WNC HOUSING TAX CREDIT FUND IV L P SERIES 1 - 10-K Annual Report

Back to GetFilings.com

FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended March 31, 2001

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 0-20057

WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1

California 33-0391979
State or other jurisdiction of (I.R.S. Employer

incorporation or organization Identification No.)

3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626

(714) 662-5565

Securities registered pursuant to Section
12(b) of the Act:

NONE

Securities registered pursuant to section
12(g) of the Act:

UNITS OF LIMITED PARTNERSHIP INTEREST

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
- ---- -------

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 or any amendment to this
Form 10-K. |X|

1

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.

INAPPLICABLE

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).

NONE

2

PART I.

Item 1. Business

Organization

WNC Housing Tax Credit Fund IV, L.P., Series 1 (the "Partnership") is a
California Limited Partnership formed under the laws of the State of California
on May 4, 1993. The Partnership was formed to acquire limited partnership
interests in limited partnerships or limited liability companies ("Local Limited
Partnerships") which own multifamily housing complexes that are eligible for
low-income housing federal and, in certain cases, California income tax credits
("Low Income Housing Credits").

The general partner of the Partnership is WNC Tax Credit Partners IV, L.P. ("TCP
IV"). The general partner of TCP IV is WNC & Associates, Inc. ("Associates").
Wilfred N. Cooper, Sr., through the Cooper Revocable Trust, owns 66.8% of the
outstanding stock of Associates. John B. Lester, Jr. was the original limited
partner of the Partnership and owns, through the Lester Family Trust, 28.6% of
the outstanding stock of Associates. Wilfred N. Cooper, Jr., President of
Associates, owns 2.1% of the outstanding stock of Associates. The business of
the Partnership is conducted primarily through Associates as neither TCP IV nor
the Partnership have employees of their own.

Pursuant to a registration statement filed with the Securities and Exchange
Commission, on October 20, 1993, the Partnership commenced a public offering of
10,000 Units of Limited Partnership Interest ("Units"), at a price of $1,000 per
Unit. The Partnership's offering terminated on July 19, 1994. A total of 10,000
Limited Partnership Interests representing $10,000,000 had been sold. Holders of
Limited Partnership Interests are referred to herein as "Limited Partners."

Description of Business

The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.

In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended by Supplements thereto (the "Partnership Agreement"),
will be able to be accomplished promptly at the end of the 15-year period. If a
Local Limited Partnership is unable to sell its Housing Complex, it is
anticipated that the local general partner ("Local General Partner") will either
continue to operate such Housing Complex or take such other actions as the Local
General Partner believes to be in the best interest of the Local Limited
Partnership. Notwithstanding the preceding, circumstances beyond the control of
the General Partner or the Local General Partners may occur during the
Compliance Period, which would require the Partnership to approve the
disposition of a Housing Complex prior to the end thereof, possibly resulting in
recapture of Low Income Housing Credits.

3

As of March 31, 2001, the Partnership had invested in twenty-one Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit. Certain Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.

The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not make its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships, and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's operations will depend on these
and other factors beyond the control of the General Partner and the Local
General Partners, there can be no assurance that the anticipated Low Income
Housing Credits will be available to Limited Partners.

In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.

As a limited partner or non-managing member, the Partnership's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of each Local Limited Partnership retain responsibility
for developing, constructing, maintaining, operating and managing the Housing
Complexes.

Item 2. Properties

Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the twenty-one Housing Complexes as the dates and for the
periods indicated:

4

------------------------------ ----------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ---------------------------------------------------------------------------------------------- ---------------------------------

Alpine Manor, L.P. Alpine, 1600 Capital ,
Texas Inc.Company $ 195,000 $ 195,000 36 92% $ 394,000 $ 913,000

Baycity Village Baytown, Green Companies
Apartments, Texas Development
Limited Partnership Group, Inc. 301,000 301,000 62 94% 629,000 1,467,000

Beckwood Manor Seven Marianna, Phillips Development
Limited Partnership Arkansas Corporation 307,000 307,000 42 95% 636,000 1,387,000

Briscoe Manor Limited Galena, McKnight &
Partnership Maryland Decoster,Inc. 308,000 308,000 31 100% 648,000 1,485,000

Evergreen Four Limited Maynard, Phillips Development
Partnership Arkansas Corporation 195,000 195,000 24 88% 402,000 868,000

Fawn Haven Limited Manchester, Georg E. Maharg and
Partnership Ohio Maharg Realty, Inc. 167,000 167,000 28 93% 376,000 855,000

Fort Stockton Ft.Stockton, 1600 Capital
Manor, L.P. Texas Company,Inc. 224,000 224,000 36 100% 453,000 1,051,000

Hidden Valley Limited Gallup, New Alan Deke
Partnership Mexico Noftsker 412,000 412,000 40 93% 801,000 1,482,000

HOI Limited Partnership Lenoir, North Housing
Of Lenoir Carolina Opportunities,Inc. 198,000 198,000 34 100% 400,000 551,000

Indian Creek Limited Bucyrus, Georg E. Maharg
Partnership Ohio 306,000 306,000 48 92% 637,000 1,469,000

Laurel Creek San Luis San Luis Obispo
Apartments Obispo, Non-Profit
California Housing Corp. 1,030,000 1,030,000 24 100% 2,103,000 636,000

Madisonville Manor Madisonville, Jean
Senior Citizens Texas Johnson 174,000 174,000 32 94% 375,000 900,000
Complex, Ltd.

5

------------------------------ ---------------------------------
As of March 31, 2001 December 31, 2000
------------------------------ ---------------------------------
Partnership Name Location General Partner Partnership's Amount of Encumbrances
Name Total Investment Investment Estimated Low of Local
in Local Limited Paid to Number Income Housing Limited
Partnerships Date of Units Occupancy Credits Partnerships
- ------------------------------------------------------------------------------------------------ ---------------------------------

Mt. Graham Safford, Rural Housing, .
Housing, Ltd. Arizona Inc 410,000 410,000 40 95% 788,000 1,406,000

Northside Plaza Angleton, Jean
Apartments, Ltd. Texas Johnson 282,000 282,000 48 96% 607,000 1,359,000

Pampa Manor, L.P. Pampa, 1600 Capital
Texas Company, Inc. 180,000 180,000 32 88% 363,000 844,000
Community Housing

Regency Court Monrovia, Assistance Program,
Partners California Inc.,a California
Nonprofit
Corporation 1,692,000 1,690,000 115 99% 3,293,000 5,156,000

Sandpiper Square, a Aulander, I. Norwood
Limited Partnership North Carolina Stone 219,000 219,000 24 100% 433,000 946,000

Seneca Falls East Seneca David R. Bacon
Apartments Falls, New and Frank
Company II, L.P. York Salvatore 270,000 270,000 32 97% 360,000 890,000

Vernon Manor, Vernon, 1600 Capital
L.P. Texas Company,Inc. 161,000 161,000 28 86% 325,000 751,000

Waterford Place, Calhoun Thomas E. Connelly, Jr.,
a Limited Falls, TEC Rental Properties
Partnership South Inc., Warren H.
Carolina Abernathy, II and Solid
South, Inc. 272,000 272,000 32 88% 549,000 1,179,000

Yantis Housing, Ltd. Yantis, Charles Cannon Jr.
Texas 145,000 145,000 24 88% 287,000 627,000
----------- ----------- ----- ---- ----------- ----------

$ 7,448,000 $ 7,446,000 812 94% $ 14,859,000 $ 26,222,000
============ ============ ==== === =========== ===========

6

---------------------------------------------------------------------------
For the year ended December 31, 2000
---------------------------------------------------------------------------
Low Income Housing
Credits Allocated to
Partnership Name Rental Income Net Income (loss) Partnership
- --------------------------------------------------------------------------------------------------------------------

Alpine Manor, L.P. $ 103,000 $ (23,000) 99%

Baycity Village Apartments, Limited
Partnership 259,000 (55,000) 99%

Beckwood Manor Seven Limited Partnership 151,000 (59,000) 95%

Briscoe Manor Limited Partnership 165,000 (96,000) 99%

Evergreen Four Limited Partnership 83,000 (36,000) 95%

Fawn Haven Limited Partnership 81,000 (22,000) 99%

Fort Stockton Manor, L.P. 116,000 (22,000) 99%

Hidden Valley Limited Partnership 156,000 (30,000) 99%

HOI Limited Partnership Of Lenoir 131,000 (34,000) 99%

Indian Creek Limited Partnership 139,000 (40,000) 99%

Laurel Creek Apartments 169,000 (35,000) 99%

Madisonville Manor Senior Citizens
Complex, Ltd. 111,000 1,000 99%

Mt. Graham Housing, Ltd. 144,000 (67,000) 99%

Northside Plaza Apartments, Ltd. 152,000 (17,000) 99%

Pampa Manor, L.P. 98,000 (34,000) 99%

Regency Court Partners 657,000 (62,000) 99%

Sandpiper Square, a Limited Partnership 99,000 (15,000) 99%

Seneca Falls East Apartments Company
II, L.P. 143,000 (22,000) 99.98%

Vernon Manor, L.P. 78,000 (32,000) 99%

Waterford Place, a Limited Partnership 115,000 (55,000) 99%

Yantis Housing, Ltd. 71,000 (29,000) 99%
----------- ------------

$ 3,221,000 $ (784,000)
=========== ============

7

Item 3. Legal Proceedings

NONE.

Item 4. Submission of Matters to a Vote of Security Holders

NONE.

PART II.
- --------
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Item 5a.

(a) The Units are not traded on a public exchange but were sold through a
public offering. It is not anticipated that any public market will develop
for the purchase and sale of any Unit and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.

(b) At March 31, 2001, there were 731 Limited Partners.

(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships.

(d) No unregistered securities were sold by the Partnership during the year
ended March 31, 2001.

Item 5b.

