<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q
                                        
                  QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
                     of the Securities Exchange Act of 1934
                      for the quarter ended June 30, 1998


                             Commission File Number
                                    0-17669
                                    -------

                                        
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
                        (A Delaware Limited Partnership)
                                        

                 I.R.S. Employer Identification No.  04-2981989
                                                     ----------

                  2335 North Bank Drive, Columbus, OH  43220
      Registrant's Telephone Number, Including Area Code:  (614) 451-9929


       Securities Registered Pursuant to Section 12(b) of the Act:  None
          Securities Registered Pursuant to Section 12(g) of the Act:

                     Units of Limited Partnership Interest



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



                               Yes   X    No   
                                   -----        

                                       1
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
                        A DELAWARE LIMITED PARTNERSHIP
                            June 30, 1998 FORM 10-Q
                                        
                               TABLE OF CONTENTS
                                        
                                        

PART I  FINANCIAL INFORMATION                                           PAGE NO.
-----------------------------                                           --------

Item 1.     Unaudited Combined Financial Statements
 
 
      Combined Balance Sheets..................................................3
 
      Combined Statements of Operations........................................5
 
      Combined Statements of Cash Flows........................................7
 
      Notes to Combined Financial Statements...................................8
 
Item 2.     Management's Discussion and Analysis of 
            Financial Condition
            and Results of Operations..........................................9
 
PART II  OTHER INFORMATION
--------------------------
 
      Other Information.......................................................13
 
      Signatures..............................................................14
 

                                       2
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
    COMBINED BALANCE SHEETS JUNE 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
                                 (In Thousands)



 
                                                June 30        December 31
ASSETS                                           1998              1997
-------------------------------------------    ---------       ------------
                                                                   
Current Assets:                                                    
                                                                   
     Cash and cash equivalents                $     918        $        968
     Tenants' security deposits                     438                 429
     Mortgage escrow deposits                       948                 648
     Prepaid expenses and other assets              757                 765
                                              ---------        ------------
          Total current assets                    3,061               2,810
                                              ---------        ------------
                                                                   
                                                                   
Assets limited as to use                          5,637               5,388
                                              ---------        ------------
                                                                   
Rental property:                                                   
     Buildings and improvements                  76,322              75,962
     Furniture and equipment                      2,560               2,521
                                              ---------        ------------
                                                 78,882              78,483
       Less accumulated depreciation            (24,543)            (23,086)
                                              ---------        ------------
                                                 54,339              55,397
     Land                                         3,719               3,719
                                              ---------        ------------
                                                 58,058              59,116
                                              ---------        ------------
Prepaid land leases, less current                                  
     maturities                                      44                  47
                                              ---------        ------------
                                                                   
          Total assets                        $  66,800        $     67,361
                                              =========        ============



                     The accompanying notes are an integral
                   part of the combined financial statements.


                                       3
<PAGE>
 
                  NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                      COMBINED BALANCE SHEETS, CONTINUED
                    (In Thousands, except Investment Units)



<TABLE>
<CAPTION>

LIABILITIES AND PARTNERS' DEFICIT                           June 30,             December 31,
                                                             1998                    1997
----------------------------------------------          ---------------        ----------------
                                                          (Unaudited)
<S>                                                     <C>                    <C> 
Current liabilities:                           
     Accounts payable and accrued expenses              $         2,636        $          2,190
     Rents received in advance                                       69                      35
     Deposits held                                                  459                     438
     Accrued interest on mortgage notes payable                     147                     201
     Current maturities of term debt                                952                   1,008
                                                        ---------------        ----------------
                                               
          Total current liabilities                               4,263                   3,872
                                                        ---------------        ----------------
                                               
Term debt, less current maturities:            
     Mortgage notes payable                                      40,488                  40,938
     Promissory notes, including accrued       
        interest payable                                         28,131                  27,200
                                                        ---------------        ----------------
                                                                 68,619                  68,138
                                                        ---------------        ----------------
                                               
                                               
Partners' deficit:                             
     General Partners:                         
       NHT, Inc.                                                    (11)                     (9)
       Other Operating General Partners                             (22)                      5
                                               
     Limited partners:                         
       Issued and outstanding  1,014,668       
          investment units                                       (6,049)                 (4,645)
                                                        ---------------        ----------------
                                               
                                                                 (6,082)                 (4,649)
                                                        ---------------        ----------------
                                               
          Total liabilities and partners' deficit       $        66,800        $         67,361
                                       
                                                        ===============        ================
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.


