting period. Actual results could differ from
         these estimates.

         Concentration - All unimproved land parcels held for sale are located
         in Southern California. The eventual sales price of all parcels is
         highly dependent on the real estate market condition. The Partnership
         attempts to mitigate any potential risk by monitoring the market
         condition and holding the land parcels until the real estate market
         recovers.

Note 2 - Related Party Transactions

         Unaffiliated borrowers paid broker loan placement fees to TMP Realty,
         Inc., an affiliate of the General Partners, of $0, $40,000 and $88,000
         during 1997, 1996 and 1995, respectively, for assistance in negotiating
         loan terms with the Partnership. TMP Realty, Inc. pays all organization
         and offering expenses, including all legal, accounting, printing,
         registration and other costs. In addition, the borrowers paid loan
         servicing fees to TMP Investments, Inc., a general partner of the
         Partnership, of $10,000 and $33,000 during 1996 and 1995, respectively.
         At December 31, 1995, the partnership owed TMP Investments, Inc.
         $22,000 for loan servicing fees. During 1997 the Partnership paid
         $42,693 to TMP Investments, Inc. for accrued servicing fees on the La
         Monte loan. This payment was included in the cost of sale of the land.


                                      FS-8
<PAGE>   31

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996


Note 2 - Related Party Transactions (Continued)

         Under the terms of the Agreement, if the General Partners or their
         affiliates provide a substantial amount of services in connection with
         the sale of a property, or a portion of it, acquired through
         foreclosure or otherwise, they shall be paid a commission not to exceed
         the lesser of 1) one-half of the normal and competitive percentage of
         gross sales price charged for similar services by an unaffiliated
         partner; or 2) 3% of the gross sales price of the property. The payment
         shall be subordinate to a return of all of the limited partners'
         capital contributions and the payment to the limited partners of their
         cumulative unpaid priority returns. During 1997 the partnership paid
         $216,250 to TMP Realty, Inc. for brokers fees from the sale of an
         investment.

         Units were offered to the public through TMP Capital Corp. ("TMP
         Capital"), an affiliate of the General Partners, as managing
         broker-dealer. As the managing broker-dealer, TMP Capital received a
         sales commission of up to 10% of the gross proceeds, up to 8% of which
         was reallocated to soliciting dealers on units sold by them. These
         sales commissions were paid by TMP Realty, Inc.

         During 1997, 1996 and 1995, the Partnership was charged $15,152,
         $21,421 and $17,624, respectively, (of which $1,096, $105 and $0 is
         included in the accrued expense balance at year-end) by TMP
         Investments, Inc. for cost reimbursements for office and secretarial
         expenses.


Note 3 - Mortgage loans on real estate

         The loan agreements require borrowers to place funds from the loan
         proceeds in a restricted bank account equal to the total interest
         payments over the term of the loan.

         The Partnership receives a first security interest in said account as
         additional collateral for the payment of the note. The borrowers
         instruct the bank to pay to the Partnership the amount of the monthly
         loan payment. In view of this, the only accrual of interest on the
         loans is for the portion of each month the loan is earning interest
         until the first of the following month when the funds are released from
         the restricted account.

         In the event of foreclosure, the collateral would be recorded at its
         fair value at the time of foreclosure. Fair value would be considered
         to be the lower of (a) appraised value determined by an independent
         real estate appraiser, or (b) the general partners' determination of
         the value of the property based on their analysis.

                                      FS-9
<PAGE>   32

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996


Note 3 - Mortgage loans on real estate (Continued)

         The Partnership would consider collateral for a loan in substance
         foreclosed if all the following criteria are met:

         1. The borrower has little or no equity in the collateral, considering
            the current fair value of the collateral; and

         2. Proceeds for repayment of the loan can be expected to come only from
            the operation or sale of the collateral; and

         3. The borrower has either:

            (a) formally or effectively abandoned control of the collateral to
                the Partnership, or

            (b) retained control of the collateral but, because of the current
                financial condition of the borrower, or the economic prospects
                for the borrower and/or the collateral in the foreseeable
                future, it is doubtful that the borrower will be able to rebuild
                equity in the collateral or otherwise repay the loan in the
                foreseeable future.