NOT APPLICABLE

Item 6. Selected Financial Data

Selected balance sheet information for the Partnership is as follows:

March 31 December 31
-------------------------------------- ------------------------------------

2001 2000 1999 1998 1997 1996
----------- ----------- ----------- ----------- ----------- -----------

ASSETS
Cash and cash equivalents $ 312,214 $ 310,214 $ 341,350 $ 389,536 $ 778,448 $ 997,025

Investments in limited
partnerships, net 2,823,846 3,538,899 4,298,485 4,495,621 4,976,247 5,771,116
Due from affiliate - 18,407 - - - 9,020
Other assets - - - - 3,000 6,986
----------- ----------- ----------- ----------- ----------- -----------

$ 3,136,060 $ 3,867,520 $ 4,639,835 $ 4,885,157 $ 5,757,695 $ 6,784,147
=========== =========== =========== =========== =========== ===========
LIABILITIES

Payables to limited $
partnerships 2,303 $ 2,303 $ 25,301 $ 25,301 $ 84,303 $ 256,610
Accrued fees and expenses
due to general partner
and affiliates 115,667 104,593 80,940 106,500 65,235 91,982

PARTNERS' EQUITY 3,018,090 3,760,624 4,533,594 4,753,356 5,608,157 6,435,555
----------- ----------- ----------- ----------- ----------- -----------

$ 3,136,060 $ 3,867,520 $ 4,639,835 $ 4,885,157 $ 5,757,695 $ 6,784,147
=========== =========== =========== =========== =========== ===========

8

Selected results of operations, cash flows and other information for the
Partnership are as follows:

For the Years Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
------------------------ ------------------------ --------------------------------------

2001 2000 1999 1998 1998 1997 1996
----------- ----------- ----------- ---------- ---------- ---------- -----------
(Unaudited

Loss from operations $ (76,146) $ (79,134) $ (33,750) $ (17,496) $ (126,723) $ (62,968) $ (30,845)
Equity in losses of
limited
partnerships (666,388) (693,836) (186,012) (185,500) (728,078) (764,430) (1,023,557)
----------- ----------- ----------- ------------ ------------ ----------- ------------

Net loss $ (742,534) $ (772,970) $ (219,762) $ (202,996) $ (854,801) $ (827,398) $ (1,054,402)
=========== =========== =========== ============= ============= ========== ============
Net loss allocated to:
General Partner $ (7,425) $ (7,730) $ (2,198) $ (2,030) $ (8,548) $ (8,274) $ (10,544)
=========== ============ =========== ============= ============ =========== ============
Limited Partners $ (735,109) $ (765,240) $ (217,564) $ (200,966) $ (846,253) $ (819,124) $ (1,043,858)
=========== ============ =========== ============ ============ =========== ============
Net loss per limited
partner unit $ (73.51) $ (76.52) $ (21.76) $ (20.10) $ (84.63) $ (81.91) $ (104.39)
=========== ============ ============ ============= ============ =========== ============
Outstanding weighted
limited partner
units 10,000 10,000 10,000 10,000 10,000 10,000 10,000
=========== ============ =========== ============ ============ =========== ============

For the Years Ended For the Three Months For the Years Ended
March 31 Ended March 31 December 31
------------------------- ------------------------ ------------------------------------
2001 2000 1999 1998 1998 1997 1996
----------- ----------- ----------- ---------- ---------- ---------- -----------

Net cash provided by
(used in):
Operating activities $ (18,169) $ (45,392) $ (52,186) $ (5,082) $ (54,089) $ (51,546) $ 22,420
Investing activities 20,169 14,256 4,000 5,225 (334,823) (170,284) (437,806)
Financing activities - - - - - 3,253 1,544
----------- ----------- ----------- ---------- ---------- ---------- -----------

Net change in cash
and
cash equivalents 2,000 (31,136) (48,186) 143 (388,912) (218,577) (413,842)

Cash and cash
equivalents,
beginning of period 310,214 341,350 389,536 778,448 778,448 997,025 1,410,867
----------- ----------- ----------- ---------- ---------- ---------- -----------

Cash and cash
equivalents,
end of period $ 312,214 $ 310,214 $ 341,350 $ 778,591 $ 389,536 $ 778,448 $ 997,025
=========== =========== =========== ========== ========== ========== ===========

Low Income Housing Credit per Unit was as follows for the years ended December 31:
2000 1999 1998 1997 1996
---------------- --------------- --------------- ---------------- ----------------

Federal $ 149 $ 146 $ 142 $ 143 $ 136
State - - - - -
-------- --------- --------- --------- ----------
Total $ 149 $ 146 $ 142 $ 143 $ 136
======== ========= ========= ========= ==========

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Forward Looking Statements

With the exception of the discussion regarding historical information,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other discussions elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors which may involve known and unknown risks that
could cause actual results of operations to differ materially from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

9

Risks and uncertainties inherent in forward looking statements include, but are
not limited to, our future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical results are not necessarily indicative of the operating results for
any future period.

Subsequent written and oral forward looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
cautionary statements in this Form 10-K and in other reports we filed with the
Securities and Exchange Commission. The following discussion should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto
included elsewhere in this filing.

Financial Condition

The Partnership's assets at March 31, 2001 consisted primarily of $312,000 in
cash and aggregate investments in the twenty-one Local Limited Partnerships of
$2,824,000. Liabilities at March 31, 2001 were $118,000, of which $116,000 was
accrued annual management fees, and $2,000 was payables to limited partnerships.

Results of Operations

Year Ended March 31, 2001 Compared to Year Ended March 31, 2000 The
Partnership's net loss for the year ended March 31, 2001 was $(743,000),
reflecting a decrease of $30,000 from the net loss experienced for the year
ended March 31, 2000. The decline in net loss is primarily due to equity in
losses of limited partnerships which declined by $28,000 to $(666,000) for the
year ended March 31, 2001 from $(694,000) for the year ended March 31, 2000.
Equity in losses of limited partnerships increased due to the reduction of the
respective net acquisition fee component of investments in Local Limited
Partnerships to zero for those Local Limited Partnerships which would otherwise
be below a zero balance. This decrease was a result of the Partnership not
recognizing certain losses of the Local Limited Partnerships. The investments in
such Local Limited Partnerships had reached $0 at March 31, 2000. Since the
Partnership's liability with respect to its investments is limited, losses in
excess of investments are not recognized.

Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. The
Partnership's net loss for the year ended March 31, 2000 was $(773,000),
reflecting a decrease of $82,000 from the net loss experienced for the year
ended December 31, 1998. The decline in net loss is primarily due to equity in
losses from limited partnerships which declined by $34,000 to $(694,000) for the
year ended March 31, 2000 from $(728,000) for the year ended December 31, 1998.
This decrease was a result of the Partnership not recognizing certain losses of
the Local Limited Partnerships. The investments in such Local Limited
Partnerships had reached $0 at March 31, 2000. Since the Partnership's liability
with respect to its investments is limited, losses in excess of investment are
not recognized. In addition, the Partnership experienced a decrease in operating
expenses paid to third parties of $59,000 partially offset by a decrease in
interest income of $12,000.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The Partnership's net loss for the three months ended March 31, 1999 was
$(220,000), reflecting an increase of $17,000 from the net loss experienced for
the three months ended March 31, 1998. The increase in net loss is due to loss
from operations which increased by $17,000 to $(34,000) for the three month
period ended March 31, 1999 from $(17,000) for the three month period ended
March 31, 1998 due to an increase in other operating expenses of $15,000 and a
decrease in interest income of $2,000.

10

Cash Flows

Year Ended March 31, 2001 Compared to Year Ended March 31, 2000. Net cash
provided during the year ended March 31, 2001 was $2,000, compared to net cash
used for the year ended March 31, 2000 of $(31,000). The change was primarily
due to the collection of $18,000 of amounts due from an affiliate and due to a
$13,000 decrease in amounts reimbursed to the General Partner or affiliates.
This was offset by a $17,000 decrease of cash used for investments in limited
partnerships and by a $11,000 decrease in distributions received from Local
Limited Partnerships.

Year Ended March 31, 2000 Compared to Year Ended December 31, 1998. Net cash
used during the year ended March 31, 2000 was $(31,000), compared to net cash
used for the year ended December 31, 1998 of $(389,000). The change was
primarily due to a decrease in cash used for investments in limited partnerships
and capitalized acquisition fees and costs of $324,000, an increase in
distributions received from Local Limited Partnerships of $25,000 and a decrease
in cash used in operating activities, resulting primarily from a decrease in
interest income received and a decrease in cash paid to third parties for
operating expenses.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used during the three months ended March 31, 1999 was $(48,000)
compared to a net increase in cash for the three months ended March 31, 1998 of
$100. The change was due to an increase in cash paid to the General Partner of
affiliates of $32,000 and an increase in cash paid to third parties for
operating expenses of $15,000.

The Partnership expects its future cash flows, together with its net available
assets at March 31, 2001, to be sufficient to meet all currently foreseeable
future cash requirements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8. Financial Statements and Supplementary Data

11

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Partners
WNC Housing Tax Credit Fund IV, L.P., Series 1

We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
IV, L.P., Series 1 (a California Limited Partnership) (the "Partnership") as of
March 31, 2001 and 2000, and the related statements of operations, partners'
equity (deficit) and cash flows for the years ended March 31, 2001 and 2000, the
three months ended March 31, 1999 and the year ended December 31, 1998. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. A significant portion of the financial statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors whose reports have been furnished to us. As discussed in Note 2 to the
financial statements, the Partnership accounts for its investments in limited
partnerships using the equity method. The portion of the Partnership's
investment in limited partnerships audited by other auditors represented 69% and
63% of the total assets of the Partnership at March 31, 2001 and 2000,
respectively. Our opinion, insofar as it relates to the amounts included in the
financial statements for the limited partnerships which were audited by others,
is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 and the reports of
the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund IV, L.P., Series 1 (a
California Limited Partnership) as of March 31, 2001 and 2000, and the results
of its operations and its cash flows for the years ended March 31, 2001 and
2000, the three months ended March 31, 1999 and the year ended December 31,
1998, in conformity with accounting principles generally accepted in the United
States of America.

