UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    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, 1998

                                       or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [No Fee Required]

For the transition period from               to
                              ---------------  ----------------

Commission File Number 0-8908
                       ------

                        PUBLIC STORAGE PROPERTIES IV, LTD
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        California                                               95-3192402
-----------------------------------------                 ----------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                            Identification Number)

       701 Western Avenue
      Glendale, California                                         91201
----------------------------------------                  ----------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:  (818) 244-8080
                                                     --------------
   
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
                      -------------------------------------
                                (Title of class)

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
                                       ---  ---

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

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

<PAGE>

                                     PART I
ITEM 1.           BUSINESS.

Forward Looking Statements
--------------------------

         When  used  within  this  document,  the words  "expects,"  "believes,"
"anticipates,"  "should,"  "estimates," and similar  expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the  Securities  Exchange Act of 1933, as amended,  and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks,  uncertainties,  and other  factors,  which may
cause the actual  results and  performance  of the  Partnership to be materially
different  from those  expressed or implied in the forward  looking  statements.
Such factors include the impact of competition from new and existing real estate
facilities  which could  impact  rents and  occupancy  levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively  compete in the markets that it does  business in; the impact of the
regulatory  environment  as  well  as  national,   state,  and  local  laws  and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic  conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.

General
-------

         Public Storage  Properties IV, Ltd., (the  "Partnership") is a publicly
held limited partnership formed under the California Uniform Limited Partnership
Act in December 1977. The  Partnership  raised  $20,000,000 in gross proceeds by
selling 40,000 units of limited partnership  interest ("Units") in an interstate
offering, which commenced in May 1978 and was completed in November 1978.

         In  1995,   there  were  a  series  of  mergers  among  Public  Storage
Management,  Inc. (which was the Partnership's  mini-warehouse operator), Public
Storage,  Inc. (which was one of the Partnership's general partners) ("old PSI")
and their  affiliates  (collectively,  "PSMI"),  culminating in the November 16,
1995 merger (the "PSMI  Merger") of PSMI into  Storage  Equities,  Inc.,  a real
estate investment trust ("REIT") organized as a California  corporation.  In the
PSMI Merger, Storage Equities, Inc. was renamed Public Storage, Inc. ("PSI") and
PSI acquired  substantially  all of PSMI's United States real estate  operations
and became a  co-general  partner of the  Partnership  and the  operator  of the
Partnership's mini-warehouse properties.

         The  Partnership's  general  partners  are  PSI  and  B.  Wayne  Hughes
("Hughes") (collectively referred to as the "General Partners"). Hughes has been
a general partner of the Partnership since its inception.  Hughes is chairman of
the board and chief  executive  officer of PSI,  and  Hughes and  members of his
family (the "Hughes Family") are the major shareholders of PSI.

         The  Partnership  is managed and its  investment  decisions are made by
Hughes and the executive  officers and directors of PSI. The limited partners of
the Partnership  have no right to participate in the operation or conduct of its
business and affairs.

         The  Partnership's  objectives  are to (i) maximize the  potential  for
appreciation  in  value  of  the  Partnership's  properties  and  (ii)  generate
sufficient cash flow from operations to pay all expenses,  including the payment
of interest to  Noteholders.  All of the  properties  were financed in September
1988.

         The term of the  Partnership is until all properties have been sold and
in any event, not later than December 31, 2038.

Investments in Facilities
-------------------------

         At December  31,  1998,  the  Partnership  owned 17  properties  in two
states.

         The Partnership believes that its operating results have benefited from
favorable   industry   trends  and  conditions.   Notably,   the  level  of  new
mini-warehouse  construction  has decreased since 1988 while consumer demand has
increased.  In  addition,  in recent  years  consolidation  has  occurred in the
fragmented mini-warehouse industry.

                                       2

<PAGE>

         Mini-warehouses  are  designed to offer  accessible  storage  space for
personal  and  business  use at a  relatively  low  cost.  A user  rents a fully
enclosed space which is for the user's  exclusive use and to which only the user
has access on an unrestricted basis during business hours.  On-site operation is
the  responsibility  of resident  managers who are  supervised by area managers.
Some  mini-warehouses  also include rentable uncovered parking areas for vehicle
storage.  Leases for  mini-warehouse  space may be on a long-term or  short-term
basis,  although typically spaces are rented on a month-to-month  basis.  Rental
rates vary according to the location of the property and the size of the storage
space.

         Users of space in  mini-warehouses  include both  individuals and large
and small  businesses.  Individuals  usually  employ  this space for storage of,
among other things, furniture, household appliances,  personal belongings, motor
vehicles,  boats,  campers,  motorcycles and other household  goods.  Businesses
normally employ this space for storage of excess  inventory,  business  records,
seasonal goods, equipment and fixtures.

         Mini-warehouses in which the Partnership has invested generally consist
of three to seven  buildings  containing  an  aggregate  of  between  350 to 750
storage  spaces,  most of  which  have  between  25 and 400  square  feet and an
interior height of approximately 8 to 12 feet.

         The  Partnership   experiences  minor  seasonal   fluctuations  in  the
occupancy levels of mini-warehouses with occupancies higher in the summer months
than in the winter  months.  The  Partnership  believes that these  fluctuations
result in part from increased moving activity during the summer.

         The Partnership's  mini-warehouses  are geographically  diversified and
are generally  located in heavily populated areas and close to concentrations of
apartment  complexes,  single family  residences  and  commercial  developments.
However,  there may be  circumstances  in which it may be  appropriate  to own a
property  in a less  populated  area,  for  example,  in an area  that is highly
visible  from a major  thoroughfare  and  close to,  although  not in, a heavily
populated area. Moreover,  in certain population centers,  land costs and zoning
restrictions may create a demand for space in nearby less populated areas.

         As  with  most  other  types  of  real  estate,   the   conversion   of
mini-warehouses to alternative uses in connection with a sale or otherwise would
generally require substantial  capital  expenditures.  However,  the Partnership
does not intend to convert its mini-warehouses to other uses.

Operating Strategies
--------------------

         The Partnership's mini-warehouses are operated by PSI under the "Public
Storage" name, which the Partnership believes is the most recognized name in the
mini-warehouse  industry.  The major  elements  of the  Partnership's  operating
strategies are as follows:  

*        CAPITALIZE ON "PUBLIC  STORAGE'S" NAME RECOGNITION.  PSI, together with
         its predecessor,  has more than 20 years of operating experience in the
         mini-warehouse  business.  PSI has informed the Partnership  that it is
         the largest  mini-warehouse  facility  operator in the United States in
         terms of both number of facilities  and rentable  space  operated.  PSI
         believes  that its  marketing  and  advertising  programs  improve  its
         competitive  position in the market.  PSI's in-house Yellow Pages staff
         designs and places  advertisements  in  approximately  700 directories.
         Commencing  in early  1996,  PSI began to  experiment  with a telephone
         reservation   system  designed  to  provide  added  customer   service.
         Customers  calling either PSI's toll-free  telephone  referral  system,
         (800)  44-STORE,  or a  mini-warehouse  facility  are directed to PSI's
         reservation  system where a trained  representative  discusses with the
         customer space  requirements,  price and location  preferences and also
         informs the customer of other  products  and services  provided by PSI.
         The telephone reservation system supports rental activity at all of the
         Partnership's  properties.  PSI's toll-free  telephone  referral system
         services approximately 175,000 calls per month from potential customers
         inquiring as to the nearest Public Storage mini-warehouse.

*        MAINTAIN HIGH OCCUPANCY LEVELS AND INCREASE REALIZED RENTS.  Subject to
         market conditions,  the Partnership  generally seeks to achieve average
         occupancy levels in excess of 90% and to eliminate  promotions prior to
         increasing  rental  rates.  Average  occupancy  for  the  Partnership's
         mini-warehouses  has increased  from 93% in 1997 to 94% 1998.  Realized
         monthly rents per occupied  square foot  increased from $.83 in 1997 to
         $.89 in  1998.  The  Partnership  has  increased  rental  rates in many
         markets where it has achieved high occupancy levels.

                                       3

<PAGE>

*        SYSTEMS  AND  CONTROLS.  PSI  has  an  organizational  structure  and a
         property  operation system,  "CHAMP"  (Computerized Help and Management
         Program),  which links its corporate  office with each  mini-warehouse.
         This enables PSI to obtain daily  information from each  mini-warehouse
         and to achieve efficiencies in operations and maintain control over its
         space inventory, rental rates, promotional discounts and delinquencies.
         Expense management is achieved through centralized payroll and accounts
         payable systems and a comprehensive property tax appeals department and
         PSI has an extensive  internal audit program  designed to ensure proper
         handling of cash collections.

*        PROFESSIONAL PROPERTY OPERATION.  There are approximately 3,800 persons
         who render services for the Public Storage system,  primarily personnel
         engaged in property operations,  substantially all of whom are employed
         by  a  clearing  company  that  provides  certain   administrative  and
         cost-sharing  services to PSI and others owners of properties  operated
         by PSI.

Property Operator
-----------------

         The   Partnership's    mini-warehouses   are   managed   by   PSI   (as
successor-in-interest  to PSMI) under a Management  Agreement.  PSI has informed
the Partnership that it is the largest  mini-warehouse  facility operator in the
United States in terms of both number of facilities and rentable space operated.

         Under the supervision of the Partnership, PSI coordinates the operation
of the  facilities,  establishes  rental policies and rates,  directs  marketing
activity  and  directs the  purchase  of  equipment  and  supplies,  maintenance
activity  and  the  selection  and  engagement  of  all  vendors,  supplies  and
independent contractors.

         PSI  engages,  at the  expense of the  Partnership,  employees  for the
operation  of  the  Partnership's   facilities,   including  resident  managers,
assistant managers, relief managers, and billing and maintenance personnel. Some
or all of these  employees may be employed on a part-time  basis and may also be
employed by other persons, partnerships,  real estate investment trusts or other
entities owning facilities operated by PSI.

         In the purchasing of services such as advertising  (including broadcast
media advertising) and insurance, PSI attempts to achieve economies by combining
the resources of the various facilities that it operates. Facilities operated by
PSI  have  historically  carried   comprehensive   insurance,   including  fire,
earthquake, liability and extended coverage.

         PSI has developed systems for space inventory,  accounting and handling
delinquent  accounts,  including a  computerized  network  linking PSI  operated
facilities. Each project manager is furnished with detailed operating procedures
and typically  receives  facilities  management  training from PSI. Form letters
covering a variety of circumstances are also supplied to the project managers. A
record of actions  taken by the project  managers  when  delinquencies  occur is
maintained.