                                       4
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                 COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
               FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                    (In Thousands, except per Unit Amounts)


<TABLE>
<CAPTION>
                                                       1998           1997
                                                      -------        -------
<S>                                                   <C>            <C> 
Revenues:                                           
     Rental revenues                                  $ 2,943        $ 3,178
     Other income                                          60            113
                                                      -------        -------
                                                    
        Total revenues                                  3,003          3,291
                                                      -------        -------
                                                    
Expenses:                                           
     Administration                                       395            404
     Operating and maintenance                            809            817
     Management fees                                      239            248
     Partnership asset management fees                     81             79
     Utilities                                            320            391
     Taxes and insurance                                  447            501
     Depreciation and amortization                        735            735
                                                      -------        -------
                                                    
        Total expenses                                  3,026          3,175
                                                      -------        -------
                                                    
        Income (loss) from rental operations              (23)           116
                                                      -------        -------
                                                    
Other revenues and (expenses):                      
     Interest income                                       48             42
     Interest expense                                    (821)          (840)
                                                      -------        -------
                                                    
          Net loss                                    $  (796)       $  (682)
                                                      =======        =======
                                                    
                                                    
Net loss per limited partnership unit                 $ (0.78)       $ (0.67)
                                                      =======        =======
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.


                                       5
<PAGE>
 
                   NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                 COMBINED STATEMENTS OF OPERATIONS (UNAUDITED)
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                    (In Thousands, except per Unit Amounts)


<TABLE>
<CAPTION>
                                                                       1998            1997
                                                                     --------        --------
<S>                                                                  <C>             <C> 
Revenues:                                                     
     Rental revenues                                                 $  5,876        $  6,288
     Other income                                                         117             191
                                                                     --------        --------
                                                              
        Total revenues                                                  5,993           6,479
                                                                     --------        --------
                                                              
Expenses:                                                     
     Administration                                                       839             813
     Operating and maintenance                                          1,397           1,567
     Management fees                                                      590             603
     Partnership asset management fees                                    162             157
     Utilities                                                            724             908
     Taxes and insurance                                                  878             986
     Depreciation and amortization                                      1,471           1,443
                                                                     --------        --------
                                                              
        Total expenses                                                  6,061           6,477
                                                                     --------        --------
                                                              
        Income (loss) from rental operations                              (68)              2
                                                                     --------        --------
                                                              
Other revenues and (expenses):                                
     Interest income                                                       97              79
     Interest expense                                                  (1,663)         (1,672)
                                                                     --------        --------
                                                              
          Net loss before extraordinary gain                           (1,634)         (1,591)
          Extraordinary gain (Note B)                                     214               -
                                                                     --------        --------
                                                              
          Net loss                                                   $ (1,420)       $ (1,591)
                                                                     ========        ========
                                                              
                                                              
Net loss per limited partnership unit before extraordinary gain         (1.61)          (1.57)
                                                         
                                                              
Extraordinary gain per limited partnership unit                          0.21               -
                                                                     --------        --------
                                                              
Net loss per limited partnership unit                                $  (1.40)       $  (1.57)
                                                                     ========        ========
</TABLE>


                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       6
<PAGE>
 
                     NATIONAL HOUSING TRUST LIMITED PARTNERSHIP
           AND ITS SUBSTANTIALLY WHOLLY-OWNED OPERATING PARTNERSHIPS
                 COMBINED STATEMENTS OF CASH FLOWS (UNAUDITED)
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                 (In Thousands)


