FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934

                    For the fiscal year ended March 31, 2001

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

           For the transition period from ____________ to ____________

                         Commission file number: 0-20057


                      WNC HOUSING TAX CREDIT FUND II, L.P.

             California                         33-0391979
      State or other  jurisdiction  of     (I.R.S.  Employer

        incorporation or organization     Identification No.)


              3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626

                                 (714) 662-5565

                    Securities registered pursuant to Section
                               12(b) of the Act:

                                      NONE

                    Securities registered pursuant to section
                               12(g) of the Act:

                      UNITS OF LIMITED PARTNERSHIP INTEREST

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes     No    X
----   -------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

                                       1
<PAGE>



State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.

                                  INAPPLICABLE


                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  into  which the  document  is
incorporated:  (1) Any  annual  report  to  security  holders;  (2) Any proxy or
information  statement;  and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the  Securities Act of 1933.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980).

                                      NONE



                                       2
<PAGE>


PART I

Item 1.  Business

Organization

WNC Housing Tax Credit Fund II, L.P. ("the Partnership") is a California limited
partnership  formed  under the laws of the State of  California  on January  19,
1990. The  Partnership was formed to acquire  limited  partnership  interests in
other  limited  partnerships  or limited  liability  companies  ("Local  Limited
Partnerships")  which own  multifamily  housing  complexes that are eligible for
low-income housing federal and, in certain cases,  California income tax credits
("Low Income Housing Credits").

The  general  partner of the  Partnership  is WNC  Financial  Group,  L.P.  (the
"General Partner").  The general partners of WNC Financial Group, L.P. are WNC &
Associates,  Inc.  ("Associates")  and Wilfred N. Cooper, Sr. Wilfred N. Cooper,
Sr., through the Cooper Revocable Trust,  owns 66.8% of the outstanding stock of
Associates.  John  B.  Lester,  Jr.  was the  original  limited  partner  of the
Partnership and owns,  through the Lester Family Trust, 28.6% of the outstanding
stock of Associates.  Wilfred N. Cooper, Jr., President of Associates, owns 2.1%
of the  outstanding  stock of  Associates.  The business of the  Partnership  is
conducted primarily through  Associates,  as the Partnership has no employees of
its own.

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission,  on April 27, 1990, the  Partnership  commenced a public offering of
12,000 units of Limited Partnership  Interest ("Units") at a price of $1,000 per
Unit.  The General  Partner  concluded the sale of Units on December 31, 1992. A
total of 7,000 Units representing $7,000,000 had been sold. Holders of Units are
referred to herein as "Limited Partners."

Description of Business

The  Partnership's  principal  business  objective  is to  provide  its  Limited
Partners with Low Income Housing Credits.  The Partnership's  principal business
therefore  consists of investing as a limited partner or non-managing  member in
Local  Limited  Partnerships  each of which will own and operate a  multi-family
housing  complex (the "Housing  Complex")  which will qualify for the Low Income
Housing Credit.  In general,  under Section 42 of the Internal  Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce  Federal  taxes  otherwise due in each year of a ten-year  period.  In
general,  under Section 17058 of the  California  Revenue and Taxation  Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against  California taxes otherwise due in each year of a four-year period.  The
Housing Complex is subject to a fifteen-year  compliance period (the "Compliance
Period"),  and under state law may have to be maintained  as low income  housing
for 30 or more years.

In general,  in order to avoid  recapture  of Low Income  Housing  Credits,  the
Partnership  does not  expect  that it will  dispose of its  interests  in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited  Partnership of its Housing Complex prior to the end of the
applicable  Compliance  Period.  Because  of  (i)  the  nature  of  the  Housing
Complexes,  (ii) the  difficulty of predicting  the resale market for low-income
housing  15 or more years in the  future,  and (iii) the  ability of  government
lenders to  disapprove  of transfer,  it is not possible at this time to predict
whether the liquidation of the  Partnership's  assets and the disposition of the
proceeds,  if any, in  accordance  with the  Partnership's  Agreement of Limited
Partnership, as amended by Supplement No.1 through Supplement No.12 thereto (the
"Partnership Agreement"), will be able to be accomplished promptly at the end of
the 15-year period. If a Local Limited Partnership is unable to sell its Housing
Complex,  it is  anticipated  that the local  general  partner  ("Local  General
Partner")  will either  continue to operate  such  Housing  Complex or take such
other actions as the Local General  Partner  believes to be in the best interest
of the Local Limited Partnership.  Notwithstanding the preceding,  circumstances
beyond the  control of the General  Partner or the Local  General  Partners  may
occur during the  Compliance  Period,  which would  require the  Partnership  to
approve the disposition of a Housing Complex prior to the end thereof,  possibly
resulting in recapture of Low Income Housing Credits.



                                       3
<PAGE>


As of March 31, 2001, the Partnership had invested in twenty-seven Local Limited
Partnerships.  Each of these Local Limited  Partnerships  owns a Housing Complex
that is eligible  for the  federal  Low Income  Housing  Credit.  Certain  Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.

The Partnership's  investments in Local Limited  Partnerships are subject to the
risks incident to the management and ownership of low-income  housing and to the
management and ownership of multi-unit  residential  real estate.  Some of these
risks  are that the Low  Income  Housing  Credit  could be  recaptured  and that
neither the  Partnership's  investments  nor the Housing  Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes  receive  government  financing  or operating  subsidies,  they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests;  limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness.  If a  Local  Limited  Partnership  does  not  make  its  mortgage
payments,  the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits.  As a limited partner or non-managing  member of
the Local Limited  Partnerships,  the Partnership  will have very limited rights
with respect to  management  of the Local  Limited  Partnerships;  and will rely
totally  on the  general  partners  or  managing  members  of the Local  Limited
Partnerships for management of the Local Limited Partnerships.  The value of the
Partnership's  investments  will be subject to  changes  in  national  and local
economic conditions,  including unemployment  conditions,  which could adversely
impact vacancy levels, rental payment defaults and operating expenses.  This, in
turn, could substantially  increase the risk of operating losses for the Housing
Complexes and the Partnership.  In addition,  each Local Limited  Partnership is
subject to risks relating to environmental hazards and natural disasters,  which
might be uninsurable.  Because the Partnership's operations will depend on these
and other  factors  beyond the  control  of the  General  Partner  and the Local
General  Partners,  there can be no assurance  that the  anticipated  Low Income
Housing Credits will be available to Limited Partners.

In addition,  Limited  Partners are subject to risks in that the rules governing
the Low Income  Housing  Credit are  complicated,  and the use of credits can be
limited.  The only  material  benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will  develop.  All  Partnership  management
decisions are made by the General Partner.

As a limited partner or non-managing  member,  the  Partnership's  liability for
obligations of each Local Limited Partnership is limited to its investment.  The
Local General Partners of each Local Limited  Partnership retain  responsibility
for developing,  constructing,  maintaining,  operating and managing the Housing
Complexes.

Item 2.  Properties

Through its investments in Local Limited  Partnerships,  the  Partnership  holds
limited  partnership  interests in the Housing  Complexes.  The following  table
reflects the status of the  twenty-seven  Housing  Complexes as of the dates and
for the periods indicated:


                                       4
<PAGE>


<TABLE>
<CAPTION>

                                                                    ------------------------------ ---------------------------------
                                                                        As of March 31, 2001              December 31, 2000
                                                                    ------------------------------ ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                              Encumbrances
                                               Name          Total Investment  Investment                  Estimated Low    of Local
                                                             in Local Limited   Paid to    Number          Income Housing    Limited
                                                              Partnerships      Date      of Units  Occupancy  Credits  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>                 <C>          <C>              <C>     <C>    <C>          <C>

Airport Road              Slidell,         Clifford E. Olsen,
Associates, Limited       Louisiana        Olsen Securities
                                           Corporation         $  334,000   $   334,000      40      100%   $  695,000   $ 1,444,000

Am-Kent Associates,       Amite &          Olsen
Ltd.                      Kentwood,        Securities
                          Louisiana        Corporation            232,000       232,000      32      100%      585,000     1,114,000

Arizona I Limited         Showlow,         Western States
Partnership               Arizona          Housing
                                           Corporationand Joe W.
                                           Roberts Company        320,000       320,000      42       93%      617,000     1,480,000

Ashland Investment        Ashland,         Ronald D.
Group, an Oregon          Oregon           Bettencourt
Limited Partnership                                               300,000       300,000      40      100%      666,000     1,381,000

Brantley Housing,         Brantley,        Thomas H. Cooksey
Ltd.                      Alabama          and Apartment
                                           Developers,Inc.        108,000       108,000      19      100%      287,000       572,000

Brian's Village           Mannford,        Robert W. Green
Apartments, an            Oklahoma         and Emerald
Oklahoma Limited                           Development
Partnership.                               Co., Inc.              176,000       176,000      28      100%      374,000       753,000

Candleridge               Perry,           Eric A Sheldahl
Apartments       Iowa
of Perry,L.P.                                                     93,000         93,000      23      100%      224,000       590,000

Candleridge               Runnells,        Eric A. Sheldahl
Apartments of             Iowa
Runnells, L.P.                                                    58,000         58,000      15       93%      141,000       371,000


</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>


                                                                    ------------------------------ ---------------------------------
                                                                        As of March 31, 2001              December 31, 2000
                                                                    ------------------------------ ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                               Encumbrances
                                               Name          Total Investment  Investment                  Estimated Low    of Local
                                                             in Local Limited   Paid to    Number          Income Housing    Limited
                                                              Partnerships      Date      of Units  Occupancy  Credits  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>                     <C>          <C>          <C>      <C>      <C>         <C>

Casa Allegre              Las Vegas,       Western States
Limited                   New Mexico       Housing Corporation,
Partnership                                ABO Corporation and
                                           Alan D. Nofsker         318,000      318,000      42       100%     635,000     1,378,000

Castroville               Castroville,     Doublekaye Corp and
Village,Ltd.              Texas            Gary L. Kersch          165,000      165,000      40       100%     426,000       944,000

Cherokee                  Rogersville,     Douglas B. Parker and
Square, L.P.              Tennessee        Billy D. Cobb           202,000      202,000      31        97%     418,000       973,000

Divall Midland            Port             Gary J. DiVall
Associates Limited        Washington,
Partnership II            Wisconsin                                234,000      234,000      32        91%     489,000     1,153,000

Eclectic                  Eclectic,        Thomas H. Cooksey
Housing, Ltd.             Alabama          and Apartment
                                           Developers,Inc.          74,000       74,000      15       100%     216,000       409,000

Elizabeth Square          Raceland,        Olsen Securities
Associates, Ltd.          Louisiana        Corp.                   356,000      356,000      48        96%     748,000     1,465,000

Emory Capital,            Emory,           1600 Capital
L.P.                      Texas            Company, Inc.            85,000       85,000      16        94%     175,000       368,000

Emory Manor,              Emory,           1600 Capital
L.P.                      Texas            Company, Inc.           128,000      128,000      24       100%     206,000       550,000

