601 MAIN STREET INVESTORS
                       (A California Limited Partnership)

                          COMPARATIVE FINANCIAL REPORT





                           DECEMBER 31, 2002 and 2001








<PAGE>



                                 C O N T E N T S

                                                                           Page

INDEPENDENT AUDITORS' REPORT ON THE
         FINANCIAL STATEMENTS                                               1

FINANCIAL STATEMENTS

         Balance sheets                                                     2
         Statements of income                                               3
         Statements of partners' deficit                                    4
         Statements of cash flows                                           5
         Notes to financial statements                                      6-8

SUPPLEMENTARY INFORMATION                                                   9-10



<PAGE>



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------


          To the  Partners
          601 Main  Street  Investors
          (A  California  Limited Partnership)
          Sacramento, California

          We have  audited the  accompanying  balance  sheets of 601 Main Street
          Investors,  A California Limited Partnership,  as of December 31, 2002
          and 2001, and the related statements of income, partners' deficit, and
          cash flows for the years then ended.  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.

          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  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.  We believe that our audits
          provide 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 601 Main
          Street Investors, A California Limited Partnership, as of December 31,
          2002 and 2001 and the results of its operations and cash flows for the
          years then ended in conformity  with accounting  principles  generally
          accepted in the United States of America.

          Our  audits  were made for the  purpose  of  forming an opinion on the
          basic  financial  statements  taken  as  a  whole.  The  supplementary
          information   included  in  pages  9-10   presented  for  purposes  of
          additional  analysis and is not a required part of the basic financial
          statements.   Such   information  has  been  subjected  to  the  audit
          procedures applied in the audit of the basic financial statements and,
          in our opinion,  is fairly stated in all material respects in relation
          to the basic financial statements taken as a whole.



          /S/ Bowman & Company, LLP

          Stockton, California
          February 18, 2003





                                       -1-
<PAGE>


                            601 MAIN STREET INVESTORS
                  (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2002 and 2001




<TABLE>
<CAPTION>
                                                                                   2002                    2001
                                                                            -------------------      -----------------
<S>                                                                              <C>                     <C>
      ASSETS

  Cash                                                                           $       450             $     1,019
  Rent receivable                                                                     13,454                  13,453
  Security deposits                                                                    2,877                   5,015
  Prepaid insurance                                                                   11,357                   6,776
  Reserve for replacements                                                            14,005                  13,782
                                                                            -----------------       -----------------
                                                                                      42,143                  40,045
                                                                            -----------------       -----------------

LOAN FEES, at amortized                                                                5,321                   5,591
                                                                            -----------------       -----------------

PROPERTY AND EQUIPMENT, at cost
  Land                                                                                80,000                  80,000
  Building                                                                         5,345,429               5,345,429
  Furniture and fixtures                                                             138,733                 136,348
                                                                            -----------------       -----------------
                                                                                   5,564,162               5,561,777
  Less accumulated depreciation                                                    2,085,427               1,889,230
                                                                            -----------------       -----------------
                                                                                   3,478,735               3,672,547
                                                                            -----------------       -----------------

                                                                                 $ 3,526,199             $ 3,718,183
                                                                            =================       =================




      LIABILITIES AND PARTNERS' DEFICIT

 LIABILITIES
  Outstanding checks in excess of bank balance                                   $    11,264             $     6,186
  Accounts payable and accrued expenses                                               20,873                  17,191
  Due to affiliate of general partner                                                249,577                 207,002
  Tenant security deposits                                                            15,515                  15,769
  Accrued interest                                                                 1,142,275               1,039,006
  Mortgages payable                                                                3,951,202               3,966,981
                                                                            -----------------       -----------------
                                                                                   5,390,706               5,252,135

PARTNERS' DEFICIT                                                                 (1,864,507)             (1,533,952)
                                                                            -----------------------------------------

                                                                                 $ 3,526,199             $ 3,718,183
                                                                            =================       =================
</TABLE>

                     See Notes to Financial Statements -2-

<PAGE>

                            601 MAIN STREET INVESTORS
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 2002 and 2001





<TABLE>
<CAPTION>

                                                                                   2002                    2001
                                                                            -----------------       -----------------
<S>                                                                               <C>                     <C>
REVENUES

Rental income                                                                     $  512,388              $  458,340
Other income                                                                           3,497                   5,498
Interest income                                                                          224                     419
                                                                            -----------------       -----------------
     Total revenue                                                                   516,109                 464,257
                                                                            -----------------       -----------------