<TABLE>
<CAPTION>

                                                                    1998            1997
                                                                 --------        --------
<S>                                                              <C>             <C> 
Cash flows from operating activities:                
     Net loss                                                    $ (1,420)       $ (1,591)
     Adjustments to reconcile net loss to net cash   
        provided by operating activities:            
          Depreciation and amortization                             1,471           1,443
          Accrued interest on promissory notes                        811             782
     Changes in operating assets and liabilities:    
          Increase in deposits, prepaids and other assets            (312)           (478)
          Increase in accounts payable and           
              accrued expenses                                        446             401
          Increase (decrease) in other current liabilities              1             (42)
                                                                 --------        --------
Cash provided by operations                                           997             515
                                                                 --------        --------
                                                     
Investing activities:                                
     Additions to buildings, furniture and           
        equipment, net                                               (399)           (535)
     Deposits to assets limited as to use, net                       (249)           (366)
                                                                 --------        --------
        Cash used for investing activities                           (648)           (901)
                                                                 --------        --------
                                                     
Financing Activities:                                
     General partners cash distributions                              (13)             (1)
     Additions to term debt                                           120             434
     Payments of term debt                                           (506)           (454)
                                                                 --------        --------
       Net  cash used for financing activities                       (399)            (21)
                                                                 --------        --------
                                                     
Decrease in cash and cash equivalents                                 (50)           (407)
                                                     
Cash and cash equivalents beginning of  year                          968           1,313
                                                                 --------        --------
                                                     
Cash and cash equivalents end of period                          $    918        $    906
                                                                 ========        ========
</TABLE>



                     The accompanying notes are an integral
                   part of the combined financial statements.

                                       7
<PAGE>
 
                NATIONAL HOUSING TRUST LIMITED PARTNERSHIP AND
             ITS SUBSTANTIALLY WHOLLY OWNED OPERATING PARTNERSHIPS
                                  (UNAUDITED)
                    NOTES TO COMBINED FINANCIAL STATEMENTS

NOTE A--BASIS OF PRESENTATION

The accompanying combined financial statements include the accounts of National
Housing Trust Limited Partnership (Investment Partnership) and the Operating
Partnerships in which it has acquired a significant limited partnership
interest.

The information furnished reflects all adjustments (all of which were of a
normal recurring nature) which are, in the opinion of management, necessary to
fairly present the combined financial position, results of operations, and cash
flows on a consistent basis.

The accompanying unaudited combined financial statements are presented in
accordance with the requirements for Form 10-Q and consequently do not include
all disclosures normally required by generally accepted accounting principles.
Reference should be made to the Partnership's 1997 Annual Report on Form 10-K
for additional disclosures including a summary of the Partnership's accounting
policies which are not significantly different.


NOTE B - BANKRUPTCY - OPERATING PARTNERSHIPS

During March 1996, two Operating Partnerships which had purchased apartment
projects in Fort Worth, Texas filed for bankruptcy.  The bankruptcy filing
followed unsuccessful negotiations with the lender (HUD) and the foreclosure
actions by a Texas bank which purchased the loans from HUD.  During 1997,
attempts to reorganize the Operating Partnerships were unsuccessful and the
Texas bank was permitted to complete its foreclosure actions and purchase the
apartment projects at the foreclosure sales.  In connection with the foreclosure
action, the Operating Partnerships were relieved of any obligation related to
the nonrecourse mortgage debt. At December 31, 1997, the Operating Partnerships
had accumulated cash of $216,000 which was in contention and, accordingly, was
charged against the extraordinary gain and a reserve established pending the
resolution of the bankruptcy hearing scheduled for March 26, 1998 to determine
the ownership of the cash.

The hearing to dismiss the bankruptcy and determine the ownership of the cash
was held on March 26, 1998.  The Court entered an order denying the bank's
motion for payment of cash collateral and granted the motion to dismiss the
bankruptcy. The bank has filed a notice of appeal to preserve its right to file
an appeal.  It is anticipated these Texas Operating Partnerships will be
dissolved in 1998 paying remaining Operating Partnership liabilities out of
available Operating Partnership cash.  Any cash in excess of liabilities will be
distributed to the Investment Partnership.  No distributions are expected to be
made to the Unit holders.


