ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                              FINANCIAL STATEMENTS
                           December 31, 2002 and 2001













<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership



                                    CONTENTS


                                                                          Page

INDEPENDENT AUDITORS' REPORT ON THE
  FINANCIAL STATEMENTS                                                      1


FINANCIAL STATEMENTS
  Balance Sheets                                                            2
  Statements of Operations                                                3 - 5
  Statements of Changes in Partners' Capital                                6
  Statements of Cash Flows                                                7 - 8
  Notes to Financial Statements                                           9 - 13


INDEPENDENT AUDITORS' REPORT ON THE
  SUPPORTING DATA REQUIRED BY USDA/RD                                       14


SUPPORTING DATA REQUIRED BY USDA/RD                                      15 - 24


INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON
  INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON
  AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
  ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS                          25 - 26




<PAGE>




                          INDEPENDENT AUDITORS' REPORT



To the Partners
Ashland Investment Group
An Oregon Limited Partnership

     We have audited the accompanying balance sheets of Ashland Investment
Group, an Oregon Limited Partnership,  as of December 31, 2002 and 2001, and the
related statements of operations,  changes in partners' capital,  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  and  Government  Auditing  Standards
issued by the Comptroller General of the United States.  Those standards require
that we plan and perform the audit to obtain reasonable  assurance about whether
the financial  statements are free of material  misstatement.  An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits 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 Ashland Investment
Group 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.

     In accordance with  Government  Auditing  Standards,  we have also issued a
report  dated  January 13,  2003,  on our  consideration  of Ashland  Investment
Group's  internal  control  over  financial  reporting  and  our  tests  of  its
compliance with certain provisions of laws,  regulations,  contracts and grants.
That  report  is an  integral  part of an audit  performed  in  accordance  with
Government Auditing Standards and should be read in conjunction with this report
in considering the results of our audit.

                                         Tate, Propp, Beggs & Sugimoto
                                         An Accountancy Corporation


January 13, 2003
Sacramento, California


<PAGE>





                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                                 BALANCE SHEETS
                           December 31, 2002 and 2001


                                     ASSETS
<TABLE>
<CAPTION>

                                                                                                2002                 2001
                                                                                           ----------------    -----------------
<S>                                                                                         <C>                 <C>
Current Project Assets:
   Cash                                                                                     $       20,571      $       19,966
   Restricted cash:
     Tenant security deposits                                                                        9,250               9,500
     Taxes and insurance                                                                             4,059               7,537
     USDA/RD reserve                                                                               173,206             165,087
   Accounts receivable                                                                               4,966               2,697
   Prepaid expenses                                                                                  5,189               3,025
                                                                                           ----------------    -----------------

       Total current project assets                                                                217,241             207,812

Property and equipment                                                                           1,338,320           1,372,029
                                                                                           ----------------    -----------------

         Total Assets                                                                         $  1,555,561        $  1,579,841
                                                                                           ================    =================


                        LIABILITIES AND PARTNERS' CAPITAL

Current Project Liabilities:
   Accounts payable                                                                         $        3,705     $           433
   Tenant security deposits                                                                          9,250               9,500
   Note payable, current portion                                                                     4,472               4,088
   Note payable - other, current portion                                                               326               1,395
                                                                                           ---------------     -----------------

       Total current project liabilities                                                            17,753              15,416
                                                                                           ---------------     -----------------

Long-Term Project Liabilities:
   Note payable, less current portion                                                            1,365,201           1,369,673
   Note payable - other, less current portion                                                            -                 326
                                                                                           ---------------     -----------------

       Total long-term project liabilities                                                       1,365,201           1,369,999
                                                                                           ---------------     -----------------

         Total liabilities                                                                       1,382,954           1,385,415

Partners' capital                                                                                  172,607             194,426
                                                                                           ---------------     -----------------

         Total Liabilities and Partners' Capital                                              $  1,555,561        $  1,579,841
                                                                                           ===============     =================
</TABLE>