/s/ BDO SEIDMAN, LLP
Orange County, California BDO SEIDMAN, LLP
June 26, 2001

12

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

BALANCE SHEETS

March 31
-------------------------------
-------------------------------

2001 2000
-------------- --------------

ASSETS

Cash and cash equivalents $ 312,214 $ 310,214
Investments in limited partnerships (Notes 2 and 3) 2,823,846 3,538,899
Other assets - 18,407
-------------- --------------
$ 3,136,060 $ 3,867,520
============== ==============
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)
Liabilities:
Payables to limited partnerships (Note 4) $ 2,303 $ 2,303
Accrued fees and advances due to General
Partner and affiliate (Note 3) 115,667 104,593
-------------- --------------
Total liabilities 117,970 106,896
-------------- --------------

Commitments and contingencies

Partners' equity (deficit):
General partner (69,720) (62,295)
Limited partners (10,000 units authorized,
10,000 units issued and outstanding) 3,087,810 3,822,919
-------------- --------------
Total partners' equity 3,018,090 3,760,624
-------------- --------------
$ 3,136,060 $ 3,867,520
============== ==============

See accompanying notes to financial statements
13

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

STATEMENTS OF OPERATIONS

For the
Three
Months For the Year
For the Years Ended Ended Ended
March 31 March 31 December 31
--------------------------- ------------ --------------
2001 2000 1999 1998
------------ ------------- ------------ -------------

Interest income $ 18,304 $ 15,541 $ 4,084 $ 27,708
Other income 4,200 - - -
------------ ------------- ------------ -------------

Total income 22,504 15,541 4,084 27,708

Operating expenses:
Amortization (Note 2) 28,496 28,496 7,124 31,369
Asset management fees (Note 3) 42,000 42,105 10,000 40,000
Other 28,154 24,074 20,710 83,062
------------ ------------- ------------ -------------

Total operating expenses 98,650 94,675 37,834 154,431
------------ ------------- ------------ -------------
Loss from operations (76,146) (79,134) (33,750) (126,723)
Equity in losses of limited
partnerships (Note 2) (666,388) (693,836) (186,012) (728,078)
------------ ------------- ------------ -------------
Net loss $ (742,534) $ (772,970) $ (219,762)$ (854,801)
============ ============= ============ =============
Net loss allocated to
General partner $ (7,425) $ (7,730) $ (2,198)$ (8,548)
============ ============= ============ =============
Limited partners $ (735,109) $ (765,240) $ (217,564)$ (846,253)
============ ============= ============ =============
Net loss per limited partner unit $ (73.51) $ (76.52) $ (21.76)$ (84.63)
============ ============= ============ =============
Outstanding weighted limited
partner units 10,000 10,000 10,000 10,000
============ ============= ============ =============
See accompanying notes to financial statements

14

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

General Limited
Partner Partners Total
--------------- --------------- ---------------

Partners' equity (deficit) at January 1, 1998 $ (43,819) $ 5,651,976 $ 5,608,157

Net loss (8,548) (846,253) (854,801)
--------------- --------------- ---------------

Partners' equity (deficit) at December 31, 1998 (52,367) 4,805,723 4,753,356

Net loss (2,198) (217,564) (219,762)
--------------- --------------- ---------------

Partners' equity (deficit) at March 31, 1999 (54,565) 4,588,159 4,533,594

Net loss (7,730) (765,240) (772,970)
--------------- --------------- ---------------

Partners' equity (deficit) at March 31, 2000 (62,295) 3,822,919 3,760,624

Net loss (7,425) (735,109) (742,534)
--------------- --------------- ---------------

Partners' equity (deficit) at March 31, 2001 $ (69,720) $ 3,087,810 $ 3,018,090
=============== =============== ===============
See accompanying notes to financial statements

15

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

STATEMENTS OF CASH FLOWS

For the
Three
Months For the Year
For the Years Ended Ended Ended
March 31 March 31 December 31
--------------------------- ------------ --------------
2001 2000 1999 1998
------------ ------------- -------------- ----------------

Cash flows from operating activities:
Net loss $ (742,534) $ (772,970) $ (219,762) $ (854,801)
Adjustments to reconcile net loss to
net cash used in operating activities:
Amortization 28,496 28,496 7,124 31,369
Equity in losses of limited
partnerships 666,388 693,836 186,012 728,078
Change in accrued fees and
expenses due to general partner
and affiliates 11,074 23,653 (25,560 ) 41,265
Change in other assets 18,407 (18,407 ) - -
----------- ----------- -------------- ----------------

Net cash used in operating activities (18,169) (45,392) (52,186) (54,089)
----------- ----------- -------------- ----------------
Cash flows from investing activities:
Investments in limited partnerships,
net 28 (17,134) - (335,059)
Capitalized acquisition costs and
fees - - - (5,789)
Distributions from limited
partnerships 20,141 31,390 4,000 6,025
----------- ----------- -------------- ----------------
Net cash provided by (used in)
investing activities 20,169 14,256 4,000 (334,823)
----------- ----------- -------------- ----------------
Net increase (decrease) in cash and cash equivalents 2,000 (31,136) (48,186) (388,912)

Cash and cash equivalents, beginning
of period 310,214 341,350 389,536 778,448
----------- ----------- -------------- ----------------
Cash and cash equivalents, end of
period $ 312,214 $ 310,214 $ 341,350 $ 389,536
=========== =========== ============== ================
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Taxes paid $ 800 $ 800 $ - $ 800
============ ============ ============== ================

16

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Organization
- ------------

WNC Housing Tax Credit Fund IV, L.P., Series 1, a California Limited Partnership
(the "Partnership"), was formed on May 4, 1993 under the laws of the state of
California, and commenced operations on October 20, 1993. The Partnership was
formed to invest primarily in other limited partnerships (the "Local Limited
Partnerships") which own and operate multi-family housing complexes (the
"Housing Complex") that are eligible for low income housing credits. The local
general partners (the "Local General Partners") of each Local Limited
Partnership retain responsibility for maintaining, operating and managing the
Housing Complex.

The general partner is WNC Tax Credit Partners, IV, L.P. (the "General
Partner"), a California limited partnership. WNC & Associates, Inc. ("WNC") is
the general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B.
Lester, Jr. was the original limited partner of the Partnership and owns,
through the Lester Family Trust, 28.6% of the outstanding stock of WNC. Wilfred
N. Cooper, Jr., President of WNC, owns 2.1% of the outstanding stock of WNC.

The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.

The Partnership Agreement authorized the sale of up to 10,000 units at $1,000
per Unit ("Units"). The offering of Units concluded in July 1994 at which time
10,000 Units in the amount of $10,000,000 had been accepted. The General Partner
has a 1% interest in operating profits and losses, taxable income and losses,
cash available for distribution from the Partnership and tax credits. The
limited partners will be allocated the remaining 99% of these items in
proportion to their respective investments.

After the limited partners have received proceeds from sale or refinancing equal
to their capital contributions and their return on investment (as defined in the
Partnership Agreement) and the General Partner has received proceeds equal to
its capital contribution and subordinated disposition fee (as described in Note
3) from the remainder, any additional sale or refinancing proceeds will be
distributed 90% to the limited partners (in proportion to their respective
investments) and 10% to the General Partner.

Change in Reporting Year End
- ----------------------------

In 1999, the Partnership elected to change its year end for financial reporting
purposes from December 31 to March 31. All financial information reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial information relating to
the Local Limited Partnerships included in Note 2.

17

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
- --------------------------------------------------------------
Risks and Uncertainties
- -----------------------

The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low-income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, which could adversely impact vacancy levels, rental
payment defaults and operating expenses. This, in turn, could substantially
increase the risk of operating losses for the Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters, which might be
uninsurable. Because the Partnership's operations will depend on these and other
factors beyond the control of the General Partner and the Local General
Partners, there can be no assurance that the anticipated low income housing
credits will be available to Limited Partners.

In addition, Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.

Method of Accounting for Investments in Limited Partnerships
- ------------------------------------------------------------

The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Note 2).

Losses from limited partnerships for the year ended December 31, 1998 have been
recorded by the Partnership based on reported results provided by the Local
Limited Partnerships. Losses from limited partnerships for the three months
ended March 31, 1999 have been estimated by management of the Partnership.
Losses from Local Limited Partnerships for the years ended March 31, 2001 and
2000 have been recorded by the Partnership based on nine months of reported
results provided by the Local Limited Partnerships and on three months of
results estimated by management of the Partnership. Losses from limited
partnerships allocated to the Partnership will not be recognized to the extent
that the investment balance would be adjusted below zero.

Offering Expenses
- -----------------

Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of limited partners' capital and amounted to $1,356,705 at the end
of all periods presented.

18

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 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
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.

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

The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. There
were no cash equivalents as of March 31, 2001 and 2000.

Concentration of Credit Risk
- ----------------------------

At March 31, 2001, the Partnership maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.

Net Loss Per Limited Partner Unit
- ---------------------------------

Net loss per limited partner unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net loss per unit is not required.

Reporting Comprehensive Income
- ------------------------------

In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of Partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the periods
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
- --------------------------------------------

As of the periods presented, the Partnership had acquired limited partnership
interests in twenty-one Local Limited Partnerships, each of which owns one
housing complex consisting of an aggregate of 812 apartment units. As of
December 31, 1998, construction on all multifamily complexes was complete. The
respective general partners of the Local Limited Partnerships manage the day to
day operations of the entities. Significant Local Limited Partnership business
decisions require approval from the Partnership. The Partnership, as a limited
partner, is generally entitled to 99%, as specified in the Local Limited
Partnership agreements, of the operating profits and losses, taxable income and
losses and tax credits of the Local Limited Partnerships.

19

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1
(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------

The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at March 31, 2001 and 2000, are approximately $692,000 and
$618,000, respectively, greater than the Partnership's equity at the preceding
December 31 as shown in the Local Limited Partnerships' combined financial
statements presented below. This difference is primarily due to unrecorded
losses, as discussed below, acquisition, selection and other costs related to
the acquisition of the investments which have been capitalized in the
Partnership's investment account and to capital contributions payable to the
limited partnerships which were netted against partner capital in the Local
Limited Partnership's financial statements. The Partnership's investment is also
lower than the Partnership's equity as shown in the Local Limited Partnership's
combined financial statements due to the estimated losses recorded by the
Partnership for the three month period ended March 31.

Equity in losses of Local Limited Partnerships is recognized in the financial
statements until the related investment account is reduced to a zero balance.
Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.

Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.