                                       8
<PAGE>
 
ITEM 2  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

General
-------

In 1988, the Investment Partnership raised $20,293,000 in gross proceeds through
a public offering.  After paying the selling, offering and organization expenses
of the offering the Investment Partnership had $17,249,000 in net proceeds.  Of
the net proceeds, $260,000 was deposited in the Investment Partnership reserve
and $16,989,000 was invested in 31 Operating Partnerships.  The 31 Operating
Partnerships that were acquired own low-income housing developments (the
"Properties") eligible for the low-income housing tax credit.  One of the
Properties was also eligible for the historic rehabilitation tax credit.  The 31
acquisitions occurred from October 1988 through March 1990.  Two Operating
Partnerships (see Properties below) are anticipated to be dissolved in 1998.

Each Operating Partnership's Property qualifies for the low-income housing tax
credit (LIHTC).  The LIHTC  was created by the 1986 Tax Reform Act and is
governed by Section 42 of the Internal Revenue Code. The Investment Partnership
serves as a conduit of the Operating Partnerships' tax credits, passive losses,
portfolio income and other tax information to the holders of Units of limited
partnership interest in the Investment Partnership (the "Unit holders").  The
tax credits are allocated to the Unit holders for 10 years after a property has
been placed in service and rented up.  The tax credits were first allocated to
Unit holders in 1988 and are anticipated to continue until 2001. The Investment
Partnership elected a special option available in 1990 to accelerate the LIHTC
for individuals who had an interest in the Investment Partnership before October
26, 1990. Qualifying Unit holders received a tax credit of 150% of the credit
otherwise allowable for the tax year ending December 31, 1990. The remaining tax
credit available for 1991 and subsequent tax years is being reduced on a pro
rata basis by the amount of the 1990 increased credit. Non-qualifying Unit
holders will receive the original unaccelerated tax credit for the remaining
qualifying tax years of their investment.

An analysis of future tax credits anticipated based upon current information and
assuming no changes in the Operating and Investment Partnerships indicates an
estimate of future tax credits for the Qualifying Unit holders who received the
1990 acceleration to be as follows:  approximately $2.65 of credit per unit in
1998; approximately $2.12 of credit per unit in 1999; approximately $ .36 of
credit per unit in 2000; and approximately $ .20 of credit per unit in 2001.  In
addition, in order for a Property to qualify for the tax credits, the Property
must be utilized as a low-income property for 15 years before it can be sold.
The General Partner anticipates the Properties will be sold in the years 2003
through 2008.

The properties are subject to substantial debt, in many cases including seller
financing on which interest has accrued since the Partnership invested in the
Properties.  Most of the Properties are dependent upon continuing government
subsidies.  In addition, many of the Properties are located in market areas that
would not support significant rent increases.  Finally, most of the Properties
are subject to use restrictions that limit their use to low-income housing
beyond the end of the tax credit compliance period.  For these and other
reasons, there can be no assurance that the sale of the Properties will produce
sales proceeds to the Operating Partnerships in excess of the debt financing and
the expenses of sale; nor can there be any assurance that distributions of the
sales proceeds, if any, from the Operating Partnerships to the Partnership will
exceed the Partnership's accumulated liabilities.  Accordingly, upon sale of the
Properties, there can be no assurance that any funds will be distributed to Unit
holders or, if funds are distributed, that the funds will be sufficient to
enable Unit Holders to pay taxes arising from such sales.

In the year 2000, many existing computer programs that use only two digits
(rather than four) to identify a year in the date field could fail or create
erroneous results if not corrected.  This computer program flaw is expected to
affect virtually all companies and organizations, including governmental
agencies with which the Operating Partnerships have substantial activities. The
Partnership plans to communicate with all of its significant suppliers to
determine the extent to which the Partnership's interface systems are vulnerable
to those third parties' failure to remediate their own year 2000 issues.  There
can be no assurance that the systems of other companies on which the
Partnership's systems rely will be timely converted and will not have an adverse
effect on the 


                                       9
<PAGE>
 
Partnership's systems. The Partnership cannot quantify the potential costs and
uncertainties associated with this computer program flaw at this time and the
impact, if any. The Partnership is currently updating its accounting software to
accommodate year 2000 issues and anticipates completing the year 2000 project
before year 2000.