                   The accompanying notes are an integral part
                          of these financial statements
                                       2
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                            STATEMENTS OF OPERATIONS
                 For the Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>


                                                                                                2002                  2001
                                                                                           ----------------    -----------------
<S>                                                                                          <C>                 <C>
Project Operating Income:
   Gross rent                                                                                $     114,631       $     111,125
   Rental assistance                                                                                51,668              51,864
   Less vacancies                                                                                   (4,081)             (3,544)
                                                                                           ----------------    -----------------
   Net rent                                                                                        162,218             159,445
   Other project income:
     Laundry income                                                                                  2,810               2,785
     Late charges                                                                                      652                 190
     Other tenant income                                                                             1,913               1,879
   Interest income                                                                                   4,479               5,734
                                                                                           ----------------    -----------------
       Total project operating income                                                              172,072             170,033
                                                                                           ----------------    -----------------

Project Operating Expenses:
   Maintenance and operating:
     Caretaker                                                                                      11,291               8,870
     Supplies                                                                                        1,715               2,398
     Painting and decorating                                                                           143               1,027
     General maintenance and repairs                                                                 7,749               4,172
     Snow removal                                                                                        -                   -
     Elevator maintenance                                                                                -                   -
     Grounds maintenance                                                                               404               1,713
     Services                                                                                          886                 919
     Furniture and furnishings replacement                                                           6,873               3,680
     Other operating expenses                                                                            -                   -
                                                                                           ----------------    -----------------

       Total maintenance and operating                                                              29,061              22,779
                                                                                           ----------------    -----------------

   Utilities:
     Electricity                                                                                     5,466               3,899
     Water                                                                                           5,404               5,119
     Sewer                                                                                           6,243               5,228
     Heating fuel/other                                                                                  -                   -
     Garbage and trash removal                                                                       5,864               5,808
                                                                                           ----------------    -----------------

       Total utilities                                                                              22,977              20,054
                                                                                           ----------------    -----------------
</TABLE>
                   The accompanying notes are an integral part
                          of these financial statements
                                       3
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

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


                                                                                                2002                 2001
                                                                                           ----------------    -----------------
<S>                                                                                          <C>               <C>
Project Operating Expenses (Continued):
   Administrative:
     Manager                                                                                 $       10,929    $         9,827
     Management fees                                                                                 18,306             18,266
     Accounting/auditing                                                                              4,240              4,120
     Bookkeeping                                                                                          -                  -
     Legal                                                                                            1,554                396
     Advertising                                                                                        850                297
     Telephone                                                                                        1,862              1,278
     Office supplies                                                                                  2,243              2,286
     Office furniture and equipment                                                                     127                  -
     Training expense                                                                                   750                  -
     Health insurance                                                                                 7,589              3,796
     Payroll taxes                                                                                    2,470              1,836
     Worker's compensation insurance                                                                  1,609              1,386
     Other administrative expenses                                                                      779                711
                                                                                           ----------------    -----------------

       Total administrative                                                                          53,308             44,199
                                                                                           ----------------    -----------------

   Taxes and insurance:
     Real estate taxes                                                                                8,615              9,326
     Special assessments                                                                                  -                  -
     Other taxes, fees and permits                                                                    2,157              1,080
     Property insurance                                                                               4,271              5,046
     Other insurance                                                                                  3,429                625
                                                                                           ----------------    -----------------

       Total taxes and insurance                                                                     18,472             16,077
                                                                                           ----------------    -----------------

       Total project operating expenses                                                             123,818            103,109
                                                                                           ----------------    -----------------
</TABLE>
                   The accompanying notes are an integral part
                          of these financial statements
                                       4
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

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


                                                                                               2002                  2001
                                                                                         -----------------    ------------------
<S>                                                                                       <C>                 <C>
Other Project Income (Expenses):
   Interest subsidy - PASS Credit                                                         $       91,892      $        91,892
   Depreciation and amortization                                                                 (33,709)             (33,709)
   Interest expense:
     USDA/RD 1% interest                                                                         (31,581)             (31,931)
     Interest subsidy                                                                            (91,892)             (91,892)
     Other interest                                                                                  (95)                (192)
   Authorized capital improvements from USDA/RD reserve                                           (1,239)              (8,294)
                                                                                         -----------------    ------------------