         The  Partnership's  facilities  are typically  advertised  via signage,
yellow pages,  flyers and broadcast media advertising  (television and radio) in
geographic  areas in which many of the  Partnership's  facilities  are  located.
Broadcast  media and other  advertising  costs are charged to the  Partnership's
facilities located in geographic areas affected by the advertising. From time to
time, PSI adopts  promotional  programs,  such as temporary rent reductions,  in
selected areas or for individual facilities.

         For as long as the Management  Agreement is in effect,  PSI has granted
the Partnership a non-exclusive license to use two PSI service marks and related
designs,  including the "Public  Storage" name, in  conjunction  with rental and
operation of  facilities  managed  pursuant to the  Management  Agreement.  Upon
termination of the Management  Agreement,  the Partnership  would no longer have
the right to use the  service  marks and  related  designs  except as  described
below.  The  General  Partners  believe  that the  loss of the  right to use the
service marks and related  designs could have a material  adverse  effect on the
Partnership's business.

         The Management  Agreement between the Partnership and PSI provides that
the Management  Agreement may be terminated  without cause upon 60 days' written
notice by either party.

Competition
-----------

         Competition  in the market areas in which the  Partnership  operates is
significant  and  affects  the  occupancy  levels,  rental  rates and  operating
expenses  of  certain  of  the  Partnership's  facilities.  Competition  may  be
accelerated  by any increase in  availability  of funds for  investment  in real
estate. Recent increases in plans for development of mini-warehouses is expected

                                       4

<PAGE>

to further  intensify  competition  among  mini-warehouse  operators  in certain
market areas. In addition to competition from  mini-warehouses  operated by PSI,
there are three other national firms and numerous  regional and local operators.
The Partnership believes that the significant operating and financial experience
of PSI, and the "Public Storage" name, should enable the Partnership to continue
to compete effectively with other entities.

Other Business Activities
-------------------------

         A corporation  owned by the Hughes Family  reinsures  policies  against
losses to goods  stored by tenants  in the  Partnership's  mini-warehouses.  The
Partnership  believes that the  availability of insurance  reduces the potential
liability of the  Partnership to tenants for losses to their goods from theft or
destruction.  This  corporation  receives  the  premiums  and  bears  the  risks
associated with the insurance.

         A corporation,  in which PSI has a 95% economic interest and the Hughes
Family has a 5% economic interest,  sells locks, boxes and tape to tenants to be
used in securing  their  spaces and moving their  goods.  PSI believes  that the
availability of locks, boxes and tape for sale promotes the rental of spaces.

Employees
---------

         There are 54 persons who render services on behalf of the  Partnership.
These persons include resident managers,  assistant  managers,  relief managers,
district managers, and administrative  personnel. Some employees may be employed
on a part-time basis and may be employed by other persons,  Partnerships,  REITs
or other entities owning facilities operated by PSI.

                                       5

<PAGE>

ITEM 2.  PROPERTIES.

         The  following  table sets forth  information  as of December  31, 1998
about properties owned by the Partnership:

<TABLE>
<CAPTION>

                                                       Net             Number            Date of          Completion 
        Location           Size of Parcel        Rentable Area       of Spaces          Purchase             Date
--------------------       --------------       ----------------     ---------       -------------       ------------
CALIFORNIA                                     
----------
<S>                          <C>                 <C>                    <C>          <C>                  <C> 
Azusa                        5.85 acres          105,000 sq. ft.        941          July 14, 1978        Nov. 1978

Concord                      2.87 acres          52,000 sq. ft.         525          June 20, 1978        Jan. 1979
                                               
Oakland                      1.97 acres          41,000 sq. ft.         370          Oct. 11, 1978        Apr. 1979
                                               
Pasadena                     1.82 acres          37,000 sq. ft.         339          July 19, 1978        Nov. 1978
                                               
Redlands                     3.44 acres          63,000 sq. ft.         580          Aug. 24, 1978        Feb. 1979
                                               
Richmond                     1.82 acres          35,000 sq. ft.         352          Aug. 23, 1978        Mar. 1979
                                               
Riverside                    2.47 acres          45,000 sq. ft.         393          Jan. 2, 1979          May 1979
                                               
Sacramento                                     
   Howe Avenue               2.36 acres          41,000 sq. ft.         386          Dec. 14, 1978        Aug. 1979
                                 .             
Sacramento                                     
   West Capitol              3.38 acres          44,000 sq. ft.         457          Jan. 5, 1979         June 1979
                                               
San Carlos                   2.80 acres          51,000 sq. ft.         458          Jan. 30, 1979        Oct. 1979
                                               
Santa Clara                  4.45 acres          75,000 sq. ft.         698          Dec. 22, 1978      June 1979 and
                                                                                                          July 1981
                                               
Tustin                       4.40 acres          67,000 sq. ft.         559          July 3, 1978         Dec. 1978
                                               
FLORIDA                              
-------
Miami Airport                                  
   Expressway                1.70 acres          29,000 sq. ft.         274          Aug. 24, 1978        Jan. 1979
                                               
Miami (1)                                      
   Cutler Ridge              4.00 acres          46,000 sq. ft.         481          Sept. 6, 1978        Apr. 1979
                                               
Pembroke Park (2)            2.35 acres          49,000 sq. ft.         446          Sept. 1, 1978        July 1979
                                               
Ft. Lauderdale                                 
   I95 & 23rd Ave.           2.77 acres          45,000 sq. ft.         504          Nov. 9, 1978         Sept. 1979
                                               
Ft. Lauderdale                                 
   I95 & Sunrise             3.32 acres          56,000 sq. ft.         558          Dec. 4, 1979         Sept. 1979
                                               
</TABLE>

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

(1)  On August 24, 1992, this property was damaged by Hurricane Andrew and, as a
     result,  the  facility  became idle as of this date.  The facility has been
     rebuilt and recommenced operations in October 1994.

(2)  In 1995, the Partnership sold approximately  4,729 sq. ft. of this property
     to the State of Florida under a condemnation proceeding.

                                       6

<PAGE>

         Substantially all of the  Partnership's  facilities were acquired prior
to the time that it was  customary to conduct  environmental  investigations  in
connection with property  acquisitions.  During 1995, the Partnership  completed
environmental  assessments  of its  properties  to  evaluate  the  environmental
condition of, and potential environmental liabilities of such properties.  These
assessments  were performed by an  independent  environmental  consulting  firm.
Based on the  assessments,  the Partnership  expensed  $26,000 in 1995 for known
environmental remediation requirements.

         The properties are held subject to encumbrances  which are described in
this report under Note 7 of the Notes to the  Financial  Statements  included in
Item 14(a).

ITEM 3.  LEGAL PROCEEDINGS.

         No material legal proceeding is pending against the Partnership.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of 1998.

                                     PART II

ITEM 5.  MARKET  FOR  THE  PARTNERSHIP'S  COMMON EQUITY AND RELATED  STOCKHOLDER
         MATTERS.

         The Partnership has no common stock.

         The Units are not listed on any national  securities exchange or quoted
on the NASDAQ System,  and there is no established public trading market for the
Units. Secondary sales activity for the Units has been limited and sporadic. The
General Partners monitor transfers of the Units (a) because the admission of the
transferee as a substitute  limited partner  requires the consent of the General
Partners under the Partnership's  Amended and Restated Certificate and Agreement
of  Limited  Partnership,  (b) in order to ensure  compliance  with safe  harbor
provisions  to  avoid  treatment  as a  "publicly  traded  partnership"  for tax
purposes,  and (c) because the General Partners have purchased  Units.  However,
the General Partners do not have  information  regarding the prices at which all
secondary  sale  transactions  in  the  Units  have  been  effectuated.  Various
organizations  offer  to  purchase  and  sell  limited   partnership   interests
(including  securities  of the  type  such  as the  Units)  in  secondary  sales
transactions.  Various  publications  such as The Stanger  Report  summarize and
report  information (on a monthly,  bimonthly or less frequent basis)  regarding
secondary sales transactions in certain limited partnership interests (including
the Units),  including the prices at which such secondary sales transactions are
effectuated.

         Exclusive of the General Partners'  interest in the Partnership,  as of
December 31, 1998, there were approximately 1,106 record holders of Units.

         In May 1997,  B.  Wayne  Hughes  ("Hughes")  a general  partner  of the
Partnership,  completed  a cash tender  offer,  which  commenced  in March 1997,
pursuant to which Hughes acquired a total of 5,003 limited  partnership units at
$447 per Unit.

         Distributions to the general and limited partners of all cash available
for  distribution  have been made quarterly.  Cash available for distribution is
generally  funds from  operations  of the  Partnership,  without  deduction  for
depreciation,  but after  deducting  funds to pay or establish  reserves for all
other expenses (other than incentive  distributions to the general partners) and
capital  improvements,  plus net  proceeds  from any  sale or  financing  of the
Partnership's  properties. In the third quarter of 1991, quarterly distributions
were  discontinued  to enable the  Partnership  to  increase  its  reserves  for
principal  repayments that commenced in 1990 and will continue  through 1998, at
which time the entire remaining principal balance will be payable.

         Reference is made to Item 6 and 7 hereof for  information on the amount
of such distributions.

                                       7

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.


ITEM 6.  SELECTED FINANCIAL DATA.

<TABLE>
<CAPTION>

For the Year Ended December 31,              1998              1997             1996              1995              1994
--------------------------------        --------------    --------------    --------------   --------------    --------------    
<S>                                     <C>               <C>               <C>              <C>               <C>           
Revenues                                $    9,234,000    $    8,516,000    $    7,774,000   $    7,629,000    $    7,085,000

Depreciation and amortization                  926,000           881,000           814,000          742,000           692,000

Interest expense                             2,080,000         2,805,000         2,898,000        2,967,000         3,071,000

Gain on sale of real estate                     -                 -                 -               125,000            -

Net income                                   3,507,000         2,281,000         1,698,000        1,724,000         1,208,000

Limited partners' share                      3,468,000         2,256,000         1,680,000        1,704,000         1,195,000

General partners' share                         39,000            25,000            18,000           20,000            13,000

Limited partners' per unit data (1)
     Net income                                $86.70            $56.40            $42.00           $42.60            $29.88


As of December 31,
--------------------------------

Cash and cash equivalents               $      433,000    $    1,911,000    $    2,440,000   $      967,000    $      551,000

Total Assets                            $   20,876,000    $   23,818,000    $   22,742,000   $   18,367,000    $   16,505,000

Debt                                    $   19,650,000    $   25,405,000    $   26,338,000   $   27,178,000    $   28,086,000


</TABLE>

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

(1)  Per unit  data is based  on the  weighted  average  number  of the  limited
     partnership units (40,000) outstanding during the period.