         If this occurred, the collateral would be considered foreclosed and
         would be recorded at its fair value.

         The Olson #2 note for $500,000 matured December 17, 1994, went into
         default and was foreclosed on April 26, 1995. The collateral (land) was
         recorded in the accounts at the loan amount which approximates the fair
         value of the land.

         The Environmental Development loan for $1,625,000 matured October 15,
         1994, went into default and was foreclosed on August 23, 1995. The
         collateral (land) was recorded in the accounts at the loan amount which
         approximates the fair value of the land.

         During the year ended December 31, 1995 the Singletary loan for
         $2,200,000 and the Lansing loan for $625,000 were paid in full.

         The LaMonte loan for $1,220,000 defaulted on April 26, 1995 and was
         foreclosed January 17, 1996. The collateral (land) was recorded in the
         accounts at the loan amount which approximates the fair value of the
         land.

                                     FS-10
<PAGE>   33

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996


Note 3 - Mortgage loans on real estate (Continued)

         The Rockfield Development loan for $100,000 defaulted on April 13, 1995
         and foreclosure was completed on January 17, 1996. The Partnership
         acquired the collateral (land) and transferred it to TMP Mortgage
         Income Plus, Ltd. in exchange for an interest in a project.

         The Peppertree loan for $2,000,000 matured June 28, 1995 and was paid
         July 30, 1996. $1,500,000 was received in cash and $500,000 was
         received in the form of a 20% interest in a 163.33 acre project named
         Village One.

Note 4 - Investments

         Following is a summary of the investments of the Partnership as of
         December 31, 1996 and 1997.

<TABLE>
<CAPTION>
                                                       1997         1996
                                                       ----         ----
<S>                                                <C>          <C>
          TMP Flowerfield, LLC                     $  144,175   $  140,233
          TMP Remington, LLC                          878,876      523,803
          Steadfast HSC, LLC                                0    1,006,206
          TMP Flowerfield - Sun City, LLC             356,835      341,685
          Peppertree Park, LLC                        500,000      500,000
          TMP Mortgage Income Plus, L.P. project      285,739      285,739
                                                   ----------   ----------
                                                   $2,165,625   $2,797,666
                                                   ==========   ==========
</TABLE>


         The Partnership has a controlling interest in the above entities and
         the equity method is used to account for its share of the entities'
         earnings. None of the assets or liabilities of the entities are
         reflected in the Partnerships accounts.

                                     FS-11
<PAGE>   34

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                          Notes to Financial Statements
                           December 31, 1997 and 1996



Note 5 - Gain on sale of land

         During 1997 the land received through foreclosure of the La Monte loan
         was sold.

<TABLE>
<S>                                              <C>
         Sales Price                             $1,950,000

         Balance of foreclosed loan               1,220,000
         Foreclosure costs                          135,580
         Carrying costs capitalized                  82,778
         Closing costs                                5,902
                                                -----------

         Total costs                              1,444,260
                                                -----------

         Gain on sale                           $   505,740
                                                 ==========
</TABLE>


Note 6 - Gain on sale of investments

        During 1995 the Partnership invested in Steadfast H.S.C., LLC which was
        formed to acquire and operate an apartment building. During 1997 the
        building was sold and the proceeds distributed to the members of the
        Limited Liability Company.

