<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 10-Q


                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the Quarterly Period Ended MARCH 31, 1998

                         Commission File Number 33-22857

                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A California Limited Partnership)

                  I.R.S. Employer Identification No. 95-4166241

                         9090 WILSHIRE BLVD., SUITE 201
                           BEVERLY HILLS, CALIF. 90211

                         Registrant's Telephone Number,
                       Including Area Code (310) 278-2191


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


                                 Yes [X] No [ ]


<PAGE>   2
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                               INDEX TO FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 1998



<TABLE>
<CAPTION>
<S>                                                                             <C>
PART I. FINANCIAL INFORMATION

      Item 1. Financial Statements and Notes to Financial Statements

                  Balance Sheets, March 31, 1998 and December 31, 1997           1

                  Statements of Operations,
                        Three Months Ended March 31, 1998 and 1997 ...           2

                  Statement of Partners' Capital (Deficiency)
                        Three Months Ended March 31, 1998 ............           3

                  Statements of Cash Flows
                        Three Months Ended March 31, 1998 and 1997 ...           4

                  Notes to Financial Statements ......................           5

      Item 2. Management's Discussion and Analysis of Financial
                        Condition and Results of Operations ..........          12


PART II. OTHER INFORMATION

      Item 1. Legal Proceedings ......................................          13

      Item 6. Exhibits and Reports on Form 8-K .......................          14

      Signatures .....................................................          15
</TABLE>


<PAGE>   3
                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 BALANCE SHEETS

                      MARCH 31, 1998 AND DECEMBER 31, 1997

                                     ASSETS


<TABLE>
<CAPTION>
                                                           1998                 1997
                                                        (Unaudited)           (Audited)
                                                        ------------         ------------
<S>                                                     <C>                  <C>         
RENTAL PROPERTY (Notes 1, 2 and 3)                      $ 33,838,777         $ 34,013,326

CASH AND CASH EQUIVALENTS (Note 1)                         4,612,642            4,100,537

RESTRICTED CASH (Notes 1 and 5)                              158,700              158,700

OTHER ASSETS (Note 5)                                         10,524               39,001
                                                        ------------         ------------

                                                        $ 38,620,643         $ 38,311,564
                                                        ============         ============


                  LIABILITIES AND PARTNERS' CAPITAL

ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES (Note 4)                                    $    380,401         $    367,529

SECURITY DEPOSITS                                            307,511              297,622

PREPAID RENT                                                  12,435               16,866
                                                        ------------         ------------

                                                             700,347              682,017


COMMITMENTS AND CONTINGENCIES (Note 5)

PARTNERS' CAPITAL (Note 1)                                37,920,296           37,629,547
                                                        ------------         ------------

                                                        $ 38,620,643         $ 38,311,564
                                                        ============         ============
</TABLE>


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


<PAGE>   4
                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                              STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                     1998                1997
                                                  ------------        ------------
<S>                                               <C>                 <C>         
REVENUES
     Rental income                                $  1,492,831        $  1,419,028
     Interest and other income (Note 3)                 87,447              66,564
                                                  ------------        ------------
                                                     1,580,278           1,485,592
                                                  ------------        ------------

EXPENSES
     Operating (Note 4)                                311,750             332,608
     Property taxes                                     64,067              66,902
     Management fee - (Note 4)                          45,213              41,294
     General and administrative (Note 4)                91,088             124,499
     Depreciation                                      176,389             176,389
                                                  ------------        ------------

                                                       688,507             741,692
                                                  ------------        ------------

NET INCOME                                        $    891,771        $    743,900
                                                  ============        ============

NET INCOME PER DEPOSITORY UNIT                    $       0.12        $       0.10
                                                  ============        ============
</TABLE>


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


<PAGE>   5
                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                  STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
                        THREE MONTHS ENDED MARCH 31, 1998
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                 Special Limited
                                        General               Limited                Partner
                                       Partners               Partners               (Note 1)            Total
                                     ------------           ------------           ------------       ------------
<S>                                  <C>                    <C>                  <C>                  <C>         
PARTNERSHIP INTERESTS

