ITOR'S REPORT



To the Partners
Colonial Village Roseville
(A California Limited Partnership)
Roseville, California




I have audited the accompanying  balance sheets of Colonial Village Roseville (A
California  Limited  Partnership),  as of December  31,  2002 and 2001,  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 Colonial  Village  Roseville (A
California  Limited  Partnership)  as of  December  31,  2002 and 2001,  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 6, 2003











<PAGE>









                                      - 1 -




                                 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






<PAGE>



                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2002 and 2001
<TABLE>
<CAPTION>




                   ASSETS                                               2002             2001
                                                                     -----------      -----------

CURRENT ASSETS
<S>                                                                  <C>              <C>
     Cash                                                            $    10,583      $   150,390
     Rents receivable                                                        - -              - -
     Other receivables                                                       - -              - -
     Prepaid expense                                                       4,117            3,250
                   Total current assets                              -----------      -----------
                                                                     $    14,700      $   153,640
                                                                     -----------      -----------


RESTRICTED DEPOSITS AND FUNDED RESERVES
     Tenants' security deposits                                      $    28,235      $    27,413
     Replacement reserve escrow                                          127,477          112,611
                                                                     -----------      -----------
                                                                     $   155,712      $   140,024
                                                                     -----------      -----------


PROPERTY AND EQUIPMENT, AT COST
     Land                                                            $   315,303      $   315,303
     Building                                                          4,808,665        4,808,665
     Equipment                                                           177,478          175,386
                                                                     -----------      -----------
                                                                     $ 5,301,446      $ 5,299,354
     Less accumulated depreciation                                     1,550,785        1,366,364
                                                                     -----------      -----------
                                                                     $ 3,750,661      $ 3,932,990
                                                                     -----------      -----------

OTHER ASSETS
     Deferred charges, less accumulated
         amortization of $39,301 and $34,088                         $    94,121      $    99,334
                                                                     -----------      -----------
                                                                     $    94,121      $    99,334
                                                                     -----------      -----------




                                                                     $ 4,015,194      $ 4,325,988
                                                                     ===========      ===========

</TABLE>










See Notes to Financial Statements.
                                      - 2 -
<PAGE>



                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2002 and 2001
<TABLE>
<CAPTION>




                   LIABILITIES AND PARTNERS' EQUITY                     2002             2001
                                                                     -----------      ------------
<S>                                                                  <C>              <C>

CURRENT LIABILITIES
     Current maturities of long-term debt                            $    34,583      $    32,038
     Accounts payable                                                     13,535            7,803
     Accounts payable - general partner                                    8,230            7,737
     Accrued expense                                                         800              800
     Developer fees payable                                               96,303           27,500
     Advances from general partner, without
         interest, due date, or collateral                                   - -              - -
     Accrued interest                                                        - -              - -
                                                                     -----------      ------------
                   Total current liabilities                         $   153,451      $    75,878
                                                                     -----------      ------------


DEPOSIT AND PREPAYMENT LIABILITIES
     Tenants' security deposits                                      $    26,300      $    27,054
     Prepaid rents                                                           - -              - -
                                                                     -----------      ------------
                                                                     $    26,300      $    27,054
                                                                     -----------      ------------


LONG-TERM DEBT
     Mortgage payable, less current maturities
                                                                     $ 1,977,036      $ 2,011,619
     Developer fees payable                                                  - -          287,553
                                                                     -----------      ------------
                                                                     $ 1,977,036      $ 2,299,172
                                                                     -----------      ------------
COMMITMENT


PARTNERS' EQUITY                                                     $ 1,858,407      $ 1,923,884
                                                                     -----------      ------------




                                                                     $ 4,015,194      $ 4,325,988
                                                                     ===========      ============
</TABLE>










See Notes to Financial Statements.
                                      - 3 -
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




                                                                        2002             2001
                                                                     -----------      ----------

<S>                                                                  <C>              <C>
RENTAL INCOME
     Apartments                                                      $   462,853      $ 450,465
     Tenant assistance payments                                              - -            - -
     Furniture and equipment                                                 - -            - -
     Commercial                                                              - -            - -
     Parking spaces                                                          - -            - -
     Subsidy income                                                          - -            - -
     Miscellaneous                                                           - -            - -
                                                                     -----------      ----------
             Net rental revenue                                      $   462,853      $ 450,465