<TABLE>
<S>                                             <C>
        Partnership share of net proceeds       $1,725,096
                                                ----------

        Amount invested                            854,474
        Share of income for 1995-1997              181,520
        Share of sales commissions                 167,992
                                                ----------

        Total costs                              1,203,986

               Gain on sale                     $  521,110
                                                ==========
</TABLE>

                                     FS-12
<PAGE>   35

                            SUPPLEMENTARY INFORMATION


<PAGE>   36

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                   Schedule I - Mortgage Loans on Real Estate
             (Schedule XII, Rule 12-29, for SEC Reporting Purposes)
                                December 31, 1997



<TABLE>
<CAPTION>
COLUMN    A           B          C         D         E          F           G             H
--------------------------------------------------------------------------------------------------
                                                                                       Amount of
                                                                                     Loans Subject
                                         Final    Periodic     Face      Carrying    to Delinquent
    Description    Interest   Maturity  Payment    Prior     Amount of   Amount of   Principal or
    of Loans(A)      Rate       Date     Term      Liens     Mortgages   Mortgages     Interest
--------------------------------------------------------------------------------------------------
<S>               <C>         <C>       <C>       <C>         <C>          <C>           <C>
       None          n/a        n/a       n/a       n/a         0            0             0

                  Beginning balance                           $ 0
                  Additions during period:
                    New mortgage loans                          0
                  Reduction during period
                    Loans paid off                              0
                    Loans foreclosed                            0
                                                              ---
                  Ending balance                                0
                                                              ===
</TABLE>


             See Accompanying Notes and Independent Auditor's Report

                                     FS-13
<PAGE>   37

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                   Schedule I - Mortgage Loans on Real Estate
             (Schedule XII, Rule 12-29, for SEC Reporting Purposes)
                                December 31, 1996


<TABLE>
<CAPTION>
COLUMN    A           B          C         D         E          F           G             H
--------------------------------------------------------------------------------------------------
                                                                                       Amount of
                                                                                     Loans Subject
                                         Final    Periodic     Face      Carrying    to Delinquent
    Description    Interest   Maturity  Payment    Prior     Amount of   Amount of   Principal or
    of Loans(A)      Rate       Date     Term      Liens     Mortgages   Mortgages     Interest
--------------------------------------------------------------------------------------------------
<S>               <C>         <C>       <C>       <C>      <C>            <C>           <C>
       None          n/a        n/a       n/a       n/a              0       0             0

                  Beginning balance                        $ 3,320,000
                  Additions during period:
                    New mortgage loans                               0
                  Reduction during period
                    Loans paid off                          (2,000,000)
                    Loans foreclosed                        (1,320,000)
                                                           ------------
                  Ending balance                           $          0
                                                           ============
</TABLE>



            See Accompanying Notes and Independent Auditor's Report.

                                     FS-14
<PAGE>   38

                          TMP LAND MORTGAGE FUND, LTD.
                       (A California Limited Partnership)
                   Schedule I - Mortgage Loans on Real Estate
             (Schedule XII, Rule 12-29, for SEC Reporting Purposes)
                                December 31, 1995


<TABLE>
<CAPTION>
COLUMN    A                            B         C        D        E       F          G              H
-------------------------------------------------------------------------------------------------------------
                                                                                                 Amount of
                                                                                                Loans Subject
                                               Final   Periodic           Face      Carrying    to Delinquent
    Description                    Interest   Maturity  Payment  Prior  Amount of   Amount of   Principal or
    of Loans(A)                      Rate       Date     Term    Liens  Mortgages   Mortgages     Interest
-------------------------------------------------------------------------------------------------------------
<S>                                  <C>      <C>       <C>      <C>    <C>         <C>          <C>

1. Rockfield Development (Note 3)    12.5%    3/1/95      (B)    None   $  100,000  $  100,000    $  100,000
2. La Monte (Note 3)                 12.5%    4/25/95     (B)    None    1,220,000   1,220,000     1,220,000
3. Peppertree Land Company (Note 3)  12.5%    6/28/95(C)  (B)    None    2,000,000   2,000,000        None
                                                                        ----------  ----------    ----------
                                                                        $3,320,000  $3,320,000    $1,320,000
                                                                        ==========  ==========    ==========

                    Beginning balance                                   $8,270,000
                      Additions during period:
                        New mortgage loans                                       0
                      Reduction during period
                        Loans paid off                                  (2,825,000)
                        Loans foreclosed                                (2,125,000)
                                                                        ----------

                     Ending balance                                     $3,320,000
                                                                        ==========
</TABLE>
----------
(A)     All loans are first mortgage on unimproved property in the Southern
        California area.