BALANCE, JANUARY 1, 1998             $   (274,234)          $ 37,903,781           $         --       $ 37,629,547

DISTRIBUTIONS (Note 7)                     (6,010)              (595,012)                    --           (601,022)

NET INCOME FOR THE THREE
MONTHS ENDED MARCH 31, 1998                 8,918                882,853                     --            891,771
                                     ------------           ------------           ------------       ------------

BALANCE, MARCH 31, 1998              $   (271,327)          $ 38,191,623           $         --       $ 37,920,296
                                     ============           ============           ============       ============
</TABLE>


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


<PAGE>   6
                  CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                            STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 1998 AND 1997


<TABLE>
<CAPTION>
                                                            1998                  1997
                                                         ------------          ------------
<S>                                                      <C>                   <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net  income                                         $    891,771          $    743,900
    Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation                                              176,389               176,389
    Decrease (increase) in other assets                        28,477                37,918
    Increase (decrease) in accounts payable and
    accrued liabilities                                        12,872                66,011
    Increase (decrease) in security deposits                    9,889                (6,158)
    Increase (decrease) in prepaid rent                        (4,431)              (58,012)
                                                         ------------          ------------

    Net cash provided by operating activities               1,114,967               960,048
                                                         ------------          ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Increase in rental property                                (1,840)             (189,386)
                                                         ------------          ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
    Distributions to partners                                (601,022)             (588,097)
                                                         ------------          ------------


NET INCREASE IN CASH AND CASH EQUIVALENTS                     512,105               182,565

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              4,100,537             3,490,463
                                                         ------------          ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                 $  4,612,642          $  3,673,028
                                                         ============          ============
</TABLE>


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


<PAGE>   7
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        GENERAL

        The information contained in the following notes to the financial
        statements is condensed from that which would appear in the annual
        financial statements; accordingly, the financial statements included
        herein should be reviewed in conjunction with the financial statements
        and related notes thereto contained in the Annual Report for the year
        ended December 31, 1997 prepared by Century HillCreste Apartment
        Investors, L.P. (the "Partnership"). Accounting measurements at interim
        dates inherently involve greater reliance on estimates than at year end.
        The results of operations for the interim periods presented are not
        necessarily indicative of the results for the entire year.

        In the opinion of National Partnership Investments Corp. ("NAPICO"), the
        accompanying unaudited financial statements contain all adjustments
        (consisting primarily of normal recurring accruals) necessary to present
        fairly the financial position as of March 31, 1998, and the results of
        operations and changes in cash flows for the three months then ended.

        ORGANIZATION

        The Partnership, a California limited partnership, was formed on June 6,
        1988, with NAPICO (the "Managing General Partner"), and HillCreste
        Properties Inc. (the "Non-Managing General Partner") as the general
        partners (collectively, the "General Partners"). On October 26, 1988,
        the Partnership issued to investors (the "Limited Partners") 7,258,000
        depositary units (each depositary unit being entitled to the beneficial
        interest of a limited partnership interest) for a total amount raised of
        $72,580,000, through a public offering.

        NAPICO is a wholly owned subsidiary of Casden Investment Corporation,
        which is wholly owned by Alan I. Casden.

        Concurrent with the issuance of the depository units, the Partnership
        purchased a 315-unit luxury apartment complex in the Century City area
        of Los Angeles (the "Property") from an affiliate of the Managing
        General Partner (the "Seller") for a purchase price of $68,548,000. To
        complete the purchase of the Property, the Seller purchased a 10 percent
        special limited partnership interest in the Partnership for $6,855,000.
        The Partnership Agreement provides that the 10 percent special limited
        partnership interest is subordinate to the other Limited Partners'
        specified priority return in the case of distributions of net cash flow
        from operations, plus the other Limited Partners' return of capital in
        the case of net sales or refinancing distribution proceeds.


                                        5


<PAGE>   8
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

        USE OF ESTIMATES

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

        MINIMUM DISTRIBUTION GUARANTEE

        The minimum distribution guarantee payments from the seller have been
        reflected as a reduction in the carrying amount of the Property.