       Total other project income (expenses)                                                     (66,624)             (74,126)
                                                                                         -----------------    ------------------

         Net loss                                                                          $     (18,370)     $        (7,202)
                                                                                         =================    ==================
</TABLE>
                   The accompanying notes are an integral part
                          of these financial statements
                                       5
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                       STATEMENTS OF CHANGES IN PARTNERS'
             CAPITAL For the Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>


                                                            General                 Limited
                                                            Partner                 Partner
                                                       ------------------    ---------------------
                                                                                  WNC Housing
                                                                                  Tax Credit
                                                                                    Fund II
                                                           Ronald D.                Limited
                                                          Bettencourt             Partnership                Total
                                                       ------------------    ---------------------    -------------------

<S>                                                    <C>                   <C>                       <C>
Balance, December 31, 2000                             $         25,692      $           179,385       $       205,077

Return on investment                                             (2,299)                  (1,150)               (3,449)

Net loss                                                            (72)                  (7,130)               (7,202)
                                                       ------------------    ---------------------    -------------------

Balance, December 31, 2001                                       23,321                  171,105               194,426

Return on investment                                             (2,299)                  (1,150)               (3,449)

Net loss                                                           (184)                 (18,186)              (18,370)
                                                       ------------------    ---------------------    -------------------

Balance, December 31, 2002                             $         20,838      $           151,769       $       172,607
                                                       ==================    =====================    ===================
</TABLE>
                   The accompanying notes are an integral part
                          of these financial statements
                                       6
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                            STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 2002 and 2001
                                Increase in Cash
<TABLE>
<CAPTION>


                                                                                                2002                 2001
                                                                                           ----------------    -----------------
<S>                                                                                          <C>                 <C>
Cash Flows From Operating Activities:
   Cash received from tenants for rent                                                       $     159,949       $     159,769
   Cash paid to tenants for security deposits                                                         (250)                  -
   Miscellaneous cash received                                                                       9,854              10,588
   Cash paid to suppliers and employees and
     for other restricted cash                                                                    (120,221)            (76,851)
   Interest paid                                                                                   (31,676)            (32,123)
                                                                                           ----------------    -----------------

     Net cash provided by operating activities                                                      17,656              61,383
                                                                                           ----------------    -----------------

Cash Flows From Investing Activities:
   Deposits to the USDA/RD reserve                                                                  (9,358)            (51,346)
   Withdrawals from the USDA/RD reserve                                                              1,239              10,707
                                                                                           ----------------    -----------------

     Net cash used by investing activities                                                          (8,119)            (40,639)
                                                                                           ----------------    -----------------

Cash Flows From Financing Activities:
   Principal payments on note payable                                                               (4,088)             (3,737)
   Principal payments on note payable - other                                                       (1,395)             (1,396)
   Return on investment                                                                             (3,449)             (3,449)
                                                                                           ----------------    -----------------

     Net cash used by financing activities                                                          (8,932)             (8,582)
                                                                                           ----------------    -----------------

Increase in cash                                                                                       605              12,162

Cash, beginning of year                                                                             19,966               7,804
                                                                                           ----------------    -----------------

Cash, end of year                                                                           $       20,571      $       19,966
                                                                                           ================    =================
</TABLE>
                   The accompanying notes are an integral part
                          of these financial statements
                                       7
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                       STATEMENTS OF CASH FLOWS(CONTINUED)
                 For the Years Ended December 31, 2002 and 2001
                                Increase in Cash
<TABLE>
<CAPTION>


Reconciliation of Net Loss to Net
  Cash Provided by Operating Activities:                                                        2002                2001
----------------------------------------
                                                                                           ----------------    -----------------

