--------------------------------------------------------------------------------
BERNARD E. REA, CPA
--------------------------------------------------------------------------------
                                                     CERTIFIED PUBLIC ACCOUNTANT

                          INDEPENDENT AUDITOR'S REPORT



To the Partners
Pioneer Street Associates
(A California Limited Partnership)
Visalia, California


I have audited the accompanying  balance sheets of Pioneer Street  Associates (A
California  Limited  Partnership),  as of December  31,  2003 and 2002,  and the
related  statements of income,  partners'  equity,  and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial statements based on my audits.

I conducted my audits in accordance with auditing  standards  generally accepted
in the United States of America. Those standards require that I plan and perform
the audits 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.  I believe that my audit provides a reasonable basis for
my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Pioneer  Street  Associates  (A
California  Limited  Partnership)  as of  December  31,  2003 and 2002,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

                                               /s/ Bernard E. Rea, CPA




Stockton, California
February 20, 2004











                                      - 1 -
P.O.BOX 4632 o STOCKTON, CA 95204 o TELEPHONE (209)933-9113 o FAX (209)933-9115
o EMAILBReaCPA@AOL.COM


<PAGE>


                                 C O N T E N T S


                                                                            Page

INDEPENDENT AUDITOR'S REPORT ON
     THE FINANCIAL STATEMENTS................................................ 1

FINANCIAL STATEMENTS

     Balance sheets..........................................................2-3
     Statements of income....................................................4-7
     Statements of changes in partners' equity...............................  8
     Statements of cash flows...............................................9-10
     Notes to financial statements.........................................11-14



                                       2
<PAGE>


                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                  2003                      2002
                                                                               --------------          ---------------
<S>                                                                            <C>                     <C>
                  ASSETS
CURRENT ASSETS
     Cash                                                                      $      75,383           $        97,711
     Real estate tax and insurance                                                     9,455                    30,453
     Prepaid expense                                                                  10,741                     7,734
                                                                               --------------          ----------------
                  Total current assets                                         $      95,579           $       135,898
                                                                               --------------          ----------------

RESTRICTED DEPOSITS AND FUNDED RESERVES
     Tenants' security deposits                                                $      43,199           $        42,786
     Replacement reserve                                                             148,761                   172,897
                                                                               --------------          ----------------
                                                                               $     191,960           $       215,683
                                                                               --------------          ----------------

PROPERTY AND EQUIPMENT, AT COST
     Land                                                                      $     300,000           $       300,000
     Buildings                                                                     3,646,889                 3,619,266
     Equipment                                                                       178,017                   178,017
                                                                               --------------          ----------------
                                                                               $   4,124,906           $     4,097,283
     Less accumulated depreciation                                                 1,302,230                 1,164,153
                                                                               --------------          ----------------
                                                                               $   2,822,676           $     2,933,130
                                                                               --------------          ----------------

OTHER ASSETS
     Deferred charges, less accumulated
         amortization of $25,739 and $22,655                                   $      40,111           $        43,195
                                                                               --------------           ---------------

                                                                               $   3,150,326           $     3,327,906
                                                                               ==============          ================
</TABLE>




See Notes to Financial Statements.
                                      - 3 -


<PAGE>



                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>
                  LIABILITIES AND PARTNERS' EQUITY

CURRENT LIABILITIES
     Current maturities of long-term debt                                      $     30,987            $       28,564
     Accounts payable                                                                 5,243                     4,293
     Accrued interest                                                                   - -                       - -
     Accrued reporting fee                                                            4,000                     2,000
     Accrued property taxes                                                             - -                       - -
                                                                               --------------          --------------
                  Total current liabilities                                    $     40,230            $       34,857
                                                                               --------------          --------------

DEPOSIT AND PREPAYMENT LIABILITIES
     Tenants' security deposits                                                $     35,600            $       35,600
     Prepaid rents                                                                      - -                       - -
                                                                               --------------          --------------
                                                                               $     35,600            $       35,600
                                                                               --------------          --------------