At March 31, 2001 and 2000, the investment accounts in certain Local Limited
Partnerships have reached a zero balance. Consequently, a portion of the
Partnership's estimate of its share of losses for the years ended March 31, 2001
and 2000 and the three month period ended March 31, 1999 amounting to
approximately $97,000, $75,000 and $16,000, respectively, have not been
recognized. The Partnership's share of losses during the year ended December 31,
1998 amounting to approximately $59,000 has not been recognized. As of March 31,
2001, the aggregate share of net losses not recognized by the Partnership
amounted to $247,000.

Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:

For the Years Ended For the Three For the Year
Months Ended Ended
March 31 March 31 December 31
---------------------------------- --------------- --------------

2001 2000 1999 1998
--------------- ----------------- --------------- --------------

Investments per balance sheet, beginning
of period $ 3,538,899 $ 4,298,485 $ 4,495,621 $ 4,976,247
Capital contributions paid, net (28) (5,864) - 276,057
Distributions received (20,141) (31,390) (4,000) (6,025)
Capitalized acquisition fees and costs - - - 5,789
Equity in losses of limited partnerships (666,388) (693,836) (186,012) (728,078)
Amortization of paid acquisition fees
and costs (28,496) (28,496) (7,124) (28,369)
--------------- ----------------- --------------- --------------

Investments per balance sheet, end
of period $ 2,823,846 $ 3,538,899 $ 4,298,485 $ 4,495,621
=============== ================= =============== ==============

20

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1

(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------

The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted against
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:

COMBINED CONDENSED BALANCE SHEETS

2000 1999
--------------- ---------------

ASSETS

Buildings and improvements, net of accumulated
depreciation of $6,724,000 and $5,600,000 for 2000
and 1999, respectively $ 27,914,000 $ 29,007,000
Land 1,657,000 1,610,000
Due from related parties 16,000 14,000
Other assets 2,090,000 2,051,000
--------------- ---------------

$ 31,677,000 $ 32,682,000
=============== ===============

LIABILITIES

Mortgage and construction loans payable $ 26,222,000 $ 25,512,000
Due to related parties 693,000 844,000
Other liabilities 1,286,000 2,078,000
--------------- ---------------

28,201,000 28,434,000
--------------- ---------------

PARTNERS' CAPITAL

WNC Housing Tax Credits Fund IV, L.P., Series 1 2,132,000 2,921,000
Other partners 1,344,000 1,327,000
--------------- ---------------

3,476,000 4,248,000
--------------- ---------------

$ 31,677,000 $ 32,682,000
=============== ===============

21

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1

(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
- -------------------------------------------------------
COMBINED CONDENSED STATEMENTS OF OPERATIONS

2000 1999 1998
--------------- --------------- ---------------

Revenues $ 3,397,000 $ 3,342,000 $ 3,222,000
--------------- --------------- ---------------

Expenses:
Operating expenses 2,198,000 2,196,000 2,054,000
Interest expense 841,000 905,000 880,000
Depreciation and amortization 1,142,000 1,058,000 1,087,000
--------------- --------------- ---------------

Total expenses 4,181,000 4,159,000 4,021,000
--------------- --------------- ---------------

Net loss $ (784,000) $ (817,000) $ (799,000)
=============== =============== ===============

Net loss allocable to the Partnership $ (772,000) $ (806,000) $ (787,000)
=============== =============== ===============

Net loss recorded by the Partnership $ (666,000) $ (694,000) $ (728,000)
=============== =============== ===============

Certain Local Limited Partnerships have incurred significant operating losses
and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners may be
required to sustain the operations of such Local Limited Partnerships. If
additional capital contributions are not made when they are required, the
Partnership's investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.

The financial statements of one Local Limited Partnership were prepared assuming
the limited partnership will continue as a going concern. The Partnership had a
$441,770, $427,978, $644,019 and $699,602 remaining investment in such Local
Limited Partnership at March 31, 2001, 2000 and 1999, and December 31, 1998,
respectively. The Partnership's original investment in the Local Limited
Partnership approximated $1,691,585. Through December 31, 2000, the Local
Limited Partnership has had recurring losses, working capital deficiencies and
has not been billed for certain property tax expenses due since 1994. The Local
Limited Partnership is seeking abatement or an extended payment plan to pay down
certain of these liabilities; however, if the Local Limited Partnership is
unsuccessful, additional funding may be requested from the Partnership. In the
event the Local Limited Partnership is required to liquidate or sell its
property, the net proceeds could be significantly less than the carrying value
of such property. As of December 31, 2000 and 1999, the carrying value of such
property on the books and records of the Local Limited Partnership totaled
$6,703,761 and $6,849,598. The auditors for this entity have expressed
substantial doubt as to this entity's ability to continue as a going concern as
a result of the property tax issue.

In September 1996, the original general partners of this limited partnership
were removed. The Los Angeles County Housing Development Corporation ("LACHDC")
was named as the sole general partner. In September 1997, Community Housing
Assistance Program, Inc., a California nonprofit corporation replaced LACHDC as
the sole general partner.

22

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1

(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 3 - RELATED PARTY TRANSACTIONS
- -----------------------------------

Under the terms of the Partnership Agreement, the Partnership is obligated to
the General Partner or its affiliates for the following items:

Acquisition fees of up to 8% of the gross proceeds from the sale of
Partnership units as compensation for services rendered in connection with
the acquisition of Local Limited Partnerships. At the end of all periods
presented, the Partnership incurred acquisition fees of $800,000.
Accumulated amortization of these capitalized costs was $243,289 and
$157,298 as of March 31, 2001 and 2000, respectively. Of the accumulated
amortization recorded on the balance sheet at March 31, 2001 $59,327 of the
related expense was reflected as equity in losses of limited partnerships
on the statement of operations during the fourth quarter of the year ended
March 31, 2001 to reduce the respective net acquisition fee component of
investments in local limited partnerships to zero for those Local Limited
Partnerships which would otherwise be below a zero balance.

Reimbursement of costs incurred by the General Partner in connection with
the acquisition of Local Limited Partnerships. These reimbursements have
not exceeded 1.2% of the gross proceeds. At the end of all periods
presented, the Partnership incurred acquisition costs of $54,949, which
have been included in investments in limited partnerships. Accumulated
amortization amounted to $54,949 and $8,861 as of March 31, 2001 and 2000,
respectively. Of the accumulated amortization recorded on the balance sheet
at March 31, 2001, $44,256 of the related expense was reflected as equity
in losses of limited partnerships on the statement of operations during the
fourth quarter of the year ended March 31, 2001 to reduce the respective
net acquisition cost component of investments in local limited partnerships
to zero for those Local Limited Partnerships which would otherwise be below
a zero balance.

An annual asset management fee equal to the greater amount of (i) $2,000
for each apartment complex, or (ii) 0.275% of gross proceeds. In either
case, the fee will be decreased or increased annually based on changes to
the Consumer Price Index. However, in no event will the maximum amount
exceed 0.2% of the invested assets of the Local Limited Partnerships,
including the Partnership's allocable share of the mortgages. Management
fees of $42,000 were incurred during the years ended March 31, 2001 and
2000, $10,000 during the three months ended March 31, 1999, and $40,000 was
incurred for the year ended December 31, 1998 of which $30,000 and $16,310
was paid during the years ended March 31, 2001 and 2000, and $33,690 during
the three months ended March 31, 1999, respectively, and $0 was paid during
1998.

A subordinated disposition fee in an amount equal to 1% of the sales price
of real estate sold. Payment of this fee is subordinated to the limited
partners receiving a preferred return of 16% through December 31, 2003 and
6% thereafter (as defined in the Partnership Agreement) and is payable only
if the General Partner or its affiliates render services in the sales
effort.

An affiliate of the General Partner provides management services for one of
the properties in the limited partnerships. Management fees were earned by
the affiliate in the amount of $53,276 and $50,259 for the years ended
March 31, 2001 and 2000 and $8,625 for the three months ended March 31,
1999, and $38,348 during the year ended December 31, 1998. In May 1999, the
affiliate of the general partner refunded $7,086 and $1,887 of the
management fees related to 1998 and 1997, respectively, in accordance with
the terms of the Partnership's prospectus.

The accrued fees and advances due to General Partner and affiliates consist of
the following:

March 31
-------------------------------------------------

2001 2000 1999
-------------- ------------ ---------------

Reimbursement for expenses paid by the General Partner
or an affiliate $ - $ 926 $ 2,963

Asset management fee payable 115,667 103,667 77,977
-------------- ------------ ---------------

Total $ 115,667 $ 104,593 $ 80,940
============== ============ ===============

23

WNC HOUSING TAX CREDIT FUND IV, L.P., SERIES 1

(A California Limited Partnership)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Years Ended March 31, 2001 and 2000,
For The Three Months Ended March 31, 1999 and
For The Year Ended December 31, 1998

NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS
- -----------------------------------------

Payables to limited partnerships represent amounts which are due at various
times based on conditions specified in the limited partnership agreement. These
contributions are payable in installments and are due upon the limited
partnership achieving certain operating and development benchmarks (generally
within two years of the Partnership's initial investment).

NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
- ----------------------------------------------------

The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000 (in thousands, except for per unit data).

June 30 September 30 December 31 March 31
--------------- --------------- --------------- ---------------

2001

Income $ 5,000 $ 9,000 $ 5,000 $ 3,000

Operating expenses (22,000) (34,000) (20,000) (23,000)

Equity in losses of limited
partnerships (180,000) (180,000) (179,000) (127,000)

Net loss (197,000) (205,000) (194,000) (147,000)

Loss available to limited partners (195,000) (203,000) (193,000) (144,000)

Loss per limited partner unit (20) (20) (19) (14)

2000

Income $ 4,000 $ 4,000 $ 4,000 $ 4,000

Operating expenses (23,000) (27,000) (24,000) (21,000)

Equity in losses of limited
partnerships (196,000) (191,000) (189,000) (118,000)

Net loss (215,000) (214,000) (209,000) (135,000)

Loss available to limited partners (213,000) (212,000) (207,000) (133,000)

Loss per limited partner unit (21) (21) (21) (13)

NOTE 6 - INCOME TAXES
- ---------------------

No provision for income taxes has been recorded in the financial statements as
any liability for income taxes is the obligation of the partners of the
Partnership.

