ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                              FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


<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, 2001 and 2000, 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, 2001 and 2000, 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 24, 2002,  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.

                                       /s/TATE,PROPP,BEGGS
                                       An Accountancy Corporation


January 24, 2002
Sacramento, California


<PAGE>





                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                                 BALANCE SHEETS
                           December 31, 2001 and 2000
<TABLE>
<CAPTION>

                                                                ASSETS
                                                                ------

                                                                                     2001                 2000
                                                                                ----------------    -----------------
<S>                                                                              <C>                          <C>
Current Project Assets:
   Cash                                                                            $     19,966        $      7,804
   Restricted cash:
     Tenant security deposits                                                             9,500               9,500
     Taxes and insurance                                                                  7,537              42,035
     USDA/RD reserve                                                                    165,087             124,448
   Accounts receivable                                                                    2,697               3,021
   Prepaid expenses                                                                       3,025               2,646
                                                                                ----------------    -----------------

       Total current project assets                                                     207,812             189,454

Property and equipment                                                                1,372,029           1,405,738
                                                                                ----------------    -----------------

         Total Assets                                                              $  1,579,841        $  1,595,192
                                                                                ================    =================


                                                   LIABILITIES AND PARTNERS' CAPITAL

Current Project Liabilities:
   Accounts payable                                                                $        433        $          -
   Tenant security deposits                                                               9,500               9,500
   Note payable, current portion                                                          4,088               3,737
   Note payable - other, current portion                                                  1,395               1,396
                                                                                ----------------    -----------------

       Total current project liabilities                                                 15,416              14,633
                                                                                ----------------    -----------------

Long-Term Project Liabilities:
   Note payable, less current portion                                                 1,369,673           1,373,761
   Note payable - other, less current portion                                               326               1,721
                                                                                ----------------    -----------------

       Total long-term project liabilities                                            1,369,999           1,375,482
                                                                                ----------------    -----------------

         Total liabilities                                                            1,385,415           1,390,115

Partners' capital                                                                       194,426             205,077
                                                                                ----------------    -----------------

         Total Liabilities and Partners' Capital                                   $  1,579,841        $  1,595,192
                                                                                ================    =================
</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, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                     2001                  2000
                                                                                ----------------    -----------------
<S>                                                                               <C>                 <C>
Project Operating Income:
   Gross rent                                                                     $     111,125       $     107,967
   Rental assistance                                                                     51,864              58,493
   Less vacancies                                                                        (3,544)             (1,245)
                                                                                ----------------    -----------------
   Net rent                                                                             159,445
   Other project income:
      Laundry income                                                                      2,785               2,710
     Late charges                                                                           190                 216
      Other tenant income                                                                 1,879               2,165
   Interest income                                                                        5,734               4,963
   Miscellaneous income                                                                       -              13,755
                                                                                ----------------    -----------------

         Total project operating income                                                 170,033             189,024
                                                                                ----------------    -----------------

Project Operating Expenses:
   Maintenance and operating:
      Caretaker                                                                           8,870               9,718
      Supplies                                                                            2,398               3,463
      Painting and decorating                                                             1,027                 785
      General  maintenance and repairs                                                    4,172               6,192
      Snow removal                                                                            -                   -
      Elevator maintenance                                                                    -                   -
      Grounds maintenance                                                                 1,713               2,961
      Services                                                                              919                 846
      Furniture and furnishings replacement                                               3,680               7,989
      Other operating expenses                                                                -                   -
                                                                                ----------------    -----------------

       Total maintenance and operating                                                   22,779              31,954
                                                                                ----------------    -----------------

   Utilities:
      Electricity                                                                         3,899               4,878
      Water                                                                               5,119               5,355
      Sewer                                                                               5,228               6,032
      Heating fuel/other                                                                      -                   -
      Garbage and trash removal                                                           5,808               5,821
                                                                                ----------------    -----------------