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

Forward Looking Statements
--------------------------

         When  used  within  this  document,  the words  "expects,"  "believes,"
"anticipates,"  "should,"  "estimates," and similar  expressions are intended to
identify "forward-looking statements" within the meaning of that term in Section
27A of the  Securities  Exchange Act of 1933, as amended,  and in Section 21F of
the Securities Exchange Act of 1934, as amended. Such forward-looking statements
involve known and unknown risks,  uncertainties,  and other  factors,  which may
cause the actual  results and  performance  of the  Partnership to be materially
different  from those  expressed or implied in the forward  looking  statements.
Such factors include the impact of competition from new and existing real estate
facilities  which could  impact  rents and  occupancy  levels at the real estate
facilities that the Partnership has an interest in; the Partnership's ability to
effectively  compete in the markets that it does  business in; the impact of the
regulatory  environment  as  well  as  national,   state,  and  local  laws  and
regulations including, without limitation, those governing Partnerships; and the
impact of general economic  conditions upon rental rates and occupancy levels at
the real estate facilities that the Partnership has an interest in.


                                       8

<PAGE>

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

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997:

         The  Partnership's  net  income  was  $3,507,000  in 1998  compared  to
$2,281,000 in 1997,  representing  an increase of  $1,226,000.  This increase is
primarily a result of  increased  operating  results at the  Partnership's  real
estate facilities combined with a decrease in interest expense.

         During 1998 property net operating  income  (rental income less cost of
operations,  management fees paid to an affiliate and depreciation  expense) was
$5,241,000 in 1998 compared to $4,731,000 in 1997,  representing  an increase of
$510,000 or 11%.  This  increase was  primarily  attributable  to an increase in
rental income at the Partnership's mini-warehouse facilities partially offset by
an increase in cost of operations and depreciation expense.

         Rental  income was  $8,811,000  in 1998 compared to $8,086,000 in 1997,
representing  an  increase  of  $725,000  or  9%.  The  increase  was  primarily
attributable  to an  increase  in  occupancy  level  and  rental  rates  at  the
Partnership's   facilities.   The  weighted  average  occupancy  levels  at  the
mini-warehouse  facilities were 94% and 93% in 1998 and 1997, respectively.  The
monthly realized rent per occupied square foot averaged $.89 in 1998 compared to
$.83 in 1997.

         Other income decreased  $42,000 in 1998 compared to 1997. This decrease
is  primarily a result of the pay off of the  mortgage  note  payable  with cash
reserves,  which resulted in lower cash balances and consequently  less interest
earned.

         Dividend  income from  marketable  securities  of  affiliate  increased
$35,000 in 1998 compared to 1997.  This increase is primarily due to an increase
in the weighted average number of shares owned in 1998 compared to 1997.

         Cost of  operations  (including  management  fees paid to an affiliate)
increased  $170,000 or 7% to  $2,644,000 in 1998 from  $2,474,000 in 1997.  This
increase  was  primarily   attributable   to  increases  in   management   fees,
advertising, property tax, and repairs and maintenance expenses.

         Interest  expense  was  $2,080,000  and  $2,805,000  in 1998 and  1997,
respectively,  representing  a decrease  of $725,000 or 26%.  The  decrease  was
primarily a result of a lower average  outstanding loan balance in 1998 compared
to  1997  and  lower  interest  rates  on the  Partnership's  indebtedness.  See
Liquidity  and Capital  Resources  for a discussion  of the  refinancing  of the
Partnership's indebtedness.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996:

         The  Partnership's  net  income  was  $2,281,000  in 1997  compared  to
$1,698,000  in 1996,  representing  an increase of  $583,000.  This  increase is
primarily a result of  increased  operating  results at the  Partnership's  real
estate facilities combined with a decrease in interest expense.

         During 1997 property net operating  income  (rental income less cost of
operations,  management fees paid to an affiliate and depreciation  expense) was
$4,731,000 in 1997 compared to $4,310,000 in 1996,  representing  an increase of
$421,000 or 10%.  This  increase was  primarily  attributable  to an increase in
rental income at the Partnership's mini-warehouse facilities partially offset by
an increase in cost of operations and depreciation expense.

         Rental  income was  $8,086,000  in 1997 compared to $7,423,000 in 1996,
representing  an  increase  of  $663,000  or  9%.  The  increase  was  primarily
attributable to an increase in occupancy level at the Partnership's  facilities.
The weighted average occupancy levels at the mini-warehouse  facilities were 93%
and 89% in 1997 and 1996,  respectively.  The monthly realized rent per occupied
square foot averaged $.83 in 1997 compared to $.79 in 1996.

         Other income increased  $40,000 in 1997 compared to 1996. This increase
is primarily due to an increase in invested cash balances.

         Dividend  income from  marketable  securities  of  affiliate  increased
$39,000 in 1997 compared to 1996.  This increase is primarily due to an increase
in the weighted average number of shares owned in 1997 compared to 1996.

                                       9

<PAGE>

         Cost of  operations  (including  management  fees paid to an affiliate)
increased  $175,000 or 8% to  $2,474,000 in 1997 from  $2,299,000 in 1996.  This
increase  was  primarily   attributable   to  increases  in   management   fees,
advertising, property tax, and repairs and maintenance expenses.

         In 1995, the  Partnership  prepaid eight months of 1996 management fees
on its mini-warehouse operations discounted at the rate of 14% effective rate to
compensate for early payment. As a result, management fee expense for the twelve
months ended December 31, 1996 was $26,000 lower than it would have been without
the discounted fee structure.

         Interest  expense  was  $2,805,000  and  $2,898,000  in 1997 and  1996,
respectively,  representing  a  decrease  of $93,000  or 3%.  The  decrease  was
primarily a result of a lower average  outstanding loan balance in 1997 compared
to 1996.

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

         Cash flows from  operating  activities  ($4,670,000  for the year ended
December 31, 1998) have been  sufficient to meet all current  obligations of the
Partnership.  During 1999, the Partnership anticipates approximately $351,000 of
capital improvements compared to $393,000 in 1998 and $590,000 in 1997.

         At December 31, 1998,  the  Partnership  held 381,980  shares of common
stock (marketable securities) with a fair value totaling $10,337,000 (cost basis
of  $6,091,000  at  December  31,  1998) in  Public  Storage,  Inc.  (PSI).  The
Partnership recognized $336,000 in dividends during 1998.

         In the third quarter of 1991, quarterly distributions were discontinued
to enable the  Partnership  to increase its funds  available for debt  principal
payments.

         Distributions  to the  limited  and  general  partners  for  the  years
1978-1991  aggregated  $62,032,000  including  $29,360,000  distributed  to  the
partners in 1988 in connection with a financing of the properties.

         During 1988,  the  Partnership  financed all of its  properties  with a
$30,500,000 loan with fixed interest of 10.47 percent per annum. Net proceeds of
$29,360,000 were distributed to the partners in October 1988 and are included in
the 1988 distribution.

         On July 1, 1998,  the  Partnership  paid off the mortgage  note payable
with cash  reserves  and with the  proceeds  of a  $22,000,000  loan from Public
Storage,  Inc.,  a general  partner  of the  Partnership.  The loan from  Public
Storage,  Inc. had a fixed  interest rate of 7.2% and matured June 30, 1999. The
loan was liquidated  through  proceeds as described in the next  paragraph.  The
loan called for monthly payments of interest only.  Principal was payable at any
time without  penalty.  Public Storage,  Inc. also provided the Partnership with
options to extend the loan term through June 2003.

         During  September 1998, the  Partnership  borrowed  $21,000,000  from a
commercial  bank.  The  loan is  unsecured  and  bears  interest  at the  London
Interbank  Offering  Rate  ("LIBOR")  plus 0.60% to 1.20% (5.66% at December 31,
1998) depending on the Partnership's  interest coverage ratio. The loan requires
monthly payments of interest and matures September 2002.  Principal may be paid,
in whole or in part, at any time without  penalty or premium.  The loan proceeds
were used to pay off the Partnership's note to Public Storage, Inc.

         The  Partnership  also entered into an interest rate swap  agreement to
reduce the impact of changes in interest rates on a portion of its floating rate
debt.  The  agreement,  which covers  $11,500,000 of debt through March 2000 and
$7,500,000  from March 2000  through  September  2000,  effectively  changes the
interest rate exposure from floating rate to a fixed rate of 5.22% plus 0.60% to
1.20%  (5.82% as of  December  31,  1998)  based on the  Partnership's  interest
coverage  ratio.  Market  gains and losses on the value of the swap are deferred
and included in income over the life of the contract.  The  Partnership  records
the differences  paid or received on the interest rate swap in interest  expense
as payments are made or received.  As of December 31, 1998, the unrealized  loss
on the  interest  rate swap,  if required to be  liquidated,  was  approximately
$37,000.

                                       10

<PAGE>

Year 2000 System Issues
-----------------------

         The Partnership utilizes PSI's information systems in connection with a
cost  sharing  and  administrative  services  agreement.  PSI has  completed  an
assessment  of  all  of its  hardware  and  software  applications  to  identify
susceptibility  to what is  commonly  referred  to as the  "Y2K  Issue"  whereby
certain computer programs have been written using two digits rather than four to
define the applicable year. Any of PSI's computer  programs or hardware with the
Y2K Issue that have date-sensitive  applications or embedded chips may recognize
a date  using "00" as the year 1900  rather  than the year  2000,  resulting  in
miscalculations or system failure causing disruptions of operations.

         PSI has two phases in its process  with respect to each of its systems;
i)  assessment,  whereby PSI  evaluates  whether the system is Y2K compliant and
identifies  the plan of  action  with  respect  to  remediating  any Y2K  issues
identified  and ii)  implementation,  whereby PSI  completes  the plan of action
prepared in the  assessment  phase and  verifies  that Y2K  compliance  has been
achieved.

         Many of PSI's critical applications,  relative to the direct management
of  properties,  have  recently  been replaced and PSI believes they are already
Year 2000  compliant.  PSI has an  implementation  in process  on the  remaining
critical  applications,  including its general ledger and related systems,  that
are believed to have Y2K issues.  PSI expects the  implementation to be complete
by June  1999.  Contingency  plans  have been  developed  for use in case  PSI's
implementations  are not  completed  on a  timely  basis.  While  PSI  presently
believes  that the impact of the Y2K Issue on its systems can be  mitigated,  if
PSI's plan for ensuring Year 2000 Compliance and the related  contingency  plans
were  to  fail,  be  insufficient,  or not be  implemented  on a  timely  basis,
Partnership operations could be materially impacted.