LONG-TERM DEBT
     Mortgage payable, less current maturities                                 $  1,750,321            $    1,781,308
                                                                               --------------          --------------

COMMITMENT

PARTNERS' EQUITY                                                               $  1,324,175            $    1,476,141
                                                                               --------------          --------------

                                                                               $  3,150,326            $    3,327,906
                                                                               ==============          ==============


</TABLE>

See Notes to Financial Statements.
                                      - 4 -


<PAGE>


                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                   2003                     2002
                                                                              --------------          ---------------
<S>                                                                            <C>                     <C>
RENTAL INCOME
     Apartments                                                                $     548,532           $      548,532
     Tenant assistance payments                                                          - -                      - -
     Furniture and equipment                                                             - -                      - -
     Commercial                                                                          - -                      - -
     Parking spaces                                                                      - -                      - -
     Subsidy income                                                                      - -                      - -
     Miscellaneous                                                                       - -                      - -
                                                                               --------------          ---------------
         Sub-total potential rent revenue                                      $     548,532           $      548,532
                                                                               --------------          ---------------

VACANCIES
     Apartments                                                                $     (17,696)          $      (60,060)
     Commercial                                                                          - -                      - -
     Parking spaces                                                                      - -                      - -
     Miscellaneous                                                                       - -                      - -
                                                                               --------------          ---------------
         Sub-total vacancies                                                   $     (17,696)          $      (60,060)
                                                                               --------------          ---------------

            Net rental revenue                                                 $     530,836           $      488,472
                                                                               --------------          ---------------

FINANCIAL REVENUE
     Interest Income - project operations                                      $         890           $        1,394
     Income from investments - replacement reserve                                     1,184                    2,391
     Income from investments - operating reserve                                         - -                      - -
     Income from investments - miscellaneous                                             - -                      - -
                                                                               --------------          ---------------
         Sub-total financial revenue                                           $       2,074           $        3,785
                                                                               --------------          ---------------

OTHER REVENUE
     Laundry and vending                                                       $      10,068           $       10,738
     NSF and late charges                                                                - -                      - -
     Damage and cleaning fees                                                             24                      103
     Forfeited tenant security deposits                                                6,157                   13,014
     Other revenue                                                                    13,249                   43,976
                                                                               --------------          ---------------
         Sub-total other revenue                                               $      29,498           $       67,831
                                                                               --------------          ---------------

                   Total revenues                                              $     562,408           $      560,088
                                                                               ==============          ==============
</TABLE>


See Notes to Financial Statements.
                                      - 5 -



<PAGE>


                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2003 and 2002
<TABLE>
<CAPTION>


                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>
OPERATING EXPENSES

     Renting expenses
         Advertising                                                           $         132           $           31
         Miscellaneous renting expenses                                                2,825                    3,275
                                                                               --------------          --------------
            Sub-total renting expenses                                         $       2,957           $        3,306
                                                                               --------------          --------------

     Administrative expenses
         Office salaries                                                       $         - -           $          - -
         Office supplies                                                               3,658                    2,406
         Office rent                                                                     - -                      - -
         Management fee                                                               42,041                   39,808
         Manager's salary                                                             30,128                   28,160
         Legal expense                                                                   - -                    4,877
         Audit expense                                                                26,039                    4,293
         Bookkeeping / accounting services                                             4,293                      - -
         Telephone and answering service                                               1,114                    1,083
         Bad debts                                                                       - -                      - -
         Miscellaneous administrative expenses                                           205                        3
                                                                               --------------          --------------
            Sub-total administrative expenses                                  $     107,478           $       80,630
                                                                               --------------          --------------