<S>                                                                                         <C>                 <C>
Net loss                                                                                    $      (18,370)     $       (7,202)
Adjustments to reconcile net loss to net
   cash provided by operating activities:
   Depreciation and amortization                                                                    33,709              33,709
   (Increase) decrease in accounts receivable                                                       (2,269)                324
   Increase in prepaid expenses                                                                     (2,164)               (379)
   Decrease in other restricted cash                                                                 3,728              34,498
   Increase in accounts payable                                                                      3,272                 433
   Decrease in tenant security deposits                                                               (250)                  -
                                                                                           ----------------    -----------------

Net cash provided by operating activities                                                  $        17,656     $        61,383
                                                                                           ================    =================
</TABLE>

                   The accompanying notes are an integral part
                          of these financial statements
                                       8
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001



      NOTE     1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Ashland Investment Group, an Oregon Limited  Partnership,  was
                  formed  in June  1988  for the  purpose  of  constructing  and
                  operating a 40-unit rural rental  housing  project  located in
                  Jackson  County,  Oregon,  known as Ashley Garden  Apartments.
                  Project  construction began in March 1990 and was completed in
                  November 1990. Rental operations commenced in November 1990.

                  The  major  activities  of the  Project  are  governed  by the
                  partnership  agreement  and the United  States  Department  of
                  Agriculture/Rural  Development  (USDA/RD) pursuant to Sections
                  515 and 521 of the  Housing  Act of 1949,  as  amended,  which
                  provide  for  interest  and  rental  subsidies,  respectively.
                  USDA/RD has  contracted  with the  Partnership  to make rental
                  assistance  payments to the Partnership on behalf of qualified
                  tenants.  The contract  terminates upon total  disbursement of
                  the assistance obligation.

                  The following is a summary of significant accounting policies:

                  (a)      The financial  statements are prepared on the accrual
                           basis of accounting.

                  (b)      The  Partnership  is not an income tax paying entity.
                           The net  income  or loss  of the  Partnership  passes
                           through  to  and  is   reportable   by  the  partners
                           individually.  Therefore,  no  provision  for  income
                           taxes is reflected in these financial statements.

                  (c)      Property and equipment is stated at cost. Assets are
                           depreciated over their estimated useful lives using
                           the straight-line method. The estimated useful lives
                           range from 5 to 50 years.

                  (d)      Loan  acquisition   costs  and  construction   period
                           interest  are  amortized  over  50  years  using  the
                           straight-line method.

                  (e)      The  Partnership   maintains  its  cash  balances  in
                           institutions where they are insured,  up to $100,000,
                           by the Federal Deposit Insurance Corporation (FDIC).

                  (f)      The   presentation   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 the reported amounts of assets and liabilities
                           and disclosure of contingent  assets and  liabilities
                           at the  date  of the  financial  statements  and  the
                           reported  amounts of revenues and expenses during the
                           reported  period.  Actual  results  could differ from
                           those estimates.

                                       9
<PAGE>
                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001



NOTE 2:        TENANT SECURITY DEPOSITS

               Tenant security  deposits are maintained in a separate account at
               a bank insured by the FDIC.

NOTE 3:        TAXES AND INSURANCE RESERVE

               A separate bank account has been  established to accumulate  cash
               transfers for the payment of property taxes and insurance. During
               2002 and 2001, $8,000 and $36,000,  respectively, of unrestricted
               cash was transferred  from this  interest-bearing  account to the
               operating account.

NOTE 4:        USDA/RD RESERVE

               The loan  agreement  with USDA/RD  requires  cash  transfers to a
               replacement  reserve account in the amount of approximately 1% of
               the  original  loan  amount  each year  until  $139,389  has been
               accumulated.  Withdrawals  from the  reserve  account may be made
               only with the approval and countersignature of the USDA/RD.