FINANCIAL REVENUE
     Interest Income - project operations                            $     2,862      $   4,541
     Income from investments - replacement reserve                         3,689          3,905
     Income from investments - operating reserve                             385          4,028
     Income from investments - miscellaneous                                - -             - -
         Sub-total financial revenue                                 -----------      ----------
                                                                     $     6,936      $  12,474
                                                                     -----------      ----------


OTHER REVENUE
     Laundry and vending                                             $     6,953      $   6,848
     NSF and late charges                                                    925          1,511
     Damage and cleaning fees                                              7,180          5,463
     Forfeited tenant security deposits                                      - -            - -
     Other revenue                                                         2,082          1,654
         Sub-total other revenue                                     -----------      ----------
                                                                     $    17,140      $  15,476
                                                                     -----------      ----------


                    Total revenues                                   $   486,929      $ 478,415
                                                                     ===========      ==========
</TABLE>







See Notes to Financial Statements.
                                      - 4 -
<PAGE>



                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




                                                                        2002             2001
                                                                     -----------      ----------
OPERATING EXPENSES
<S>                                                                  <C>              <C>

     Renting expenses
         Advertising                                                 $       - -      $     - -
         Miscellaneous renting expenses                                      836            550
             Sub-total renting expenses                              -----------      ----------
                                                                     $       836      $     550
                                                                     -----------      ----------

     Administrative expenses
         Office salaries                                             $       - -      $     - -
         Office supplies                                                   1,753          1,743
         Office rent                                                         - -            - -
         Management fee                                                   32,256         24,192
         Manager's salary                                                 19,332         23,647
         Manager rent free unit                                           10,159          9,792
         Legal expense                                                       844            - -
         Audit expense                                                     4,900          4,900
         Bookkeeping / accounting services                                   - -            - -
         Telephone and answering service                                   1,534          1,401
         Bad debts                                                         2,936          2,207
         Miscellaneous administrative expenses                             9,326          8,702
             Sub-total administrative expenses                       -----------      ----------
                                                                     $    83,040      $  76,584


     Utilities expense
         Fuel oil / coal                                             $       - -      $     - -
         Electricity                                                       5,905          4,468
         Water                                                             3,509          3,052
         Gas                                                               2,418          3,806
         Sewer                                                             6,609          5,390
             Sub-total utilities expense                             -----------      ----------
                                                                     $    18,441      $  16,716
                                                                     ===========      ==========
</TABLE>
















See Notes to Financial Statements.
                                      - 5 -
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




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

     Operating and maintenance expense
         Janitor and cleaning payroll                                $     4,552      $   7,025
         Janitor and cleaning supplies                                     1,863            934
         Janitor and cleaning contract                                     1,865          1,665
         Exterminating payroll / contract                                    849            867
         Exterminating supplies                                              - -            - -
         Garbage and trash removal                                         8,309          7,031
         Security payroll / contract                                         - -            - -
         Grounds payroll                                                     - -            - -
         Grounds supplies                                                     50            224
         Grounds contract                                                  7,469          7,395
         Repairs payroll                                                  24,544         18,980
         Repairs material                                                  3,583          3,258
         Repairs contract                                                 12,183          6,395
         Elevator maintenance / contract                                     - -            - -
         Heating / cooling repairs and maintenance                           - -            - -
         Swim pool maintenance / contract                                    - -            - -
         Snow removal                                                        - -            - -
         Decorating payroll / contract                                     2,535            859
         Decorating supplies                                               2,860          1,220
         Vehicle and maintenance equipment o & r                             - -            - -
         Miscellaneous operating and maint. expenses                       3,019          1,665
                                                                     -----------      ----------
             Sub-total operating & maint. expense                    $    73,681      $  57,518


     Taxes and insurance
         Real estate taxes                                           $        64      $     313
         Payroll taxes                                                     3,891          4,616
         Miscellaneous taxes, licenses, and permits                          800            800
         Property and liability insurance                                  5,660          4,374
         Fidelity bond insurance                                             - -            - -
         Workman's compensation                                            4,951          3,524
         Health insurance and other employee benefits                      7,270          6,688
         Other insurance                                                     - -            - -
                                                                     -----------      ----------
             Sub-total taxes & insurance                             $    22,636      $  20,315
                                                                     -----------      ----------