(B)     All loans provide for level monthly payments of interest only with the
        entire face amount of the mortgage due at maturity.

(C)     This loan was originally due on June 28, 1995 and was extended up to
        December 28, 1995. Currently under another agreement it is on a
        month-to-month basis.

            See Accompanying Notes and Independent Auditor's Report.

                                     FS-15
<PAGE>   39

                           TMP LAND MORTAGE FUND, LTD.
                       (A California Limited Partnership)
             Schedule II - Real Estate and Accumulated Depreciation
              (Schedule XI, Rule 12-28, For SEC Reporting Purposes)
                                December 31, 1997


<TABLE>
<CAPTION>
COLUMN    A                  B        C                  D                 E           F             G            H          I
------------------------------------------------------------------------------------------------------------------------------------
                                                 COSTS CAPITALIZED
                                                    SUBSEQUENT           Gross
                                                  TO ACQUISITION         amount
                                              ----------------------    at which                                          Estimated
                                    Initial                 Carrying   Carried at  Accumulated     Date of       Date    Depreciable
Description of Assets  Encumbrances  Costs    Improvements    Costs     Year-End   Depreciation  Construction  Acquired     Life
------------------------------------------------------------------------------------------------------------------------------------
<S>                          <C>   <C>          <C>        <C>         <C>              <C>         <C>          <C>         <C>
Unimproved land -
     San Jacinto, CA         0     $3,550,000   $ 63,737   $3,656,695  $ 7,270,432      0            n/a         6/2/94      n/a
Unimproved land -                                                                                             & 8/11/94
     Sun City, CA            0      1,320,000        638       34,633    1,355,271      0            n/a        11/2/94      n/a
Unimproved land -
     Banning, CA             0      1,875,000      1,500       63,888    1,940,388      0            n/a       12/21/94      n/a
Unimproved land -
     San Diego               0      1,658,000     15,207       86,201    1,759,408      0            n/a        8/23/95      n/a
Unimproved land -
     Sun City                0        500,000      4,780        6,291      511,071      0            n/a        4/26/95      n/a
                                   ----------   --------   ----------  -----------

                             0     $8,903,000   $ 85,862   $3,847,708  $12,836,570      0
                            ===    ==========   ========   ==========  ===========     ===

Reconciliation of carrying amount
---------------------------------

Beginning balance                 $12,939,130

Additions
 Carrying costs       $ 1,339,762
                      -----------
  Total additions                   1,339,762

Deductions
 Initial costs        $ 1,220,000
 Improvements              72,794
 Carrying costs           149,528
                      -----------
  Total deductions                 (1,442,322)
                                   ----------

Ending balance                    $12,836,570
                                  ===========
</TABLE>


            See Accompanying Notes and Independent Auditor's Report.

                                     FS-16
<PAGE>   40

                           TMP LAND MORTAGE FUND, LTD.
                       (A California Limited Partnership)
             Schedule II - Real Estate and Accumulated Depreciation
              (Schedule XI, Rule 12-28, For SEC Reporting Purposes)
                                December 31, 1995