        DEPRECIATION

        Depreciation is reported using the straight-line method over the
        estimated useful lives of the buildings and equipment as follows:


<TABLE>
<S>                                                      <C>     
                 Buildings                               35 years
                 Furniture and equipment                  5 years
</TABLE>


        CASH AND CASH EQUIVALENTS

        Cash and cash equivalents consists of cash and bank certificates of
        deposit with an original maturity of three months or less. The
        Partnership has its cash and cash equivalents on deposit primarily with
        one money market mutual fund. Such cash and cash equivalents are
        uninsured.

        RESTRICTED CASH

        Restricted cash consists of bank certificates of deposits assigned to
        the City of Los Angeles in lieu of purchasing a subdivision improvement
        bond to effectuate the privatization of city streets located within the
        Property's perimeter (see Note 5).

        INCOME TAXES

        No provision has been made for income taxes in the accompanying
        financial statements as such taxes, if any, are the liability of the
        partners.


                                        6


<PAGE>   9
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      NET INCOME PER DEPOSITORY UNIT

      Net income per depository unit was computed by dividing the limited
      partners' share of net income (99 percent) by the number of depository
      units outstanding during the year. The number of depository units was
      7,258,000 for the periods presented.

      IMPAIRMENT OF LONG-LIVED ASSETS

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

NOTE 2 - RENTAL PROPERTY

      Rental property is carried at cost and consists of the following at March
      31, 1998 and December 31, 1997:


<TABLE>
<CAPTION>
                                                 1998                   1997
                                             ------------           ------------
      <S>                                    <C>                    <C>         
      Land                                   $ 16,175,000           $ 16,175,000
      Building                                 24,694,402             24,694,402
      Furniture and equipment                   3,870,000              3,870,000
      Improvements                                828,947                827,107
                                             ------------           ------------
                                               45,568,349             45,566,509

      Less accumulated depreciation           (11,729,572)           (11,553,183)
                                             ------------           ------------
                                             $ 33,838,777           $ 34,013,326
                                             ============           ============
</TABLE>


      In December 1996, Everest HillCreste Investors, LLC ("Everest"), an
      affiliate of Everest Century Investors, LLC, commenced a proxy
      solicitation of the Limited Partners seeking to obtain sufficient votes in
      order to (a) authorize Everest to notify the General Partners on behalf of
      Limited Partners to call for a special meeting of the Limited Partners,
      and (b) adopt a resolution at such meeting approving Everest's proposal to
      purchase the Property for $40 million subject to certain material
      conditions. On January 9, 1997, the Managing General Partner advised the
      limited partners that the proposed purchase price was less than the
      Property's appraised value of $46.9 million as of February 1996, and that
      four other, non-binding purchase proposals had been received for prices
      ranging from $40.2 million to $44.7 million, each subject to various
      contingencies and conditions. The Managing General Partner also informed
      the Limited Partners that Casden Properties, an affiliate of the Managing
      General Partner and the Special Limited Partner of the Partnership, has
      under the terms of the Amended and Restated Agreement of limited
      partnership (the "Partnership Agreement"), a right of first refusal to
      acquire the Property for the proposed sales price and terms (the "Right of
      First Refusal").


                                        7


<PAGE>   10
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998

NOTE 2 - RENTAL PROPERTY (CONTINUED)

        Subsequently, Everest increased its offer by $7 million to $47 million
        (the "Everest Proposal"). Additionally, the Partnership received (a) a
        report from an independent real estate appraisal firm that the
        Property's current market value is approximately $47 million and (b) a
        non-binding proposal from one of the four prior offerees proposing to
        increase its offer to purchase the Property to $47.4 million.

        The Managing General Partner makes no recommendation as to the Everest
        Proposal.

        The Managing General Partner has been informed that its affiliate, the
        Special Limited Partner, plans, subject to obtaining reasonable
        financing, to exercise the aforementioned Right of First Refusal in the
        event the Everest Proposal is approved.