         Certain  of  PSI's  other  non-computer  related  systems  that  may be
impacted  by the Y2K  Issue,  such as  security  systems,  are  currently  being
evaluated,  and PSI expects  the  evaluation  to be  complete by June 1999.  PSI
expects the  implementation of any required  solutions to be complete in advance
of December 31,  1999.  PSI has not fully  evaluated  the impact of lack of Year
2000  compliance  on these  systems,  but has no reason to believe  that lack of
compliance would materially impact the Partnership's operations.

         The Partnership  exchanges electronic data with certain outside vendors
in the banking and payroll processing areas. The Partnership has been advised by
these  vendors that their  systems are or will be Year 2000  compliant,  but has
requested  a  Year  2000  compliance  certification  from  these  entities.  The
Partnership  is not aware of any other  vendors,  suppliers,  or other  external
agents with a Y2K Issue that would materially impact the  Partnership's  results
of operations,  liquidity, or capital resources. However, the Partnership has no
means of ensuring that external  agents will be Year 2000  compliant,  and there
can be no assurance that the Partnersip has identified all such external agents.
The inability of external agents to complete their Year 2000 compliance  process
in a timely  fashion  could  materially  impact the  Partnership.  The effect of
non-compliance by external agents is not determinable.

         The cost of the PSI's Year 2000 compliance  activities (which primarily
consists of the costs of new systems) to be allocated to the Partnership and the
Joint  Venture  is  estimated  at   approximately   $76,143.   These  costs  are
capitalized.  PSI's  Year  2000  compliance  efforts  have not  resulted  in any
significant deferrals in other information system projects.

         The costs of the projects and the date on which PSI and the Partnership
expect  to  achieve  Year  2000  Compliance  are based  upon  management's  best
estimates,  and were derived  utilizing  numerous  assumptions of future events.
There can be no assurance  that these  estimates  will be  achieved,  and actual
results  could  differ  materially  from  those  anticipated.  There  can  be no
assurance  that the  Partnership  or PSI has identified all potential Y2K Issues
either within the Partnership,  at PSI, or at external agents. In addition,  the
impact of the Y2K issue on governmental  entities and utility  providers and the
resultant  impact on the  Partnership,  as well as  disruptions  in the  general
economy, may be material but cannot be reasonably determined or quantified.

                                       11

<PAGE>

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The  Partnership's  interest  expense  is  sensitive  to changes in the
general level of U.S.  interest rates. In this regard,  changes in U.S. interest
rates affect the interest paid on the Partnerhip's  debt. To mitigate the impact
of fluctuations in U.S. interest rates, the Partnership  generally maintains its
debt as fixed rate in nature by borrowing on a long-term  basis or entering into
interest  swap  transactions.  As of December  31,  1998,  the  Partnership  had
$19,650,000  of  outstanding  debt  maturing  on  September,   2002.  Also,  the
Partnership  has an interest  rate swap in the  notional  amount of  $19,000,000
through September, 2000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The Partnership's  financial  statements are included elsewhere herein.
Reference is made to the Index to Financial  Statements and Financial  Statement
Schedule in Item 14(a).

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

         None.

                                       12

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.

         The Partnership has no directors or executive officers.

         The  Partnership's  general partners are PSI and B. Wayne Hughes.  PSI,
acting through its directors and executive  officers,  and Mr. Hughes manage and
make investment decisions for the Partnership.

         The names of all directors  and executive  officers of PSI, the offices
held by each of them with PSI, and their ages and business experience during the
past five years are as follows:

        Name                           Positions with PSI
-----------------------        -------------------------------------------------
B. Wayne Hughes                Chairman of the Board and Chief Executive Officer
Harvey Lenkin                  President and Director
B. Wayne Hughes, Jr.           Vice President and Director
John Reyes                     Senior Vice President and Chief Financial Officer
Carl B. Phelps                 Senior Vice President
Obren B. Gerich                Senior Vice President
Marvin M. Lotz                 Senior Vice President
David Goldberg                 Senior Vice President and General Counsel
A. Timothy Scott               Senior Vice President and Tax Counsel
David P. Singelyn              Vice President and Treasurer
Sarah Hass                     Vice President and Secretary
Robert J. Abernethy            Director
Dann V. Angeloff               Director
William C. Baker               Director
Thomas J. Barrack Jr.          Director
Uri P. Harkham                 Director
Daniel C. Staton               Director

         B. Wayne Hughes, age 65, a general partner of the Partnership, has been
a director of PSI since its  organization in 1980 and was President and Co-Chief
Executive  Officer from 1980 until November 1991 when he became  Chairman of the
Board and sole Chief Executive  Officer.  Mr. Hughes has been active in the real
estate  investment field for over 25 years. He is the father of B. Wayne Hughes,
Jr.

         Harvey Lenkin, age 62, has been employed by PSI for 21 years and became
President and a director of PSI in November 1991. Mr. Lenkin has been a director
of PS Business Parks,  Inc.  ("PSBP"),  an affiliated REIT, since March 16, 1998
and was President of PSBP  (formerly  Public  Storage  Properties XI, Inc.) from
1990  until  March 16,  1998.  He is a member of the Board of  Governors  of the
National Association of Real Estate Investment Trusts (NAREIT).

         B. Wayne Hughes,  Jr., age 39, became  director of PSI in January 1998.
He has been a Vice President Acquisitions of PSI since 1992. He is the son of B.
Wayne Hughes.

         John Reyes, age 38, a certified public  accountant,  joined PSI in 1990
and was  Controller  of PSI from 1992 until  December  1996 when he became Chief
Financial  Officer.  He became a Vice  President  of PSI in November  1995 and a
Senior Vice President of PSI in December 1996.  From 1983 to 1990, Mr. Reyes was
employed by Ernst & Young.

         Carl B.  Phelps,  age 60,  became a  Senior  Vice  President  of PSI in
January  1998  with  overall   responsibility   for  property   acquisition  and
development.  From June 1991 until joining PSI, he was a partner in the law firm
of  Andrews & Kurth,  L.L.P.,  which  performed  legal  services  for PSI.  From
December 1982 through May 1991, his  professional  corporation  was a partner in
the law firm of Sachs & Phelps, then counsel to PSI.

         Obren B. Gerich, age 60, a certified public accountant, has been a Vice
President of PSI since 1980 and became Senior Vice  President of PSI in November
1995. He was Chief Financial Officer of PSI until November 1991.

                                       13

<PAGE>

         Marvin M.  Lotz,  age 56,  has had  overall  responsibility  for Public
Storage's  mini-warehouse  operations  since  1988.  He  became  a  Senior  Vice
President  of PSI  in  November  1995.  Mr.  Lotz  was an  officer  of PSI  with
responsibility for property acquisitions from 1983 until 1988.

         David  Goldberg,  age 49,  joined  PSI's legal  staff in June 1991.  He
became Senior Vice President and General  Counsel of PSI in November 1995.  From
December  1982  until  May  1991,  he was a  partner  in the law firm of Sachs &
Phelps, then counsel to PSI.

         A.  Timothy  Scott,  age 47,  became a Senior  Vice  President  and Tax
Counsel of PSI and Vice President and Tax Counsel of the Public Storage REITs in
November 1996.  From June 1991 until joining PSI, Mr. Scott practiced tax law as
a shareholder of the law firm of Heller,  Ehrman, White & McAuliffe,  counsel to
PSI. Prior to June 1991, his  professional  corporation was a partner in the law
firm of Sachs & Phelps, then counsel to PSI.

         David P.  Singleyn,  age 37, a certified  public  accountant,  has been
employed by PSI since 1989 and became Vice  President  and  Treasurer  of PSI in
November  1995.  From 1987 to 1989,  Mr.  Singelyn was  Controller of Winchell's
Donut Houses, L.P.

         Sarah Hass,  age 43,  became  Secretary  of PSI in February  1992.  She
became  a Vice  President  of PSI in  November  1995.  She  joined  PSI's  legal
department  in June 1991,  rendering  services on behalf of PSI. From 1987 until
May 1991, her professional  corporation was a partner in the law firm of Sachs &
Phelps,  then  counsel to PSI,  and from  April  1986  until June 1987,  she was
associated  with that  firm,  practicing  in the area of  securities  law.  From
September 1979 until  September  1985, Ms. Hass was associated with the law firm
of Rifkind & Sterling, Incorporated.

         Robert J.  Abernethy,  age 59, has been President of American  Standard
Development Company and of Self-Storage  Management  Company,  which develop and
operate mini-warehouses,  since 1976 and 1977,  respectively.  Mr. Abernethy has
been a director  of PSI since its  organization  in 1980.  He is a member of the
board of  trustees  of Johns  Hopkins  University  and a  director  of  Marathon
National Bank. Mr. Abernethy is a former member of the board of directors of the
Los Angeles County  Metropolitan  Transportation  Authority and the Metropolitan
Water District of Southern  California and a former  Planning  Commissioner  and
Telecommunications   Commissioner  and  former  Vice-Chairman  of  the  Economic
Development Commission of the City of Los Angeles.


         Dann V. Angeloff, age 63, has been President of the Angeloff Company, a
corporate  financial  advisory  firm,  since  1976.  The  Angeloff  Company  has
rendered,  and is  expected  to  continue  to  render,  financial  advisory  and
securities  brokerage services for PSI. Mr. Angeloff is the general partner of a
limited partnership that owns a mini-warehouse operated by PSI and which secures
a note  owned  by PSI.  Mr.  Angeloff  has  been a  director  of PSI  since  its
organization  in  1980.  He  is  a  director  of  Balboa  Capital   Corporation,
Compensation   Resource   Group,    Nicholas/Applegate   Growth   Equity   Fund,
Nicholas/Applegate  Mutual Funds, ReadyPac Produce, Inc., Royce Medical Company,
SupraLife International and WorldxChange Communications,  Inc. He was a director
of SPI from 1989 until June 1996.

         William C. Baker,  age 65,  became a director of PSI in November  1991.
Since January 1999, Mr. Baker has been President and Chief Executive  Officer of
Los Angeles Turf Club,  Incorporated,  which operates the Santa Anita  Racetrack
and is wholly-owned subsidiary of Magna International Inc. Since August 1998, he
has been President of Meditrust  Operating  Company,  a paired share real estate
investment trust. From November 1997 until December 1998, he was Chairman of the
Board  and Chief  Executive  Officer  of The  Santa  Anita  Companies,  Inc.,  a
wholly-owned  subsidiary of Meditrust  Operating Company which then operated the
Santa Anita Racetrack.  From August 1996 until November 1997, he was Chairman of
the Board and Chief  Executive  Officer of Santa  Anita  Operating  Company  and
Chairman of the Board of Santa Anita Realty  Enterprises,  Inc.,  the  companies
which were merged with Meditrust in November  1997.  From April 1993 through May
1995, Mr. Baker was President of Red Robin International,  Inc., an operator and
franchiser of casual dining  restaurants  in the United States and Canada.  From
January 1992 through  December 1995 he was Chairman and Chief Executive  Officer
of  Carolina   Restaurant   Enterprises,   Inc.,  a  franchisee   of  Red  Robin
International,  Inc.  Since  1991,  he has been  Chairman  of the Board of Coast
Newport Properties, a real estate brokerage company. From 1976 to 1988, he was a
principal  shareholder  and  Chairman and Chief  Executive  Officer of Del Taco,
Inc., an operator and franchiser of fast food  restaurants  in  California.  Mr.
Baker is a director of Callaway Golf Company and Meditrust Operating Company.