Idalou Manor,             Idalou,          1600 Capital
L.P.                      Texas            Company, Inc.           122,000      122,000      24       100%     290,000       616,000

Jefferson                 Jefferson,       1600 Capital
Capital,L.P.              Texas            Company, Inc.           167,000      167,000      30        77%     269,000       711,000

</TABLE>

                                       6
<PAGE>



<TABLE>
<CAPTION>
                                                                      ------------------------------ -------------------------------
                                                                        As of March 31, 2001              December 31, 2000
                                                                    ------------------------------ ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                               Encumbrances
                                               Name          Total Investment  Investment                  Estimated Low    of Local
                                                             in Local Limited   Paid to    Number          Income Housing    Limited
                                                              Partnerships      Date      of Units  Occupancy  Credits  Partnerships
-----------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>               <C>         <C>               <C>      <C>    <C>          <C>

Jefferson                   Jefferson,     1600 Capital
Manor, L.P.                 Texas          Company, Inc.         179,000     179,000        32      100%       362,000       760,000

                            Beaver Dam,    Thomas G. Larson,
Lakeview Limited            Wisconsin      William H. Larson,
Partnership                                and Raymond L.
                                           Tetzlaff              264,000     264,000        40       95%       528,000     1,234,000

Littlefield                 Littlefield,   1600 Capital
Manor,L.P.                  Texas          Company, Inc.         117,000     117,000        24       83%       280,000       592,000

Perry County                Uniontown,     Thomas H. Cooksey
Housing,Ltd.                Alabama        and Apartment
                                           Developers, Inc.       82,000      82,000        15       73%       215,000       437,000

Pine Hill                   Pine Hill,     Thomas H. Cooksey
Housing,Ltd.                Alabama        and Apartment
                                           Developers, Inc.      105,000     105,000        19       89%       267,000       559,000

Rociada Partners            Hereford,      Richard Lee (Rick)
Ltd.                        Texas          Brown                 154,000     154,000        28       93%       316,000       727,000

Wadley Housing,             Wadley,        Thomas H. Cooksey
Ltd.                        Alabama        Apartment and
                                           Developers, Inc.       76,000      76,000        15       60%       213,000       437,000

Whitewater                  Whitewater,    Thomas G. Larson,
Woods                       Wisconsin      William H. Larson,
Limited                                    and Raymond L.
Partnership                                Tetzlaff              301,000     301,000        40       97%       603,000     1,290,000

Willcox Investment          Willcox,       John P. Casper
Group, an Arizona           Arizona
Limited Partnership                                              246,000     246,000        30       97%       490,000     1,055,000
                                                                --------    --------    --------     --        -------     ---------


                                                             $ 4,996,000 $ 4,996,000       784       94%   $10,735,000  $ 23,363,000
                                                            ============  ==========  ==========     ===   ============ ============

</TABLE>

                                       7
<PAGE>


<TABLE>
<CAPTION>
                                 --------------------------------------------------------------------------
                                               For the year ended December 31, 2000
                                 --------------------------------------------------------------------------

                                                                                Low Income Housing
                                                                                Credits Allocated to
        Partnership Name            Rental Income     Net Income/(Loss)         Partnership
-----------------------------------------------------------------------------------------------------------
<S>                                     <C>                  <C>                           <C>

Airport Road Associates, Limited        $ 162,000            $ (71,000)                    99%

Am-Kent Associates, Ltd.                  131,000              (66,000)                    99%

Arizona I Limited Partnership             157,000              (24,000)                    99%

Ashland Investment Group, an
Oregon Limited Partnership                165,000                4,000                     99%

Brantley Housing, Ltd.                     64,000               (3,000)                    99%

Brian's Village Apartments, an
Oklahoma Limited Partnership.             114,000              (24,000)                    99%

Candleridge Apartments of
Perry, L.P.                               121,000              (16,000)                    99%

Candleridge Apartments of
Runnells, L.P.                             85,000              (10,000)                    99%

Casa Allegre Limited Partnership          175,000                2,000                     99%

Castroville Village, Ltd.                 167,000               (3,000)                    99%

Cherokee Square, L.P.                      89,000              (27,000)                    99%

Divall Midland Associates
Limited Partnership II                    128,000              (45,000)                    99%

Eclectic Housing, Ltd.                     47,000               (4,000)                    99%

Elizabeth Square Associates,
Ltd.                                      165,000              (45,000)                    99%

Emory Capital, L.P.                        54,000              (13,000)                    99%

Emory Manor, L.P.                          80,000              (21,000)                    99%

Idalou Manor, L.P.                         82,000              (20,000)                    99%

Jefferson Capital, L.P.                    86,000              (12,000)                    99%

Jefferson Manor, L.P.                      96,000              (20,000)                    99%

Lakeview Limited Partnership              144,000              (46,000)                    99%

Littlefield Manor, L.P.                    69,000              (28,000)                    99%

</TABLE>

                                       8

<PAGE>

<TABLE>
<CAPTION>
                                 ---------------------------------------------------------------------------------------
                                               For the year ended December 31, 2000
                                 --------------------------------------------------------------------------

                                                                                Low Income Housing
                                                                                Credits Allocated to
        Partnership Name            Rental Income     Net Income/(Loss)         Partnership
------------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                           <C>

Perry County Housing, Ltd.                 44,000              (11,000)                    99%

Pine Hill Housing, Ltd.                    57,000              (12,000)                    99%

Rociada Partners Ltd.                     142,000              (20,000)                    99%

Wadley Housing, Ltd.                       48,000              (14,000)                    99%

Whitewater Woods Limited
Partnership                               171,000              (37,000)                    99%

Willcox Investment Group, an
Arizona Limited Partnership               119,000              (21,000)                    99%
                                          -------              --------

                                       $2,962,000            $(607,000)
                                       ===========           ==========

</TABLE>

                                       9

<PAGE>





Item 3.  Legal Proceedings

NONE.

Item 4.  Submission of Matters to a Vote of Security Holders

NONE.

PART II.

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Item 5a.

(a)  The  Units  are not  traded on a public  exchange  but were sold  through a
     public offering.  It is not anticipated that any public market will develop
     for the  purchase  and  sale of any  Unit and  none  exists.  Units  can be
     assigned  only if certain  requirements  in the  Partnership  Agreement are
     satisfied.

(b)  At March 31, 2001, there were 583 Limited Partners.

(c)  The Partnership was not designed to provide cash  distributions  to Limited
     Partners in  circumstances  other than  refinancing  or  disposition of its
     investments in Local Limited Partnerships.

(d)  No unregistered  securities  were sold by the  Partnership  during the year
     ended March 31, 2001.

Item 5b.

NOT APPLICABLE

Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>

                                      March 31                               December 31
                        -------------------------------------   -------------------------------------

                               2001         2000         1999         1998         1997         1996
                         -----------  -----------  -----------  -----------  -----------  -----------

<S>                    <C>          <C>          <C>          <C>          <C>           <C>
ASSETS
Cash and cash

equivalents            $    136,626 $    150,827 $    175,658 $    175,192 $    181,313 $    208,303
Investments in
   limited
   partnerships, net        622,522    1,049,680    1,460,945    1,533,952    1,828,770    2,005,382
Other assets                      -            -            -            -            -          587
                         -----------  -----------  -----------  -----------  -----------  -----------

                       $    759,148 $  1,200,507 $  1,636,603 $  1,709,144 $  2,010,083 $  2,214,272
                         ===========  ===========  ===========  ===========  ===========  ===========

LIABILITIES
Accrued fees and
   expenses due to
   general partner
   and affiliates      $  1,335,561 $  1,194,613 $  1,055,204 $  1,019,071 $    871,377 $    758,827

PARTNERS' (DEFICIT)
   EQUITY                  (576,413)       5,894      581,399      690,073    1,138,706    1,455,445
                         -----------  -----------  -----------  -----------  -----------  -----------

                       $    759,148 $  1,200,507 $  1,636,603 $  1,709,144 $  2,010,083 $  2,214,272
                         ===========  ===========  ===========  ===========  ===========  ===========
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>

Selected results of operations, cash flows, and other information for the
Partnership is as follows for the periods indicated:

                            For the Years Ended      For the Three Months              For the Years Ended
                                 March 31               Ended March 31                     December 31
                          ------------------------  ------------------------   -------------------------------------

                             2001         2000         1999         1998         1998         1997          1996
                          -----------   ----------  -----------   ----------   ----------   ----------    ----------
                                                                  (Unaudited


<S>                    <C>           <C>          <C>         <C>           <C>          <C>          <C>
Loss from operations   $   (180,074) $  (190,926) $   (46,381)$    (40,643) $   (181,052)$   (173,718)$   (224,004)
Equity in loss from
   limited
   partnerships            (402,233)    (384,579)     (62,293)     (70,760)     (267,581)    (143,021)    (568,488)
   ------------            ---------    ---------     --------     --------     ---------    ---------    ---------


Net loss               $   (582,307) $  (575,505) $  (108,674) $  (111,403) $   (448,633) $  (316,739)$   (792,492)
                          ===========   ==========  ===========   ==========    ==========   ==========   ==========

Net loss allocated to:

   General partner      $    (5,823) $    (5,755) $    (1,087) $    (1,114) $     (4,486) $    (3,167)$     (7,925)
                          ===========   ==========  ===========   ==========    ==========   ==========   ==========
   Limited partners     $  (576,484) $  (569,750) $  (107,587) $  (110,289) $   (444,147)    (313,572)$   (784,567)
                          ===========   ==========  ===========   ==========   ==========   ==========    ==========

Net loss per limited
   partner unit         $    (82.35) $    (81.39) $    (15.37) $    (15.76)$      (63.45)  $   (44.80)$    (112.08)
                          ===========   ==========   ===========   ==========    ==========    ========== ==========


  Outstanding
   weighted limited
   partner units              7,000        7,000        7,000        7,000         7,000        7,000        7,000
                          ===========   ==========  ===========   ==========    =========    =========    ==========
</TABLE>

<TABLE>
<CAPTION>

                            For the Years Ended      For the Three Months              For the Years Ended
                                 March 31               Ended March 31                     December 31
                          ------------------------  ------------------------   -------------------------------------

                             2001         2000         1999         1998         1998         1997          1996
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------
                                                                  (Unaudited
<S>                     <C>          <C>          <C>          <C>          <C>           <C>           <C>
Net cash provided by
   (used in):
   Operating
activities              $   (17,774) $   (30,165) $    (4,910) $     3,849  $    (12,006) $    (39,229) $   (41,630)
Investing
   activities                 3,573        5,334        5,376        2,545         5,885        12,239       11,451
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------
Net change in cash
  and cash equivalents      (14,201)     (24,831)         466        6,394        (6,121)      (26,990)     (30,179)

Cash and cash
  equivalents,
  beginning of period       150,827      175,658      175,192      181,313       181,313       208,303      238,482
                          -----------  -----------  -----------   ----------   ----------   ----------   -----------

Cash and cash
  equivalents, end of
  period                $   136,626 $    150,827 $    175,658  $   187,707  $    175,192 $     181,313 $    208,303
                          ===========  ===========  ===========   ==========    ==========    ==========   =========


Low Income Housing Credit per Unit was as follows for the year ended December
31:
                         2001              2000              1999             1998              1997             1996
                         ----          --------          --------         --------          --------         --------
 Federal        $                      $    145          $    145         $    145          $    145         $    145
                          120
 State                      -                 -                 -                -                 -                -
                --------------    --------------   ---------------   --------------   ---------------   --------------
 Total          $        120           $    145          $    145         $    145          $    145         $    145
                 ==============    ==============   ===============   ==============   ===============   ==============
</TABLE>
                                       11
<PAGE>



Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operation

Financial Condition

The  Partnership's  assets at March 31, 2001 consisted  primarily of $137,000 in
cash and aggregate investments in the twenty-seven Local Limited Partnerships of
$623,000.  Liabilities  at March 31, 2001  primarily  consisted of $1,336,000 of
accrued annual management fees due to the General Partner.