       Total utilities                                                                   20,054              22,086
                                                                                ----------------    -----------------
</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, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                     2001                 2000
                                                                                ----------------    -----------------
<S>                                                                               <C>                 <C>
Project Operating Expenses (Continued):
  Administrative:
     Manager                                                                      $       9,827       $       9,505
     Management fees                                                                     18,266              18,263
     Accounting/auditing                                                                  4,120               4,000
     Bookkeeping                                                                              -                 (80)
     Legal                                                                                  396                 152
     Advertising                                                                            297                 551
     Telephone                                                                            1,278               1,486
     Office supplies                                                                      2,286               1,981
     Office furniture and equipment                                                           -                 140
     Training expense                                                                         -                 549
     Health insurance                                                                     3,796               1,886
     Payroll taxes                                                                        1,836               1,882
     Worker's compensation insurance                                                      1,386               1,537
     Other administrative expenses                                                          711                 360
                                                                                ----------------    -----------------

         Total administrative                                                            44,199              42,212
                                                                                ----------------    -----------------

  Taxes and insurance:
     Real estate taxes                                                                    9,326               8,964
     Special assessments                                                                      -                   -
     Other taxes, fees and permits                                                        1,080                (364)
     Property insurance                                                                   5,046               4,639
     Other insurance                                                                        625                 532
                                                                                ----------------    -----------------

         Total taxes and insurance                                                       16,077              13,771
                                                                                ----------------    -----------------

         Total project operating expenses                                               103,109             110,023
                                                                                ----------------    -----------------
</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, 2001 and 2000
<TABLE>
<CAPTION>
                                                                                     2001                  2000
                                                                                ----------------    -----------------
<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                                                                (31,931)            (32,252)
     Interest subsidy                                                                   (91,892)            (91,892)
      Other interest                                                                       (192)               (290)
   Authorized capital improvements from USDA/RD reserve                                  (8,294)             (8,554)
                                                                                ----------------    -----------------

       Total other project income (expenses)                                            (74,126)            (74,805)
                                                                                ----------------    -----------------

         Net income (loss)                                                        $      (7,202)    $         4,196
                                                                                ================    =================
</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, 2001 and 2000
<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, 1999                             $          26,456     $            175,634      $         202,090

Return on investment                                                (806)                    (403)                (1,209)

Net income                                                            42                    4,154                  4,196
                                                       ------------------    ---------------------    -------------------

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
                                                       ==================    =====================    ===================
</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, 2001 and 2000
                                Increase in Cash
<TABLE>
<CAPTION>
                                                                                                2001                 2000
                                                                                           ----------------    -----------------
<S>                                                                                        <C>                 <C>
Cash Flows From Operating Activities:
   Cash received from tenants for rent                                                     $       159,769     $       166,878
   Cash paid to tenants for security deposits                                                            -                (250)
   Miscellaneous cash received                                                                      10,588              23,809
   Cash paid to suppliers and employees and
     for other restricted cash                                                                     (76,851)            (79,144)
   Interest paid                                                                                   (32,123)            (32,542)
                                                                                           ----------------    -----------------

     Net cash provided by operating activities                                                      61,383              78,751
                                                                                           ----------------    -----------------

Cash Flows From Investing Activities:
   Deposits to the USDA/RD reserve                                                                 (51,346)            (80,697)
   Withdrawals from the USDA/RD reserve                                                             10,707              10,317
                                                                                           ----------------    -----------------

      Net cash used by investing activities                                                        (40,639)            (70,380)
                                                                                           ----------------    -----------------

Cash Flows From Financing Activities:
   Principal payments on note payable                                                               (3,737)             (3,417)
   Principal payments on note payable - other                                                       (1,396)             (1,395)
   Return on investment                                                                             (3,449)             (1,209)
                                                                                           ----------------    -----------------

     Net cash used by financing activities                                                          (8,582)             (6,021)
                                                                                           ----------------    -----------------

Increase in cash                                                                                    12,162               2,350

Cash, beginning of year                                                                              7,804               5,454
                                                                                           ----------------    -----------------

Cash, end of year                                                                          $        19,966     $         7,804
                                                                                           ================    =================
</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, 2001 and 2000
                                Increase in Cash
<TABLE>
<CAPTION>



Reconciliation of Net Income (Loss) to Net
  Cash Provided by Operating Activities:                                                        2001                2000
----------------------------------------
                                                                                           ----------------    -----------------

<S>                                                                                        <C>                 <C>
Net income (loss)                                                                          $        (7,202)    $         4,196