24

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

NOT APPLICABLE

PART III

Item 10. Directors and Executive Officers of the Registrant

The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.

Directors and Executive Officers of WNC & Associates, Inc.

The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves
as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N.
Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.

Wilfred N. Cooper, Sr., age 70, is the founder, Chairman, Chief Executive
Officer, and a Director of WNC & Associates, Inc., a Director of WNC Capital
Corporation, and a general partner in some of the programs previously sponsored
by the Sponsor. Mr. Cooper has been involved in real estate investment and
acquisition activities since 1968. Previously, during 1970 and 1971, he was
founder and principal of Creative Equity Development Corporation, a predecessor
of WNC & Associates, Inc., and of Creative Equity Corporation, a real estate
investment firm. For 12 years prior to that, Mr. Cooper was employed by Rockwell
International Corporation, last serving as its manager of housing and urban
developments where he had responsibility for factory-built housing evaluation
and project management in urban planning and development. Mr. Cooper is a
Director of the National Association of Home Builders (NAHB) and a National
Trustee for NAHB's Political Action Committee, a Director of the National
Housing Conference (NHC) and a member of NHC's Executive Committee and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.

John B. Lester, Jr., age 67, is Vice-Chairman, a Director, a member of the
Acquisition Committee of WNC & Associates, Inc., and a Director of WNC Capital
Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates, Inc., a provider
of engineering and construction services to the oil refinery and petrochemical
industries, which he co-founded in 1973. Mr. Lester graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.

Wilfred N. Cooper, Jr., age 38, is President, Chief Operating Officer, a
Director and a member of the Acquisition Committee of WNC & Associates, Inc. He
is President of, and a registered principal with, WNC Capital Corporation, a
member firm of the NASD, and is a Director of WNC Management, Inc. He has been
involved in investment and acquisition activities with respect to real estate
since he joined the Sponsor in 1988. Prior to this, he served as Government
Affairs Assistant with Honda North America in Washington, D.C. Mr. Cooper is a
member of the Advisory Board for LIHC Monthly Report, a Director of NMHC and an
Alternate Director of NAHB. He graduated from The American University in 1985
with a Bachelor of Arts degree.

David N. Shafer, age 49, is Executive Vice President, a Director, General
Counsel, and a member of the Acquisition Committee of WNC & Associates, Inc.,
and a Director and Secretary of WNC Management, Inc. Mr. Shafer has been
involved in real estate investment and acquisition activities since 1984. Prior
to joining the Sponsor in 1990, he was practicing law with a specialty in real
estate and taxation. Mr. Shafer is a Director and President of the California
Council of Affordable Housing and a member of the State Bar of California. Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts degree, from the New England School of Law in 1983 with a
Juris Doctor degree (cum laude) and from the University of San Diego in 1986
with a Master of Law degree in Taxation.

25

Thomas J. Riha, age 46, became Chief Financial Officer effective January 2001.
Prior to his appointment as Chief Financial Officer he was Vice President -
Asset Management and a member of the Acquisition Committee of WNC & Associates,
Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha
has been involved in acquisition and investment activities with respect to real
estate since 1979. Prior to joining the Sponsor in 1994, Mr. Riha was employed
by Trust Realty Advisor, a real estate acquisition and management company, last
serving as Vice President - Operations. Mr. Riha graduated from the California
State University, Fullerton in 1977 with a Bachelor of Arts degree (cum laude)
in Business Administration with a concentration in Accounting and is a Certified
Public Accountant and a member of the American Institute of Certified Public
Accountants.

Sy P. Garban, age 55, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., a real estate
development and management firm. Mr. Garban is a member of the International
Association of Financial Planners. He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland, age 38, is Vice President - Acquisitions and a member of the
Acquisition Committee of WNC & Associates, Inc. He has been involved in real
estate acquisitions and investments since 1986 and has been employed with WNC &
Associates, Inc. since 1994. Prior to that, he served on the development team of
the Bixby Ranch that constructed apartment units and Class A office space in
California and neighboring states, and as a land acquisition coordinator with
Lincoln Property Company where he identified and analyzed multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.

David Turek, age 46, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.

Kay L. Cooper, age 64, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.

Item 11. Executive Compensation:

The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to TCP IV or
Associates during the current or future years for the following fees:

(a) Annual Asset Management Fee. An annual asset management fee the greater of
(i) $2,000 per multi-family housing complex, or (ii) 0.275% of Gross
Proceeds. The base fee amount will be adjusted annually based on the change
in the Consumer Price Index. However, in no event will the annual asset
management fee exceed 0.2% of Invested Assets. "Invested Assets" means the
sum of the Partnership's investment in Local Limited Partnerships and the
Partnership's allocable share of the amount of the indebtedness related to
the Housing Complexes. Fees of $42,000, $42,000, $10,000 and $40,000 were
incurred during the years ended March 31, 2001 and 2000, the three months
ended March 31, 1999, and the year ended December 31, 1998, respectively.
The Partnership paid the General Partner or its affiliates $30,000,
$16,310, $33,690 and $0 of those fees during the years ended March 31, 2001
and 2000, the three months ended March 31, 1999 and the year ended December
31, 1998, respectively.

(b) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing Complex. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the return on investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low Income Housing
Credits) as a class, on their adjusted capital contributions commencing for
each Limited Partner on the last day of the calendar quarter during which
the Limited Partner's capital contribution is received by the Partnership,
calculated at the following rates: (i) 16% through December 31, 2003, and
(ii) 6% for the balance of the Partnership's term. No disposition fees have
been paid.

26

(c) Operating Expenses. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $26,000, $9,000, $21,000
and $1,000 during the year ended March 31, 2001 and 2000, the three months
ended March 31, 1999, and the year ended December 31, 1998, respectively.

(d) Interest in Partnership. The General Partner receives 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$15,000, $15,000 and $14,000 for the General Partner for the years ended
December 31, 2000, 1999 and 1998, respectively. The General Partner is also
entitled to receive 1% of cash distributions. There were no distributions
of cash to the General Partner during the years ended March 31, 2001 and
2000, the three months ended March 31, 1999 or the year ended December 31,
1998.

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) Security Ownership of Certain Beneficial Owners
----------------------------------------------------

No person is known to the General Partner to own beneficially in excess of 5%
of the outstanding units.

(b) Security Ownership of Management
-------------------------------

Neither the General Partner, its affiliates, nor any of the officers or
directors of the General Partner or its affiliates own directly or
beneficially any Units in the Partnership.

(c) Changes in Control
------------------

The management and control of the General Partner may be changed at any
time in accordance with their respective organizational documents, without
the consent or approval of the Limited Partners. In addition, the
Partnership Agreement provides for the admission of one or more additional
and successor General Partners in certain circumstances.

First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of any
other General Partner or the Limited Partners, (i) substitute in its stead
as General Partner any entity which has, by merger, consolidation or
otherwise, acquired substantially all of its assets, stock or other
evidence of equity interest and continued its business, or (ii) cause to be
admitted to the Partnership an additional General Partner or Partners if it
deems such admission to be necessary or desirable so that the Partnership
will be classified a partnership for Federal income tax purposes. Finally,
a majority-in-interest of the Limited Partners may at any time remove the
General Partner of the Partnership and elect a successor General Partner.

Item 13. Certain Relationships and Related Transactions

The General Partner manages all of the Partnership's affairs. The transactions
with the General Partner are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partner's
interests in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.

27

PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Financial Statements

(a)(1) Financial statements included in Part II hereof:
-----------------------------------------------

Report of Independent Certified Public Accountants Balance Sheets, March
31, 2001 and 2000 Statements of Operations for the years ended March 31,
2001 and 2000, the three months ended March 31, 1999 and the year ended
December 31, 1998 Statements of Partners' Equity for the years ended
March 31, 2001 and 2000, the three months ended March 31, 1999 and the
year ended December 31, 1998 Statements of Cash Flows for the years ended
March 31, 2001 and 2000, the three months ended March 31, 1999 and the
year ended December 31, 1998 Notes to Financial Statements

(a)(2) Financial statement schedule included in Part IV hereof:
-------------------------------------------------------

Report of Independent Certified Public Accountants on Financial Statement
Schedules Schedule III - Real Estate Owned by Local Limited Partnerships

(b) Reports on Form 8-K.
-------------------

1. None

(c) Exhibits.
--------

3.1 Articles of incorporation and by-laws: The registrant is not
incorporated. The Partnership Agreement is included as Exhibit B to the
Prospectus, filed as Exhibit 28.1 to Form 10-K for fiscal year ended
December 31, 1995.

10.1 Second Amended and Restated Agreement of Limited Partnership of Beckwood
Manor Seven Limited Partnership filed as exhibit 10.1 to Form 8-K dated
December 8, 1993 is hereby incorporated herein by reference as exhibit
10.1.

10.2 Amended and Restated Agreement of Limited Partnership of Alpine Manor
filed as exhibit 10.3 to Post-Effective Amendment No 1 dated February 16,
1994 is hereby incorporated herein by reference as exhibit 10.2.

10.3 Second Amended and Restated Agreement of Limited Partnership of Briscoe
Manor, Limited Partnership filed as exhibit 10.4 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.3.

10.4 Amended and Restated Agreement and Certificate of Limited Partnership of
Evergreen Four, Limited Partnership filed as exhibit 10.5 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.4.

10.5 Amended and Restated Agreement and Certificate of Limited Partnership of
Fawn Haven, Limited Partnership filed as exhibit 10.6 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.5.

10.6 Amended and Restated Agreement of Limited Partnership of Fort Stockton,
L. P. filed as exhibit 10.7 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.6.

28

10.7 Amended and Restated Agreement and Certificate of Limited Partnership of
Madison Manor Senior Citizens Complex, Ltd. filed as exhibit 10.8 to
Post-Effective Amendment No 1 dated February 16, 1994 is hereby
incorporated herein by reference as exhibit 10.7.

10.8 Amended and Restated Agreement and Certificate of Limited Partnership of
Mt. Graham Housing, Ltd. filed as exhibit 10.9 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.8.

10.9 Amended and Restated Agreement and Certificate of Limited Partnership of
Northside Plaza Apartments, Ltd. filed as exhibit 10.10 to Post-Effective
Amendment No 1 dated February 16, 1994 is hereby incorporated herein by
reference as exhibit 10.9.