                                       12
<PAGE>


Results of Operations

Year  Ended  March  31,  2001  Compared  to  Year  Ended  March  31,  2000.  The
Partnership's  net  loss  for the  year  ended  March  31,2001  was  $(582,000),
reflecting  an increase of $(7,000) from the net loss  experienced  for the year
ended March 31, 2000.  The increase in net loss is primarily due to the increase
in the equity in losses from limited  partnerships  which increased by $(17,000)
to  $(402,000)  for the year ended March 31, 2001 from  $(385,000)  for the year
ended  March  31,  2000  offset by a  decrease  in loss  from  operations  which
decreased  by  $11,000 to  $(180,000)  for the year  ended  March 31,  2001 from
$(191,000) for the year ended March 31, 2000 due to lower operating expenses.

Year  Ended  March 31,  2000  Compared  to Year Ended  December  31,  1998.  The
Partnership's  net  loss for the  year  ended  March  31,  2000 was  $(576,000),
reflecting  an increase of $127,000 from the net loss  experienced  for the year
ended  December 31, 1998. The increase in net loss is primarily due to equity in
losses from limited  partnerships  which increased by $117,000 to $(385,000) for
the year ended March 31, 2000 from  $(268,000)  for the year ended  December 31,
1998.  This  increase is  primarily  due to a  cumulative  effect of a change in
accounting  principle for one of the Local Limited  Partnerships,  which changed
its  depreciation  method  in  1999.  In  addition,   the  Partnership  realized
approximately  $12,000 of losses from the sale of certain cash equivalents which
did not occur in the year ended December 31, 1998.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The  Partnership's  net loss for the  three  months  ended  March  31,  1999 was
$(109,000),  reflecting a decrease of $2,000 from the net loss  experienced  for
the three months ended March 31, 1998.  The decline in net loss is due to equity
in losses of limited partnerships which decreased by $9,000 to $(62,000) for the
three  month  period  ended March 31,  1999 from  $(71,000)  for the three month
period ended March 31, 1998.  This decrease was a result of the  Partnership not
recognizing certain losses of the Local Limited Partnerships. The investments in
such Local Limited  Partnerships reached $0 during 1998. Since the Partnership's
liability  with  respect  to its  investments  is  limited,  losses in excess of
investment  are not  recognized.  The  reduction  in equity in losses of limited
partnerships  was partially  offset by loss from  operations  which increased by
$5,000 to  $(46,000)  for the  three  month  period  ended  March 31,  1999 from
$(41,000)  for the three month period ended March 31, 1998,  due to a comparable
increase in operating expenses.

Cash Flows

Year Ended March 31, 2001  Compared to Year Ended March 31, 2000.  Net cash used
during the year ended  March 31, 2001 was  $(14,000),  compared to net cash used
for the year ended March 31, 2000 of $(25,000).  The change was due primarily to
a decrease in cash paid to the General Partner or affiliates.

Year Ended March 31, 2000  Compared to Year Ended  December 31,  1998.  Net cash
used during the year ended March 31,  2000 was  $(25,000),  compared to net cash
used for the year  ended  December  31,  1998 of  $(6,000).  The  change was due
primarily to an increase in cash paid to the General  Partner or affiliates  and
an increase in losses realized on certain cash equivalents.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net increase in cash during the three months ended March 31,1999 was negligible,
compared to a net  increase in cash for the three months ended March 31, 1998 of
$6,000.  The change was due primarily to an increase in cash paid to the General
Partner or  affiliates  of $3,000,  and in  increase  in  operating  expenses of
$6,000,  partially  offset by an increase in  distributions  received from Local
Limited Partnerships of $3,000.

During the years ended March 31, 2001 and 2000 and the three  months ended March
31, 1999, accrued payables,  which consist primarily of related party management
fees due to the General  Partner,  increased by $141,000,  $139,000 and $36,000,
respectively.  The General  Partner does not anticipate  that these accrued fees
will be paid  until  such  time as  capital  reserves  are in  excess  of future
foreseeable working capital requirements of the Partnership.

The Partnership  expects its future cash flows,  together with its net available
assets at March 31, 2001, to be  sufficient  to meet all  currently  foreseeable
future cash requirements.
                                       13
<PAGE>


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data



                                       14
<PAGE>









               Report of Independent Certified Public Accountants


To the Partners
WNC Housing Tax Credit Fund II, L.P.


We have audited the  accompanying  balance sheets of WNC Housing Tax Credit Fund
II, L.P. (a California Limited  Partnership) (the "Partnership") as of March 31,
2001 and 2000,  and the  related  statements  of  operations,  partners'  equity
(deficit)  and cash flows for the year ended March 31, 2001 and 2000,  the three
months  ended  March  31,  1999 and the year  ended  December  31,  1998.  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.  A significant  portion of the  financial  statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors  whose reports have been furnished to us. As discussed in Note 2 to the
financial  statements,  the Partnership  accounts for its investments in limited
partnerships   using  the  equity  method.  The  portion  of  the  Partnership's
investment in limited partnerships audited by other auditors represented 62% and
50%,  of the  total  assets  of the  Partnership  at March  31,  2001 and  2000,
respectively.  Our opinion, insofar as it relates to the amounts included in the
financial  statements for the limited partnerships which were audited by others,
is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the 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 and the reports of
the other auditors provide a reasonable basis for our opinion.

In our opinion,  based on our audits and the reports of the other auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of WNC  Housing Tax Credit Fund II, L.P. (A  California
Limited  Partnership)  as of March 31,  2001 and 2000,  and the  results  of its
operations  and its cash flows for the years ended March 31, 2001 and 2000,  the
three  months  ended March 31, 1999 and the year ended  December  31,  1998,  in
conformity with accounting principles generally accepted in the United States of
America.




                                            /s/ BDO SEIDMAN, LLP
                                                BDO SEIDMAN, LLP
Orange County, California
May 10, 2001


                                       15
<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS





                 See accompanying notes to financial statements

<TABLE>
<CAPTION>
                                                                           March 31
                                                                 ------------------------------

                                                                     2001             2000
                                                                 --------------   -------------
<S>                                                            <C>              <C>

ASSETS

Cash and cash equivalents                                      $       136,626  $      150,827
Investments in limited partnerships, net (Notes 2 and 3)               622,522       1,049,680
                                                                 --------------   -------------

                                                               $       759,148  $    1,200,507
                                                                 ==============   =============

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
   Accrued fees and expenses due to General Partner and
     affiliates (Note 3)                                       $     1,335,561  $    1,194,613
                                                                 --------------   -------------

Commitments and contingencies

Partners' equity (deficit):
    General partner                                                    (65,306)        (59,483)
    Limited partners (12,000 units authorized; 7,000 units
     issued and outstanding)                                          (511,107)         65,377
                                                                 --------------   -------------

      Total partners' equity (deficit)                                (576,413)          5,894
                                                                 --------------   -------------

                                                               $       759,148  $    1,200,507
                                                                 ==============   =============

</TABLE>
                                       16

<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS





<TABLE>
<CAPTION>
                                                 For the Years Ended           For the Three       For the Year
                                                                               Months Ended           Ended
                                                      March 31                   March 31          December 31
                                            ------------------------------    ----------------    ---------------

                                               2001              2000              1999                1998
                                           --------------    -------------    ----------------    ---------------
<S>                                      <C>               <C>              <C>                 <C>

Interest income                          $           701   $        5,418   $           3,627   $          9,224
Distribution income                                5,549            2,500                 500                  -
Dividend income                                    5,134            3,029                   -                  -
                                           --------------    -------------    ----------------    ---------------

    Total income                                  11,384           10,947               4,127              9,224
                                           --------------    -------------    ----------------    ---------------

Operating expenses:
   Amortization (Note 2)                          21,352           21,352               5,338             21,352
   Asset management fees (Note 3)                144,904          144,902              36,226            144,903
   Other                                          25,202           35,619               8,944             24,021
                                           --------------    -------------    ----------------    ---------------

    Total operating expenses                     191,458          201,873              50,508            190,276
                                           --------------    -------------    ----------------    ---------------

Loss from operations                            (180,074)        (190,926)            (46,381)          (181,052)

Equity in losses of limited
    partnerships (Note 2)                       (402,233)        (384,579)            (62,293)          (267,581)
                                           --------------    -------------    ----------------    --- ------------

Net loss                                 $      (582,307)$       (575,505) $         (108,674)$        (448,633)
                                            ==============     =============    ================    ===============

Net loss allocated to:
   General partner                       $        (5,823)$         (5,755) $           (1,087)$          (4,486)
                                             ==============     =============    ================    ==============

   Limited partners                      $      (576,484)$       (569,750) $         (107,587)$        (444,147)
                                            ==============     =============    ================    ===============

Net loss per limited partnership unit    $        (82.35)$         (81.39) $           (15.37)$          (63.45)
                                            ==============     =============    ================    ===============

Outstanding weighted limited partner
  units                                            7,000            7,000               7,000             7,000
                                            ==============    =============    ================    ===============
</TABLE>

                                       17


<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998


<TABLE>
<CAPTION>
                                                               General             Limited
                                                               Partner             Partners            Total
                                                            ---------------     ---------------    ---------------


<S>                                                       <C>               <C>                   <C>
Partners' equity (deficit) at January 1, 1998             $        (48,155) $         1,186,861   $      1,138,706

Net loss                                                            (4,486)            (444,147)          (448,633)
                                                            ---------------     ---------------    ---------------

Partners' equity (deficit) at December 31, 1998                    (52,641)             742,714            690,073

Net loss                                                            (1,087)            (107,587)          (108,674)
                                                            ---------------     ---------------    ---------------

Partners' equity (deficit) at March 31, 1999                       (53,728)             635,127            581,399

Net loss                                                            (5,755)            (569,750)          (575,505)
                                                            ---------------     ---------------    ---------------

Partners' equity (deficit) at March 31, 2000                       (59,483)              65,377              5,894

Net loss                                                            (5,823)            (576,484)          (582,307)
                                                            ---------------     ---------------    ---------------

Partners' deficit at March 31, 2001                       $        (65,306)  $         (511,107)$         (576,413)
                                                             ===============      ===============     ===============