OPERATING EXPENSES
Depreciation                                                                         197,274                 196,559
Utilities                                                                            136,803                 124,962
Payroll                                                                              132,736                 123,143
Interest                                                                             126,781                 126,678
Management fees                                                                       59,400                  59,400
Property taxes                                                                        52,365                  51,691
Repairs and maintenance                                                               51,734                  34,622
Insurance                                                                             50,962                  26,798
Office and administration                                                             13,566                   9,194
Payroll taxes                                                                         12,916                  14,550
Legal and accounting                                                                   8,243                   4,249
Supplies                                                                               2,360                   1,424
Other taxes                                                                            1,254                   4,374
Amortization                                                                             270                     270
                                                                            -----------------       -----------------
   Total operating expenses                                                          846,664                 777,914
                                                                            -----------------       -----------------

Net loss                                                                          $ (330,555)             $ (313,657)
                                                                            =================       =================
</TABLE>


                     See Notes to Financial Statements -3-
<PAGE>




                            601 MAIN STREET INVESTORS
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS'DEFICIT
                     Years Ended December 31, 2002 and 2001





<TABLE>
<CAPTION>


                                                                                       Limited               General
                                                                 Total                 Partner               Partner
                                                            -----------------     ------------------     -----------------
<S>                         <C> <C>                             <C>                    <C>                     <C>
Balance (deficit), December 31, 2000                            $ (1,220,295)          $ (1,042,159)           $ (178,136)

Less:  Net loss                                                     (313,657)              (277,947)              (35,710)
                                                            -----------------     ------------------     -----------------

Balance (deficit), December 31, 2001                              (1,533,952)            (1,320,106)             (213,846)

Less:  Net loss                                                     (330,555)              (278,490)              (52,065)
                                                            -----------------     ------------------     -----------------

Balance (deficit), December 31, 2002                            $ (1,864,507)          $ (1,598,596)           $ (265,911)
                                                            =================     ==================     =================
</TABLE>


                      See Notes to Financial Statements -4-

<PAGE>


                            601 MAIN STREET INVESTORS
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2002 and 2001




<TABLE>
<CAPTION>

                                                                                     2002                   2001
                                                                            -----------------       -----------------
<S>                                                                                <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                                                          $ (330,555)             $ (313,657)
 Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Depreciation                                                                        196,197                 196,559
  Amortization                                                                            270                     270
  Change in assets and liabilities:
   Decrease (increase) in:
    Rent receivable                                                                       - -                    (193)
    Security deposits                                                                   2,138                  (1,414)
    Prepaid expenses                                                                   (4,580)                 (3,442)
    Reserve for replacements                                                             (224)                  5,308
   Increase (decrease) in:
     Outstanding checks in excess of bank balance                                       5,078                    (523)
     Accounts payable and accrued expenses                                              3,681                  (1,522)
     Due to affiliate of general partner                                               42,575                  26,376
     Tenant security deposits                                                            (254)                  7,953
     Accrued interest                                                                 103,269                 103,722
                                                                            -----------------       -----------------
      Net cash provided by operating activities                                        17,595                  19,437
                                                                            -----------------       -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of furniture and fixtures                                                    (2,385)                 (2,580)
                                                                            -----------------       -----------------
        Net cash used in investing activities                                          (2,385)                 (2,580)
                                                                            -----------------       -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Principal payments on long-term borrowings                                           (15,779)                (16,946)
                                                                            -----------------       -----------------
         Net cash used in financing activities                                        (15,779)                (16,946)
                                                                            -----------------       -----------------

         Increase (decrease) in cash                                                     (569)                    (89)

Cash
 Beginning                                                                              1,019                   1,108
                                                                            -----------------       -----------------

 Ending                                                                            $      450              $    1,019
                                                                            =================       =================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
 INFORMATION
 Cash payment for interest                                                         $   23,512              $   22,956
                                                                            =================       =================
</TABLE>


                      See Notes to Financial Statements -5-

<PAGE>







                            601 MAIN STREET INVESTORS
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS


Note 1. Organization and Summary of Significant Accounting Policies

        Organization:

          601 Main Street  Investors  (a  California  Limited  Partnership)  was
          formed  in  June  1988  to own  and  operate  a  156-unit  single-room
          occupancy facility,  known as the Phoenix House,  located in Stockton,
          California.  The project was completed in September 1992 and commenced
          rental   operations  at  that  time.  During  1997,  an  additional  9
          efficiency  studio units were added which were  occupied  beginning in
          January 1998. The project  provides  low-cost  housing to low and very
          low-income residents.  Below-market rents are made possible because of
          below-market interest rates and deferred payments on the Partnership's
          debt  with  the   California   Department  of  Housing  and  Community
          Development.  Rents from tenants are  restricted  under the Regulatory
          Agreements  with the Department of Housing and Community  Development,
          the  City  of  Stockton  and  the  California  Tax  Credit  Allocation
          Committee.