               Changes in the reserve for the years ended  December 31, 2002 and
               2001, are as follows:

               Balance, December 31, 2000                        $      124,448

               Deposit                                                   48,943
               Interest earned                                            2,403
               Withdrawals                                               (8,294)
               Interest withdrawn                                        (2,403)
               Bank charges                                                 (10)
                                                                ----------------

               Balance, December 31, 2001                               165,087

               Deposits                                                   8,000
               Interest earned                                            1,358
               Withdrawals                                               (1,239)
                                                                ----------------

               Balance, December 31, 2002                        $      173,206
                                                                ================

                                       10
<PAGE>

                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001
<TABLE>
<CAPTION>


NOTE 5:        PROPERTY AND EQUIPMENT

               Property  and  equipment  at  December  31,  2002 and  2001,  was comprised of the following:

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

<S>                                                                                      <C>                  <C>
               Land                                                                      $        90,000      $        90,000
               Building                                                                        1,650,450            1,650,450
               Furniture and equipment                                                            83,742               83,742
                                                                                         -----------------    -----------------

                                                                                               1,824,192            1,824,192
               Less accumulated depreciation and amortization                                    485,872              452,163
                                                                                         -----------------    -----------------

                   Total property and equipment                                            $   1,338,320        $   1,372,029
                                                                                         =================    =================
</TABLE>

NOTE 6:        NOTE PAYABLE

               The  Partnership  has  a  note  payable  to  USDA/RD  in  monthly
               installments of $10,630 including interest at 9.0% per annum, due
               November  2040.  The  note is  secured  by a deed of trust on the
               apartment project.

               The  Partnership has entered into an interest  subsidy  agreement
               with USDA/RD.  USDA/RD provides a monthly interest subsidy in the
               amount of $7,658 which  reduces the  effective  interest  rate to
               approximately  1.0% over the term of the  loan.  The  subsidy  is
               credited to subsidy  income,  and interest at 9.0% is included in
               interest expense.  The USDA/RD regulatory  agreement provides for
               USDA/RD to establish and control the allowable rents.

               Principal  payments for the succeeding  five years and thereafter
               are as follows:

                  Year Ending December 31:
                            2003                                $         4,472
                            2004                                          4,891
                            2005                                          5,350
                            2006                                          5,852
                            2007                                          6,400
                         Thereafter                                   1,342,708
                                                               ----------------

                            Total                                 $   1,369,673
                                                               ================

                                       11
<PAGE>
                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001



NOTE 7:        NOTE PAYABLE - OTHER

               The  Partnership  has a note  payable  to the City of  Ashland in
               semi-annual installments of $1,158 including interest at 7.5% per
               annum,   due  November  2003.  The  principal   payment  for  the
               succeeding year is as follows:

                  Year Ending December 31:
                  ------------------------
                            2003                               $
                                                                            326
                                                               ----------------
                            Total                              $
                                                                            326
                                                               ================

NOTE 8:        RELATED PARTY TRANSACTIONS

               Fees Paid to Related Entities
               -----------------------------

               The  general  partner  of the  Project  is a  partner  in The CBM
               Management  Group.  The general  partner of the Project is also a
               shareholder in the following related entities:

                    o The CBM Group,  Inc. and its divisions:  CBM  Diversified,
                    Consolidated Building Maintenance, and CBM Landscape. During
                    2002 and 2001,  The CBM Group,  Inc.  was paid  $18,306  and
                    $17,833,  respectively,  in  management  fees.  Included  in
                    accounts  payable at December  31, 2001 was $433  payable to
                    The  CBM  Group,   Inc.  for  2001   management   fees.  CBM
                    Diversified  was paid  $308 and $435  during  2002 and 2001,
                    respectively,  for credit  checking  fees.  At December  31,
                    2002,   $17  was   included  in  accounts   payable  to  CBM
                    Diversified for 2002 credit checking fees.
                    o Capital Resources, Inc. and its division, Atlantic Vending
                    Services.  During 2002 and 2001,  Atlantic  Vending Services
                    was  paid  $2,810  and  $2,785,  respectively,  for  laundry
                    facility maintenance.
                    o  Rural  Housing  Reinsurance,  the  surety  company  which
                    provides the insurance coverage for the Project. The general
                    partner owns a less than 5% interest in the surety  company,
                    which  was paid  $6,435  and  $5,425  during  2002 and 2001,
                    respectively, for insurance premiums.