         Thomas J.  Barrack,  Jr., age 51,  became a director of PSI in February
1998.  Mr. Barrack has been the Chairman and Chief  Executive  Officer of Colony
Capital, Inc. since September,  1991. Colony Capital, Inc. is one of the largest
real estate investors in America, having acquired properties in the U.S., Europe
and Asia. Prior to founding Colony Capital, Inc., from 1987 to 1991, Mr. Barrack
was a principal with the Robert M. Bass Group,  Inc.,  the principal  investment
vehicle for Robert M. Bass of Fort Worth,  Texas. From 1985 to 1987, Mr. Barrack

                                       14

<PAGE>

was President of Oxford Ventures, Inc., a Canadian-based real estate development
company.  From  1984 to 1985 he was a  Senior  Vice  President  at E. F.  Hutton
Corporate  Finance in New York.  Mr.  Barrack was appointed by President  Ronald
Reagan as Deputy Under  Secretary at the U.S.  Department  of the Interior  from
1982 to 1983. Mr. Barrack currently is a director of Continental Airlines, Inc.,
Harvey's Acquisition Corp.and Kennedy-Wilson, Inc.

         Uri P.  Harkham,  age 50,  became a director of PSI in March 1993.  Mr.
Harkham  has been the  President  and Chief  Executive  Officer of the  Jonathan
Martin  Fashion  Group,  which  specializes  in  designing,   manufacturing  and
marketing  women's  clothing,  since its  organization in 1976.  Since 1978, Mr.
Harkham has been the Chairman of the Board of Harkham Properties,  a real estate
firm  specializing in buying and managing fashion  warehouses in Los Angeles.

         Daniel C. Staton, age 46, became a director of PSI on March 12, 1999 in
connection  with the merger of Storage  Trust Realty,  a real estate  investment
trust,  with PSI.  Mr.  Staton was  Chairman of the Board of Trustees of Storage
Trust  Realty from  February  1998 until March 12, 1999 and a Trustee of Storage
Trust Realty from  November 1994 until March 12, 1999. He is President of Walnut
Capital Partners,  an investment and venture capital company. Mr. Staton was the
Chief Operating Officer and Executive Vice President of Duke Realty Investments,
Inc.  from  1993  to  1997.  He has  been a  director  of Duke  Associates,  the
predecessor of Duke Realty Investments, Inc. Prior to joining Duke Associates in
1981, he was a partner and general  manager of he own moving  company,  Gate way
Van & Storage, Inc. in St. Louis, Missouri. From 1986 to 1988, Mr. Staton served
as president of the Greater  Cincinnati  Chapter of the National  Association of
Industrial and Office Parks.

         Pursuant to Articles 16 and 17 of the Partnership's Amended Certificate
and  Agreement  of  Limited  Partnership,  a copy of  which is  included  in the
Partnership's  prospectus included in the Partnership's  Registration  Statement
File No.  2-60530,  each of the General  Partners  continues  to serve until (i)
death, insanity, insolvency, bankruptcy or dissolution, (ii) withdrawal with the
consent  of the  other  general  partner  and a  majority  vote  of the  limited
partners, or (iii) removal by a majority vote of the limited partners.

         Each  director of PSI serves until he resigns or is removed from office
by the shareholders of PSI, and may resign or be removed from office at any time
with or without cause. Each officer of PSI serves until he resigns or is removed
by the board of directors of PSI. Any such officer may resign or be removed from
office at any time with or without cause.

         There  have  been no events  under  any  bankruptcy  act,  no  criminal
proceedings,  and no judgments or injunctions  material to the evaluation of the
ability of any director or executive officer of PSI during the past five years.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Based on a review  of the  reports  filed  under  Section  16(a) of the
Securities Exchange Act of 1934 with respect to the units that were submitted to
the Partnership,  the Partnership  believes that with respect to the fiscal year
ended December 31, 1998, B. Wayne Hughes, Jr. And Thomas J. Barrak, Jr., each of
whom is a director of PSI, a General Partner of the Partnership,  each filed his
Initial Statement of Beneficial  Ownership of Securities on Form 3 after its due
date.

ITEM 11. EXECUTIVE COMPENSATION.

         The Partnership has no subsidiaries, directors or officers. See Item 13
for a  description  of certain  transactions  between  the  Partnership  and its
General Partners and their affiliates.

                                       15

<PAGE>

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

         (a) At March 10, 1999, the following  persons  beneficially  owned more
than 5% of the Units:

<TABLE>
<CAPTION>
                                      Name and Address of
       Title of Class                  Beneficial Owners        Beneficial Ownership    Percent of Class
---------------------------       --------------------------    --------------------    ----------------

<S>                               <C>                            <C>                         <C>  
Units of Limited Partnership      Public Storage, Inc.           13,178 Units (1)            32.9%
Interest                          701 Western Avenue             
                                  Glendale, California 91201

Units of Limited Partnership      B. Wayne Hughes                11,900 Units (2)            29.8%
Interest                          Tamara Hughes Gustavson,
                                  PS Orangeco, Inc.
                                  701 Western Avenue
                                  Glendale, California 91201
</TABLE>

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

(1)  Includes  (i) 12,965 Units owned by PSI as to which PSI has sole voting and
     dispositive  power,  (ii) 158 Units which PSI has a  currently  exercisable
     option to acquire from Tamara Hughes Gustavson, an adult daughter of Hughes
     and (iii) 55 Units which PSI has an option to acquire  from  Tamara  Hughes
     Gustavson commencing April 1, 1999.

(2)  Includes  5,892 Units  owned by BWH Marina  Corporation  II, a  corporation
     wholly-owned by Hughes,  as to which Hughes has sole voting and dispositive
     power,  (ii) 306 Units owned by Tamara Hughes  Gustavson as to which Tamara
     Hughes Gustavson has sole voting and dispositive power; PSI has a currently
     exercisable  option  to  acquire  158 of these  Units  and has an option to
     acquire 55 of these Units  commencing  April 1, 1999, and (iii) 5,702 Units
     owned by PS Orangeco,  Inc., a corporation whose common stock (representing
     5% of the  equity) is owned by Hughes  and  members of his family and whose
     non-voting  preferred  stock  (representing  95% of the equity) is owned by
     PSI,  and as to which Units PS  Orangeco,  Inc. and Hughes share voting and
     dispositive power.

         (b) The Partnership has no officers and directors. The General Partners
contributed  $202,000 to the original capital of the Partnership and as a result
participate  in  the   distributions   to  the  limited   partners  and  in  the
Partnership's  profits  and  losses  in the same  proportion  that  the  General
Partners'  capital  contribution  bears  to  the  total  capital   contribution.
Information  regarding  ownership  of  Units  by PSI  and  Hughes,  the  General
Partners,  is set forth under section (a) above. Dann V. Angeloff, a director of
PSI, beneficially owns 9 Units (0.02% of the Units). The directors and executive
officers of PSI (including Hughes), as a group (17 persons), beneficially own an
aggregate of 11,613 Units, representing 29.0% of the Units (including the 5,892
Units owned by Hughes and the 5,702 Units owned by PS Orangeco, Inc. as to which
Hughes shares voting and dispositive power set forth above).

         (c) The Partnership knows of no contractual arrangements, the operation
of the terms of which may at a subsequent  date result in a change in control of
the  Partnership,  except  for  articles  16,  17 and 21.1 of the  Partnership's
Amended  Certificate  and  Agreement of Limited  Partnership  (the  "Partnership
Agreement"),  a copy  of  which  is  included  in the  Partnership's  prospectus
included in the  Partnership's  Registration  Statement File No. 2-60530.  Those
articles provide, in substance,  that the limited partners shall have the right,
by majority  vote,  to remove a general  partner and that a general  partner may
designate  a  successor  with the  consent of the other  general  partner  and a
majority of the limited partners.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The Partnership  Agreement  provides that the General  Partners will be
entitled  to  cash  incentive  distributions  in an  amount  equal  to (i) 8% of
distributions  of cash  flow from  operations  until  the  distributions  to all
partners from all sources equal their capital contributions;  thereafter, 25% of
distributions of cash flow from operations,  and (ii) 25% of distributions  from
net proceeds from sale and financing of the Partnership's  properties  remaining
after  distribution  to all  partners of any portion  thereof  required to cause
distributions to partners from all sources to equal their capital contributions.
During  1986,  the partners  received  cumulative  distributions  equal to their
capital contributions.  The Partnership has not made any distributions since the
third quarter of 1991.

                                       16

<PAGE>

         The   Partnership   has   a   Management   Agreement   with   PSI   (as
successor-in-interest  to PSMI). Under the Management Agreement, the Partnership
pays PSI a fee of 6% of the  gross  revenues  of the  mini-warehouse  properties
operated for the Partnership. During 1998, the Partnership paid fees of $529,000
to PSI pursuant to the Management Agreement.

                                     PART IV

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

         (a)      List of Documents file as part of the Report.

                  1.       Financial   Statements.   See   Index  to   Financial
                           Statements and Financial Statement Schedule.

                  2.       Financial Statement Schedules. See Index to Financial
                           Statements and Financial Statement Schedule.

                  3.       Exhibits: See Exhibit Index contained below.

         (b)      Reports on Form 8-K: No reports on Form 8-K were filed  during
                  the last quarter of fiscal 1996.

         (c)      Exhibits: See Exhibit Index contained below.

                                       17

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.

                                  EXHIBIT INDEX
                                  (Item 14 (c))


3.1      Amended  Certificate and Agreement of Limited  Partnership.  Previously
         filed with the Securities  and Exchange  Commission as Exhibit A to the
         Registrant's  Prospectus included in Registration Statement No. 2-60530
         and incorporated herein by references.

3.2      Thirty-fifth  Amendment to Amended Certificate and Agreement of Limited
         Partnership.   Previously   filed  with  the  Securities  and  Exchange
         Commission as an exhibit to the Registrant's Annual Report on Form 10-K
         for the year  ended  December  31,  1993  and  incorporated  herein  by
         reference.