</TABLE>

                                       18
<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS




<TABLE>
<CAPTION>

                                          For the Years Ended March          For the       For the Years
                                                                              Three
                                                                             Months
                                                                              Ended            Ended
                                                      31                    March 31        December 31
                                          ---------------------------      ------------    ---------------

                                              2001           2000             1999              1998
                                          -------------   -----------      ------------    ---------------

<S>                                     <C>             <C>            <C>               <C>

Cash flows from operating activities:

   Net loss                             $     (582,307) $    (575,505) $        (108,674) $        (448,633)
   Adjustments  to reconcile  net loss
     to
     net cash used in operating
    activities:
     Amortization                               21,352         21,352              5,338             21,352
     Equity in losses of limited
       partnerships                            402,233        384,579             62,293            267,581
     Increase in accrued fees and
       expenses due to general partner
       and affiliates                          140,948        139,409             36,133            147,694
                                            -------------   -----------      ------------     ---------------

Net cash used in operating activities          (17,774)       (30,165)            (4,910)           (12,006)
                                            -------------   -----------      ------------    ---------------

Cash flows from investing activities:
   Distributions from limited
     partnerships                                3,573          5,334              5,376              5,885
                                             -------------   -----------      ------------    ---------------

Net increase (decrease) in cash and
  cash equivalents                             (14,201)     (24,831)                 466             (6,121)

Cash and cash equivalents, beginning
   of period                                   150,827      175,658              175,192            181,313
                                            -------------   -----------      ------------    ---------------

Cash and cash equivalents, end of
   period                               $      136,626 $    150,827        $     175,658   $        175,192
                                           =============   ===========        ============    ===============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION

     Taxes paid                         $         800   $        800     $           -   $           800
                                             ============    ===========      ============    ==============
</TABLE>


                                       19

<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WNC Housing Tax Credit Fund II,  L.P.,  a California  Limited  Partnership  (the
"Partnership"),  was formed on January  19,  1990 under the laws of the State of
California.  The  Partnership  was formed to invest  primarily in other  limited
partnerships   (the  "Local  Limited   Partnerships")   which  own  and  operate
multifamily  housing complexes (the "Housing Complex") that are eligible for low
income  housing tax credits.  The local  general  partners  (the "Local  General
Partners")  of  each  Local  Limited   Partnership  retain   responsibility  for
maintaining, operating and managing the Housing Complex.

The general partner is WNC Financial Group, L.P., a California  partnership (the
"General  Partner")  of the  Partnership.  WNC &  Associates,  Inc.  ("WNC") and
Wilfred N.  Cooper,  Sr. are the  partners  of the General  Partner.  Wilfred N.
Cooper,  Sr., through the Cooper Revocable Trust,  owns 66.8% of the outstanding
stock of WNC.  John B.  Lester,  Jr.  was the  original  limited  partner of the
Partnership and owns,  through the Lester Family Trust, 28.6% of the outstanding
stock of WNC.  Wilfred  N.  Cooper,  Jr.,  President  of WNC,  owns  2.1% of the
outstanding stock of WNC.

The Partnership  shall continue in full force and effect until December 31, 2045
unless  terminated  prior to that date pursuant to the partnership  agreement or
law.

The financial  statements  include only activity relating to the business of the
Partnership,  and do not give  effect to any assets that the  partners  may have
outside of their interests in the Partnership, or to any obligations,  including
income taxes, of the partners.

The  Partnership  Agreement  authorized the sale of up to 12,000 units at $1,000
per Unit  ("Units").  The  offering of Units  concluded  on December 31, 1992 at
which time 7,000 Units  representing  subscriptions  in the amount of $7,000,000
had been accepted.  The General  Partner has a 1% interest in operating  profits
and losses,  taxable income and losses,  in cash available for distribution from
the Partnership and tax credits of the Partnership. The limited partners will be
allocated the  remaining  99% of these items in  proportion to their  respective
investments.

After the limited  partners  have received  proceeds from a sale or  refinancing
equal to their capital  contributions and their return on investment (as defined
in the  Partnership  Agreement)  and the General  Partner has received  proceeds
equal  to its  capital  contribution  and a  subordinated  disposition  fee  (as
described in Note 3) from the  remainder,  any  additional  sale or  refinancing
proceeds will be distributed 95% to the limited partners (in proportion to their
respective investments) and 5% to the General Partner.

Change in Reporting Year End

In 1999, the Partnership  elected to change its year end for financial reporting
purposes from December 31 to March 31. All  financial  information  reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial  information relating to
the Local Limited Partnerships included in Note 2.



                                       20
<PAGE>


                      WNC HOUSING TAX CREDIT FUND II, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Risks and Uncertainties

The Partnership's  investments in Local Limited  Partnerships are subject to the
risks incident to the management and ownership of low-income  housing and to the
management and ownership of multi-unit  residential  real estate.  Some of these
risks  are that the low  income  housing  credit  could be  recaptured  and that
neither the  Partnership's  investments  nor the Housing  Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes  receive  government  financing  or operating  subsidies,  they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests;  limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations.  The Housing Complexes are or will be subject
to  mortgage  indebtedness.  If a Local  Limited  Partnership  does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex  and low  income  housing  credits.  As a limited  partner  of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local  Limited  Partnerships,  and will rely totally on the
Local General  Partners of the Local Limited  Partnerships for management of the
Local Limited Partnerships.  The value of the Partnership's  investments will be
subject  to  changes  in  national  and  local  economic  conditions,  including
unemployment  conditions,  which could adversely  impact vacancy levels,  rental
payment  defaults and operating  expenses.  This, in turn,  could  substantially
increase  the  risk of  operating  losses  for  the  Housing  Complexes  and the
Partnership.  In addition,  each Local Limited  Partnership  is subject to risks
relating  to  environmental   hazards  and  natural  disasters  which  might  be
uninsurable. Because the Partnership's operations will depend on these and other
factors  beyond  the  control  of the  General  Partner  and the  Local  General
Partners,  there can be no assurance  that the  anticipated  low income  housing
credits will be available to Limited Partners.

In addition,  Limited  Partners are subject to risks in that the rules governing
the low income  housing  credit are  complicated,  and the use of credits can be
limited.  The only  material  benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop.  All management decisions will
be made by the General Partner.

Method of Accounting For Investments in Limited Partnerships

The Partnership  accounts for its investments in limited  partnerships using the
equity method of  accounting,  whereby the  Partnership  adjusts its  investment
balance for its share of the Local Limited  Partnership's  results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership  in  acquiring  the  investments  are  capitalized  as  part  of the
investment account and are being amortized over 30 years (see Notes 2 and 3).

Losses from limited  partnerships for the year ended December 31, 1998 have been
recorded  by the  Partnership  based on reported  results  provided by the Local
limited  Partnerships.  Losses from  limited  partnerships  for the three months
ended March 31,  1999 have been  estimated  by  management  of the  Partnership.
Losses from Local  Limited  Partnerships  for the years ended March 31, 2001 and
2000 have been  recorded  by the  Partnership  based on nine  months of reported
results  provided  by the  Local  Limited  Partnerships  and on three  months of
results  estimated by management of the  Partnership.  Losses from Local Limited
Partnerships  allocated to the Partnership are not recognized to the extent that
the investment balance would be adjusted below zero.


                                       21
<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Offering Expenses

Offering  expenses consist of underwriting  commissions,  legal fees,  printing,
filing and  recordation  fees,  and other costs  incurred  with selling  limited
partnership  interests in the  Partnership.  The General Partner is obligated to
pay all  offering  and  organization  costs in  excess of 15%  (including  sales
commissions) of the total offering proceeds.  Offering expenses are reflected as
a reduction of partners'  capital and amounted to  $1,036,840  at the end of all
periods presented.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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  reporting  period.
Actual results could materially differ from those estimates.

Cash and Cash Equivalents

The  Partnership   considers  all  highly  liquid   investments  with  remaining
maturities of three months or less when purchased to be cash equivalents.  As of
March 31, 2001 and 2000, the  Partnership  had cash  equivalents of $129,950 and
$142,285, respectively.

Concentration of Credit Risk

At March 31,  2001,  the  Partnership  maintained  a cash balance at a financial
institution in excess of the federally insured maximum.

Reclassifications

Certain  prior  year  balances  have been  reclassified  to  conform to the 2001
presentation.

Net Loss Per Limited Partner Unit

Net loss per limited  partnership  unit is  calculated  pursuant to Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share. Net loss per unit
includes no dilution  and is computed  by  dividing  loss  available  to limited
partners by the weighted average number of units outstanding  during the period.
Calculation of diluted net loss per unit is not required.

Reporting Comprehensive Income

In June 1997,  the FASB  issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 130, Reporting  Comprehensive  Income.  This statement  establishes
standards for reporting the components of comprehensive income and requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be included in a financial statement that is
displayed with the same prominence as other financial statements.  Comprehensive
income  includes net income as well as certain items that are reported  directly
within a separate  component  of  Partners'  equity and bypass net  income.  The
Partnership  adopted the  provisions of this  statement in 1998. For the periods
presented,  the Partnership has no elements of other  comprehensive  income,  as
defined by SFAS No. 130.


                                       22
<PAGE>


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS

As of the periods  presented,  the Partnership had acquired limited  partnership
interests in  twenty-seven  Local Limited  Partnerships,  each of which owns one
Housing  Complex  consisting  of  an  aggregate  of  784  apartment  units.  The
respective  general  partners  of the  Local  Limited  Partnerships  manage  the
day-to-day  operations of the entities.  Significant  Local Limited  Partnership
business  decisions,  as defined,  require the approval of the Partnership.  The
Partnership, as a limited partner, is generally entitled to 99%, as specified in
the Local Limited Partnership  agreements,  of the operating profits and losses,
taxable income and losses and tax credits of the Local Limited Partnerships.

The Partnership's  investment in Local Limited Partnerships shown in the balance
sheets at March 31, 2001 and 2000 are  approximately  $1,462,000 and $1,283,000,
respectively, greater than the Partnership's equity at the preceding December 31
as  shown in the  Local  Limited  Partnerships'  combined  financial  statements
presented  below.  This  difference is primarily due to  unrecorded  losses,  as
discussed  below,  acquisition,   selection  and  other  costs  related  to  the
acquisition of the investments  which have been capitalized in the Partnership's
investment  account.  Capitalized  costs are being amortized over 30 years.  The
Partnership's investment is also lower than the Partnership's equity as shown in
the Local Limited Partnership's  combined financial statements due to the losses
recorded by the Partnership for the three month period ended March 31.

Equity  in  losses  of the  Local  Limited  Partnerships  is  recognized  in the
financial  statements until the related  investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are not
recognized. If the Local Limited Partnerships report net income in future years,
the  Partnership  will resume applying the equity method only after its share of
such net  income  equals  the share of net  losses  not  recognized  during  the
period(s) the equity method was suspended.

Distributions  received by limited  partners are accounted for as a reduction of
the investment balance.  Distributions received after the investment has reached
zero are recognized as income.