               The Project also pays The CBM Group, Inc. a ten-cent per copy fee
               for bulk copies of forms.


                                       12
<PAGE>
                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2002 and 2001



NOTE 9:        PARTNERSHIP PROFITS, LOSSES AND DISTRIBUTIONS

               Profits and losses,  as adjusted  for certain  provisions  of the
               Partnership  agreement,  are allocated 1% to the general  partner
               and  99% to  the  limited  partner.  Under  USDA/RD  regulations,
               distributions  to partners  may be made from  Project  operations
               only to the extent funds exceed the required contributions to the
               cash reserve account.  Annual  distributions are limited to 8% of
               the Partnership's  initial capital  investment.  If the return on
               investment is not paid in a given year, any unpaid portion may be
               carried forward for one year and paid if earned.

NOTE 10:       TAXABLE LOSS

               A  reconciliation  of the  financial  statement  net  loss to the
               taxable loss of the Partnership at December 31, 2002 and 2001, is
               as follows:
<TABLE>
<CAPTION>

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

<S>                                                                                       <C>                 <C>
               Financial statement net loss                                               $      (18,370)     $        (7,202)

               Adjustments:
                  Excess of tax depreciation and amortization over
               financial statement depreciation and amortization                                 (26,721)             (26,704)
                  Miscellaneous                                                                        -                 (127)
                                                                                         -----------------    -----------------

                      Taxable loss                                                        $      (45,091)      $      (34,033)
                                                                                         =================    =================
</TABLE>

NOTE 11:       CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

               The Project's operations are concentrated in the multifamily real
               estate  market.  In addition,  the Project  operates in a heavily
               regulated environment.  The operations of the Project are subject
               to  the  administrative  directives,  rules  and  regulations  of
               federal, state and local regulatory agencies,  including, but not
               limited to, USDA/RD.  Such administrative  directives,  rules and
               regulations  are  subject to change by an act of  congress  or an
               administrative change mandated by USDA/RD. Such changes may occur
               with little notice or  inadequate  funding to pay for the related
               cost, including the additional  administrative  burden, to comply
               with a change.

                                       13
<PAGE>




                       SUPPORTING DATA REQUIRED BY USDA/RD


<PAGE>



                       INDEPENDENT AUDITORS' REPORT ON THE
                       SUPPORTING DATA REQUIRED BY USDA/RD



To the Partners
Ashland Investment Group
An Oregon Limited Partnership

     We have audited the financial  statements of Ashland  Investment  Group, an
Oregon Limited Partnership,  as of and for the year ended December 31, 2002, and
have issued our report  thereon  dated  January 13, 2003.  Our audit was made in
accordance with auditing  standards  generally  accepted in the United States of
America and Government  Auditing Standards issued by the Comptroller  General of
the United  States  and,  accordingly,  included  such  tests of the  accounting
records and such other  auditing  procedures as we  considered  necessary in the
circumstances.

     Our audit was made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplementary information provided on
pages 15 through 24, including USDA/RD Form RD 1930-7,  has been prepared in the
format  and  following  the  instructions  of the  USDA/RD.  Those  instructions
prescribe  practices  that differ in some  respects from  accounting  principles
generally   accepted  in  the  United  States  of  America.   Accordingly,   the
accompanying  forms are not intended to present financial position or results of
operations in conformity with accounting  principles  generally  accepted in the
United  States of America.  The  information  in USDA/RD Form RD 1930-7 has been
subjected to the auditing procedures applied in the audit of the basic financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
accordance with practices and instructions prescribed by USDA/RD.

     This report is intended solely for filing with regulatory  agencies and the
United States Department of Agriculture/Rural Development and is not intended to
be and should not be used by anyone other than these specific parties.