10.1     Second  Amended and Restated  Management  Agreement  dated November 16,
         1995 between the Partnership and Public Storage,  Inc. Previously filed
         with  the  Securities  and  Exchange  Commission  as an  exhibit  to PS
         Partners, Ltd.'s Annual Report on Form 10-K for the year ended December
         31, 1996 and incorporated herein by reference.

10.2     Loan documents  dated September 16, 1988 between the Registrant and The
         Prudential  Insurance  Company of  America.  Previously  filed with the
         Securities  and Exchange  Commission as an exhibit to the  Registrant's
         Annual  Report on Form 10-K for the year ended  December  31,  1993 and
         incorporated herein by reference.

10.3     Credit  Agreement dated September 1, 1998 by and between Public Storage
         Properties  IV,  Ltd.  and  Wells  Fargo  Bank,  National  Association.
         Previously  filed with the  Securities  and Exchange  Commission  as an
         exhibit  to the  Partnership's  Quarterly  Report  on Form 10-Q for the
         quarter ended September 30, 1998 and incorporated herein by reference.

10.4     Interest Swap Agreement  dated September 18, 1998 by and between Public
         Storage Properties IV, Ltd. and Wells Fargo Bank, National Association.
         Previously  filed with the  Securities  and Exchange  Commission  as an
         exhibit  to the  Partnership's  Quarterly  Report  on Form 10-Q for the
         quarter ended September 30, 1998 and incorporated herein by reference.

27       Financial Data Schedule. Filed herewith.

                                       18

<PAGE>

                                   SIGNATURES

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

                               PUBLIC STORAGE PROPERTIES IV, LTD.,
                               a California Limited Partnership

Dated:  March 31, 1999         By:  Public Storage, Inc., General Partner


                                    By:  /s/ B Wayne Hughes
                                         --------------------------------------
                                         B. Wayne Hughes, Chairman of the Board

                               By:  /s/ B Wayne Hughes
                                    --------------------------------------
                                    B. Wayne Hughes, General Partner


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

<TABLE>
<CAPTION>
     Signature                       Capacity                               Date
------------------------     --------------------------------------    --------------
<S>                          <C>                                       <C> 
/s/ B Wayne Hughes           Chairman of the Board and                 March 31, 1999
------------------------     Chief Executive Officer of
B. Wayne Hughes              Public Storage, Inc. and General
                             Partner (principal executive offer)


/s/ Harvey Lenkin            President and Director of                 March 31, 1999
------------------------     Public Storage, Inc.
Harvey Lenkin


/s/ B. Wayne Hughes, Jr.     Vice President and Director of            March 31, 1999
------------------------     Public Storage, Inc.
B. Wayne Hughes, Jr.


/s/ John Reyes               Senior Vice President and Chief           March 31, 1999
------------------------     Financial Officer of Public Storage, Inc.
John Reyes                   (principal financial officer and
                             principal accounting officer)


/s/ Robert J. Abernethy      Director of Public Storage, Inc.          March 31, 1999
------------------------   
Robert J. Abernethy


/s/ Dann V. Angeloff         Director of Public Storage, Inc.          March 31, 1999
------------------------
Dann V. Angeloff


/s/ William C. Baker         Director of Public Storage, Inc.          March 31, 1999
------------------------
William C. Baker


                             Director of Public Storage, Inc.
------------------------
Thomas J. Barrack, Jr.


/s/ Uri P. Harkham           Director of Public Storage, Inc.          March 31, 1999
------------------------
Uri P. Harkham


                             Director of Public Storage, Inc.
------------------------
Daniel C. Staton

</TABLE>

                                       19

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.

                                    INDEX TO
                              FINANCIAL STATEMENTS
                                       AND
                          FINANCIAL STATEMENT SCHEDULE
                                  (Item 14 (a))




                                                                    Page
                                                              References
                                                              ----------

Report of Independent Auditors                                       F-1


Financial Statements and Schedule:


Balance Sheets as of December 31, 1998 and 1997                      F-2


For the years ended December 31, 1998, 1997 and 1996:


         Statements of Income                                        F-3


         Statements of Partners' Equity (Deficit)                    F-4


         Statements of Cash Flows                              F-5 - F-6


Notes to Financial Statements                                 F-7 - F-10


Schedule:


         III - Real Estate and Accumulated Depreciation      F-11 - F-12




         All other schedules have been omitted since the required information is
not present or not present in amounts  sufficient  to require  submission of the
schedule,  or because the  information  required  is  included in the  financial
statements or the notes thereto.


<PAGE>

                         Report of Independent Auditors




The Partners
Public Storage Properties IV, Ltd.

We have audited the accompanying balance sheets of Public Storage Properties IV,
Ltd. as of December  31, 1998 and 1997,  and the related  statements  of income,
partners'  equity  (deficit)  and cash flows for each of the three  years in the
period ended December 31, 1998. Our audits also included the schedule  listed in
the  index at item  14(a).  These  financial  statements  and  schedule  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Public Storage Properties IV,
Ltd. at December 31, 1998 and 1997,  and the results of its  operations  and its
cash flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related  financial  statement  schedule,  when considered in relation to the
basic  financial  statements  taken as a whole,  presents fairly in all material
respects the information set forth therein.




                                                               ERNST & YOUNG LLP

February 26, 1999
Los Angeles, California

                                      F-1

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                                 BALANCE SHEETS
                           December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                  1998                     1997
                                                                           -------------------     -------------------
                                     ASSETS
                                     ------

<S>                                                                        <C>                      <C>             
Cash and cash equivalents                                                  $        433,000         $      1,911,000
Marketable securities of affiliate (cost of $6,091,000)                          10,337,000               11,220,000
Rent and other receivables                                                          136,000                  166,000

Real estate facilities:
     Building and equipment                                                      16,424,000               16,031,000
     Land                                                                         5,244,000                5,244,000
                                                                           -------------------     -------------------
                                                                                 21,668,000               21,275,000

     Less accumulated depreciation                                              (11,824,000)             (10,898,000)
                                                                           -------------------     -------------------
                                                                                  9,844,000               10,377,000

Other assets                                                                        126,000                  144,000
                                                                           -------------------     -------------------

Total assets                                                               $     20,876,000         $     23,818,000
                                                                           ===================     ===================

                        LIABILITIES AND PARTNERS' EQUITY
                        --------------------------------

Accounts payable                                                           $        249,000         $         65,000
Deferred revenue                                                                    235,000                  230,000
Mortgage note payable                                                                 -                   25,405,000
Note payable to commercial bank                                                  19,650,000                   -

Partners' equity (deficit):
     Limited partners' deficit, $500 per unit, 40,000 units authorized,
         issued and outstanding                                                  (2,599,000)              (5,200,000)
     General partners' deficit                                                     (905,000)              (1,811,000)
     Unrealized gain on marketable securities                                     4,246,000                5,129,000
                                                                           -------------------     -------------------

     Total partners' equity (deficit)                                               742,000               (1,882,000)
                                                                           -------------------     -------------------

Total liabilities and partners' equity (deficit)                           $     20,876,000         $     23,818,000
                                                                           ===================     ===================

</TABLE>
                            See accompanying notes.
                                      F-2

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                              STATEMENTS OF INCOME
              For the years ended December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>

                                                             1998                      1997                     1996
                                                      ------------------       ------------------        ------------------        
REVENUES:

<S>                                                   <C>                      <C>                       <C>              
Rental income                                         $       8,811,000        $       8,086,000         $       7,423,000
Dividends from marketable securities
     of affiliate                                               336,000                  301,000                   262,000
Other income                                                     87,000                  129,000                    89,000
                                                      ------------------       ------------------        ------------------        

                                                              9,234,000                8,516,000                 7,774,000
                                                      ------------------       ------------------        ------------------        

COSTS AND EXPENSES:

Cost of operations                                            2,115,000                1,989,000                 1,880,000
Management fees paid to affiliate                               529,000                  485,000                   419,000
Depreciation                                                    926,000                  881,000                   814,000
Administrative                                                   77,000                   75,000                    65,000
Interest expense                                              2,080,000                2,805,000                 2,898,000
                                                      ------------------       ------------------        ------------------       

                                                              5,727,000                6,235,000                 6,076,000
                                                      ------------------       ------------------        ------------------        

NET INCOME                                            $       3,507,000        $       2,281,000         $       1,698,000
                                                      ==================       ==================        ==================  

Limited partners' share of net income ($86.70 per
     unit in 1998, $56.40 per unit in 1997 and
     $42.00 per unit in 1996)                         $       3,468,000        $       2,256,000         $       1,680,000

General partners' share of net income                            39,000                   25,000                    18,000
                                                      ------------------       ------------------        ------------------        

                                                      $       3,507,000        $       2,281,000         $       1,698,000
                                                      ==================       ==================        ==================  

</TABLE>
                            See accompanying notes.
                                      F-3

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
             For the years ended December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>

                                                                                        Other
                                                                                     Comprehensive     Total Partners'
                                            Limited Partners    General Partners        Income         Equity(Deficit)
                                            ----------------    ----------------   ----------------   ----------------   

<S>                                         <C>                 <C>                <C>                <C>             
Balance at December 31, 1995                $    (8,152,000)    $    (2,838,000)   $     1,854,000    $    (9,136,000)

Unrealized gain on marketable securities            -                   -                3,566,000          3,566,000

Net income                                        1,680,000              18,000             -               1,698,000

Equity transfer                                    (420,000)            420,000             -                 -
                                            ----------------    ----------------   ----------------   ----------------   

Balance at December 31, 1996                     (6,892,000)         (2,400,000)         5,420,000         (3,872,000)

Unrealized loss on marketable securities             -                   -                (291,000)          (291,000)

Net income                                        2,256,000              25,000             -               2,281,000

Equity transfer                                    (564,000)            564,000             -                  -
                                            ----------------    ----------------   ----------------   ----------------   

Balance at December 31, 1997                     (5,200,000)         (1,811,000)         5,129,000         (1,882,000)

Unrealized loss on marketable securities             -                   -                (883,000)          (883,000)

Net income                                        3,468,000              39,000             -               3,507,000

Equity transfer                                    (867,000)            867,000             -                  -
                                            ----------------    ----------------   ----------------   ----------------   

Balance at December 31, 1998                $    (2,599,000)    $      (905,000)   $     4,246,000    $       742,000
                                            ================    ================   ================   ================   
</TABLE>
                            See accompanying notes.
                                      F-4

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                            STATEMENTS OF CASH FLOWS
             For the years ended December 31, 1998, 1997, and 1996


<TABLE>
<CAPTION>
                                                                        1998               1997                1996
                                                                   ----------------   ----------------   ----------------   

Cash flows from operating activities:

     <S>                                                           <C>                <C>                <C>            
     Net income                                                    $     3,507,000    $     2,281,000    $     1,698,000