At March 31, 2001 and 2000,  the  investment  accounts in certain  Local Limited
Partnerships  have  reached  a zero  balance.  Consequently,  a  portion  of the
Partnership's estimate of its share of losses for the years ended March 31, 2001
and  2000  and the  three  month  period  ended  March  31,  1999  amounting  to
approximately  $209,414,  $373,135  and  $52,058,  respectively,  have  not been
recognized. The Partnership's share of losses during the year ended December 31,
1998 amounting to approximately  $189,571 have not been recognized.  As of March
31, 2001, the aggregate  share of net losses not  recognized by the  Partnership
amounted to $1,251,095.

Following is a summary of the equity method activity of the investments in Local
Limited Partnerships for the periods presented:


<TABLE>
<CAPTION>
                                                                For the Years                 For the          For the Year
                                                                                           Three Months
                                                                                               Ended              Ended
                                                                Ended March 31               March 31          December 31
                                                        -------------------------------    --------------     ---------------

                                                            2001              2000              1999               1998
                                                        --------------    -------------    ---------------    ---------------

<S>                                                   <C>               <C>              <C>                <C>
Investments per balance sheet, beginning of period    $     1,049,680   $    1,460,945   $      1,533,952   $      1,828,770
Equity in losses of limited partnerships                     (402,233)        (384,579)           (62,293)          (267,581)
Distributions received                                         (3,573)          (5,334)            (5,376)            (5,885)
Amortization of paid acquisition fees and costs               (21,352)         (21,352)            (5,338)           (21,352)
                                                        --------------    -------------    ---------------    ---------------

Investments per balance sheet, end of period          $       622,522   $    1,049,680   $      1,460,945   $      1,533,952
                                                         ==============    =============    ===============    ===============
</TABLE>

                                       23

<PAGE>


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

The financial  information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest  subsidies are generally  netted against
interest expense.  Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:
<TABLE>
<CAPTION>

                        COMBINED CONDENSED BALANCE SHEETS

                                                                                     2000               1999
                                                                                ---------------    ---------------
<S>                                                                           <C>                <C>

ASSETS

Buildings and improvements, net of accumulated
   depreciation of $8,832,000 and $7,981,000 for 2000
   and 1999, respectively                                                     $     20,377,000   $     21,139,000
Land                                                                                 1,354,000          1,354,000
Other assets                                                                         2,068,000          2,059,000
                                                                                ---------------    ---------------

                                                                              $     23,799,000   $     24,552,000
                                                                                ===============    ===============

LIABILITIES

Mortgage loan payable                                                         $     23,363,000   $     23,441,000
Due to related parties                                                                 194,000            182,000
Other liabilities                                                                      375,000            430,000
                                                                                ---------------    ---------------

                                                                                    23,932,000         24,053,000
                                                                                ---------------    ---------------

PARTNERS' CAPITAL (DEFICIT)

WNC Housing Tax Credit Fund II, L.P.                                                  (839,000)          (233,000)
Other partners                                                                         706,000            732,000
                                                                                ---------------    ---------------

                                                                                      (133,000)           499,000
                                                                                ---------------    ---------------

                                                                              $     23,799,000   $     24,552,000
                                                                                ===============    ===============

</TABLE>

                                       24

<PAGE>

<TABLE>
<CAPTION>

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                 2000               1999                1998
                                                            ---------------    ---------------     ---------------
<S>                                                       <C>                <C>                 <C>

Total revenues, including interest and rent               $      3,100,000   $      2,958,000    $      2,944,000
   subsidies
                                                            ---------------    ---------------     ---------------

Expenses:
   Operating expenses                                            2,160,000          2,035,000           1,951,000
   Interest expense                                                696,000            619,000             624,000
   Depreciation and amortization                                   851,000          1,044,000             831,000
                                                            ---------------     ---------------     ---------------

         Total expenses                                          3,707,000          3,698,000           3,406,000
                                                            ---------------    ---------------     ---------------

Net loss                                                  $       (607,000)$         (740,000)  $        (462,000)
                                                            ===============     ===============      ===============

Net loss allocable to the Partnership                     $       (601,000)$         (733,000)  $        (457,000)
                                                            ===============     ===============      ===============

Net loss recorded by the Partnership                      $       (402,000)$         (385,000)  $        (268,000)
                                                            ===============     ===============      ===============
</TABLE>

Certain Local Limited Partnerships incurred operating losses and/or have working
capital deficiencies.  In the event these Local Limited Partnerships continue to
incur significant  operating  losses,  additional  capital  contributions by the
Partnership  and/or the Local  General  Partner  may be  required to sustain the
operations  of  such  Local   Limited   Partnerships.   If  additional   capital
contributions are not made when they are required, the Partnership's  investment
in certain of such Local Limited  Partnerships  could be impaired,  and the loss
and recapture of the related tax credits could occur.

NOTE 3 - RELATED PARTY TRANSACTIONS

Under the terms of the  Partnership  Agreement,  the  Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:

Acquisition  fees of up to 9% of the  gross  proceeds  from the sale of Units as
     compensation  for services  rendered in connection  with the acquisition of
     Local  Limited  Partnerships.  At the  end of all  periods  presented,  the
     Partnership incurred acquisition fees of $630,000. Accumulated amortization
     of these  capitalized  costs was $480,661 and $186,974 as of March 31, 2001
     and 2000,  respectively.  Of the accumulated  amortization  recorded on the
     balance  sheet at March 31,  2001,  $272,691  of the  related  expense  was
     reflected as equity in losses of limited  partnerships  on the statement of
     operations  during the fourth  quarter of the year of the year ended  March
     31,  2001 to  reduce  the  respective  net  acquisition  fee  component  of
     investments  in local  limited  partnerships  to zero for the Local Limited
     Partnerships which would otherwise be below a zero balance.

Reimbursement of costs  incurred by an affiliate of WNC in  connection  with the
     acquisition of Local Limited  Partnerships.  These  reimbursements have not
     exceeded  1.7%  of  the  gross  proceeds.  As of the  end  of  all  periods
     presented, the Partnership incurred acquisition costs of $10,581 which have
     been  included  in   investments  in  limited   partnerships.   Accumulated
     amortization  totaled  $10,581  at  March  31,  2001.  Of  the  accumulated
     amortization recorded on the balance sheet at March 31, 2001, $6,631 of the
     related  expense was reflected as equity in losses of limited  partnerships
     on the statement of operations during the fourth quarter of the year of the
     year of the  year  ended  March  31,  2001 to  reduce  the  respective  net
     acquisition  fee component of investments in local limited  partnerships to
     zero for the Local Limited  Partnerships  which would  otherwise be below a
     zero balance.

                                       25
<PAGE>


NOTE 3 - RELATED PARTY TRANSACTIONS, continued

          An annual  management fee equal to 0.5% of the invested  assets of the
          Local  Limited  Partnerships,  including the  Partnership's  allocable
          share of the mortgages.  Management fees of $144,904 and $144,902 were
          incurred during the years ended March 31, 2001 and 2000, respectively,
          $36,226 were incurred during the three months ended March 31, 1999 and
          $144,903  were  incurred  during the year ended  December 31, 1998, of
          which  $7,000 and $2,500  were paid  during the years  ended March 31,
          2001 and 2000,  respectively,  and $0 was paid during the three months
          ended March 31, 1999, and the year ended December 31, 1998.

          A subordinated  disposition  fee in an amount equal to 1% of the sales
          price of any real estate sold.  Payment of this fee is subordinated to
          the limited  partners who receive a 6% preferred return (as defined in
          the Partnership  Agreement) and is payable only if the General Partner
          or its affiliates render services in the sales effort.

     The  accrued  fees and  expenses  due to  General  Partner  and  affiliates
     consist of the following at:

<TABLE>
<CAPTION>
                                                                                    March 31
                                                                        ----------------------------------

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

<S>                                                                   <C>                <C>
Advances from WNC                                                     $          3,014   $            (30)

Asset management fee payable                                                 1,332,547          1,194,643
                                                                        ---------------    ---------------

                                                                      $      1,335,561   $      1,194,613
                                                                        ===============    ===============
</TABLE>

The General  Partner does not  anticipate  that these  accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable  working
capital requirements of the Partnership.

NOTE 4 - INCOME TAXES

No provision  for income taxes has been recorded in the  accompanying  financial
statements as any  liability for income taxes is the  obligation of the partners
of the Partnership.


                                       26

<PAGE>


NOTE 5 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000:
<TABLE>
<CAPTION>

                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------

               2001

<S>                                   <C>                 <C>                <C>                 <C>
Income                                $          1,652    $          1,522   $          1,428    $          6,782

Operating expenses                              45,406              54,666             46,167              45,219

Equity in losses of limited
     partnerships                              (45,718)            (44,056)           (38,737)           (273,722)

Net income (loss)                              (89,472)            (97,200)           (83,476)           (312,159)

Income (loss) available to
     limited partner                           (88,577)           (96,228)            (82,641)           (309,038)

Earnings (loss) per limited
     partnership unit                              (13)               (14)                (12)                (44)

               2000

Income                                $          3,104    $          1,160   $          1,423    $          5,260

Operating expenses                              46,128              57,498             52,550              45,697

Equity in losses of limited
     partnerships                              (49,391)           (46,647)          (46,647)          (241,894)

Net income (loss)                              (92,415)          (102,985)          (97,774)          (282,331)

Income (loss) available to
     limited partner                           (91,491)          (101,955)          (96,796)          (279,508)

Earnings (loss) per limited
     partnership unit                              (13)               (15)              (14)               (40)


</TABLE>



                                       27
<PAGE>



49 Item 9. Changes in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

NOT APPLICABLE

PART III.

Item 10. Directors and Executive Officers of the Registrant

The Partnership has no directors or executive officers of its own. The following
biographical  information is presented for the directors and executive  officers
of Associates which has principal responsibility for the Partnership's affairs.

Directors and Executive Officers of WNC & Associates, Inc.

The directors of WNC & Associates,  Inc. are Wilfred N. Cooper,  Sr., who serves
as Chairman of the Board,  John B.  Lester,  Jr.,  David N.  Shafer,  Wilfred N.
Cooper, Jr. and Kay L. Cooper.  The principal  shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.

Wilfred  N.  Cooper,  Sr.,  age 70, is the  founder,  Chief  Executive  Officer,
Chairman of the Board and a Director of WNC &  Associates,  Inc.,  a Director of
WNC  Capital  Corporation,  and a  general  partner  in  some  of  the  programs
previously sponsored by the Sponsor. Mr. Cooper has been involved in real estate
investment and acquisition  activities since 1968.  Previously,  during 1970 and
1971, he was founder and principal of Creative Equity Development Corporation, a
predecessor of WNC & Associates,  Inc., and of Creative  Equity  Corporation,  a
real estate investment firm. For 12 years prior to that, Mr. Cooper was employed
by Rockwell  International  Corporation,  last serving as its manager of housing
and urban developments  where he had  responsibility  for factory-built  housing
evaluation and project management in urban planning and development.  Mr. Cooper
is a Director of the National Association of Home Builders (NAHB) and a National
Trustee  for NAHB's  Political  Action  Committee,  a Director  of the  National
Housing  Conference  (NHC)  and a member  of  NHC's  Executive  Committee  and a
Director of the National Multi-Housing Council (NMHC). Mr. Cooper graduated from
Pomona College in 1956 with a Bachelor of Arts degree.