Properties
----------

As of June 30,1998,  average occupancy of the Properties was 96%.

Two Properties located in Ft. Worth, Texas had experienced cash flow
difficulties and had experienced a decline in value.  During 1993, the General
Partner resolved a dispute with a former Managing General Partner who had not
made mortgage payments on one of the properties and failed to comply with its
Operating Deficit Guarantee. Per an agreement completed in May 1993, the former
Managing General Partner paid $60,000.

Due to the nonpayment of the two properties' mortgages by the former Managing
General Partner, the mortgages were assigned to the U.S. Department of Housing
and Urban Development (HUD).  In September 1995, HUD auctioned off the mortgage
loans for these properties.  The General Partner bid on the mortgage loans, but
a Texas bank was the successful bidder.  The General Partner attempted to
negotiate with the bank seeking a consensual agreement to restructure the debt.
The bank responded  with a notice dated March 12, 1996  that the bank
accelerated the maturity of the indebtedness under the Notes, demanded payment
in full and gave notice that if the indebtedness is not paid in full, the bank
would cause the trustee under the deeds of trust securing  the Notes to conduct
a foreclosure sale on April 2, 1996.

The General Partner, after evaluating the consequences of foreclosure and as
part of a strategy to minimize the effect to the investors, filed on March 26,
1996 with respect to Trinidad Apartments Limited Partnership  and on March 28,
1996 with respect to Springchase Apartments Limited Partnership in the Northern
District of Texas, Fort Worth Division, Case #496-41284 and Case #496-4136
respectfully, petitions for relief under Chapter 11 to enable the Operating
Partnerships to reorganize.  A hearing was commenced on June 5, 1997 and was
continued on July 21, 1997 and August 20, 1997.  On October 22, 1997, the Court
entered an order denying confirmation of the plans of reorganization and granted
the bank relief from the automatic stay of foreclosure.  On December 2, 1997, a
foreclosure sale was held and the Properties were transferred to the bank.

Because each investor's tax situation was different, the consequences of the
foreclosure was different based upon each investor's previous use of tax credits
and passive losses, and its individual tax situation.  However, in general, the
foreclosure caused:  a recapture of a portion of the tax credits previously
received by the investors; the reduction of tax credits in future years; an
interest charge under the Internal Revenue Code on tax credits recaptured; and a
tax gain on disposition of the property as a result of the foreclosure.  The
December 31, 1997 Schedule K-1 included a 48 cents per Unit recapture of tax
credits with a corresponding estimated interest charge of 23 cents per unit.
The passive gain relating to the disposition of the two Properties as a result
of foreclosure was less than the 1997 passive losses passed through from the
remaining 29 Operating Partnerships.  Future tax credits will be reduced in each
of 1998, 1999, 2000, and 2001 by the loss of the two Properties' credits.  (For
an estimate of future credits after this reduction see General above in the
MD&A.)

The hearing to dismiss the bankruptcy was held on March 26, 1998. The Court
entered an order denying the bank's motion for payment of cash collateral and
granted the motion to dismiss the bankruptcy. The bank has filed a notice of
appeal to preserve its rights to file an appeal.  It is anticipated these Texas
Operating Partnerships will be dissolved in 1998 paying remaining Operating
Partnership liabilities out of available Operating Partnership cash.  Any cash
in excess of liabilities will  be distributed to the Investment Partnership.  No
distributions are expected to be made to Unit holders.

Liquidity and Capital Resources
-------------------------------

Liquidity is defined as an Operating Partnership's ability to meet its current
and long-term financial obligations. If a Property were to lose its governmental
rent, interest subsidy or mortgage insurance, the Operating Partnership holding
such Property might be unable to fund expenses on an ongoing basis.


                                      10
<PAGE>
 
Liquidity shortfalls might be covered by new federal governmental subsidy
programs, by state and local agencies, by funds from the Investment Partnership
reserve, or managing general partner operating deficit guarantees, although
there is no assurance that such sources would be available or, if available,
sufficient to cover any liquidity shortfall. A liquidity shortfall, for whatever
reason, might result in a sale, refinancing, or foreclosure of the Property, any
one of which could have material adverse tax consequences to a Unit holder,
including a partial recapture of previously allocated low-income housing  tax
credits.