        A real estate investment trust organized by an affiliate of NAPICO has
        advised the Partnership that it intends to make a proposal to purchase
        from the Partnership the real estate assets of the Partnership for
        $52,500,000.

        The Partnership received from an unrelated entity a proposal, dated
        March 26, 1998, to purchase the property owned by the Partnership for
        $54,500,000.

NOTE 3 - MINIMUM DISTRIBUTION GUARANTEE RECEIVABLE FROM PARTNER

        The Minimum Distribution Guarantee Agreement (the "Guarantee Agreement")
        required the Seller, who is also the Special Limited Partner, to make
        payments to the Partnership, if and when necessary, in an amount
        sufficient to enable the Partnership to provide the Limited Partners
        with distributions sufficient to achieve a minimum annual return upon
        the Limited Partners' investment in the Partnership, through December
        31, 1993, as follows:


<TABLE>
<CAPTION>
              Years Ended December 31,              Annual Return on Investment
              ------------------------              ---------------------------
<S>                                                 <C>
                        1988                                   8.0%
                        1989                                   8.0%
                        1990                                   8.5%
                        1991                                   9.0%
                        1992                                   9.0%
                        1993                                   9.0%
</TABLE>


        The Seller has funded a total of $13,130,998 directly to the Partnership
        for distributions to the Limited Partners pursuant to the Guarantee
        Agreement. This amount has been reflected as a reduction in the carrying
        amount of the Property. Commencing in 1994, distributions to the
        Partners have been made from cash flow from operations.


                                        8


<PAGE>   11
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 4 - FEES PAID TO GENERAL PARTNERS AND AFFILIATES

        In accordance with the Partnership Agreement certain fees and
        reimbursements are paid to the General Partners and their affiliates as
        follows:

        (a)     A Partnership management fee payable to the Managing General
                Partner of $50,000 annually. The fee is included in general and
                administrative expenses.

        (b)     Partnership expense reimbursements not to exceed $50,000
                annually are paid to the Non-Managing General Partner.

        (c)     The Partnership is obligated to pay certain fees to the Managing
                General Partner or its affiliates upon sale of the Property. The
                payment of such fees is subordinated to certain preferred
                returns to the Limited Partners.

        (d)     The Managing General Partner is entitled to receive 1 percent of
                distributions (as defined in the Partnership Agreement). This is
                paid quarterly by the Partnership to the Managing General
                Partner.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

        a.      Construction to "privatize" the streets and alleys providing
                access to the Property and to construct wrought iron security
                fencing with controlled entrances into the Property is now
                complete at a cost to the Partnership of $828,947. The
                Partnership pledged a certificate of deposit in the amount of
                $158,700 to the City, to secure an improvement guarantee on
                the additional construction of a storm drain and related
                improvement, which is also complete. Upon final inspection,
                the Partnership will receive its deposit of $158,700.

        b.      The Managing General Partner of the Partnership is a plaintiff
                in various lawsuits and has also been named as a defendant in
                other lawsuits arising from transactions in the ordinary course
                of business. In the opinion of management and the Managing
                General Partner, the claims will not result in any material
                liability to the Partnership. In addition, the Partnership is
                involved in the actions described below:


                                        9


<PAGE>   12
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

        c.      The Partnership, NAPICO, and several of NAPICO's officers,
                directors and affiliates consented to the entry, on June 25,
                1997, of an administrative cease and desist order by the U.S.
                Securities and Exchange Commission (the "Commission"), without
                admitting or denying any of the findings made by the Commission.
                The order concerns, in part, the treatment of Partnership funds
                deposited between September 1991 and July 1993 in a master
                disbursement account used by the Partnership's previous property
                management company. The Commission found that those funds should
                have been recorded on the Partnership's books and reported in
                its financial statements as related party accounts receivable
                rather than as cash as done so by the Partnership's auditors.
                Although the Commission found that this misclassification of
                current assets violated federal securities laws, the Commission
                did not find that these violations were intentional nor did the
                Commission find that limited partners had suffered any loss or
                damage as a result of these violations. Moreover, the
                Commission's order does not impose any cost, burden or penalty
                on the Partnership and does not impact NAPICO's ability to serve
                as the Partnership's Managing General Partner.