     Utilities expense
         Fuel oil / coal                                                       $         - -           $          - -
         Electricity                                                                   9,488                    8,765
         Water                                                                        14,585                   10,162
         Gas                                                                             - -                      - -
         Sewer                                                                           - -                      - -
                                                                               --------------          --------------
            Sub-total utilities expense                                        $      24,073           $       18,927
                                                                               ==============          ==============
</TABLE>





See Notes to Financial Statements.
                                      - 6 -


<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>

                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>
     Operating and maintenance expense
         Janitor and cleaning payroll                                          $         - -           $          - -
         Janitor and cleaning supplies                                                   - -                      - -
         Janitor and cleaning contract                                                   - -                      - -
         Exterminating payroll / contract                                                - -                      - -
         Exterminating supplies                                                          - -                      - -
         Garbage and trash removal                                                    17,020                   16,987
         Security payroll / contract                                                     - -                      - -
         Grounds payroll                                                                 - -                      - -
         Grounds supplies                                                                - -                      - -
         Grounds contract                                                             23,680                   21,294
         Repairs payroll                                                              28,941                   34,542
         Repairs material                                                             19,206                   21,434
         Repairs contract                                                             19,356                   20,097
         Elevator maintenance / contract                                                 - -                      - -
         Heating / cooling repairs and maintenance                                       - -                      - -
         Swim pool maintenance / contract                                                - -                      - -
         Snow removal                                                                    - -                      - -
         Decorating payroll / contract                                                   - -                      - -
         Decorating supplies                                                           2,577                    2,250
         Vehicle and maintenance equipment o & r                                         - -                      - -
         Miscellaneous operating and maint. expenses                                  17,430                   19,778
                                                                               --------------          --------------
            Sub-total operating & maint. expense                               $     128,210           $      136,382
                                                                               --------------          --------------

     Taxes and insurance
         Real estate taxes                                                     $       8,288           $          - -
         Payroll taxes                                                                 5,789                    6,042
         Miscellaneous taxes, licenses, and permits                                      975                      975
         Property and liability insurance                                              9,882                    7,605
         Fidelity bond insurance                                                         - -                      - -
         Workman's compensation                                                        9,663                    5,905
         Health insurance and other employee benefits                                  7,085                      954
         Other insurance                                                                 - -                      - -
                                                                               --------------          --------------
            Sub-total taxes & insurance                                        $      41,682           $       21,481
                                                                               --------------          --------------

                   Total operating expenses                                    $     304,400           $      260,726
                                                                               ==============          ==============
</TABLE>


See Notes to Financial Statements.
                                      - 7 -

<PAGE>


                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2003 and 2002



<TABLE>
<CAPTION>
                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>
OTHER EXPENSES
     Interest expense - mortgage                                               $     146,813           $      149,046
     Interest expense - notes                                                            - -                      - -
     Miscellaneous financial expense                                                     - -                      - -
     Depreciation and amortization                                                   141,161                  144,334
     Non project expenses                                                              4,000                    4,000
                                                                               --------------          --------------
         Sub-total other expenses                                              $     291,974           $      297,380
                                                                               --------------          --------------

                   Total expenses                                              $     596,374           $      558,106
                                                                               --------------          --------------

                   Net income (loss)                                           $     (33,966)          $        1,982
                                                                               ==============          ==============
</TABLE>

See Notes to Financial Statements.
                                      - 8 -


<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' EQUITY
                     Years Ended December 31, 2003 and 2002



<TABLE>
<CAPTION>
                                                                                 General                   Limited
                                                     Total                       Partners                  Partner
                                                 ------------                  -------------            -------------
<S>                                              <C>                           <C>                       <C>
Partners' equity
     December 31, 2001                           $ 1,512,159                   $  (254,320)              $  1,766,479

Partners' capital
     contributions                                       - -                           - -                        - -

Partners' capital
     distributions                                   (38,000)                      (38,000)                       - -

Net income (loss)                                      1,982                            20                      1,962
                                                 ------------                  -------------             ------------

Partners' equity
     December 31, 2002                           $ 1,476,141                   $  (292,300)              $  1,768,441