     Adjustments  to  reconcile   net  income  to  cash  
         provided  by  operating activities:

     Depreciation                                                          926,000            881,000            814,000
     Decrease (increase) in rent and other receivables                      30,000            (16,000)           (50,000)
     Amortization of prepaid loan fees                                      69,000             92,000             92,000
     (Increase) decrease in other assets                                   (51,000)            37,000            (31,000)
     Amortization of prepaid management fees                                 -                   -               265,000
     Increase (decrease) in accounts payable                               184,000             13,000            (29,000)
     Increase (decrease) in deferred revenue                                 5,000              6,000            (20,000)
                                                                   ----------------   ----------------   ----------------   

         Total adjustments                                               1,163,000          1,013,000          1,041,000
                                                                   ----------------   ----------------   ----------------   

         Net cash provided by operating activities                       4,670,000          3,294,000          2,739,000
                                                                   ----------------   ----------------   ----------------   

Cash flows from investing activities:

     Purchase of marketable securities of affiliate                          -             (2,300,000)             -
     Additions to real estate facilities                                  (393,000)          (590,000)          (426,000)
                                                                   ----------------   ----------------   ----------------   

         Net cash used in investing activities                            (393,000)        (2,890,000)          (426,000)
                                                                   ----------------   ----------------   ----------------   

Cash flows from financing activities:

     Proceeds from note payable to general partner                      22,000,000             -                  -
     Principal payments on note payable to general partner             (22,000,000)            -                  -
     Proceeds from note payable to commercial bank                      21,000,000             -                  -
     Principal payments on note payable to commercial bank              (1,350,000)            -                  -
     Principal payments on mortgage note payable                       (25,405,000)          (933,000)          (840,000)
                                                                   ----------------   ----------------   ----------------   

         Net cash used in financing activities                          (5,755,000)          (933,000)          (840,000)
                                                                   ----------------   ----------------   ----------------   

Net (decrease) increase in cash and cash equivalents                    (1,478,000)          (529,000)         1,473,000

Cash and cash equivalents at the beginning of the year                   1,911,000          2,440,000            967,000
                                                                   ----------------   ----------------   ----------------   

Cash and cash equivalents at the end of the year                   $       433,000    $     1,911,000    $     2,440,000
                                                                   ================   ================   ================   
</TABLE>
                            See accompanying notes.
                                      F-5

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                            STATEMENTS OF CASH FLOWS
             For the years ended December 31, 1998, 1997, and 1996
                                   (Continued)


<TABLE>
<CAPTION>
                                                                        1998                1997               1996
                                                                   ----------------   ----------------   ----------------   

Supplemental schedule of non-cash investing and financing activities:

     <S>                                                              <C>                <C>               <C>
     Decrease (increase) in fair value of marketable
       securities of affiliate                                        $ 883,000           $291,000         $(3,566,000)
                                                                   ================   ================   ================   

     Unrealized ( loss) gain on marketable securities of
       affiliate                                                      $(883,000)         $(291,000)         $3,566,000
                                                                   ================   ================   ================   

</TABLE>
                            See accompanying notes.
                                      F-6

<PAGE>

                       PUBLIC STORAGE PROPERTIES IV, LTD.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 1998


1.       DESCRIPTION OF PARTNERSHIP

                  Public  Storage  Properties IV, Ltd. (the  "Partnership")  was
         formed with the proceeds of a public offering.  The general partners in
         the Partnership are Public  Storage,  Inc.  ("PSI") and B. Wayne Hughes
         ("Hughes").  The Partnership owns 17 mini-warehouse  facilities located
         in California and Florida.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PARTNERSHIP MATTERS

         Mini-Warehouse Facilities:
         --------------------------

                  Cost of land includes appraisal fees and legal fees related to
         acquisition  and closing costs.  Buildings and equipment  reflect costs
         incurred to develop primarily  mini-warehouse  facilities which provide
         self-service  storage  spaces  for lease,  usually on a  month-to-month
         basis,  to  the  general  public.   The  buildings  and  equipment  are
         depreciated on a straight-line  basis over estimated useful lives of 25
         and 5 years, respectively.

                  In 1995,  the  Partnership  sold a  portion  of its  Pembroke,
         Florida   property  to  the  State  of  Florida  under  a  condemnation
         proceeding for $137,000.  The Partnership recognized a gain of $125,000
         on the sale.  Proceeds  from the sale were used to make an  unscheduled
         principal payment on the Partnership's mortgage note payable.

                  In 1995,  the  Financial  Accounting  Standards  Board  issued
         Statement of Financial  Accounting  Standards No. 121,  "Accounting for
         the  Impairment of Long-Lived  Assets and for  Long-Lived  Assets to be
         Disposed of"  ("Statement  121").  Statement  121  requires  impairment
         losses to be recorded on  long-lived  assets  used in  operations  when
         indicators of impairment  are present and the  undiscounted  cash flows
         estimated  to be  generated  by those  assets are less than the assets'
         carrying  amount.  Statement  121 also  addresses  the  accounting  for
         long-lived  assets that are expected to be disposed of. The Partnership
         has not  identified  any assets  which  indicate an  impairment  in the
         carrying value of the asset is present.

         Allocation of Net Income:
         -------------------------

                  The general  partners' share of net income consists of amounts
         attributable to their capital contribution and an additional percentage
         of cash flow (as defined) which relates to the general  partners' share
         of cash  distributions as set forth in the Partnership  Agreement (Note
         4). All remaining net income is allocated to the limited partners.

                  Per unit data is based on the weighted  average  number of the
         limited partnership units (40,000) outstanding during the period.

         Cash and Cash Equivalents:
         --------------------------

                  For financial  statement purposes,  the Partnership  considers
         all highly liquid investments purchased with a maturity of three months
         or less to be cash equivalents.

         Marketable Securities:
         ----------------------

                  Marketable securities at December 31, 1998 and 1997 consist of
         381,980 shares of common stock of PSI. The  Partnership  has designated
         its  portfolio of marketable  securities  as being  available for sale.
         Accordingly,  at  December  31,  1998 and  1997,  the  Partnership  has
         recorded  the  marketable  securities  at fair  value,  based  upon the
         closing  quoted price of the  securities at December 31, 1998 and 1997,
         and has  recorded  a  corresponding  unrealized  (loss)  gain  totaling
         $(883,000), $(291,000), and $3,566,000 for the years ended December 31,
         1998,  1997  and  1996,  respectively,  as  a  (decrease)  increase  to
         Partnership equity. The Partnership  recognized  dividends of $336,000,
         $301,000 and $262,000 for the years ended  December 31, 1998,  1997 and
         1996, respectively.

                                      F-7

<PAGE>

2.       SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES AND  PARTNERSHIP  MATTERS
         (CONTINUED)

         Comprehensive Income:
         ---------------------

                  As of January 1, 1998,  the  Company  adopted  Statement  130,
         Reporting Comprehensive Income. Statement 130 establishes new rules for
         the reporting and display of  comprehensive  income and its components;
         however,  the adoption of this Statement had no impact on the Company's
         net income or shareholders'  equity.  Statement 130 requires unrealized
         gains or losses on the Company's  available-for-sale  securities, which
         prior to adoption were reported separately in shareholders'  equity, to
         be included in other  comprehensive  income. The primary impact of this
         statement  for the  Company  is to  recharaterize  unrealized  gains or
         losses in shareholders' equity as "other  comprehensive  income." Prior
         year  financial  statments  have been  reclassified  to  conform to the
         requirements of Statement 130.

         Other Assets:
         -------------

                  Included  in  other  assets  is  deferred  financing  costs of
         $68,000 at  December  31,  1997.  Such  balance is being  amortized  as
         interest  expense using the  straight-line  method over the life of the
         related  mortgage note  payable.  As of December 31, 1998 the remaining
         balance has been fully amortized.

         Use of Estimates:
         -----------------

                  The preparation of the financial statements in conformity with
         generally accepted  accounting  principles  requires management to make
         estimates  and  assumptions  that  affect the  amounts  reported in the
         financial  statements  and  accompanying  notes.  Actual  results could
         differ from those estimates.

         Environmental Cost:
         -------------------

                   Substantially  all  of  the  Partnership's   facilities  were
         acquired   prior  to  the  time  that  it  was   customary  to  conduct
         environmental  investigations in connection with property acquisitions.
         During 1995, the Partnership completed environmental assessments of its
         properties  to evaluate the  environmental  condition of, and potential
         environmental  liabilities of such properties.  These  assessments were
         performed by an independent environmental consulting firm. Based on the
         assessments,  the  Partnership  expensed  $26,000  in  1995  for  known
         environmental  remediation  requirements.  Although  there  can  be  no
         assurance,   the   Partnership  is  not  aware  of  any   environmental
         contamination of any of its property sites which individually or in the
         aggregate  would be material  to the  Partnership's  overall  business,
         financial condition or results of operations.

         Segement Reporting:
         -------------------

                  Effective  January 1, 1998, the  Partnership  adopted SFAS No.
         131,   "Disclosure   about   Segments  of  an  Enterprise  and  Related
         Information."  SFAS No. 131  established  standards  for the way public
         business  enterprises  report  information about operating  segments in
         annual financial  statements and requires that those enterprises report
         selected  information  about  operating  segments in interim  financial
         reports.   SFAS  No.  131  also   establishes   standards  for  related
         disclosures  about  products and services,  geographic  areas and major
         customers.  The Partnership only has one reportable  segment as defined
         within  SFAS No.  131,  therefore  the  adoption of SFAS No. 131 had no
         effect on the Partnership's disclosure.

         Derivatives:
         ------------

                   In June 1998, the Financial Accounting Standards Board issued
         Statement No. 133,  Accounting for Derivative  Instruments  and Hedging
         Activities,  which is required to be adopted in years  beginning  after
         June 15, 1999.  Management does not anticipate that the adoption of the
         new  Statement  will  have a  significant  effect  on  earnings  or the
         financial position of the Partnership.


                                      F-8

<PAGE>

3.       CASH DISTRIBUTIONS

                  The  Partnership  Agreement  requires that cash  available for
         distribution  (cash flow from all sources less cash  necessary  for any
         obligations  or  capital  improvement  needs) be  distributed  at least
         quarterly.  Cash  distributions  have  been  suspended  since the third
         quarter of 1991 in order to build cash reserves for future debt service
         payments.