                The events that gave rise to the Commission's order occurred in
                or before 1993. Subsequent corrective action by the Partnership
                and its general partners precludes any recurrence of the cash
                management issues described in the Commission's order.

        d.      On February 13, 1997, J/B Investment Partners ("J/B") filed an
                action in the Los Angeles Superior Court (the "J/B Lawsuit"),
                against the Managing General Partner and its directors, and
                Casden Properties and certain of its affiliates (collectively,
                the "Defendants").

                By order dated November 25, 1997, the Los Angeles Superior Court
                dismissed the J/B Lawsuit with prejudice. No appeal has been
                taken.

                The J/B Lawsuit was styled as a class action brought against the
                Defendants on behalf of all limited partners of the Partnership,
                and a derivative action brought on behalf of the Partnership
                itself. The Partnership was named as a "nominal defendant." The
                complaint in the J/B Lawsuit contained four causes of action:
                (a) breach of fiduciary duty; (b) breach of contract; (c) unjust
                enrichment; and (d) equitable relief.

                The alleged wrongdoing of the Defendants as set forth in the J/B
                Lawsuit related to the following issues:

                1.      J/B alleged misappropriation and misuse of Partnership
                        funds which were the subject of a previous lawsuit (the
                        "Prior Lawsuit") filed in the Los Angeles Superior Court
                        in June 1995 by the Non-Managing General Partner. The
                        Managing General Partner vigorously denied these
                        allegations, and without admission of any wrongdoing,
                        the Prior Lawsuit was settled by a Memorandum of
                        Understanding executed in August 1995, with final
                        settlement documentation executed in April 1996, at
                        which time the Prior


                                       10


<PAGE>   13
                         CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                              (A CALIFORNIA LIMITED PARTNERSHIP)

                           NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                        MARCH 31, 1998


NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

                        Lawsuit was dismissed with prejudice as to all
                        defendants. Additionally, J/B alleged that the
                        Defendants wrongfully caused the Partnership to pay
                        legal fees on behalf of the Managing General Partner or
                        certain of its affiliates relating to a regulatory
                        investigation discussed above.

                2.      J/B alleged that the Defendants failed to explore
                        transactions that would maximize the value of the
                        limited partners' investment in the Partnership,
                        including the four unsolicited offers to purchase the
                        Property, implementation of an auction process regarding
                        the potential sale of the Property and obtaining
                        financing with respect to the Property.

                3.      J/B alleged that the January 1997 letter from the
                        Managing General Partner to the Limited Partners
                        contained misleading statements about the original
                        Everest proxy solicitation and about the Special Limited
                        Partner's Right of First Refusal. Specifically, J/B
                        contended that the January letter failed to disclose the
                        Managing General Partner's advice and opinions regarding
                        the response of the Limited Partners to the original
                        Everest offer and contained misstatements about certain
                        provisions of the Partnership Agreement pertaining to
                        actions permitted or required to be taken by the Limited
                        Partners of the Partnership. J/B stated that the Limited
                        Partners were not authorized, by vote of a
                        majority-in-interest or otherwise, to bind, compel, or
                        require the Partnership to enter into any contract for
                        the sale of the Property, including the proposed sales
                        contract with Everest. In other words, J/B asserted that
                        the Everest Proposal could not be implemented as
                        proposed because it is beyond the Limited Partners'
                        authority under the Partnership Agreement. Consequently,
                        J/B claimed that the conditions to the Special Limited
                        Partner's Right of First Refusal to purchase the
                        Property for a price and on terms equal to those
                        contained in the Everest Proposal could not under the
                        Partnership Agreement be fulfilled, and, therefore, no
                        such Right of First Refusal could be exercised.

                        J/B was seeking damages in the J/B Lawsuit in a
                        unspecified amount and equitable relief, including,
                        among other things, a declaration judgment as to whether
                        or not there exists a Right of First Refusal.