Partners' capital
     contributions                                       - -                           - -                        - -

Partners' capital
     distributions                                  (118,000)                     (118,000)                       - -

Net income (loss)                                    (33,966)                         (340)                   (33,626)
                                                 ------------                  -------------             -------------

Partners' equity
     December 31, 2003                           $ 1,324,175                    $ (410,640)              $  1,734,815
                                                 ============                  =============             =============
Percentage at
     December 31, 2003                                   100%                            1%                        99%
                                                 ============                  =============             =============
</TABLE>

See Notes to Financial Statements.
                                      - 9 -
<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2003 and 2002

<TABLE>
<CAPTION>

                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                         $     (33,966)          $        1,982
     Adjustments to reconcile net income
      (loss) to net cash provided by
       (used in) operating activities:
         Depreciation and amortization                                               141,161                  144,334
         Change in assets and liabilities:
          Decrease (increase) in:
            Rents receivable                                                             - -                     - -
            Prepaid expenses                                                          (3,007)                  (1,676)
            Tenants' security deposits                                                  (413)                    (637)
            Tax and insurance impounds                                                20,998                  (21,644)
          Increase (decrease) in:
            Accounts payable                                                             950                    4,293
            Bank overdraft                                                               - -                      - -
            Accrued reporting fee                                                      2,000                   (2,000)
            Accrued interest                                                             - -                      - -
            Prepaid rents                                                                - -                      - -
            Tenants' security deposits                                                   - -                      350
                                                                               --------------          --------------
                Net cash provided by (used in)
                    operating activities                                       $     127,723           $      125,002
                                                                               --------------          --------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Funding of replacement reserve                                            $      (5,837)          $       (4,718)
     Withdrawals from replacement reserve                                             29,973                   13,088
     Acquisition of property and equipment                                           (27,623)                 (10,356)
                                                                               --------------          --------------
                Net cash provided by (used in)
                   investing activities                                        $      (3,487)          $       (1,986)
                                                                               --------------          ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Partner contributions                                                     $         - -           $          - -
     Partner distributions                                                          (118,000)                 (38,000)
     Principal payments on long-term debt                                            (28,564)                 (26,331)
                                                                               --------------          ---------------
                Net cash provided by (used in)
                   financing activities                                        $    (146,564)          $      (64,331)
                                                                               ==============          ===============


</TABLE>


See Notes to Financial Statements.
                                     - 10 -

<PAGE>

                            PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                     Years Ended December 31, 2003 and 2002


<TABLE>
<CAPTION>

                                                                                   2003                     2002
                                                                               --------------          --------------
<S>                                                                            <C>                     <C>

                Increase (decrease) in cash and
                   cash equivalents                                            $    (22,328)           $        58,685

Cash and cash equivalents
     Beginning                                                                       97,711                     39,026
                                                                               --------------          ---------------

     Ending                                                                    $     75,383            $        97,711
                                                                               ==============          ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION
         Cash paid during the year for interest, net
            of capitalized interest                                            $    146,813            $       149,046
                                                                               ==============          ===============
</TABLE>

See Notes to Financial Statements.
                                     - 11 -

<PAGE>


                          PIONEER STREET ASSOCIATES
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary of the Partnership's significant accounting policies consistently
     applied  in  the  preparation  of  the  accompanying  financial  statements
     follows.

     BASIS OF ACCOUNTING
     -------------------

     The  financial  statements of the  partnership  are prepared on the accrual
     basis of accounting and in accordance with accounting  principles generally
     accepted in the United States of America.