John B. Lester,  Jr., age 67, is  Vice-Chairman,  a Director and a member of the
Acquisition  Committee of WNC & Associates,  Inc., and a Director of WNC Capital
Corporation.   Mr.  Lester  has  27  years  of  experience  in  engineering  and
construction  and has been involved in real estate  investment  and  acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates,  Inc., a provider
of engineering and construction  services to the oil refinery and  petrochemical
industries,  which  he  co-founded  in  1973.  Mr.  Lester  graduated  from  the
University of Southern  California in 1956 with a Bachelor of Science  degree in
Mechanical Engineering.

Wilfred N.  Cooper,  Jr.,  age 38, is  President,  Chief  Operating  Officer,  a
Director and a member of the Acquisition Committee of WNC & Associates,  Inc. He
is President of, and a registered  principal  with, WNC Capital  Corporation,  a
member firm of the NASD, and is a Director of WNC  Management,  Inc. He has been
involved in investment and  acquisition  activities  with respect to real estate
since he joined the  Sponsor  in 1988.  Prior to this,  he served as  Government
Affairs  Assistant with Honda North America in Washington,  D.C. Mr. Cooper is a
member of the Advisory Board for LIHC Monthly Report,  a Director of NMHC and an
Alternate  Director of NAHB. He graduated  from The American  University in 1985
with a Bachelor of Arts degree.

David N.  Shafer,  age 49, is  Executive  Vice  President,  a Director,  General
Counsel,  and a member of the Acquisition  Committee of WNC & Associates,  Inc.,
and a  Director  and  Secretary  of WNC  Management,  Inc.  Mr.  Shafer has been
involved in real estate investment and acquisition  activities since 1984. Prior
to joining the Sponsor in 1990, he was  practicing  law with a specialty in real
estate and taxation.  Mr.  Shafer is a Director and President of the  California
Council of Affordable  Housing and a member of the State Bar of California.  Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts  degree,  from the New  England  School of Law in 1983 with a
Juris  Doctor  degree (cum laude) and from the  University  of San Diego in 1986
with a Master of Law degree in Taxation.


                                       28
<PAGE>


Thomas J. Riha, age 46, became Chief Financial  Officer  effective January 2001.
Prior to his  appointment  as Chief  Financial  Officer he was Vice  President -
Asset Management and a member of the Acquisition  Committee of WNC & Associates,
Inc. and a Director and Chief Executive Officer of WNC Management, Inc. Mr. Riha
has been involved in acquisition and investment  activities with respect to real
estate since 1979.  Prior to joining the Sponsor in 1994,  Mr. Riha was employed
by Trust Realty Advisor, a real estate acquisition and management company,  last
serving as Vice  President - Operations.  Mr. Riha graduated from the California
State  University,  Fullerton in 1977 with a Bachelor of Arts degree (cum laude)
in Business Administration with a concentration in Accounting and is a Certified
Public  Accountant  and a member of the American  Institute of Certified  Public
Accountants.

Sy P. Garban,  age 55, is Vice  President - National  Sales of WNC & Associates,
Inc.  and has been  employed by the  Sponsor  since  1989.  Mr.  Garban has been
involved in real estate  investment  activities since 1978. Prior to joining the
Sponsor he served as  Executive  Vice  President  of MRW,  Inc.,  a real  estate
development  and management  firm.  Mr. Garban is a member of the  International
Association of Financial  Planners.  He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland,  age 38, is Vice President - Acquisitions  and a member of the
Acquisition  Committee of WNC &  Associates,  Inc. He has been  involved in real
estate  acquisitions and investments since 1986 and has been employed with WNC &
Associates, Inc. since 1994. Prior to that, he served on the development team of
the Bixby Ranch that  constructed  apartment  units and Class A office  space in
California and neighboring  states,  and as a land acquisition  coordinator with
Lincoln  Property   Company  where  he  identified  and  analyzed   multi-family
developments. Mr. Buckland graduated from California State University, Fullerton
in 1992 with a Bachelor of Science degree in Business Finance.

David Turek, age 46, is Vice President - Originations of WNC & Associates,  Inc.
He has been involved with real estate  investment and finance  activities  since
1976 and has been employed by WNC & Associates,  Inc.  since 1996.  From 1995 to
1996,  Mr. Turek served as a consultant  for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties.  From 1990 to 1995, he was involved in the development of
conventional  and tax credit  multi-family  housing.  He is a Director  with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.

Kay L. Cooper,  age 64, is a Director of WNC & Associates,  Inc. Mrs. Cooper was
the founder and sole  proprietor  of Agate 108, a  manufacturer  and retailer of
home  accessory  products,  from 1975 until 1998.  She is the wife of Wilfred N.
Cooper,  Sr.,  the mother of Wilfred  N.  Cooper,  Jr. and the sister of John B.
Lester,  Jr. Ms. Cooper graduated from the University of Southern  California in
1958 with a Bachelor of Science degree.

Item 11.  Executive Compensation

The Partnership has no officers,  employees,  or directors.  However,  under the
terms of the  Partnership  Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:

(a)  Annual Asset  Management  Fee. An annual asset  management fee in an amount
     equal to 0.5% of invested assets (the sum of the  Partnership's  Investment
     in Local  Limited  Partnership  Interests and the  Partnership's  allocable
     share of the amount of the  mortgage  loans on and other debts  related to,
     the Housing  Complexes owned by such Local Limited  Partnerships).  Fees of
     $144,904,  $144,902,  $36,226 and $144,903 were  incurred  during the years
     ended March 31, 2001 and 2000,  the three months ended March 31, 1999,  and
     the year ended December 31, 1998,  respectively.  The Partnership  paid the
     General Partner or its affiliates  $7,000,  $2,500, $0 and $0 of those fees
     during the years  ended  March 31, 2001 and 2000,  the three  months  ended
     March 31, 1999 and the year ended December 31, 1998, respectively.

(b)  Subordinated  Disposition Fee. A subordinated  disposition fee in an amount
     equal to 1% of the  sale  price  received  in  connection  with the sale or
     disposition of a Housing  Complex.  Subordinated  disposition  fees will be
     subordinated  to  the  prior  return  of  the  Limited   Partners'  capital
     contributions  and  payment  of the  Return on  Investment  to the  Limited
     Partners.  "Return  on  Investment"  means an  annual,  cumulative  but not
     compounded,  "return" to the Limited Partners (including Low Income Housing
     Credits) as a class on their adjusted capital contributions  commencing for
     each Limited  Partner on the last day of the calendar  quarter during which
     the Limited Partner's capital  contribution is received by the Partnership,
     calculated at the following  rate; 6% for the balance of the  Partnership's
     term. No disposition fees have been paid.

                                       29
<PAGE>


(c)  Operating Expenses.  The Partnership  reimbursed the General Partner or its
     affiliates for operating expenses of approximately $6,000, $14,000, $11,000
     and $3,000 during the years ended March 31, 2001 and 2000, the three months
     ended March 31, 1999, and the year ended December 31, 1998, respectively.

(d)  Interest  in  Partnership.   The  General   Partners   receive  1%  of  the
     Partnership's  allocated Low Income  Housing  Credits,  which  approximated
     $8,000,  $10,000 and $10,000 for the General  Partners  for the years ended
     December 31, 2000, 1999 and 1998,  respectively.  The General  Partners are
     also  entitled  to  receive  1%  of  cash  distributions.   There  were  no
     distributions  of cash to the General Partners during the years ended March
     31, 2001 and 2000,  the three months ended March 31, 1999 or the year ended
     December 31, 1998.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     (a)  Security Ownership of Certain Beneficial Owners

     No   person is known to the General  Partner to own  beneficially in excess
          of 5% of the outstanding Units.

     (b)  Security Ownership of Management

     Neither the General  Partner,  its  affiliates,  nor any of the officers or
     directors  of  the  General  Partner  or its  affiliates  own  directly  or
     beneficially any Units in the Partnership.

(c)  Changes in Control

     The  management  and control of the  General  Partner may be changed at any
     time in accordance with their respective organizational documents,  without
     the  consent  or  approval  of  the  Limited  Partners.  In  addition,  the
     Partnership  Agreement provides for the admission of one or more additional
     and successor General Partners in certain circumstances.

     First,   with  the   consent   of  any  other   General   Partners   and  a
     majority-in-interest  of the  Limited  Partners,  any  General  Partner may
     designate  one or  more  persons  to be  successor  or  additional  General
     Partners. In addition,  any General Partner may, without the consent of any
     other General Partner or the Limited Partners,  (i) substitute in its stead
     as General  Partner  any  entity  which has,  by merger,  consolidation  or
     otherwise,  acquired  substantially  all  of its  assets,  stock  or  other
     evidence of equity interest and continued its business, or (ii) cause to be
     admitted to the Partnership an additional General Partner or Partners if it
     deems such  admission to be necessary or desirable so that the  Partnership
     will be classified a partnership for Federal income tax purposes.  Finally,
     a  majority-in-interest  of the Limited Partners may at any time remove the
     General Partner of the Partnership and elect a successor General Partner.

Item 13.  Certain Relationships and Related Transactions

     The  General  Partner  manages  all  of  the  Partnership's   affairs.  The
     transactions  with the General  Partner are  primarily  in the form of fees
     paid by the  Partnership  for services  rendered to the Partnership and the
     General Partner's interests in the Partnership, as discussed in Item 11 and
     in the notes to the Partnership's financial statements.


                                       30
<PAGE>


PART IV.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)   Financial statements included in Part II hereof:
         -----------------------------------------------

Report of Independent  Certified Public  Accountants
Balance Sheets,  March 31,2001 and 2000

Statements of Operations  for the years ended March 31, 2001
     and 2000, the three months ended March 31, 1999 and the year ended December
     31, 1998
Statements of Partners' Equity (Deficit) for the years ended March
     31, 2001 and 2000, the three months ended March 31, 1999 and the year ended
     December  31, 1998
Statements  of Cash Flows for the years ended March 31,
     2001 and 2000,  the three  months  ended  March 31, 1999 and the year ended
     December 31, 1998
Notes to Financial Statements

(a)(2)Financial statement schedules included in Part IV hereof:
         --------------------------------------------------------

     Report of Independent  Certified Public Accountants on Financial  Statement
     Schedules Schedule III - Real Estate Owned by Local Limited Partnerships

(b) Reports on Form 8-K.
    -------------------

     None

(c) Exhibits.
    --------

3.1    Articles  of   incorporation   and  by-laws:   The   registrant   is  not
       incorporated.  The Partnership  Agreement dated as of January 19, 1990 is
       included as Exhibit B to the Prospectus, filed as Exhibit 28.1 to Form 10
       K for the year ended December 31, 1994 is hereby  incorporated  herein as
       exhibit 3.1.

