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|                                                         |   | December 31 |               |   | March 31 |   |
|--------------------------------------------------------------|--------|-------------|--------------------|--------|----------|--------|
| Assets                                                       |   |        |               |   |     |   |
|                                                         |   |        |               |   |     |   |
| Cash and cash equivalents                                    |   | $           | 279,711            |   |     | $      | 381,970 |   |
| Investment in Local Limited Partnership (Note 1)             |   |        | -                  |   |     |   | - |   |
| Other assets                                                 |   |        |  139          |   |     |   | 38 |   |
| Total Assets                                                 |   | $           | 279,850            |   |     | $      | 382,008 |   |
|                                                         |   |        |               |   |     |   |   |   |
| Liabilities and Partners' Equity                             |   |        |               |   |     |   |   |   |
|                                                         |   |        |               |   |     |   |   |   |
| Due to affiliate                                             |   | $           | 2,324              |   |     | $      | 2,325 |   |
| Accrued expenses                                             |   |        |   26,186 |   |     |   | 43,785 |   |
| Total Liabilities                                            |   |        | 28,510             |   |     |   | 46,110 |   |
|                                                         |   |        |               |   |     |   |   |   |
| General, Initial and Investor Limited Partners’ Equity |   |        |  251,340      |   |     |   | 335,898 |   |
| Total Liabilities and Partners' Equity                       |   | $           | 279,850            |   |     | $      | 382,008 |   |
|                                                         |   |        |               |   |     |   |   |   |
|                                                         |   |        |               |   |     |   |   |   |

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|                                    |   | Three Months Ended |    |   | Nine Months Ended |   |
|-----------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                    |   | December 31,       |    |   | December 31,      |   |   | December 31, |   |   | December 31, |   |
|                                    |   | 2010               |    |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Revenue                                 |   |               |    |   |              |   |   |   |   |   |   |   |
| Investment                              |   | $                  | 287     |   |              | $      | 1,167 |   |   | $ | 972 |   |   | $ | 9,815 |   |
| Other                                   |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | 4 |   |
| Total Revenue                           |   |               | 287     |   |              |   | 1,167 |   |   |   | 972 |   |   |   | 9,819 |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Expenses:                               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Asset management fees, affiliate        |   |               | 2,323   |   |              |   | 9,051 |   |   |   | 6,971 |   |   |   | 27,153 |   |
| General and administrative              |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| (includes reimbursement to an           |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| affiliate in the amount of $16,315      |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| and $18,903 for the nine months         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| ended December 31, 2010 and 2009,       |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| respectively)                           |   |               | 23,918  |   |              |   | 24,615 |   |   |   | 78,559 |   |   |   | 118,616 |   |
| Total Expenses                          |   |               | 26,241  |   |              |   | 33,666 |   |   |   | 85,530 |   |   |   | 145,769 |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Loss before equity in losses of         |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Local Limited Partnerships and gain     |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| on sale of investments in               |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Local Limited Partnerships              |   |               | (25,954 | )      |              |   | (32,499 | ) |   |   | (84,558 | ) |   |   | (135,950 | ) |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Equity in losses of Local Limited       |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Partnerships (Note 1)                   |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | - |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of investments in          |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Local Limited Partnerships (Note 1)     |   |               | -       |   |              |   | - |   |   |   | - |   |   |   | 200,000 |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                       |   | $                  | (25,954 | )      |              | $      | (32,499 | ) |   | $ | (84,558 | ) |   | $ | 64,050 |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)  allocated: |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| General Partners                        |   | $                  | (260    | )      |              | $      | (324 | ) |   | $ | (846 | ) |   | $ | 641 |   |
| Limited Partners                        |   |               | (25,694 | )      |              |   | (32,175 | ) |   |   | (83,712 | ) |   |   | 63,409 |   |
|                                    |   | $                  | (25,954 | )      |              | $      | (32,499 | ) |   | $ | (84,558 | ) |   | $ | 64,050 |   |
|                                    |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) Per Limited Partner   |   |               |    |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Unit (100,000 Units)                    |   | $                  | (0.26   | )      |              | $      | (.32 | ) |   | $ | (0.84 | ) |   | $ | 0.64 |   |

----

|                         |   |     |   |   | Initial  |   |   | Investor |   |   |    |   |
|------------------------------|--------|----------|--------|--------|----------|--------|--------|----------|--------|--------|---------|--------|
|                         |   | General  |   |   | Limited  |   |   | Limited  |   |   |    |   |
|                         |   | Partners |   |   | Partners |   |   | Partners |   |   | Total   |   |
|                         |   |     |   |   |     |   |   |     |   |   |    |   |
| Balance at March 31, 2010    |   | $        | 3,286  |   |     | $      | 5,000  |     |   | $      | 327,612 |   |   | $ | 335,898 |   |
|                         |   |     |   |   |     |   |   |     |   |   |    |   |   |   |   |   |
| Net Loss                     |   |     | (846   | )      |     |   | -      |     |   |   | (83,712 | )      |   |   | (84,558 | ) |
|                         |   |     |   |   |     |   |   |     |   |   |    |   |   |   |   |   |
| Balance at December 31, 2010 |   | $        | 2,440  |   |     | $      | 5,000  |     |   | $      | 243,900 |   |   | $ | 251,340 |   |
|                         |   |     |   |   |     |   |   |     |   |   |    |   |   |   |   |   |
|                         |   |     |   |   |     |   |   |     |   |   |    |   |   |   |   |   |