                                       Tate, Propp, Beggs & Sugimoto
                                       An Accountancy Corporation


January 13, 2003
Sacramento, California


<PAGE>

                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                      SUPPLEMENTAL INFORMATION REQUIRED FOR
                      2002 ANNUAL REPORTS FOR 515 PROJECTS
<TABLE>
<CAPTION>


                           Requirement                                                           Response
                           -----------                                                           --------
<S>                                                                    <C>

1.    Identity of interest.                                            See the audited financial statements of Ashland Investment
                                                                       Group, a California Limited Partnership, as of and for the
                                                                       year ended December 31, 2002, and the accompanying
                                                                       Note 8 - Related Party Transactions to the audited financial
                                                                       statements dated January 13, 2003.

2.    Funds paid to management firm in excess of the approved
      management fee.                                                  $0

3.    Incumbrance of project accounts.                                 None

4.    Project accounts.                                                Cash, account #12588-09174 maintained at Bank of America,
                                                                       2885 Bell Road, Auburn, CA 95603, with a balance of $20,421,
                                                                       non-interest bearing.

                                                                       Tenant security deposits, account #12582-02364 maintained at
                                                                       Bank of America, 2885 Bell Road, Auburn, CA 95603, with a
                                                                       balance of $9,250, non-interest bearing.

                                                                       Taxes and insurance reserve, account #12584-02240 maintained
                                                                       at Bank of America, 2885 Bell Road, Auburn, CA 95603, with a
                                                                       balance of $4,059, interest at 0.65% annually.

                                                                       USDA/RD reserve, Certificate of Deposit, account #01042683
                                                                       maintained at Auburn Community Bank, 412 Auburn-Folsom Road,
                                                                       Auburn, CA 95603, with a balance of $65,000, interest at
                                                                       1.51% annually.

                                                                       USDA/RD reserve, account #3150963914 maintained at Union
                                                                       Bank of California, 974 Lincoln Way, Auburn, CA 95603, with
                                                                       a balance of $9,953, interest at 0.75% annually.
</TABLE>
                                       21

<PAGE>

                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                      SUPPLEMENTAL INFORMATION REQUIRED FOR
                2002 ANNUAL REPORTS FOR 515 PROJECTS (CONTINUED)
<TABLE>
<CAPTION>


                           Requirement                                                           Response
                           -----------                                                           --------
<S>                                                                    <C>
4.   Project accounts (continued).                                     USDA/RD reserve, account #9224116955  maintained at
                                                                       California Federal Bank, 2845 Bell Road, Auburn, CA 95603,
                                                                       with a balance of $26,714, interest at 1.094% annually.

                                                                       USDA/RD reserve account #190001776 maintained at Bank of
                                                                       Sacramento, 1750 Howe Avenue, Suite 100, Sacramento, CA
                                                                       95825, with a balance of $71,539, interest at 0.9% annually.

5.   Total cash paid to owners in 2002.                                $3,449 return on investment was paid to the owners in 2002.
</TABLE>

                                       22
<PAGE>

                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                      SUPPLEMENTAL INFORMATION REQUIRED FOR
                2002 ANNUAL REPORTS FOR 515 PROJECTS (CONTINUED)

<TABLE>
<CAPTION>

                              Requirement/Response
                              --------------------

6.    USDA/RD reserve activity.

     The reserve account activity for the year ended December 31, 2002, is summarized below:

                                                                                              Actual              Required
                                                                                         -----------------    -----------------
<S>                                                                  <C>                   <C>                 <C>
     Required reserve balance, December 31, 2001                                                               $       99,950

     Actual reserve balance, December 31, 2001                                             $     165,087

     Required 2002 annual reserve deposit                                                                                   -

     Actual 2002 reserve account deposit                                                           8,000

     Less 2002 authorized withdrawals:
        09/13 Purchase lawn mower                                    $         1,239
                                                                     ----------------
     Total 2002 authorized withdrawals                                                            (1,239)              (1,239)
                                                                                                              -----------------
     Net interest earned                                                                           1,358
                                                                                         -----------------
     Required reserve balance, December 31, 2002                                                                       98,711

     Actual reserve balance, December 31, 2002                                             $     173,206              173,206
                                                                                         =================    -----------------
     Overfunded                                                                                                $       74,495
                                                                                                              =================
</TABLE>

                                       23
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                      SUPPLEMENTAL INFORMATION REQUIRED FOR
                2002 ANNUAL REPORTS FOR 515 PROJECTS (CONTINUED)


                              Requirement/Response
                              --------------------
<TABLE>
<CAPTION>
<S>                                                                                                           <C>
7. Owners' return on investment.