                    Total operating expenses                         $   198,634      $ 171,683
                                                                     ===========      ==========
</TABLE>









See Notes to Financial Statements.
                                      - 6 -
<PAGE>



                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




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

OTHER EXPENSES
     Interest expense - mortgage                                     $  155,638        $ 157,997
     Interest expense - notes                                               - -              - -
     Miscellaneous financial expense                                        - -              - -
     Depreciation and amortization                                      189,634          198,075
     Non project expenses                                                   - -              - -
         Sub-total other expenses                                    -----------       ----------
                                                                     $  345,272        $ 356,072
                                                                     -----------       ----------
                    Total expenses                                   $  543,906        $ 527,755
                                                                     -----------       ----------

                    Net income (loss)                                $  (56,977)       $ (49,340)
                                                                     ===========       ==========
</TABLE>


































See Notes to Financial Statements.
                                      - 7 -
<PAGE>
                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' EQUITY
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>



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

<S>                                                 <C>                         <C>                          <C>
Partners' equity
     December 31, 2000                              $  1,990,224                $     45,343                 $ 1,944,881

Partners' capital
     contributions                                           - -                         - -                         - -

Partners' capital
     distributions                                       (17,000)                        - -                     (17,000)

Net income (loss)                                        (49,340)                       (493)                    (48,847)
                                                     ------------               --------------               --------------
Partners' equity
     December 31, 2001                               $ 1,923,884                $     44,850                 $ 1,879,034

Partners' capital
     contributions                                           - -                         - -                         - -

Partners' capital
     distributions                                        (8,500)                        - -                      (8,500)

Net income (loss)                                        (56,977)                       (570)                    (56,407)
                                                     ------------               --------------               --------------
Partners' equity
     December 31, 2002                               $ 1,858,407                $     44,280                 $ 1,814,127
                                                     ============               ==============               ==============


Percentage at
     December 31, 2002                                       100%                          1%                         99%
                                                     =============              ==============               ==============
</TABLE>


















See Notes to Financial Statements.
                                      - 8 -
<PAGE>
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




                                                                        2002             2001
                                                                     -----------       -----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                  <C>               <C>
     Net income (loss)                                               $  (56,977)       $  (49,340)
     Adjustments to reconcile net income
      (loss) to net cash provided by
       (used in) operating activities:
         Depreciation and amortization                                  189,634           198,075
         Change in assets and liabilities:
          Decrease (increase) in:
             Prepaid expenses                                              (867)             (482)
             Tenants' security deposits                                    (822)           (1,721)
             Rents receivable                                               - -               - -
             Other receivables                                              - -               - -
          Increase (decrease) in:
             Accounts payable                                             5,732             4,539
             Accounts payable - general partner                             493            (2,031)
             Accrued expenses                                               - -               - -
             Accrued interest                                               - -               - -
             Prepaid rents                                                  - -               - -
             Tenants' security deposits                                    (754)              890
                                                                     -----------       -----------
                 Net cash provided by (used in)
                      operating activities                           $  136,439        $  149,930
                                                                     -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Funding of replacement reserve escrow                           $  (14,866)       $  (14,714)
     Withdrawals from replacement reserve escrow                                              - -                         - -
     Acquisition of property and equipment                               (2,092)              - -
             Net cash provided by (used in)                          -----------       -----------
                     investing activities                            $  (16,958)       $  (14,714)
                                                                     -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Partner contributions                                           $      - -        $      - -
     Partner distributions                                               (8,500)          (17,000)
     Advances from general partner                                          - -               - -
     Payment of development fees payable                               (218,750)          (66,500)
     Principal payments on long-term debt                               (32,038)          (29,680)
                 Net cash provided by (used in)                      -----------       -----------
                     financing activities                            $ (259,288)       $ (113,180)

                                                                     ===========       ===========
</TABLE>








See Notes to Financial Statements.
                                      - 9 -
<PAGE>
                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                     Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>




                                                                        2002             2001
                                                                     -----------       ----------

<S>                                                                  <C>               <C>
                 Increase (decrease) in cash and
                     cash equivalents                                $ (139,807)       $  22,036

Cash and cash equivalents
     Beginning                                                          150,390          128,354
                                                                     -----------       ----------
     Ending                                                          $   10,583        $ 150,390
                                                                     ===========       ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION
         Cash paid during the year for interest                      $  155,638        $ 157,997
                                                                     ===========       ==========
</TABLE>


































See Notes to Financial Statements.
                                     - 10 -
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (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.