----

|                                      |   | 2010   |     |   | 2009   |   |
|-------------------------------------------|--------|--------|----------|--------|--------|--------|
|                                      |   |   |     |   |   |   |
| Net cash used for operating activities    |   | $      | (102,259 | )      |   | $      | (168,549 | ) |
|                                      |   |   |     |   |   |   |   |   |
| Net cash provided by investing activities |   |   | -        |   |   |   | 200,000 |   |
|                                      |   |   |     |   |   |   |   |   |
| Net cash used for financing activities    |   |   | -        |   |   |   | (2,600,350 | ) |
|                                      |   |   |     |   |   |   |   |   |
| Net decrease in cash and cash equivalents |   |   | (102,259 | )      |   |   | (2,568,899 | ) |
|                                      |   |   |     |   |   |   |   |   |
| Cash and cash equivalents, beginning      |   |   | 381,970  |   |   |   | 3,014,508 |   |
|                                      |   |   |     |   |   |   |   |   |
| Cash and cash equivalents, ending         |   | $      | 279,711  |   |   | $      | 445,609 |   |
|                                      |   |   |     |   |   |   |   |   |

----

|                                                                                        |   | December 31 |       |   | March 31 |   |
|---------------------------------------------------------------------------------------------|--------|-------------|------------|--------|----------|--------|
| Capital contributions paid to Local Limited Partnership and purchase                        |   |        |       |   |     |   |
| price paid to withdrawing partners of Local Limited Partnership                             |   | $           | 3,597,307  |   |     | $      | 3,597,307 |   |
|                                                                                        |   |        |       |   |     |   |   |   |
| Cumulative equity in losses of Local Limited Partnership                                    |   |        |       |   |     |   |   |   |
|     (excluding  cumulative unrecognized losses of $44,629,569 |   |        |       |   |     |   |   |   |
|     and $43,275,556 at December 31 and March 31, 2010, respectively)    |   |        | (3,664,427 | )      |     |   | (3,664,427 | ) |
|                                                                                        |   |        |       |   |     |   |   |   |
| Investment in Local Limited Partnership before adjustments                                  |   |        | (67,120    | )      |     |   | (67,120 | ) |
|                                                                                        |   |        |       |   |     |   |   |   |
| Excess investment costs over the underlying assets acquired:                                |   |        |       |   |     |   |   |   |
|                                                                                        |   |        |       |   |     |   |   |   |
| Acquisition fees and expenses                                                               |   |        | 75,142     |   |     |   | 75,142 |   |
|                                                                                        |   |        |       |   |     |   |   |   |
| Cumulative amortization of acquisition fees and expenses                                    |   |        | (8,022     | )      |     |   | (8,022 | ) |
|                                                                                        |   |        |       |   |     |   |   |   |
| Investment in Local Limited Partnership                                                     |   | $           | -          |   |     | $      | - |   |

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| 2. | New Accounting Principles |
|----|---------------------------|

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| ·   | On November 29, 2007, QH4 and its general partners were sued in Superior Court for the County of Los Angeles, California by a Limited Partner named Danford Baker and companies named Everest Housing Investors 2, LP and Everest Management, LLC with which Mr. Baker is affiliated (collectively, “Everest”).  Everest dismissed this lawsuit without prejudice on April 17, 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On or about, May 6, 2008, the same Everest parties referenced above in the 1st California lawsuit filed a nearly identical Complaint against QH4 and its general partners in the same Superior Court for the County of Los Angeles, California.  Everest dismissed this 2nd California lawsuit without prejudice on November 11, 2008. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 22, 2008, QH4 and its general partners were sued in the District Court of Johnson County, Kansas by a Limited Partner named McDowell Investments, L.P. (“McDowell”). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On January 29, 2008, QH4 and its general partners filed suit against McDowell in the Superior Court for Suffolk County, Massachusetts. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | On April 22, 2008, QH4 and its general partners filed suit in the Superior Court for Suffolk County, Massachusetts against the following defendants:  Everest Housing Investors 2, L.P.; Everest Management LLC; Everest Properties, Inc.; Everest Properties, LLC; McDowell Investments, L.P.; MGM Holdings, LLC; Park G.P., Inc., Bond Purchase, L.L.C.; Anise L.L.C.; Paco Development, L.L.C.; Maxus Realty Trust, Inc.; David L. Johnson; W. Robert Kohorst; Danford M. Baker; Monte G. McDowell; and Kevan D. Acord. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (a)   | Exhibits |
|-----------------|----------|

| 31.1   | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   |    31.2 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   |    32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   |    32.2 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Reports on Form 8-K - No reports on Form 8-K were filed during the quarter ended December 31, 2010 |
|--------|-----|----------------------------------------------------------------------------------------------------|

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