     CAPITALIZATION AND DEPRECIATION
     -------------------------------

     Land,  buildings and  improvements  are recorded at cost.  Depreciation  of
     buildings  and  equipment  is  computed   principally  using  the  Modified
     Accelerated  Cost  Recovery  System which  approximates  straight-line  for
     buildings and  double-declining  balance for  equipment  over the following
     estimated useful lives:
                                                              Years
                                                              -----

                Buildings                                     27.5
                Equipment                                      7

     Improvements  are  capitalized,  while  expenditures  for  maintenance  and
     repairs are charged to expense as incurred.  Upon  disposal of  depreciable
     property,  the  appropriate  property  accounts  are reduced by the related
     costs and  accumulated  depreciation.  The  resulting  gains and losses are
     reflected in the statement of operations.

     CASH AND CASH EQUIVALENTS
     -------------------------

     For purposes of reporting  the  statements of cash flows,  the  Partnership
     includes all cash accounts which are not subject to withdrawal restrictions
     or  penalties,  and all highly  liquid debt  instruments  purchased  with a
     maturity  of  three  months  or less as cash and  cash  equivalents  on the
     accompanying balance sheet.

     AMORTIZATION
     ------------

     Deferred  charges are amortized over the following  estimated  useful lives
     using the straight-line method:


                                                              Years
                                                              -----

                Deferred debt expense                           30
                Tax credit monitoring fee                       15

     INCOME TAXES
     ------------

     No  provision  or  benefit  for  income  taxes has been  included  in these
     financial statements since taxable income or loss passes through to, and is
     reportable by, the partners individually.





                                     - 12 -
                          NOTES TO FINANCIAL STATEMENTS
<PAGE>




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     ESTIMATES
     ---------

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally  accepted  in the United  States of America  requires
     management to make estimates and assumptions.  These assumptions affect the
     reported  amounts of assets,  liabilities  and the amount of any 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 differ from the estimates made.

     PERSONAL ASSETS AND LIABILITIES
     -------------------------------

     In accordance with the generally accepted method of presenting  partnership
     financial statements,  the financial statements do not include the personal
     assets and  liabilities  of the partners,  including  their  obligation for
     income  taxes  on  their  distributive  shares  of the  net  income  of the
     Partnership, nor any provision for income tax expense.

     SFAS NO. 144
     ------------

     Statement of Financial  Accounting  Standards  (SFAS) No. 144 requires that
     long-lived assets and certain  identifiable  intangibles held and used by a
     entity  be  reviewed  for   impairment   whenever   events  or  changes  in
     circumstances  that the carrying amount of an asset may not be recoverable.
     The adoption of SFAS No. 144 has not materially  affected the partnership's
     reported earnings, financial condition or cash flows.


NOTE 2 - ORGANIZATION

     Pioneer Street  Associates is a California  Limited  Partnership  which was
     formed in February 1994, to develop, construct, own, maintain and operate a
     112-unit multi-family  apartment complex known as Foothill Vista Apartments
     and is located in the city of Bakersfield, California. The major activities
     of the  Partnership  are  governed by the  Partnership  Agreement  and Loan
     Agreement with the California Community Reinvestment  Corporation (CCRC), a
     California nonprofit public benefit corporation.  Under the Loan Agreement,
     the  Partnership  is required  to provide  low cost  housing to moderate or
     low-income households.

     The  Partnership  has three  general  partners  and one  investing  limited
     partner.  Partnership  transactions with the general partners are described
     in other notes to this financial statement.

NOTE 3 - DEFERRED CHARGES

     Deferred  charges  as of  December  31,  2003  and  2002,  consists  of the
     following:

                                                  2003              2002
                                             -------------     -------------
      Deferred debt expense                  $      39,200     $      39,200
      Tax credit monitoring fee                     26,650            26,650
                                             -------------     -------------
                                             $      65,850     $      65,850
              Less accumulated amortization         25,739            22,655
                                             -------------     -------------
                                             $      40,111     $      43,195
                                             =============     =============

                                     - 13 -
                          NOTES TO FINANCIAL STATEMENTS
<PAGE>




NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES

     In  accordance  with  the  Partnership  and the  CCRC  Replacement  Reserve
     Agreements,  the Partnership is required to maintain a replacement  reserve
     account.  The  account  is to be funded  annually  in the amount of $28,000
     until the aggregate balance of the account reaches $182,000.