10.10 Amended and Restated Agreement of Limited Partnership of Pampa Manor,
L.P. filed as exhibit 10.11 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.10.

10.11 Amended and Restated Agreement of Limited Partnership of Vernon Manor,
L.P. filed as exhibit 10.12 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.11.

10.12 Amended and Restated Agreement of Limited Partnership of Waterford Place,
A Limited Partnership filed as exhibit 10.13 to Post-Effective Amendment
No 1 dated February 16, 1994 is hereby incorporated herein by reference
as exhibit 10.12.

10.13 Amended and Restated Agreement of Limited Partnership of Yantis Housing,
Ltd filed as exhibit 10.13 to Post-Effective Amendment No 1 dated
February 16, 1994 is hereby incorporated herein by reference as exhibit
10.13.

10.14 Third Amended and Restated Agreement of Limited Partnership and
Certificate of Limited Partnership of Indian Creek Limited Partnership
filed as exhibit 10.16 to Post-Effective Amendment No 2 dated March 11,
1994 is hereby incorporated herein by reference as exhibit 10.14.

10.15 Agreement of Limited Partnership of Laurel Creek Apartments filed as
exhibit 10.1 to Form 8-K dated May 25, 1994 is hereby incorporated herein
by reference as exhibit 10.15.

10.16 Second Amended and Restated Agreement of Limited Partnership of Sandpiper
Square, A Limited Partnership filed as exhibit 10.2 to Form 8-K dated May
25, 1994 is hereby incorporated herein by reference as exhibit 10.16.

10.17 Amended and Restated Agreement of Limited Partnership of Regency Court
Partners filed as exhibit 10.1 to Form 8-K dated June 30, 1994 is hereby
incorporated herein by reference as exhibit 10.17.

10.18 Disposition and Development Agreement By and Between The Community
Development Commission of the County of Los Angeles and Regency Court
Partners (including forum of Ground Lease) filed as exhibit 10.2 to Form
8-K dated June 30, 1994 is hereby incorporated herein by reference as
exhibit 10.18.

10.19 Amended and Restated Agreement of Limited Partnership of Bay City Village
Apartments, Limited Partnership filed as exhibit 10.19 to Post-Effective
Amendment No 4 dated July 14, 1994 is hereby incorporated herein by
reference as exhibit 10.19.

10.20 Second Amended and Restated Agreement of Limited Partnership of Hidden
Valley Limited Partnership filed as exhibit 10.20 to Post-Effective
Amendment No 4 dated July 14, 1994 is hereby incorporated herein by
reference as exhibit 10.20.

10.21 Amended and Restated Agreement of Limited Partnership of HOI Limited
Partnership of Lenoir and Amendments thereto filed as exhibit 10.21 to
Post-Effective Amendment No 4 dated July 14, 1994 is hereby incorporated
herein by reference as exhibit 10.21.

21.1 Financial Statements of Laurel Creek Apartments, for the years ended
December 31, 1999 and 1998 together with Independent Auditors' Report
Thereon; a significant subsidiary of the Partnership.

29

21.2 Financial Statements of Laurel Creek Apartments, for the years ended
December 31, 2000 and 1999 together with Independent Auditors' Report
Thereon; a significant subsidiary of the Partnership.

(d) Financial statement schedules follow, as set forth in subsection (a)(2)
--------------------------------------
hereof.

30

Report of Independent Certified Public Accounts on
Financial Statement Schedules

To the Partners
WNC Housing Tax Credit Fund IV, L.P. Series 1

The audits referred to in our report dated June 26, 2001, relating to the 2001,
2000, 1999 and 1998 financial statements of WNC Housing Tax Credit Fund IV, L.P.
Series 1 (the "Partnership"), which is contained in Item 8 of this Form 10-K,
included the audit of the accompanying financial statement schedules. The
financial statement schedules are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statement schedules based upon our audits.

In our opinion, such financial statement schedules presents fairly, in all
material respects, the financial information set forth therein.

/s/ BDO SEIDMAN, LLP
Orange County, California BDO SEIDMAN, LLP
June 26, 2001

31

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001

------------------------------------------ ----------------------------------------
As of March 31, 2001 As of December 31, 2000
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Alpine Alpine,
Manor, L.P. Texas $ 195,000 $ 195,000 $ 913,000 $ 1,170,000 $ 192,000 $ 978,000

Baycity Village Apartments, Baytown,
Limited Partnership Texas 301,000 301,000 1,467,000 1,829,000 486,000 1,343,000

Beckwood Manor Seven Marianna,
Limited Partnership Arkansas 307,000 307,000 1,387,000 1,790,000 463,000 1,327,000

Briscoe Manor Limited Galena,
Partnership Maryland 308,000 308,000 1,485,000 1,812,000 441,000 1,371,000

Evergreen Four Limited Maynard,
Partnership Arkansas 195,000 195,000 868,000 1,129,000 285,000 844,000

Fawn Haven Manchester,
Limited Partnership Ohio 167,000 167,000 855,000 1,069,000 296,000 773,000

Fort Stockton Ft.Stockton,
Manor, L.P. Texas 224,000 224,000 1,051,000 1,248,000 186,000 1,062,000

Hidden Valley Limited Gallup, New
Partnership Mexico 412,000 412,000 1,482,000 1,979,000 321,000 1,658,000

HOI Limited Partnership Lenoir, North
Of Lenoir Carolina 198,000 198,000 551,000 1,168,000 250,000 918,000

Indian Creek Bucyrus,
Limited Partnership Ohio 306,000 306,000 1,469,000 1,776,000 416,000 1,360,000

San Luis
Laurel Creek Obispo,
Apartments California 1,030,000 1,030,000 636,000 2,165,000 464,000 1,701,000

32

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
------------------------------------------ ----------------------------------------
As of March 31, 2001 As of December 31, 2000
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Madisonville Manor Senior Madisonville,
Citizens Complex, Ltd. Texas 174,000 174,000 900,000 1,150,000 118,000 1,032,000

Safford,
Mt. Graham Housing, Ltd. Arizona 410,000 410,000 1,406,000 1,878,000 454,000 1,424,000

Northside Plaza Angleton,
Apartments, Ltd. Texas 282,000 282,000 1,359,000 1,736,000 208,000 1,528,000

Pampa Manor, L.P. Pampa, Texas 180,000 180,000 844,000 1,032,000 161,000 871,000

Monrovia,
Regency Court Partners California 1,692,000 1,690,000 5,156,000 7,708,000 1,004,000 6,704,000

Sandpiper Square, Aulander,
a Limited North
Partnership Carolina 219,000 219,000 946,000 1,193,000 198,000 995,000

Seneca Falls East Seneca Falls,
ApartmentsCompany II, L.P. New York 270,000 270,000 890,000 1,224,000 107,000 1,117,000

Vernon Manor, L.P. Vernon, Texas 161,000 161,000 751,000 905,000 140,000 765,000

Waterford Place, Calhoun
a Limited Falls, Sout
Partnership Carolina 272,000 272,000 1,179,000 1,495,000 391,000 1,104,000

Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 627,000 839,000 143,000 696,000
--------- ---------- ------------ -------------- -------- -----------
$ 7,448,000 $7,446,000 $ 26,222,000 $ 36,295,000 $ 6,724,000 $ 29,571,000
============= ========== ============ ============ =========== ============

33

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001

---------------------------------------
For the year ended December 31, 2000
---------------------------------------
Partnership Name Rental Net Year Investment Status Estimated Useful
Income Income/(loss) Acquired Life (Years)
- --------------------------------------------------------------------------------------------------------------------

Alpine Manor, L.P. $ 103,000 $ (23,000) 1994 Completed 40

Baycity Village Apartments,
Limited Partnership 259,000 (55,000) 1994 Completed 30

Beckwood Manor Seven Limited
Partnership 151,000 (59,000) 1993 Completed 27.5

Briscoe Manor Limited
Partnership 165,000 (96,000) 1994 Completed 27.5

Evergreen Four Limited
Partnership 83,000 (36,000) 1994 Completed 27.5

Fawn Haven Limited
Partnership 81,000 (22,000) 1994 Completed 27.5

Fort Stockton Manor, L.P. 116,000 (22,000) 1994 Completed 40

Hidden Valley Limited
Partnership 156,000 (30,000) 1994 Completed 40

HOI Limited Partnership Of
Lenoir 131,000 (34,000) 1993 Completed 40

Indian Creek Limited
Partnership 139,000 (40,000) 1994 Completed 27.5

Laurel Creek Apartments 169,000 (35,000) 1994 Completed 27.5

Madisonville Manor Senior
Citizens Complex, Ltd. 111,000 1,000 1994 Completed 50

Mt. Graham Housing, Ltd. 144,000 (67,000) 1994 Completed 27.5

Northside Plaza Apartments,
Ltd. 152,000 (17,000) 1994 Completed 50

Pampa Manor, L.P. 98,000 (34,000) 1994 Completed 40

Regency Court Partners 657,000 (62,000) 1994 Completed 40

Sandpiper Square, a Limited
Partnership 99,000 (15,000) 1994 Completed 35

Seneca Falls East Apartments
Company II, L.P. 143,000 (22,000) 1998 Completed 40

34

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001

---------------------------------------
For the year ended December 31, 2000
---------------------------------------
Partnership Name Rental Net Year Investment Status Estimated Useful
Income Income/(loss) Acquired Life (Years)
- ------------------------------------------------------------------------------------------------------------------

Vernon Manor, L.P. 78,000 (32,000) 1994 Completed 40

Waterford Place, a Limited
Partnership 115,000 (55,000) 1994 Completed 40

Yantis Housing, Ltd. 71,000 (29,000) 1994 Completed 40
---------- -----------

$ 3,221,000 $ (784,000)
=========== ===========

35

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000

------------------------------------------ ----------------------------------------
As of March 31, 2000 As of December 31, 1999
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Alpine Alpine,
Manor, L.P. Texas $ 195,000 $ 195,000 $ 916,000 $ 1,170,000 $ 163,000 $ 1,007,000