10.1   Amended and Restated  Agreement of Limited  Partnership of DiVall Midland
       Associates  Limited  Partnership  II filed as  exhibit  10.1 on Form 10-K
       dated December 31, 1992 is hereby incorporated herein as exhibit 10.1.

10.2   Amended and  Restated  Agreement of Limited  Partnership  of Airport Road
       Associates, Limited filed as exhibit 10.2 on Form 10-K dated December 31,
       1992 is hereby incorporated herein as exhibit 10.2.

10.3   Amended  and  Restated  Agreement  of  Limited  Partnership  of Arizona I
       Limited Partnership filed as exhibit 10.3 on Form 10-K dated December 31,
       1992 is hereby incorporated herein as exhibit 10.3.

10.4   Amended and Restated Agreement of Limited Partnership of Cherokee Square,
       L.P. filed as exhibit 10.4 on Form 10-K dated December 31, 1992 is hereby
       incorporated herein as exhibit 10.4.

10.5   Amended  and  Restated  Agreement  of  Limited   Partnership  of  Ashland
       Investment  Group filed as exhibit  10.5 on Form 10-K dated  December 31,
       1992 is hereby incorporated herein as exhibit 10.5.

10.6   Amended and Restated Agreement of Limited  Partnership of Brian's Village
       Apartments  filed as exhibit 10.6 on Form 10-K dated December 31, 1992 is
       hereby incorporated herein as exhibit 10.6.

10.7   Amended and Restated  Agreement of Limited  Partnership of Emory Capital,
       L.P. filed as exhibit 10.7 on Form 10-K dated December 31, 1992 is hereby
       incorporated herein as exhibit 10.7.

10.8   Amended and  Restated  Agreement of Limited  Partnership  of Emory Manor,
       L.P. filed as exhibit 10.8 on Form 10-K dated December 31, 1992 is hereby
       incorporated herein as exhibit 10.8.

                                       31
<PAGE>


10.9   Amended  and  Restated  Agreement  of Limited  Partnership  of  Jefferson
       Capital,  L.P. filed as exhibit 10.9 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.9.

10.10  Amended and Restated Agreement of Limited Partnership of Jefferson Manor,
       L.P.  filed as exhibit  10.10 on Form 10-K  dated  December  31,  1992 is
       hereby incorporated herein as exhibit 10.10.

10.11  Amended  and  Restated  Agreement  of  Limited   Partnership  of  Rociada
       Partners,  Ltd.  filed as exhibit  10.11 on Form 10-K dated  December 31,
       1992 is hereby incorporated herein as exhibit 10.11.

10.12  Amended  and  Restated   Agreement  of  Limited   Partnership  of  Wilcox
       Investment  Group filed as exhibit 10.12 on Form 10-K dated  December 31,
       1992 is hereby incorporated herein as exhibit 10.12.

10.13  Amended and  Restated  Agreement of Limited  Partnership  of Casa Allegre
       filed as exhibit  10.13 on Form 10-K dated  December  31,  1992 is hereby
       incorporated herein as exhibit 10.13.

10.14  Amended and Restated Agreement of Limited Partnership of Lakeview Limited
       Partnership  filed as exhibit 10.14 on Form 10-K dated  December 31, 1992
       is hereby incorporated herein as exhibit 10.14.

10.15  Amended and Restated Agreement of Limited Partnership of Whitewater Woods
       Limited  Partnership  filed as exhibit 10.15 on Form 10-K dated  December
       31, 1992 is hereby incorporated herein as exhibit 10.15.

10.16  Amended and Restated  Agreement  of Limited  Partnership  of  Castroville
       Village, Ltd. filed as exhibit 10.16 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.16.

10.17  Amended and Restated  Agreement of Limited  Partnership  of Idalou Manor,
       L.P.  filed as exhibit  10.17 on Form 10-K  dated  December  31,  1992 is
       hereby incorporated herein as exhibit 10.17.

10.18  Amended and Restated  Agreement  of Limited  Partnership  of  Littlefield
       Manor,  L.P.  filed as exhibit 10.18 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.18.

10.19  Amended  and  Restated  Agreement  of  Limited   Partnership  of  Am-Kent
       Associates,  Ltd.  filed as exhibit 10.19 on Form 10-K dated December 31,
       1992 is hereby incorporated herein as exhibit 10.19.

10.20  Amended  and  Restated  Agreement  of  Limited  Partnership  of  Brantley
       Housing, Ltd. filed as exhibit 10.20 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.20.

10.21  Amended and Restated  Agreement of Limited  Partnership of Candleridge of
       Perry,  L.P.  filed as exhibit 10.21 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.21.

10.22  Amended and Restated  Agreement of Limited  Partnership of Candleridge of
       Runnells,  L.P.  filed as exhibit  10.22 on Form 10-K dated  December 31,
       1992 is hereby incorporated herein as exhibit 10.22.

10.23  Amended and  Restated  Agreement of Limited  Partnership  of Perry County
       Housing, Ltd. filed as exhibit 10.23 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.23.

10.24  Amended  and  Restated  Agreement  of Limited  Partnership  of  Eclectric
       Housing, Ltd. filed as exhibit 10.24 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.24.

10.25  Amended  and  Restated  Agreement  of  Limited  Partnership  of Pine Hill
       Housing, Ltd. filed as exhibit 10.25 on Form 10-K dated December 31, 1992
       is hereby incorporated herein as exhibit 10.25.

10.26  Amended and Restated Agreement of Limited  Partnership of Wadley Housing,
       Ltd.  filed as exhibit  10.26 on Form 10-K  dated  December  31,  1992 is
       hereby incorporated herein as exhibit 10.26.

10.27  Amendment and Entire  Restatement of Articles of Partnership of Elizabeth
       Square Associates, Ltd. filed as exhibit 10.1 on Form 10-K dated December
       31, 1994 is hereby incorporated herein as exhibit 10.27.

21.1   Financial  Statements of Airport Road  Associates,  Limited as of and for
       the years ended  December  31, 2000 and 1999  together  with  independent
       auditors' report thereon; a significant subsidiary of the partnership.

(d)    Financial  statement  schedules follow, as set forth in subsection (a)(2)
       hereof. ------------------------------------

                                       32
<PAGE>




Report of  Independent  Certified  Public  Accountants  on  Financial  Statement
Schedules




To the Partners
WNC Housing Tax Credit Fund II, L.P.


The audits  referred to in our report dated May 10, 2001,  relating to the 2001,
2000, 1999 and 1998 financial statements of WNC Housing Tax Credit Fund II, L.P.
(the  "Partnership"),  which is contained in Item 8 of this Form 10-K,  included
the audit of the  accompanying  financial  statement  schedules.  The  financial
statement schedules are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial  statement  schedules
based upon our audits.

In our opinion,  such  financial  statement  schedules  present  fairly,  in all
material respects, the financial information set forth therein.



                                          /s/  BDO SEIDMAN, LLP
                                               BDO SEIDMAN, LLP

Orange County, California
May 10, 2001





                                       33
<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001

<TABLE>
<CAPTION>


                                                  ------------------------------  --------------------------------------------------
                                                          As of March 31, 2001                As of December 31, 2000
                                                  ----------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------


<S>                               <C>                <C>             <C>           <C>            <C>           <C>       <C>
 Airport Road                     Slidell,
 Associates, Limited              Louisiana          $    334,000    $   334,000   $1,444,000     $1,858,000    $709,000  $1,149,000

                                  Amite &
                                  Kentwood,
Am-Kent Associates, Ltd.          Louisiana               232,000        232,000    1,114,000      1,588,000     535,000   1,053,000

Arizona I Limited                 Showlow,

Partnership                       Arizona                 320,000        320,000    1,480,000      1,973,000     525,000   1,448,000

Ashland Investment Group, an      Ashland,
Oregon Limited Partnership        Oregon                  300,000        300,000    1,381,000      1,825,000     419,000   1,406,000

                                  Brantley,
Brantley Housing, Ltd.            Alabama                 108,000        108,000      572,000        706,000     178,000     528,000

Brian's Village
Apartments, an Oklahoma           Mannford,
Limited Partnership.              Oklahoma                176,000        176,000      753,000        974,000     353,000     621,000

Candleridge Apartments
of Perry, L.P.                    Perry, Iowa              93,000         93,000      590,000        776,000     242,000     534,000

Candleridge Apartments            Runnells,
of Runnells, L.P.                 Iowa                     58,000         58,000      371,000        492,000     153,000     339,000

Casa Allegre                      Las Vegas,
Limited Partnership               New Mexico              318,000        318,000    1,378,000      1,906,000     473,000   1,433,000

Castroville                       Castroville,
Village, Ltd.                     Texas                   165,000        165,000      944,000      1,150,000     210,000     940,000
</TABLE>


                                       34
<PAGE>

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                                  ------------------------------  --------------------------------------------------
                                                          As of March 31, 2001                As of December 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                     <C>            <C>        <C>            <C>           <C>       <C>
                                  Rogersville,
Cherokee Square, L.P.             Tennessee               202,000        202,000      973,000      1,225,000     452,000     773,000

Divall Midland                    Port
Associates Limited                Washington,
Partnership II                    Wisconsin               234,000        234,000    1,153,000      1,533,000     543,000     990,000

Eclectic                          Eclectic,
Housing, Ltd.                     Alabama                  74,000         74,000      409,000        500,000     132,000     368,000

Elizabeth Square                  Raceland,
Associates, Ltd.                  Louisiana               356,000        356,000    1,465,000      2,063,000     635,000   1,428,000

Emory Capital, L.P.               Emory, Texas             85,000         85,000      368,000        486,000     181,000     305,000

Emory Manor, L.P.                 Emory, Texas            128,000        128,000      550,000        742,000     253,000     489,000

Idalou Manor, L.P.                Idalou, Texas           122,000        122,000      616,000        776,000     174,000     602,000

Jefferson                         Jefferson,
Capital, L.P.                     Texas                   167,000        167,000      711,000        962,000     316,000     646,000

Jefferson                         Jefferson,
Manor, L.P.                       Texas                   179,000        179,000      760,000      1,007,000     336,000     671,000

</TABLE>

                                       35
<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                                  ------------------------------  --------------------------------------------------
                                                          As of March 31, 2001                As of December 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>             <C>          <C>            <C>           <C>        <C>

Lakeview Limited                  Beaver Dam,
Partnership                       Wisconsin              264,000        264,000    1,234,000      1,589,000      411,000   1,178,000

                                  Littlefield,
Littlefield Manor, L.P.           Texas                  117,000        117,000      592,000        746,000      170,000     576,000

Perry County                      Uniontown,
Housing, Ltd.                     Alabama                 82,000         82,000      437,000        527,000      135,000     392,000

Pine Hill                         Pine Hill,
Housing, Ltd.                     Alabama                105,000        105,000      559,000        680,000      166,000     514,000

Rociada                           Hereford,
Partners Ltd.                     Texas                  154,000        154,000      727,000        922,000      239,000     683,000