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


                                       11


<PAGE>   14
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                                 MARCH 31, 1998


NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS

        Statement of Financial Accounting Standards No. 107, "Disclosure about
        Fair Value of Financial Instruments," requires disclosure of fair value
        information about financial instruments. The carrying amounts of assets
        and liabilities reported on the balance sheets that require such
        disclosure approximate fair value due to their short-term maturity.


                                       12


<PAGE>   15
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
        OF OPERATIONS

        CAPITAL RESOURCES AND LIQUIDITY

        The Partnership raised proceeds of $72,580,000 from the sale of
        depository units, pursuant to a public offering and received additional
        capital contributions from the General Partners of $1,050 and from the
        special limited partner of $6,855,000. Currently, the only sources of
        Partnership income consist of income from rental operations at the
        Property and interest earned on Partnership reserves.

        Construction to "privatize" the streets and alleys providing access to
        the Property and to construct wrought iron security fencing with
        controlled entrances into the Property is now complete at a cost to
        the Partnership of $828,947. The Partnership pledged a certificate of
        deposit in the amount of $158,700 to the City, to secure an improvement
        guarantee on the additional construction of a storm drain and related
        improvement, which is also complete. Upon final inspection, the
        Partnership will receive its deposit of $158,700.

        RESULTS OF OPERATIONS

        Occupancy averaged 99 percent and 97 percent for the three months ended
        March 31, 1998 and 1997, respectively. Rental income increased in 1998
        as compared to 1997 as a result of the increase in occupancy and an
        increase in rental charges per unit. Included in the interest and other
        income is interest income earned on cash and cash equivalents of $58,000
        and $45,000 for the three months ended March 31, 1998 and 1997,
        respectively. Interest income increased in 1998 as compared to 1997 as a
        result of the increase in cash and cash equivalents from $3,490,000 at
        December 31, 1996 to $4,613,000 at March 31, 1998. The Partnership has
        its cash and cash equivalents on deposit primarily with one money market
        mutual fund.

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

        A real estate investment trust ("REIT") organized by an affiliate of
        NAPICO has advised the Partnership that it intends to make a proposal to
        purchase the property.


                                       13


<PAGE>   16
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
        OF OPERATIONS (CONTINUED)

        RESULTS OF OPERATIONS (CONTINUED)

        The REIT proposes to purchase such property for cash, which it plans to
        raise in connection with a private placement of its equity securities.
        The purchase is subject to, among other things, (i) consummation of such
        private placement by the REIT; (ii) the consent of the limited partners
        to the sale of the property and (iii) the consummation of a minimum
        number of purchase transactions with other NAPICO affiliated
        partnerships.

        A proxy is contemplated to be sent to the limited partners setting forth
        the terms and conditions of the purchase of the property for investment
        by the Partnership, together with certain amendments to the Partnership
        Agreement and other disclosures of various conflicts of interest in
        connection with the transaction.


                                       14


<PAGE>   17
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As of March 31, 1998, NAPICO, the Managing General Partner, was a plaintiff or
defendant in several lawsuits, which are unrelated to the Partnership. In
addition, the Partnership is involved in the actions described below:

Securities and Exchange Commission

The Partnership, NAPICO, and several of NAPICO's officers, directors and
affiliates consented to the entry, on June 25, 1997, of an administrative cease
and desist order by the U.S. Securities and Exchange Commission (the
"Commission"), without admitting or denying any of the findings made by the
Commission. The order concerns, in part, the treatment of Partnership funds
deposited between September 1991 and July 1993 in a master disbursement account
used by the Partnership's previous property management company. The Commission
found that those funds should have been recorded on the Partnership's books and
reported in its financial statements as related party accounts receivable rather
than as cash as done so by the Partnership's auditors. Although the Commission
found that this misclassification of current assets violated federal securities
laws, the Commission did not find that these violations were intentional nor did
the Commission find that limited partners had suffered any loss or damage as a
result of these violations. Moreover, the Commission's order does not impose any
cost, burden or penalty on the Partnership and does not impact NAPICO's ability
to serve as the Partnership's Managing General Partner.