<TABLE>
<CAPTION>
COLUMN  A              B           C              D                 E           F            G            H           I
----------------------------------------------------------------------------------------------------------------------------
                                           COSTS CAPITALIZED
                                               SUBSEQUENT         Gross
                                            TO ACQUISITION        amount
                                         ---------------------   at which                                         Estimated
Description of                   Initial              Carrying  Carried at  Accumulated    Date of       Date    Depreciable
Assets            Encumbrances    Costs  Improvements   Costs    Year-End  Depreciation  Construction  Acquired     Life
------            ------------    -----  ------------   -----    --------  ------------  ------------  --------     ----
<S>                <C>         <C>        <C>         <C>       <C>          <C>           <C>        <C>           <C>
Unimproved land -
  San Jacinto, CA          0   $3,550,000  $63,737    $566,979  $4,180,716      0            n/a        6/2/94&
                                                                                                       8/11/94       n/a
Unimproved land -
  Sun City, CA             0    1,320,000      637      11,377   1,332,014      0            n/a       11/2/94       n/a
Unimproved land -
  Banning, CA              0    1,875,000        0      25,739   1,900,739      0            n/a      12/21/94       n/a
Unimproved land -
  San Diego                0    1,658,000   13,399      33,299   1,704,698      0            n/a       8/23/95       n/a
Unimproved land -
  Sun City                 0      500,000    4,780       2,049     506,829      0            n/a       4/26/95       n/a
Unimproved land -
  Simi Valley              0            0    8,534(A)        0       8,534      0            n/a           (A)       n/a
                         ---   ----------  -------    --------  ----------    ---

                           0   $8,903,000  $91,087    $639,443  $9,633,530      0
                         ---   ==========  =======    ========  ==========    ===

Reconciliation of carrying amount
---------------------------------

Beginning balance              $6,801,462

Additions
  Initial costs   $2,158,000
  Improvements        41,696
  Carrying costs     632,372
                     -------
  Total additions               2,832,068
                                ---------
Ending balance                 $9,633,530
                               ==========
</TABLE>

----------
(A)     Costs incurred for defaulted loan. The property is under foreclosure as
        of December 31, 1996. (See Note 3)


            See Accompanying Notes and Independent Auditor's Report.

                                     FS-17

<PAGE>   41

                           TMP LAND MORTAGE FUND, LTD.
                       (A California Limited Partnership)
             Schedule II - Real Estate and Accumulated Depreciation
              (Schedule XI, Rule 12-28, For SEC Reporting Purposes)
                                December 31, 1996

<TABLE>
<CAPTION>
COLUMN  A              B           C              D                 E           F            G            H           I
----------------------------------------------------------------------------------------------------------------------------
                                           COSTS CAPITALIZED
                                               SUBSEQUENT         Gross
                                            TO ACQUISITION        amount
                                         ---------------------   at which                                         Estimated
Description of                   Initial              Carrying  Carried at  Accumulated    Date of       Date    Depreciable
Assets            Encumbrances    Costs  Improvements   Costs    Year-End  Depreciation  Construction  Acquired     Life
------            ------------    -----  ------------   -----    --------  ------------  ------------  --------     ----
<S>                <C>        <C>         <C>        <C>       <C>          <C>           <C>        <C>           <C>
Unimproved land -
  San Jacinto, CA         0   $ 3,550,000  $ 63,737  $2,459,279  $ 6,073,016      0          n/a         6/2/94 &
                                                                                                        8/11/94      n/a
Unimproved land -
  Sun City, CA            0     1,320,000       638      25,619    1,346,257      0          n/a        11/2/94      n/a
Unimproved land -
  Banning, CA             0     1,875,000     1,500      48,581    1,925,081      0          n/a       12/21/94      n/a
Unimproved land -
  San Diego               0     1,658,000    15,207      63,870    1,737,077      0          n/a        8/23/95      n/a
Unimproved land -
  Sun City                0       500,000     4,780       5,162      509,942      0          n/a        4/26/95      n/a
Unimproved land -
  Simi Valley             0     1,220,000    72,794      54,963    1,347,757      0          n/a        4/22/96      n/a
                        ---   -----------  --------  ----------  -----------    ---

                          0   $10,123,000  $158,656  $2,657,474  $12,939,130      0
                        ===   ===========  ========  ==========  ===========    ===

Reconciliation of carrying amount
---------------------------------

Beginning balance             $ 9,633,530

Additions
  Initial costs  $1,220,000
  Improvements       67,569
  Carrying costs  2,018,031
                 ----------
  Total additions               3,305,600
                              -----------
Ending balance                $12,939,130
                              ===========
</TABLE>



            See Accompanying Notes and Independent Auditor's Report.

                                     FS-18