Material changes have been made and additional changes have been proposed by
various Members of Congress and the Clinton Administration in the programs of
the U.S. Department of Housing and Urban Development.  The Multifamily Assisted
Housing Reform and Affordability Act of 1997, Public Law 105-65, effective
October 1, 1997, continued for fiscal year 1998 (October 1, 1997 through
September 30, 1998) a debt restructuring demonstration first enacted for fiscal
year 1997.  Under the demonstration program, HUD provides short-term renewals
for Section 8 assistance contracts so long as the subsidized rents on the
properties do not exceed 120% of HUD-published Fair Market Rents (FMRs) for the
market areas in which the properties are located.  With respect to most
properties with rents in excess of 120% of FMRs and Section 8 contracts that
expire in fiscal year 1998, Public Law 105-65 provides that subsided rent levels
may be reduced to market levels and the debt may be restructured into two
mortgages.  The first mortgage is set at a level supportable by the lower
subsidized rents, and the second mortgage is payable only out of cash flow after
other approved expenses and sale or refinancing proceeds.  In many cases, the
rent subsidies will become tenant-based, meaning that the subsidies may move
with the tenants.  However, for certain projects, such as those that
predominately serve elderly or disabled families or are located in markets with
an inadequate supply of affordable housing, the rent subsidies may continue to
be project-based.

Participation in the restructuring program is voluntary, in that the owner may
decline to extend the Section 8 assistance contract.  Owners who have engaged in
adverse financial or managerial actions are barred from participating in the
restructuring program.

The demonstration program becomes a permanent program in fiscal year 1999.
Whereas the demonstration program is limited to properties with rents in excess
of 120% or FMRs, the permanent program will be applicable to all projects with
rents above those of comparable properties in local markets.  HUD will enter
into contracts to carry out the restructuring with state housing finance
agencies and others who will have authority to set rents above the comparable
rents for 20% of their inventory each year.  These rents would be based on
approved project budgets, and would be capped at 120% of FMRs, except for up to
5% of the inventory, which could have budget-based rents above 120% of FMRs
based on a showing of special need.

The Operating Partnerships own fifteen Properties whose Section 8 contracts have
or will expire in fiscal year 1998 or 1999, of which two have rents in excess of
120% of FMRs.  The Section 8 contracts for fourteen of these fifteen Properties
have been or are expected to be renewed with HUD until at least the end of
fiscal year 1999.  In addition, three other Properties owned by the Operating
Partnerships have Section 8 contracts with rents in excess of 120% of FMRs that
expire after fiscal year 1999.  In a number of other Properties, rents may be
above comparable rents as determined by HUD and therefore could be subject to
HUD restructuring.  The General Partner will seek to renew all expiring Section
8 contracts, and if required or appropriate, the General Partner will
participate in the program to restructure loans and rent subsidies. For the one
property indicated above that may not have the Section 8 subsidy renewed through
1999, the Managing General Partner has entered into negotiations with HUD that
may lead to the restructuring of the financing and Section 8 subsidy for the
Stygler Village Apartments, which has contract rents that are in excess of 120%
of FMR.

These changes could affect demand for and cash flow of many of the Properties,
as well as potentially create debt forgiveness taxable income.  Moreover, a
shift to tenant-based subsidies could lead over time to lower occupancies and
lower rents, adversely affecting cash flow.  The General Partner is preparing
for the potential impact of the restructuring of HUD programs and is monitoring
the development of HUD policy guidance and legislation.  The General Partner is
unable to predict with certainty the impact of HUD program restructuring on the
Operating Partnerships, but it is possible that a restructuring could have a
material adverse effect on one or 


                                      11
<PAGE>
 
more of the Operating Partnerships, which in turn could have a material adverse
effect on the Investment Partnership.