Adjustments to reconcile net income (loss) to net cash provided by operating
   activities:
   Depreciation and amortization                                                                    33,709              33,709
   Decrease in accounts receivable                                                                     324               1,663
   Increase in prepaid expenses                                                                       (379)               (120)
   Decrease in other restricted cash                                                                34,498              39,553
   Increase in accounts payable                                                                        433                   -
   Decrease in tenant security deposits                                                                  -                (250)
                                                                                           ----------------    -----------------

Net cash provided by operating activities                                                  $        61,383     $        78,751
                                                                                           ================    =================
</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, 2001 and 2000


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, 2001 and 2000


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 2001,
         $36,000 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  $489,440  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, 2001 and 2000,
         are as follows:
         Balance, December 31, 1999                               $      54,068

         Deposit                                                         78,944
         Interest earned                                                  1,753
         Withdrawals                                                     (8,554)
         Interest withdrawn                                              (1,738)
         Bank charges                                                       (25)
                                                               -----------------

         Balance, December 31, 2000                                     124,448

         Deposits                                                        48,943
         Interest earned                                                  2,403
         Withdrawals                                                     (8,294)
         Interest withdrawn                                              (2,403)
         Bank charges                                                       (10)
                                                               -----------------
         Balance, December 31, 2001                               $      165,087
                                                               =================

                                       10
<PAGE>



                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE   5:     PROPERTY AND EQUIPMENT

              Property  and  equipment  at  December  31,  2001  and  2000,  was
              comprised of the following:
<TABLE>
<CAPTION>

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

<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                                    452,163              418,454
                                                                                         -----------------    -----------------

                   Total property and equipment                                         $     1,372,029      $     1,405,738
                                                                                         =================    =================
</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:
<TABLE>
<CAPTION>
<S>                                           <C>                                        <C>
                                              Year Ending December 31:
                                                       2002                              $          4,088
                                                       2003                                         4,472
                                                       2004                                         4,891
                                                       2005                                         5,350
                                                       2006                                         5,852
                                                    Thereafter                                  1,349,108
                                                                                         -----------------

                                                      Total                              $      1,373,761
                                                                                         =================
</TABLE>
                                       11

<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


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.  Principal  payments for the succeeding years
         are as follows:
<TABLE>
<CAPTION>



<S>                                           <C>                                       <C>
                                              Year Ending December 31:
                                                       2002                              $          1,395
                                                       2003                                           326
                                                                                         -----------------

                                                      Total                              $          1,721
                                                                                         =================
</TABLE>

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.
                    o    Capital  Resources,  Inc.  and  its  division  Atlantic
                         Vending Services.
                    o    the  surety   company  which   provides  the  insurance
                         coverage  for the Project.  The general  partner owns a
                         less than 5% interest in the surety company:




               During 2001 and  2000,fees  were paid to the  related  entites as
               follows:

               Related Entity         Expense                 2001          2000
               --------------         -------                 ----       -------
               The CBM Group, Inc.    Management fees        $18,266     $18,263
               CBM Diversified        Credit checking fees      $435        $145
               Atlantic Vending       Laundry facility
               Services               Maintenance            $ 2,785     $ 2,710
               Rural Housing
               Reinsurance            Insurance premiums       6,050       5,291

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



               At December 31, 2001, $433 was payable to The CBM Group,  Inc.for
               accrued  management  fees.  This  amount is  included in accounts
               payable.

                                       12
<PAGE>


                            ASHLAND INVESTMENT GROUP
                          An Oregon Limited Partnership

                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


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 income (loss) to
              the taxable loss of the Partnership at December 31, 2001 and 2000,
              is as follows: 2001 2000
<TABLE>
<CAPTION>
                                                                                                    2001                2000
                                                                                                    ----                ----
<S>                                                                                      <C>                  <C>
               Financial statement net income (loss)                                     $                    $
                                                                                                  (7,202)               4,196

               Adjustments:
                   Excess of tax depreciation and amortization over
               financial statement depreciation and amortization                                 (26,704)             (26,973)
                   Expense reported on financial statements in excess of
               tax return expenses                                                                     -                  129
                   Miscellaneous                                                                    (127)                  (2)
                                                                                         -----------------    -----------------

                      Taxable loss                                                       $       (34,033)     $       (22,650)
                                                                                         =================    =================
</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, 2001, and
have issued our report  thereon  dated  January 24, 2002.  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.

                                                     /s/TATE,PROPP.BEGGS
                                                     An Accountancy Corporation


January 24, 2002
Sacramento, California