Baycity Village Apartments, Baytown,
Limited Partnership Texas 301,000 301,000 1,478,000 1,829,000 419,000 1,410,000

Beckwood Manor Seven Marianna,
Limited Partnership Arkansas 307,000 307,000 1,391,000 1,790,000 395,000 1,395,000

Briscoe Manor Limited Galena,
Partnership Maryland 308,000 308,000 1,490,000 1,812,000 343,000 1,469,000

Evergreen Four Limited Maynard,
Partnership Arkansas 195,000 195,000 871,000 1,129,000 241,000 888,000

Fawn Haven Manchester,
Limited Partnership Ohio 167,000 167,000 859,000 1,069,000 259,000 810,000

Fort Stockton Ft.Stockton,
Manor, L.P. Texas 224,000 224,000 1,055,000 1,248,000 156,000 1,092,000

Hidden Valley Limited Gallup, New
Partnership Mexico 412,000 412,000 1,487,000 1,944,000 269,000 1,675,000

HOI Limited Partnership Lenoir, North
Of Lenoir Carolina 198,000 198,000 562,000 1,168,000 217,000 951,000

Indian Creek Bucyrus,
Limited Partnership Ohio 306,000 306,000 1,475,000 1,776,000 351,000 1,425,000

San Luis
Laurel Creek Obispo,
Apartments California 1,030,000 1,030,000 660,000 2,165,000 393,000 1,772,000

36

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000

------------------------------------------ ----------------------------------------
As of March 31, 2000 As of December 31, 1999
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Madisonville Manor Senior Madisonville,
Citizens Complex, Ltd. Texas 174,000 174,000 903,000 1,149,000 95,000 1,054,000

Safford,
Mt. Graham Housing, Ltd. Arizona 410,000 410,000 1,411,000 1,874,000 382,000 1,492,000

Northside Plaza Angleton,
Apartments, Ltd. Texas 282,000 282,000 1,364,000 1,736,000 171,000 1,565,000

Pampa Manor, L.P. Pampa, Texas 180,000 180,000 846,000 1,029,000 135,000 894,000

Monrovia,
Regency Court Partners California 1,692,000 1,690,000 4,324,000 7,658,000 809,000 6,849,000

Sandpiper Square, Aulander,
a Limited North
Partnership Carolina 219,000 219,000 949,000 1,190,000 166,000 1,024,000

Seneca Falls East Seneca Falls,
ApartmentsCompany II, L.P. New York 270,000 270,000 893,000 1,220,000 61,000 1,159,000

Vernon Manor, L.P. Vernon, Texas 161,000 161,000 764,000 905,000 118,000 787,000

Waterford Place, Calhoun
a Limited Falls, Sout
Partnership Carolina 272,000 272,000 1,184,000 1,518,000 335,000 1,183,000

Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 630,000 838,000 122,000 716,000
--------- ---------- ------------ -------------- -------- -----------
$ 7,448,000 $7,446,000 $ 25,512,000 $ 36,217,000 $ 5,600,000 $ 30,617,000
============= ========== ============ ============ =========== ============

37

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000

--------------------------------------------------------------------------------------
For the year ended December 31, 1999
--------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- --------------------------------------------------------------------------------------------------------------------

Alpine Manor, L.P. $ 148,000 $ (26,000) 1994 Completed 40

Baycity Village Apartments,
Limited Partnership 234,000 (60,000) 1994 Completed 30

Beckwood Manor Seven Limited
Partnership 147,000 (47,000) 1993 Completed 27.5

Briscoe Manor Limited
Partnership 161,000 (21,000) 1994 Completed 27.5

Evergreen Four Limited
Partnership 78,000 (35,000) 1994 Completed 27.5

Fawn Haven Limited
Partnership 87,000 (24,000) 1994 Completed 27.5

Fort Stockton Manor, L.P. 112,000 (22,000) 1994 Completed 40

Hidden Valley Limited
Partnership 157,000 (24,000) 1994 Completed 40

HOI Limited Partnership Of
Lenoir 121,000 (51,000) 1993 Completed 40

Indian Creek Limited
Partnership 145,000 (41,000) 1994 Completed 27.5

Laurel Creek Apartments 166,000 (26,000) 1994 Completed 27.5

Madisonville Manor Senior
Citizens Complex, Ltd. 105,000 (9,000) 1994 Completed 50

Mt. Graham Housing, Ltd. 149,000 (64,000) 1994 Completed 27.5

Northside Plaza Apartments,
Ltd. 145,000 (20,000) 1994 Completed 50

Pampa Manor, L.P. 99,000 (31,000) 1994 Completed 40

Regency Court Partners 661,000 (220,000) 1994 Completed 40

Sandpiper Square, a Limited
Partnership 98,000 (14,000) 1994 Completed 35

Seneca Falls East Apartments
Company II, L.P. 141,000 (18,000) 1998 Completed 40

38

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000

--------------------------------------------------------------------------------------
For the year ended December 31, 1999
--------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- --------------------------------------------------------------------------------------------------------------------

Vernon Manor, L.P. 86,000 (12,000) 1994 Completed 40

Waterford Place, a Limited
Partnership 122,000 (36,000) 1994 Completed 40

Yantis Housing, Ltd. 74,000 (16,000) 1994 Completed 40
----------- -----------
$ 3,236,000 $ (817,000)
=========== ===========

39

, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

------------------------------------------ ----------------------------------------
As of March 31, 1999 As of December 31, 1998
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Alpine Alpine,
Manor, L.P. Texas $ 195,000 $ 195,000 $ 920,000 $ 1,167,000 $ 134,000 $ 1,033,000

Baycity Village Apartments, Baytown,
Limited Partnership Texas 301,000 301,000 1,489,000 1,829,000 353,000 1,476,000

Beckwood Manor Seven Marianna,
Limited Partnership Arkansas 307,000 307,000 1,395,000 1,789,000 327,000 1,462,000

Briscoe Manor Limited Galena,
Partnership Maryland 308,000 308,000 1,521,000 1,813,000 305,000 1,508,000

Evergreen Four Limited Maynard,
Partnership Arkansas 195,000 195,000 873,000 1,128,000 199,000 929,000

Fawn Haven Manchester,
Limited Partnership Ohio 167,000 167,000 862,000 1,070,000 218,000 852,000

Fort Stockton Ft.Stockton,
Manor, L.P. Texas 224,000 224,000 1,059,000 1,249,000 126,000 1,123,000

Hidden Valley Limited Gallup, New
Partnership Mexico 412,000 412,000 1,491,000 1,938,000 218,000 1,720,000

HOI Limited Partnership Lenoir, North
Of Lenoir Carolina 198,000 198,000 572,000 1,167,000 184,000 983,000

Indian Creek Bucyrus,
Limited Partnership Ohio 306,000 306,000 1,542,000 1,775,000 285,000 1,490,000

San Luis
Laurel Creek Obispo,
Apartments California 1,030,000 1,030,000 681,000 2,166,000 322,000 1,844,000

40

Madisonville MaP., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

------------------------------------------ ----------------------------------------
As of March 31, 1999 As of December 31, 1998
----------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of
in Local Limited InvestmentPaid Local Limited Property and Accumulated Net Book
Partnership Name Location Partnerships to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Madisonville Manor Senior Madisonville,
Citizens Complex, Ltd. Texas 174,000 174,000 905,000 1,150,000 72,000 1,078,000

Safford,
Mt. Graham Housing, Ltd. Arizona 410,000 410,000 1,416,000 1,873,000 311,000 1,562,000

Northside Plaza Angleton,
Apartments, Ltd. Texas 282,000 282,000 1,369,000 1,724,000 135,000 1,589,000

Pampa Manor, L.P. Pampa, Texas 180,000 180,000 849,000 1,029,000 110,000 919,000

Monrovia,
Regency Court Partners California 1,692,000 1,690,000 5,283,000 7,658,000 617,000 7,041,000

Sandpiper Square, Aulander,
a Limited North
Partnership Carolina 219,000 219,000 953,000 1,191,000 134,000 1,057,000

Seneca Falls East Seneca Falls,
ApartmentsCompany II, L.P. New York 276,000 253,000 896,000 1,213,000 21,000 1,192,000

Vernon Manor, L.P. Vernon, Texas 161,000 161,000 786,000 904,000 96,000 808,000

Waterford Place, Calhoun
a Limited Falls, Sout
Partnership Carolina 272,000 272,000 1,189,000 1,518,000 277,000 1,241,000

Yantis Housing, Ltd. Yantis, Texas 145,000 145,000 633,000 837,000 101,000 736,000
--------- ---------- ------------ -------------- -------- -----------
$ 7,454,000 $7,429,000 $ 26,684,000 $ 36,188,000 $ 4,545,000 $ 31,643,000
============= ========== ============ ============ =========== ============

41

WNC Housing Tax Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

--------------------------------------------------------------------------------------
For the year ended December 31, 1998
--------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- --------------------------------------------------------------------------------------------------------------------

Alpine Manor, L.P. $ 104,000 $ (19,000) 1994 Completed 40

Baycity Village Apartments,
Limited Partnership 260,000 (48,000) 1994 Completed 30

Beckwood Manor Seven Limited
Partnership 142,000 (49,000) 1993 Completed 27.5

Briscoe Manor Limited
Partnership 156,000 (57,000) 1994 Completed 27.5

Evergreen Four Limited
Partnership 68,000 (39,000) 1994 Completed 27.5

Fawn Haven Limited
Partnership 78,000 (26,000) 1994 Completed 27.5

Fort Stockton Manor, L.P. 109,000 (21,000) 1994 Completed 40

Hidden Valley Limited
Partnership 149,000 (32,000) 1994 Completed 40

HOI Limited Partnership Of
Lenoir 119,000 (45,000) 1993 Completed 40

Indian Creek Limited
Partnership 136,000 (48,000) 1994 Completed 27.5

Laurel Creek Apartments 164,000 (22,000) 1994 Completed 27.5

Madisonville Manor Senior
Citizens Complex, Ltd. 105,000 (4,000) 1994 Completed 50

Mt. Graham Housing, Ltd. 147,000 (59,000) 1994 Completed 27.5

Northside Plaza Apartments,
Ltd. 142,000 (12,000) 1994 Completed 50

Pampa Manor, L.P. 104,000 (15,000) 1994 Completed 40

Regency Court Partners 646,000 (224,000) 1994 Completed 40

Sandpiper Square, a Limited
Partnership 92,000 (21,000) 1994 Completed 35

Seneca Falls East Apartments
Company II, L.P. 124,000 9,000 1998 Completed 40

42

x Credit Fund IV, L.P., Series 1
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

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

For the year ended December 31, 1998
--------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Loss Acquired Status Life (Years)
- --------------------------------------------------------------------------------------------------------------------

Vernon Manor, L.P. 84,000 (31,000) 1994 Completed 40

Waterford Place, a Limited
Partnership 120,000 (25,000) 1994 Completed 40

Yantis Housing, Ltd. 1994 Completed 40
73,000 (11,000)
-------------- ------------

$ 3,122,000 $ (799,000)
============== ============

43

Pursuant to the requirements of Section 13 or 15(d) 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.