NOTE 5 - LONG-TERM DEBT

     Long-Term  debt  consisted of a permanent  loan with CCRC in face amount of
     $1,960,000.

     Under the terms of the 30-year Promissory Note with CCRC, the loan provides
     for an initial  interest  rate of 8.17% and monthly  payments of $14,614.74
     commencing on November 1, 1995, and continuing  through September 2025. The
     interest rate and monthly  payment will be adjusted at year eleven (11) and
     year  Twenty-one  (21),  at which time the  interest  rate will be adjusted
     based on the Current  Index plus 2.75% and the payment will be adjusted and
     determined by the amount of the monthly payment that would be sufficient to
     repay  the note  within  360  months of the  initial  payment  date.  As of
     December 31, 2003, the current  interest rate and minimum  monthly  payment
     due is 8.17% and $14,617.74, respectively.

     The  apartment  complex is pledged as  collateral  for the  mortgage and is
     secured by deeds of trust,  assignment of rents,  security  agreements  and
     fixture filings against the property.

     Aggregate  maturities  of  Long-term  debt for the next  five  years are as
     follows:

              December 31,      2004                               $      30,987
                                2005                                      33,616
                                2006                                      36,468
                                2007                                      39,561
                                2008                                      42,917
                             Thereafter                                1,597,759
                                                                   -------------
                                 TOTAL                             $   1,781,308
                                                                   =============

NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

     ANNUAL REPORTING FEE
     --------------------

     An annual  reporting fee of $2,000 is payable to the limited  partner,  WNC
     California  Housing Tax Credit Fund IV, L.P. Series 2, an investor  limited
     partner which holds a 99% interest in the  partnership,  for services to be
     rendered for accounting  matters relating to preparation of tax returns and
     other reports required.

     ANNUAL PARTNERSHIP ADMINISTRATIVE FEE
     -------------------------------------

     An  annual  partnership  administrative  fee of $2,000  is  payable  to the
     general partners,  for their services to be rendered in connection with the
     administration of the day to day business of the Partnership.





                                     - 14 -
                          NOTES TO FINANCIAL STATEMENTS
<PAGE>




NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)


     MANAGEMENT FEE
     --------------

     In accordance with the management  agreement,  the  Partnership  paid Tetra
     Property Management Company,  affiliates of one of the general partners,  a
     management  fee during 2003 and 2002 in the amounts of $42,041 and $39,808,
     respectively,  for  services  rendered in  connection  with the leasing and
     operation of the project.  The fee for its services is  approximately 8% of
     the project's rental income.


NOTE 7 - CONCENTRATION OF CREDIT RISK

     The  Partnership  maintains  cash and  cash  equivalents  at two  financial
     institutions located in California. The accounts are insured by the Federal
     Deposit Insurance Corporation up to $100,000 per financial institution.  At
     December  31, 2003,  the  Partnership's  uninsured  cash  balances  totaled
     $76,798.


NOTE 8 - COMMITMENT

     The  Partnership  entered into a Regulatory  Agreement  with the Tax Credit
     Allocation Committee (TCAC),  established under Section 50185 of the Health
     and  Safety  Code of the State of  California.  Under this  Agreement,  the
     Partnership  shall maintain the project as a Qualified  Low-income  Housing
     Project for a period of 55 consecutive  taxable years  beginning with 1995,
     the  first  taxable  year  of the  Credit  Period.  In  exchange  for  this
     agreement,  TCAC has  authorized an allocation  relating to the  low-income
     housing credit under the  provisions of Section 42 of the Internal  Revenue
     Code.


NOTE 9 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

     The   Partnership's   sole  asset  is  Foothill   Vista   Apartments.   The
     Partnership's  operations are  concentrated in the multifamily  real estate
     market.














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