       Summary of significant accounting policies:

          Cash
          ----

          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
          on the accompanying balance sheet.

          Depreciation
          ------------

          Depreciation  is  computed  using  the  straight-line  method  for the
          building  and  double-declining   balance  method  for  furniture  and
          fixtures over the following estimated useful lives:
                                                                           Years
                                                                           -----

                   Building                                          27.5 - 39.0
                   Furniture and fixtures                                    5.0

          Amortization
          ------------

          Loan fees incurred in acquiring a permanent loan through  Citibank are
          being amortized by the  straight-line  method over the 30-year term of
          the loan.





                                       -6-


<PAGE>


                          NOTES TO FINANCIAL STATEMENTS


Note 1.   Organization and Summary of Significant Accounting Policies (cont.)

             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
               that   affect   certain   reported   amounts   and   disclosures.
               Accordingly, actual results could differ from those estimates.

             Personal assets and liabilities
             -------------------------------

               In accordance  with the generally  accepted  method of presenting
               partnership  financial  statements,  the financial statement does
               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.
<TABLE>
<CAPTION>


Note 2.   Mortgages Payable
                                                                                        2002               2001
                                                                                    -----------        -----------
<S>                                                                                 <C>                <C>
          Mortgage  payable to  Citibank,  payable in  monthly  installments  of
          $1,544,  principal and interest at 4.375% per year,  due October 2022.
          This note is  secured by a first deed of trust.  Accrued  interest  at
          December 31, 2002 is $895.
                                                                                    $   245,414        $    251,547

          Mortgage payable to the California Department of Housing and Community
          Development,  payable November 2030 with simple interest of 3% payable
          annually.  If the Department  determines that the annual rental income
          is  insufficient  to pay reason- able expenses,  it may waive or defer
          payment of all or part of the accrued interest. The note is secured by
          a second deed of trust.  Accrued  inter- est at  December  31, 2002 is
          $1,092,912.                                                                 3,201,000          3,201,000

          Mortgage payable to the Redevelopment  Agency of the City of Stockton,
          due in monthly payments of $1,476 through December 2020, with interest
          at 3%. The note is secured by a third deed of trust.  Accrued interest
          at December 31, 2002 is $615.                                                 246,563            256,209
</TABLE>








                                       -7-
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

Note 2.   Mortgages Payable (cont.)
<S>                                                                                 <C>                <C>
          Mortgage payable to the Redevelopment  Agency of the City of Stockton,
          due in May 2026,  with interest at 3%.  Annual  payments from residual
          receipts  are due when cash flow  permits.  The note is  secured  by a
          fourth  deed of  trust.  Accrued  interest  at  December  31,  2002 is
          $47,853.                                                                      258,225            258,225
                                                                                    -----------        -----------

                                                                                    $ 3,951,202        $ 3,966,981
                                                                                    ===========        ===========

          The aggregate amounts of principal payments under these mortgage notes
          at December 31, 2002, are as follows:

               2003                                                                                    $    18,421
               2004                                                                                         19,094
               2005                                                                                         19,793
               2006                                                                                         20,518
               2007                                                                                         21,271
               Thereafter                                                                                3,852,105
                                                                                                       -----------

                                                                                                       $ 3,951,202
                                                                                                       ===========
</TABLE>

          The  Partnership  is required to maintain an  operating  reserve and a
          replacement  reserve under  provisions of the loan agreements with the
          California  Department  of Housing and Community  Development  and the
          City of Stockton. Except for interest income earned in the account, no
          deposits  were made into the reserve  accounts in 2002.  The  reserves
          will be funded as cash flow permits.


Note 3.   Related Party Transactions/Economic Dependence

          The Partnership utilizes management and administrative services of CFY
          Development,  Inc. ("CFY"), which is owned by the general partner. The
          Partnership  incurred property management fees and overhead charges of
          $63,300  in both 2002 and  2001,  for  services  provided  by CFY.  At
          December 31, 2002 and 2001, $249,577 and $207,002,  respectively,  are
          payable to CFY for  management  fees and  operating  expenses  paid on
          behalf of the Partnership.

          The Partnership has incurred  operating  deficits and cash flow losses
          since  the  inception  of  the  project.   In  order  to  support  the
          Partnership, CFY has agreed to defer management fees and make advances
          to the Partnership when necessary to facilitate cash flow. Without the
          assistance of the general partner or CFY, the Partnership would not be
          able to pay its operating  expenses.  Amounts  deferred by CFY for the
          years  ended  December  31, 2002 and 2001 were  $42,575  and  $26,376,
          respectively.



                                       -8-