     Total project operating income                                                                           $       172,072

     Less total project operating expenses                                                                           (123,818)
                                                                                                              -----------------

        Net project income                                                                                             48,254

     Less authorized capital improvements from USDA/RD reserve                                                         (1,239)

     Less debt service:
        Principal                                                                                                      (4,088)
        Interest                                                                                                      (31,581)

     Less required USDA/RD reserve contribution                                                                             -

     Add authorized USDA/RD reserve withdrawals                                                                         1,239
                                                                                                              -----------------

          Surplus cash - sub-total                                                                                     12,585

     Add approved deficit (from budget, Form RD 1930-7)                                                                 7,617
                                                                                                              -----------------

          Surplus cash                                                                                        $        20,202
                                                                                                              =================

     Budgeted return on investment                                                                            $         3,449
                                                                                                              =================

     Available for distribution in 2003                                                                                 3,449

     Ronald D. Bettencourt
        (CBM Management Group)                                                                                         (2,299)

     WNC Housing Tax Credit Fund II Limited Partnership                                                                (1,150)
                                                                                                              -----------------

                                                                                                              $
                                                                                                                            -
                                                                                                              =================
</TABLE>

                                       24
<PAGE>



NDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
 OVER FINANCIALREPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
    PERFORMED IN ACCORDANCE WITHGOVERNMENT AUDITING STANDARDS



<PAGE>



INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
 OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
   PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS



To the Partners
Ashland Investment Group
An Oregon Limited Partnership

      We have audited the financial  statements of Ashland  Investment Group, an
Oregon Limited Partnership,  as of and for the year ended December 31, 2002, and
have issued our report thereon dated January 13, 2003. We conducted our audit in
accordance with auditing  standards  generally  accepted in the United States of
America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States.

Compliance
----------

      As part of obtaining reasonable assurance about whether Ashland Investment
Group's  financial  statements are free of material  misstatement,  we performed
tests of its compliance with certain provisions of laws, regulations,  contracts
and grants,  noncompliance with which could have a direct and material effect on
the determination of financial statement amounts. However,  providing an opinion
on  compliance  with those  provisions  was not an objective of our audit,  and,
accordingly,  we do not  express  such an  opinion.  The  results  of our  tests
disclosed no instances of  noncompliance  that are required to be reported under
Government Auditing Standards.

Internal Control Over Financial Reporting
-----------------------------------------

      In planning and performing  our audit,  we considered  Ashland  Investment
Group's  internal  control over  financial  reporting in order to determine  our
auditing  procedures  for the purpose of expressing our opinion on the financial
statements and not to provide  assurance on the internal  control over financial
reporting.  Our  consideration of the internal control over financial  reporting
would  not  necessarily  disclose  all  matters  in the  internal  control  over
financial reporting that might be material weaknesses.  A material weakness is a
condition  in which  the  design  or  operation  of one or more of the  internal
control  components  does not  reduce  to a  relatively  low level the risk that
misstatements  in amounts  that would be material  in relation to the  financial
statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.  We noted
no matters  involving  the internal  control over  financial  reporting  and its
operation that we consider to be material weaknesses.


<PAGE>


      This report is intended solely for filing with regulatory agencies and the
United States Department of Agriculture/Rural Development and is not intended to
be and should not be used by anyone other than these specific parties.



                                       Tate, Propp, Beggs & Sugimoto
                                       An Accountancy Corporation


January 13, 2003
Sacramento, California