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                                                                    EXHIBIT 99.4


                              ASHTON WAY APARTMENTS

                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          YEAR ENDED DECEMBER 31, 1997

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                          Independent Auditors' Report


To the Board of Trustees
Transcontinental Realty Investors, Inc.

We have audited the accompanying statement of revenues and direct operating
expenses of Ashton Way Apartments for the year ended December 31, 1997. This
statement of revenues and direct operating expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating expenses based on our audit.

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

The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of Transcontinental Realty Investors, Inc.) and, as
described in Note 1, is not intended to be a complete presentation of the
results of operations.

In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of Ashton Way Apartments for the year ended December 31,
1997, in conformity with generally accepted accounting principles.



FARMER, FUQUA, HUNT & MUNSELLE, P.C.

Dallas, Texas
June 26, 1998

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                              ASHTON WAY APARTMENTS
                              STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                          Year Ended December 31, 1997


<TABLE>
<S>                                                                   <C>       
REVENUES
     Net rental revenues                                              $  503,309
     Other revenues                                                       44,945
                                                                      ----------

     Total revenues                                                      548,254

DIRECT OPERATING EXPENSES
     Repairs and maintenance                                             172,418
     Salaries and benefits                                               161,148
     Utilities                                                           118,910
     Property taxes                                                       16,085
     Insurance                                                            10,972
                                                                      ----------

     Total direct operating expenses                                     479,533
                                                                      ----------

REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES                       $   68,721
                                                                      ==========
</TABLE>




         The accompanying notes are an integral part of this statement.

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                              ASHTON WAY APARTMENTS
                         NOTES TO STATEMENT OF REVENUES
                          AND DIRECT OPERATING EXPENSES
                                December 31, 1997


NOTE 1:   ORGANIZATION AND BASIS OF PRESENTATION

          Ashton Way Apartments is a 178-unit apartment complex located in
          Midland, Texas. During 1997, the property was owned by Mutual Life
          Insurance Company of New York.

          The accompanying financial statement does not include a provision for
          depreciation and amortization, bad debt expense, interest expense, or
          income taxes. Accordingly, this statement is not intended to be a
          complete presentation of the results of operations.

NOTE 2:   ACCOUNTING 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 revenues and
          expenses during the reporting period. Actual results could differ from
          those estimates.

NOTE 3:   OTHER REVENUES

          Other revenues consist of the following:

<TABLE>
<S>                                                                    <C>      
          Forfeited deposits                                           $  19,106
          Miscellaneous income                                             8,224
          Late fees                                                        8,045
          Laundry income                                                   4,905
          Application fees                                                 3,620
          Vending income                                                   1,045
                                                                       ---------
                                                                       $  44,945
                                                                       =========
</TABLE>

NOTE 4:   SUBSEQUENT EVENT

          The property was sold to Transcontinental Realty Investors, Inc., a
          Nevada corporation, on April 30, 1998.