WNC HOUSING TAX CREDIT FUND IV, L.P., Series 1 (Registrant)

By: WNC Tax Credit Partners IV, L.P., General Partner

By: WNC & Associates, Inc., General Partner

By: /s/ Wilfred N. Cooper, Jr.
--------------------------
Wilfred N. Cooper, Jr., President
Chief Operating Officer of WNC & Associates, Inc.

Date: July 11, 2001

By: /s/ Thomas J. Riha
------------------
Thomas J. Riha, Vice-President
Chief Financial Officer of WNC & Associates, Inc.

Date: July 11, 2001

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 registrant and
in the capacities and on the dates indicated.

By /s/ Wilfred N. Cooper, Sr.
--------------------------
Wilfred N. Cooper, Sr., Chairman of the Board
of WNC & Associates, Inc.

Date: July 11, 2001

By: /s/ John B. Lester, Jr.
-----------------------
John B. Lester, Jr., Director of WNC & Associates, Inc.

Date July 11, 2001

By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.

Date: July 11, 2001

44

LAUREL CREEK APARTMENTS
(A California Limited Partnership)
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2000

LAUREL CREEK APARTMENTS
AUDITED FINANCIAL STATEMENTS
DECEMBER 31, 2000

TABLE OF CONTENTS
Page

Independent Auditors' Report 1

Balance Sheet 2

Statement of Income, Expenses and
Changes in Partners' Capital 3

Statement of Cash Flows 4

Notes to Financial Statements 5

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Laurel Creek Apartments
San Luis Obispo, California

We have audited the accompanying balance sheet of Laurel Creek Apartments (A
California Limited Partnership) as of December 31, 2000 and the related
statements of income, expenses, and changes in partners' capital, and cash flows
for the year then ended. These financial statements are the responsibility of
the Partnerships' management. Our responsibility is to express an opinion on
these financial statements 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 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 audit provides 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 Laurel Creek Apartments as of
December 31, 2000, and the results of its operations for the year then ended in
conformity with generally accepted accounting principles.

/s/ Wallace E. Rowe,CPA
Wallace E. Rowe.CPA

February 9, 2001

1

LAUREL CREEK APARTMENTS
BALANCE SHEET
DECEMBER 31, 2000

ASSETS

CURRENT ASSETS
Cash (Note 2) $ 27,206
Accounts receivable 863
Prepaid expenses 1,149
-----------------------------
TOTAL CURRENT ASSETS 29,218
Restricted reserves (Note 3) 27,619
Land, structures and equipment, net of
accumulated depreciation of $463,746 (Note 4) 1,701,608
Organizational costs, net of accumulated
amortization of $12,325 (Note 5) 14,593
---------------------------------
TOTAL ASSETS $ 1,773,038
=================================
LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES
Accounts payable - related party (Note 7) $ 10,325
Accounts payable - other 10,580
Security deposits payable 7,486
Current portion of long-term debt (Note 6) 24,717
---------------------------------
TOTAL CURRENT LIABILITIES 53,108

Long-term debt (Note 6) 611,326
---------------------------------
TOTAL LIABILITIES 664,434

Partners' capital 1,108,604
---------------------------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,773,038
=================================

See accompanying notes.

2

LAUREL CREEK APARTMENTS
STATEMENT OF INCOME, EXPENSES AND
CHANGES IN PARTNERS' CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2000

OPERATING INCOME
Rental income $ 165,469
Tenant charges 3,874
--------------------------------
TOTAL INCOME 169,343
--------------------------------
OPERATING EXPENSES
Administration 17,996
Insurance and taxes 4,464
Maintenance 38,924
Utilities 19,512
Depreciation and amortization 72,716
--------------------------------

TOTAL EXPENSES 153,612
--------------------------------
NET INCOME (LOSS) FROM OPERATIONS 15,731
--------------------------------

OTHER INCOME AND EXPENSES
Interest income 1,620
Interest expense (52,506)
--------------------------------

NET OTHER INCOME UNDER EXPENSES (50,886)
--------------------------------
NET LOSS (35,155)

BEGINNING PARTNERS' CAPITAL 1,147,135

Partner withdrawals (3,376)
--------------------------------

ENDING PARTNERS' CAPITAL $ 1,108,604
================================

See accompanying notes.

3

LAUREL CREEK APARTMENTS
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2000

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss $ (35,155)
Adjustments to reconcile net loss to
Net cash provided by operating activities
Depreciation and amortization 72,716
(Increase) decrease in:
Accounts receivable 368
Prepaid expenses (438)
Restricted reserves (4,800)
Increase (decrease) in:
Accounts payable - other 2,095
Accounts payable - related parties (10,027)
Security deposits payable 456
------------------------------

NET CASH PROVIDED BY OPERATING ACTIVITIES 25,215
-------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

Capital withdrawals (3,376)
Payment of debt (23,843)
-------------------------------

NET CASH USED IN FINANCING ACTIVITIES (27,219)
-------------------------------

NET INCREASE (DECREASE) IN CASH (2,004)

CASH - BEGINNING OF YEAR 29,210
-------------------------------

CASH - END OF YEAR $ 27,206
===============================

See accompanying notes.
4

LAUREL CREEK APARTMENTS
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2000

Note 1 - DEFINITION OF REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

The Laurel Creek Apartments is a California Limited Partnership which was
formed on May 17, 1994. The partnership was formed to construct, acquire,
own, operate, maintain, manage, lease, sell, mortgage or otherwise
dispose of a 24 unit apartment complex located in the City of San Luis
Obispo, California.

As of the report date there are two partners in the partnership,
consisting of one general and one limited partner.

Summary of Significant Accounting Policies

a. Basis of accounting

The partnership is accounted for on the accrual basis of
accounting. Under this method revenues are recognized when they
are earned and expenses are recognized when they are incurred.

b. Fixed assets and depreciation

Fixed assets are carried at cost. Expenditures for the fixed
assets are capitalized. Maintenance and repairs are charged to
operations. Depreciation is calculated using the straight-line
basis over the estimated useful lives.

c. Income taxes

Taxable income or expenses and related tax credits are not
reflected as expenses or credits of the partnership. These items
are the responsibilities of the individual partners.

5

LAUREL CREEK APARTMENTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000

(Continued)

Note 2 - CASH

Cash consists of $26,458 deposited into savings or checking
accounts, and $748 is on deposit with the State of California
Local Agency Investment Fund. At December 31, 2000 the amount
deposited into the savings accounts and the Local Agency
Investment Fund earned interest at rates from 5.89% to 6.47%
respectively.

Note 3 - RESTRICTED CASH

Restricted cash consists of $27,619 maintained in a money market
account earning 5.89%. This cash is reserved for the replacement
of structures and equipment.

Note 4 - LAND, STRUCTURES AND EQUIPMENT

Property and equipment and accumulated depreciation consist of the
following:

Accumulated
Cost Depreciation

Land $ 275,000 $ -
Building 1,868,634 444,476
Equipment 21,720 19,270
----------------- -----------------

$ 2,165,354 $ 463,746
================= =================

Note 5 - ORGANIZATION COSTS

Organization costs and accumulated amortization consist of the
following:

Accumulated
Cost Amortization

Organization costs $ 26,918 $ 12,325
================= =================

6

LAUREL CREEK APARTMENTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000

(Continued)

Note 6 - NOTE PAYABLE

The Agency has a mortgage note payable to the First Bank of San
Luis Obispo. The note requires principal and interest payments
totaling $6,381 each month until 9/1/2014. The note bears interest
at 8% per annum. The following is a schedule of the debt payment
requirements to maturity:

Year ending
December 31

2001 $ 76,569
2002 76,569
2003 76,569
2004 76,569
2005 76,569
Thereafter 663,595
----------------

Total 1,046,440

Less amounts representing
interest 410,397
----------------

$ 636,043

Note 7 - RELATED PARTIES

The accounting and administrative functions of the partnership are
performed by employees of the Housing Authority of the City of San Luis
Obispo (the Authority). Two members of the general partner's (San Luis
Obispo Nonprofit Housing Corporation) board of directors are also members
of the board of commissioner's of the Housing Authority of the City of
San Luis Obispo.

At December 31, 2000 the partnership owed the Authority $10,325. During
the year ended December 31, 2000, the partnership paid the Authority
$29,723 in maintenance expenses and management fees.

7

LAUREL CREEK APARTMENTS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000

(Continued)

Note 8 - LAND DONATION AND LEASE

The land upon which the Laurel Creek Apartments were built was originally
leased from the City of San Luis Obispo (the City) by the Housing
Authority of the City of San Luis Obispo (the Authority). This lease
agreement was later assigned from the Authority to the San Luis Obispo
Nonprofit Housing Corporation (the Corporation). The lease was later
assigned to the Laurel Creek Apartments Partnership. Each of the above
mentioned agencies have common board members or in some other manner have
oversight responsibilities over the other organizations; which would
qualify them as related parties.

The lease expires on April 29, 2046. The provisions for extending or
renewing the lease term are not specified and are contingent upon the
continuation of the project being used to provide affordable housing to
lower income families. The annual lease payments are $1 per year.

The land was recorded on the Agency's books of accounts at the appraised
value on the date the land lease was assigned to the Agency. This
appraised value was $275,000. The value of the land was also recorded as
a capital contribution from the general partner on that date.

8