The events that gave rise to the Commission's order occurred in or before 1993.
Subsequent corrective action by the Partnership and its general partners
precludes any recurrence of the cash management issues described in the
Commission's order.

J/B Lawsuit

On February 13, 1997, J/B Investment Partners ("J/B") filed an action in the Los
Angeles Superior Court (the "J/B Lawsuit"), against the Managing General Partner
and its directors, and Casden Properties and certain of its affiliates
(collectively, the "Defendants").

By order dated November 25, 1997, the Los Angeles Superior Court dismissed the
J/B Lawsuit with prejudice. No appeal has been taken.

The J/B Lawsuit was styled as a class action brought against the Defendants on
behalf of all limited partners of the Partnership, and a derivative action
brought on behalf of the Partnership itself. The Partnership was named as a
"nominal defendant." The complaint in the J/B Lawsuit contained four causes of
action: (a) breach of fiduciary duty; (b) breach of contract; (c) unjust
enrichment; and (d) equitable relief.


                                       15


<PAGE>   18
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS (CONTINUED)

The alleged wrongdoing of the Defendants as set forth in the J/B Lawsuit related
to the following issues:

3.      J/B alleged misappropriation and misuse of Partnership funds which were
        the subject of a previous lawsuit (the "Prior Lawsuit") filed in the Los
        Angeles Superior Court in June 1995 by the Non-Managing General
        Partner. The Managing General Partner vigorously denied these
        allegations, and without admission of any wrongdoing, the Prior Lawsuit
        was settled by a Memorandum of Understanding executed in August 1995,
        with final settlement documentation executed in April 1996, at which
        time the Prior Lawsuit was dismissed with prejudice as to all
        defendants. Additionally, J/B alleged that the Defendants wrongfully
        caused the Partnership to pay legal fees on behalf of the Managing
        General Partner or certain of its affiliates relating to a regulatory
        investigation discussed above.

2.      J/B alleged that the Defendants failed to explore transactions that
        would maximize the value of the limited partners' investment in the
        Partnership, including the four unsolicited offers to purchase the
        Property, implementation of an auction process regarding the potential
        sale of the Property and obtaining financing with respect to the
        Property.

3.      J/B alleged that the January 1997 letter from the Managing General
        Partner to the Limited Partners contained misleading statements about
        the original Everest proxy solicitation and about the Special Limited
        Partner's Right of First Refusal. Specifically, J/B contended that the
        January letter failed to disclose the Managing General Partner's advice
        and opinions regarding the response of the Limited Partners to the
        original Everest offer and contained misstatements about certain
        provisions of the Partnership Agreement pertaining to actions permitted
        or required to be taken by the Limited Partners of the Partnership. J/B
        stated that the Limited Partners were not authorized, by vote of a
        majority-in-interest or otherwise, to bind, compel, or require the
        Partnership to enter into any contract for the sale of the Property,
        including the proposed sales contract with Everest. In other words, J/B
        asserted that the Everest Proposal cannot be implemented as proposed
        because it is beyond the Limited Partners' authority under the
        Partnership Agreement. Consequently, J/B claimed that the conditions to
        the Special Limited Partner's Right of First Refusal to purchase the
        Property for a price and on terms equal to those contained in the
        Everest Proposal could not under the Partnership Agreement be fulfilled,
        and, therefore, no such Right of First Refusal could be exercised.

        J/B was seeking damages in the J/B Lawsuit in a unspecified amount and
        equitable relief, including, among other things, a declaration judgment
        as to whether or not there exists a Right of First Refusal.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) No reports on Form 8-K were filed during the quarter ended March 31,
1998.


                                       16


<PAGE>   19
                  CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                                 MARCH 31, 1998

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                       CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
                       (a California limited partnership)


                       By: National Partnership Investments Corp.
                           Managing General Partner


                           /s/ BRUCE NELSON
                           -------------------------------
                           Bruce Nelson
                           President


                       Date: May 18, 1998
                             --------------


                           /s/ CHARLES H. BOXENBAUM
                           -------------------------------
                           Charles H. Boxenbaum
                           Chief Executive Officer


                       Date: May 18, 1998
                             --------------



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