4.       PARTNERS' DEFICIT

                  The general  partners have a 1.1% interest in the Partnership.
         In  addition,   the  general  partners  had  an  8%  interest  in  cash
         distributions  attributable to operations  (exclusive of  distributions
         attributable to sale and financing proceeds) until the limited partners
         recovered all of their  investment.  Thereafter,  the general  partners
         have a 25%  interest  in all  cash  distributions  (including  sale and
         financing proceeds). During 1986, the limited partners recovered all of
         their initial investment.  All subsequent  distributions are being made
         25.83% (including the 1.1% interest) to the general partners and 74.17%
         to the limited partners.

                  Transfers  of equity  are made  periodically  to  conform  the
         partners'   equity  accounts  to  the  provisions  of  the  Partnership
         Agreement.  These  transactions  have  no  effect  on  the  results  of
         operations  or  distributions   to  partners.   The  financing  of  the
         properties  (Note 7) provided the  Partnership  with cash for a special
         distribution  without affecting the Partnership's  taxable income.  The
         majority of the proceeds from the financing, approximately $29,360,000,
         were distributed to the partners in October 1988 resulting in a deficit
         in limited and general partners' equity accounts.

5.       RELATED PARTY TRANSACTIONS

                  The  Partnership  has a  Management  Agreement  with  PSI  (as
         successor-in-interest  to PSMI). Under the terms of the agreement,  PSI
         operates  the  mini-warehouse  facilities  for a fee equal to 6% of the
         facilities' monthly gross revenue (as defined).

                  In November  1995,  the  Management  Agreement  was amended to
         provide  that upon demand  from PSI or PSMI made prior to December  15,
         1995,  the  Partnership  agreed to prepay  (within  15 days  after such
         demand) up to 12 months of  management  fees  (based on the  management
         fees for the  comparable  period during the calendar  year  immediately
         preceding  such  prepayment)  discounted at the rate of 14% per year to
         compensate  for  early  payment.  In  December  1995,  the  Partnership
         prepaid,  to  PSI,  8  months  of  1996  management  fees  at a cost of
         $265,000.  The amount is included in other assets in the balance  sheet
         at December 31, 1995. The amount was amortized as management  fees paid
         to affiliate during 1996.

6.       TAXES BASED ON INCOME

                  Taxes based on income are the responsibility of the individual
         partners and,  accordingly,  the Partnership's  financial statements do
         not reflect a provision for such taxes.

                  Unaudited  Taxable net income was  $3,777,000,  $2,550,000 and
         $2,100,000  for the  years  ended  December  31,  1998,  1997 and 1996,
         respectively.  The difference between taxable net income and net income
         is primarily related to depreciation expense resulting from differences
         in depreciation methods.

                                      F-9

<PAGE>

7.       MORTGAGE NOTE PAYABLE

                  During  September  1988, the  Partnership  financed all of its
         properties  with a  $30,500,000,  ten-year  nonrecourse  mortgage  note
         secured by the  Partnership's  properties.  The note provides for fixed
         interest of 10.47  percent per annum.  Loan payments for the first year
         consisted of interest only.  Thereafter,  principal is being  amortized
         over a 20 year term with monthly  payments of principal and interest of
         $303,891. The note had a maturity date of October 1, 1998 on which date
         the note required  that all remaining  principal and accrued and unpaid
         interest be paid.

                  On July 1, 1998,  the  Partnership  paid off the mortgage note
         payable with cash reserves and with the proceeds of a $22,000,000  loan
         from Public Storage,  Inc., a general partner of the  Partnership.  The
         loan from Public Storage, Inc. bears interest at the fixed rate of 7.2%
         and  matures  June 30,  1999.  The loan calls for  monthly  payments of
         interest  only.  Principal  may be paid at any  time  without  penalty.
         Public  Storage,  Inc.  also provided the  Partnership  with options to
         extend the loan term through June 2003.

                  During  September 1998, the Partnership  borrowed  $21,000,000
         from a commercial bank. The loan is unsecured and bears interest at the
         London Interbank  Offering Rate ("LIBOR") plus 0.60% to 1.20% (5.66% at
         December 31, 1998)  depending on the  Partnership's  interest  coverage
         ratio . The loan  requires  monthly  payments of  interest  and matures
         September 2002. Principal may be paid, in whole or in part, at any time
         without penalty or premium.  The loan proceeds were used to pay off the
         Partnership's note to Public Storage, Inc.

                  Carrying value of the outstanding  debt  approximates its fair
         value.

                  The  Partnership  has  entered  into  an  interest  rate  swap
         agreement  to reduce  the  impact of  changes  in  interest  rates on a
         portion  of  its  floating  rate  debt.  The  agreement,  which  covers
         $11,500,000 of debt through March 2000 and  $7,500,000  from March 2000
         through September 2000,  effectively changes the interest rate exposure
         from  floating rate to a fixed rate of 5.22% plus 0.60% to 1.20% (5.82%
         as of December 31, 1998) based on the  Partnership's  interest coverage
         ratio.  Market  gains and losses on the value of the swap are  deferred
         and included in income over the life of the contract.  The  Partnership
         records the  differences  paid or received on the interest rate swap in
         interest  expense as payments are made or received.  As of December 31,
         1998, the unrealized  loss on the interest rate swap, if required to be
         liquidated, was approximately $37,000.

                  Interest  paid on the  note  was  $1,911,000,  $2,713,000  and
         $2,806,000  for the  years  ended  December  31,  1998,  1997 and 1996,
         respectively.

                                      F-10

<PAGE>

                       Public Storage Properties IV, Ltd.
             Schedule III - Real Estate and Accumulated Depreciation
                      For the year ended December 31, 1998
<TABLE>
<CAPTION>

                                                          Initial Cost                              
                                                  ------------------------------     Costs          
                                                                    Building,     Subsequent to     
                                                                   Land Imp &     construction      
         Description             Encumbrances         Land          Equipment     (Improvements)    
---------------------------      --------------   ------------    --------------  -------------     
Mini-warehouses:
    CALIFORNIA
    ----------
<S>                                   <C>          <C>             <C>             <C>              
Azusa                                 -              $501,000       $1,093,000       $192,000       
Concord                               -               349,000          805,000        194,000       
Oakland                               -               177,000          650,000        185,000       
Pasadena                              -               379,000          496,000        124,000       
Redlands                              -               227,000          771,000        154,000       
Richmond                              -               225,000          639,000        259,000       
Riverside                             -                51,000          595,000        212,000       
Sacramento/Howe                       -               194,000          666,000        232,000       
Sacramento/West Capitol               -               100,000          719,000        277,000       
San Carlos                                            396,000          902,000        127,000       
Santa Clara                                           633,000        1,156,000        175,000       
Tustin                                                517,000          844,000        223,000       

    FLORIDA
    -------
Miami/Airport Expressway              -               186,000          442,000        221,000       
Miami/Cutler Ridge                    -               525,000          901,000        177,000       
Pembroke Park (2)                     -               255,000          607,000        365,000       
Ft. Lauderdale/I-95 & 23rd Ave.       -               243,000          611,000        322,000       
Ft. Lauderdale/I-95 & Sunrise         -               286,000          690,000        398,000       
                                 --------------   ------------    --------------  -------------     
                                 $19,650,000(1)    $5,244,000      $12,587,000     $3,837,000       
                                 ==============   ============    ==============  =============     
</TABLE>

<TABLE>
<CAPTION>
                                           Gross Carrying Amount
                                           at December 31, 1998
                                 ----------------------------------------
                                                 Building,
                                                 Land Imp &                  Accumulated      Date
         Description                Land         Equipment        Total      Depreciation   Completed
---------------------------      ----------     -----------   -----------    -----------    ---------
Mini-warehouses:
    CALIFORNIA
    ----------
<S>                              <C>           <C>           <C>            <C>               <C>  
Azusa                              $501,000      $1,285,000    $1,786,000       $971,000       11/78
Concord                             349,000         999,000     1,348,000        703,000       01/79
Oakland                             177,000         835,000     1,012,000        599,000       04/79
Pasadena                            379,000         620,000       999,000        445,000       11/79
Redlands                            227,000         925,000     1,152,000        655,000       02/79
Richmond                            225,000         898,000     1,123,000        609,000       03/79
Riverside                            51,000         807,000       858,000        573,000       05/79
Sacramento/Howe                     194,000         898,000     1,092,000        613,000       08/79
Sacramento/West Capitol             100,000         996,000     1,096,000        728,000       06/79
San Carlos                          396,000       1,029,000     1,425,000        758,000       10/79
                                                                                                6/79 
Santa Clara                         633,000       1,331,000     1,964,000        956,000      & 7/79
Tustin                              517,000       1,067,000     1,584,000        787,000       12/78

    FLORIDA
    -------
Miami/Airport Expressway            186,000         663,000       849,000        482,000       01/79
Miami/Cutler Ridge                  525,000       1,078,000     1,603,000        775,000       04/79
Pembroke Park (2)                   255,000         972,000     1,227,000        693,000       07/79
Ft. Lauderdale/I-95 & 23rd Ave.     243,000         933,000     1,176,000        680,000
Ft. Lauderdale/I-95 & Sunrise       286,000       1,088,000     1,374,000        797,000       10/79
                                 ----------     -----------   -----------    -----------   
                                 $5,244,000     $16,424,000   $21,668,000    $11,824,000
                                 ==========     ===========   ===========   ============   
</TABLE>

(1)  All 17  mini-warehouse  locations are encumbered by a promissory  note. The
     $19,650,000  listed above is the principal balance remaining on the note at
     12/31/98.

(2)  In 1995, the Partnership sold  approximately  4,729 sq. ft. of the facility
     to the State of Florida  under  condemnation  proceeding.  The  Partnership
     adjusted land by $12,000 for the sale.

                                      F-11

<PAGE>

                       Public Storage Properties IV, Ltd.
             Schedule III - Real Estate and Accumulated Depreciation
                                   (Continued)


           Reconciliation of Real Estate and Accumulated Depreciation

                          Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                  1998             1997             1996
                                             --------------   --------------   --------------   
<S>                                           <C>              <C>              <C>         
Investment in Real estate
   Balance at the beginning of the year       $ 21,275,000     $ 20,685,000     $ 20,259,000

   Additions through cash expenditures             393,000          590,000          426,000
                                             --------------   --------------   --------------   
Balance at the end of the year                $ 21,668,000     $ 21,275,000     $ 20,685,000
                                             ==============   ==============   ==============   

Accumulated Depreciation
   Balance at the beginning of the year       $ 10,898,000     $ 10,017,000     $  9,203,000

   Additions charged to costs and expenses         926,000          881,000          814,000
                                             --------------   --------------   --------------   
                                              $ 11,824,000     $ 10,898,000     $ 10,017,000
                                             ==============   ==============   ==============   
</TABLE>

(a)  The aggregate  depreciable cost of real estate (excluding land) for Federal
     income tax purposes is $6,018,000 (unaudited).

                                      F-12