At June 30, 1998, assets limited as to use were $5,637,000.  The assets were
composed of the Investment Partnership reserve of  $375,000 and Operating
Partnership reserves of $5,262,000.  The Investment Partnership reserves are
available to fund repairs and maintenance as well as operational expenses, while
the reserves maintained by an Operating Partnership are typically available only
for the Property owned by such Operating Partnership.  Historically, the
Investment Partnership reserve has been available to fund obligations of the
Investment Partnership, including the management fee payable by the Investment
Partnership to the General Partner.  As of December 31, 1997 the General Partner
had voluntarily deferred payment of $378,000 of its management fee due to a
reduced level of the Investment Partnership reserve. There can be no assurance
that the Investment Partnership reserve will be sufficient to satisfy the
liquidity requirements of any given Operating Partnership in the event that the
reserves of such Operating Partnership are insufficient for this purpose.
Deposits and withdrawals from the Operating Partnership reserves are generally
regulated by a governing federal, state or local agency.

Low-income housing projects frequently generate limited cash flow and,
therefore, the potential for cash flow deficits exists.  The General Partner
does not anticipate that the Investment Partnership will distribute cash to Unit
holders in circumstances other than refinancing or disposition of its
investments in the Operating Partnerships, and there can be no assurance of such
distributions in the event of refinancing or disposition.

Results of Operations
---------------------

The June 30, 1998 net loss of $1,420,000 decreased 10.7% from the June 30, 1997
net loss of $1,591,000.  The reasons for the differences are discussed below.

An extraordinary gain of $214,000 was recorded in first quarter 1998 as a result
of matters related to the foreclosure and debt extinguishment on the two Fort
Worth, Texas properties (see Note B).

Total revenue decreased $486,000 (7.5%) when comparing the six months ended June
30, 1998 and 1997.  The decrease in rental revenue related to the loss of
operations from the two Texas properties.  After considering this decrease of
revenue, the other properties' rental revenue increased an average of 1.5%.

Total expenses exclusive of depreciation and interest for the six months ended
June 30, 1998 and 1997 were  $4,590,000 and $5,034,000, respectively.  The
$444,000 (8.8%) decrease in expenses between 1998 and 1997 primarily related to
a decrease in expenses related to the loss of operations from the two Texas
properties.  After considering this decrease in expenses related to these two
properties the average increase in expenses is 1.2%. The expenses with the
largest fluctuations are utilities with a decrease of 5.4%, taxes and insurance
with a decrease of 4.2% and administrative with an increase of 13.1%.
Administrative expenses have increased because prior year expenses were lower
than normal.

In recent years, rental income, after the HUD rent adjustments, has not been
increasing at a rate equivalent to increases in expenses (excluding depreciation
and interest).  To date, inflation has not had a significant impact on the
Partnerships' combined operations.  However, rent levels of the Properties are
generally limited by the requirements of the low-income housing tax credit and
are subject to strict governmental regulation. In the event of significant
inflation, the Operating Partnerships may be unable to increase rents
sufficiently to compensate for increases in expenses.  Due to the changes in HUD
programs, future increases in subsidy income may be limited.  Overall, most of
the Properties are in good physical condition after taking into account the
planned repairs and maintenance discussed above and are producing positive cash
flow.


                                      12
<PAGE>
 
PART II.  OTHER INFORMATION
---------------------------


ITEM 1.                   LEGAL PROCEEDINGS
           
                          None

ITEM 2.                   CHANGES IN SECURITIES

                          None

ITEM 3.                   DEFAULTS UPON SENIOR SECURITIES

                          None

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

                          None

ITEM 5.                   OTHER INFORMATION

                          None

ITEM 6.                   EXHIBITS AND REPORTS ON FORM 8-K

                          None


                                      13
<PAGE>
 
                                  SIGNATURES

Pursuant to the requirements 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


                          National Housing Trust Limited Partnership
                          ------------------------------------------
                                      (Registrant)



Date   August 10, 1998        By /s/ James A. Bowman        .
       ----------------          ----------------------------              
                              James A. Bowman
                              President, NHT, Inc.



Date    August 10, 1998       By /s/ Susan E. Basting       .
        ----------------         ----------------------------
                              Susan E. Basting
                              Treasurer, NHT, Inc.


                                      14