          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.












                                     - 11 -
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS




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.


NOTE 2 -  ORGANIZATION

          Colonial Village Roseville is a California  Limited  Partnership which
          was formed in April 1993,  to develop,  construct,  own,  maintain and
          operate a 56-unit multi-family apartment complex and is located in the
          city of Roseville,  California. The Partnership Agreement and the loan
          agreement  with  the  California  Community  Reinvestment  Corporation
          (CCRC), a California  nonprofit public benefit corporation governs the
          major  activities  of  the  Partnership.  Under  the  agreements,  the
          Partnership is required to provide low cost housing to very low-income
          or lower-income households.

          The Partnership has one general partners, Project Go Inc., a 501(c)(3)
          tax  exempt,   non-profit   community  service  organization  and  one
          investing  limited  partner,  WNC  Housing Tax Credits  III,  L.P.,  a
          California  limited  partnership.  Partnership  transactions  with the
          partners are described in other notes to these financial statements.


NOTE 3 -  Deferred charges

          Deferred  charges as of December  31,  2002 and 2001,  consists of the
          following:


                                                     2002             2001
                                               ---------------   ---------------

          Deferred debt expense                $       110,462   $       110,462
          Tax credit monitoring fee                     22,960            22,960
                                               ---------------   ---------------
                                               $       133,422   $       133,422
                Less accumulated amortization           39,301            34,088
                                               ---------------   ---------------

                                               $        94,121   $        99,334
                                               ===============   ===============









                                     - 12 -
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS



Note 4 -  Restricted deposits and Funded reserves

          In  accordance  with  the  Partnership  Agreement  and  the  Rider  to
          Multifamily  Instrument  with CCRC,  the  Partnership  is  required to
          maintain  a  replacement  reserve  account.  The  replacement  reserve
          account is to be funded annually in the amount of $16,800.


Note 5 -  Long-Term Debt

          Long-Term  debt consisted of a permanent loan with CCRC in face amount
          of$2,200,000.

          Under the terms of the  30-year  Promissory  Note with CCRC,  the loan
          provides for an initial interest rate of 7.67% and monthly payments of
          $15,639.62  commencing on September 1, 1995,  and  continuing  through
          August 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,  2002,  the current
          interest  rate,  and  minimum   monthly   payment  due  is  7.67%  and
          $15,639.62, 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,      2003                           $      34,583
                                    2004                                  37,331
                                    2005                                  40,297
                                    2006                                  43,499
                                    2007                                  46,657
                                 Thereafter                            1,812,017
                                                                   -------------
                                    TOTAL                          $   2,014,384
                                                                   =============

NOTE 6 -  TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

          Developer Fees
          --------------

          In accordance with the Partnership  Agreement,  the Partnership agreed
          to pay the general  partner a development fee of $648,000 for services
          rendered  to  the  Partnership  for  overseeing  the  development  and
          construction of the project.  However,  during 1995,  $3,526,  of this
          amount  was  waived by the  general  partner  in  accordance  with the
          limitations imposed by the California Tax Credit Allocation Committee.

          Payment of the development  fee is to be paid from future  operational
          cash flows.

          The developer fee has been capitalized into the basis of the building.

          Management Fee
          --------------

          In accordance  with the Management  Agreement,  the  Partnership  paid
          Project Go, Inc., the general partner, a management fee during 2002 in
          the amount of $32,256,  for services  rendered in connection  with the
          leasing and  operation  of the  project.  The fee for its  services is
          approximately 7% of the project's rental income.


                                     - 13 -
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS




Note 7 -  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 8 -  Current VULNERABILITY due to certain concentrations

          The Partnership's sole asset is Colonial Village Roseville Apartments.
          The Partnership's  operations are concentrated in the multifamily real
          estate market.













































                                     - 14 -