Wadley                            Wadley,
Housing, Ltd.                     Alabama                 76,000         76,000      437,000        527,000      132,000     395,000

Whitewater Woods                  Whitewater,
Limited Partnership               Wisconsin              301,000        301,000    1,290,000      1,692,000      444,000   1,248,000

Willcox Investment                Willcox,
Group, an Arizona                 Arizona
Limited Partnership                                      246,000        246,000    1,055,000      1,338,000      316,000   1,022,000
                                                        --------       --------    ---------      ---------    ---------  ---------

                                                   $   4,996,000   $  4,996,000 $ 23,363,000   $ 30,563,000  $ 8,832,00 $ 21,731,000
                                                  ==============  ============= =============  ============ ============ ===========

</TABLE>

                                       36
<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001

<TABLE>
<CAPTION>
                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 2000
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                <C>              <C>                     <C>
Airport Road
Associates, Limited                    $ 162,000             $(71,000)          1990             Completed               27.5

Am-Kent Associates, Ltd.                 131,000              (66,000)          1991             Completed               27.5

Arizona I Limited
Partnership                              157,000              (24,000)          1990             Completed                 35

Ashland Investment Group, an
Oregon Limited Partnership.              165,000                4,000           1990             Completed                 50

Brantley Housing, Ltd.                    64,000               (3,000)          1992             Completed                 40

Brian's Village Apartments, an
Oklahoma Limited Partnership.            114,000              (24,000)          1990             Completed                 30

Candleridge Apartments
of Perry, L.P.                           121,000              (16,000)          1992             Completed               27.5

Candleridge Apartments
of Runnells, L.P.                         85,000              (10,000)          1992             Completed               27.5

Casa Allegre
Limited Partnership                      175,000                2,000           1990             Completed                 40

Castroville Village, Ltd.                167,000               (3,000)          1991             Completed                 50

Cherokee Square, L.P.                     89,000              (27,000)          1990             Completed                 50
Divall Midland Associates

Limited Partnership II                   128,000              (45,000)          1990             Completed               27.5

Eclectic Housing, Ltd.                    47,000               (4,000)          1992             Completed                 40

Elizabeth Square
Associates, Ltd.                         165,000              (45,000)          1994             Completed               27.5

Emory Capital, L.P.                       54,000              (13,000)          1990             Completed               27.5

</TABLE>

                                       37
<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 2000
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                   <C>                  <C>              <C>                       <C>

Emory Manor, L.P.                         80,000              (21,000)          1990             Completed                 30

Idalou Manor, L.P.                        82,000              (20,000)          1992             Completed                 40

Jefferson Capital, L.P.                   86,000              (12,000)          1990             Completed                 50

Jefferson Manor, L.P.                     96,000              (20,000)          1990             Completed                 50

Lakeview Limited
Partnership                              144,000              (46,000)          1991             Completed                 35

Littlefield Manor, L.P.                   69,000              (28,000)          1991             Completed                 40

Perry County Housing, Ltd.                44,000              (11,000)          1992             Completed                 40

Pine Hill Housing, Ltd.                   57,000              (12,000)          1992             Completed                 40

Rociada Partners Ltd.                    142,000              (20,000)          1990             Completed                 40

Wadley Housing, Ltd.                      48,000              (14,000)          1992             Completed                 40

Whitewater Woods
Limited Partnership                      171,000              (37,000)          1991             Completed                 35

Willcox Investment Group, an
Arizona Limited Partnership              119,000              (21,000)          1990             Completed                 50
                                        --------              --------

                                     $ 2,962,000           $ (607,000)
                                    ============           ===========

</TABLE>




                                       38

<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                                   ------------------------------  ------------------------------------------------
                                                           As of March 31, 2000                As of December 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                <C>             <C>            <C>           <C>          <C>       <C>
 Airport Road                     Slidell,
 Associates, Limited              Louisiana          $    334,000    $   334,000    $ 1,447,000   $1,858,000   $ 645,000 $ 1,213,000

 Am-Kent                          Amite &
                                  Kentwood,
 Associates, Ltd.                 Louisiana               232,000        232,000      1,117,000    1,586,000     480,000   1,106,000

Arizona I Limited                 Showlow,
Partnership                       Arizona                 320,000        320,000      1,484,000    1,967,000     471,000   1,496,000

Ashland Investment Group,         Ashland,
an Oregon LimitedPartnership      Oregon                  300,000        300,000      1,385,000    1,824,000     385,000   1,439,000

                                  Brantley,
Brantley Housing, Ltd.            Alabama                 108,000        108,000        573,000      703,000     158,000     545,000

Brian's Village Apartments,       Mannford,
an Oklahoma Limited Partnership.  Oklahoma                176,000        176,000        755,000      974,000     322,000     652,000

Candleridge Apartments
of Perry, L.P.                    Perry, Iowa              93,000         93,000        593,000      769,000     209,000     560,000

Candleridge Apartments            Runnells,
of Runnells, L.P.                 Iowa                     58,000         58,000        374,000      486,000     132,000     354,000

Casa Allegre                      Las Vegas,
Limited Partnership               New Mexico              318,000        318,000      1,386,000    1,878,000     423,000   1,455,000

Castroville                       Castroville,
Village, Ltd.                     Texas                   165,000        165,000        950,000    1,150,000     187,000     963,000

</TABLE>
                                       39
<PAGE>

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>

                                                --------------------------------- --------------------------------------------------
                                                       As of March 31, 2000                As of December 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                     <C>            <C>          <C>          <C>           <C>       <C>
                                  Rogersville,
Cherokee Square, L.P.             Tennessee               202,000        202,000        976,000    1,225,000     417,000     808,000

Divall Midland                    Port
Associates Limited                Washington,
Partnership II                    Wisconsin               234,000        234,000      1,156,000    1,514,000     483,000   1,031,000

Eclectic                          Eclectic,
Housing, Ltd.                     Alabama                  74,000         74,000        411,000      500,000     122,000     378,000

Elizabeth Square                  Raceland,
Associates, Ltd.                  Louisiana               356,000        356,000      1,471,000    2,063,000     561,000   1,502,000

Emory Capital, L.P.               Emory, Texas             85,000         85,000        369,000      486,000     168,000     318,000

Emory Manor, L.P.                 Emory, Texas            128,000        128,000        551,000      742,000     235,000     507,000

Idalou Manor, L.P.                Idalou, Texas           122,000        122,000        616,000      776,000     155,000     621,000

Jefferson                         Jefferson,
Capital, L.P.                     Texas                   167,000        167,000        713,000      962,000     301,000     661,000

Jefferson                         Jefferson,
Manor, L.P.                       Texas                   179,000        179,000        762,000    1,005,000     320,000     685,000


</TABLE>

                                       40
<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                                   -----------------------------  -------------------------------------------------
                                                           As of March 31, 2000                As of December 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                    <C>            <C>          <C>          <C>           <C>        <C>

Lakeview Limited                  Beaver Dam,
Partnership                       Wisconsin              264,000        264,000      1,240,000    1,589,000     368,000    1,221,000

Littlefield                       Littlefield,
Manor, L.P.                       Texas                  117,000        117,000        593,000      745,000     151,000      594,000

Perry County                      Uniontown,
Housing, Ltd.                     Alabama                 82,000         82,000        438,000      524,000     121,000      403,000

Pine Hill                         Pine Hill,
Housing, Ltd.                     Alabama                105,000        105,000        561,000      675,000     145,000      530,000

Rociada                           Hereford,
Partners Ltd.                     Texas                  154,000        154,000        729,000      922,000     217,000      705,000

Wadley                            Wadley,
Housing, Ltd.                     Alabama                 76,000         76,000        439,000      521,000     117,000      404,000

Whitewater Woods                  Whitewater,
Limited Partnership               Wisconsin              301,000        301,000      1,294,000    1,692,000     398,000    1,294,000

Willcox Investment Group,an       Willcox,
Arizona  Limited Partnership      Arizona                246,000        246,000      1,058,000    1,338,000     290,000    1,048,000
                                                        --------       --------      ---------    ---------   ---------    ---------

                                                   $   4,996,000   $   4,996,000  $ 23,441,000 $ 30,474,000 $ 7,981,000 $ 22,493,000
                                                   ==============  ============== ============= ============ =========== ===========

</TABLE>
                                       41

<PAGE>


WNC Housing
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 1999
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                   <C>                <C>               <C>                     <C>
Airport Road
Associates, Limited                    $ 162,000             $(52,000)          1990              Completed               27.5

Am-Kent Associates, Ltd.                 124,000              (38,000)          1991              Completed               27.5
Arizona I Limited
Partnership                              149,000              (36,000)          1990              Completed                 35

Ashland Investment Group, an
Oregon Limited Partnership.              172,000               (4,000)          1990              Completed                 50

Brantley Housing, Ltd.                    60,000               (8,000)          1992              Completed                 40

Brian's Village Apartments, an
Oklahoma Limited Partnership.            103,000              (20,000)          1990              Completed                 30

Candleridge
Apartments of Perry, L.P.                118,000              (16,000)          1992              Completed               27.5

Candleridge Apartments
of Runnells, L.P.                         86,000               (8,000)          1992              Completed               27.5

Casa Allegre
Limited Partnership                      174,000               (6,000)          1990              Completed                 40

Castroville Village, Ltd.                154,000               (5,000)          1991              Completed                 50

Cherokee Square, L.P.                     90,000             (202,000)          1990              Completed                 50

Divall Midland Associates
Limited Partnership II                   128,000              (37,000)          1990              Completed               27.5

Eclectic Housing, Ltd.                    46,000               (4,000)          1992              Completed                 40
Elizabeth Square

Associates, Ltd.                         162,000              (51,000)          1994              Completed               27.5

Emory Capital, L.P.                       52,000              (16,000)          1990              Completed               27.5
</TABLE>
                                       42

<PAGE>


WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 1999
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                   <C>                  <C>               <C>                       <C>

Emory Mano                                81,000              (10,000)          199               Completed                 30

Idalou Manor, L.P.                        81,000               (5,000)          1992              Completed                 40

Jefferson Capital, L.P.                   82,000              (21,000)          1990              Completed                 50

Jefferson Manor, L.P.                     85,000              (27,000)          1990              Completed                 50

Lakeview Limited
Partnership                              141,000              (43,000)          1991              Completed                 35

Littlefield Manor, L.P.                   71,000               (6,000)          1991              Completed                 40

Perry County Housing,                     49,000              (10,000)          1992              Completed                 40

Pine Hill Housing, Lt                     60,000              (16,000)          1992              Completed                 40

Rociada Partners Ltd.                     94,000              (18,000)          1990              Completed                 40

Wadley Housing, Ltd.                      51,000               (5,000)          1992              Completed                 40

Whitewater Woods
Limited Partnership                      151,000              (46,000)          1991              Completed                 35

Willcox Investment Group, an
Arizona Limited Partnership              116,000              (30,000)          1990              Completed                 50
                                         --------             --------

                                     $ 2,842,000           $ (740,000)
                                    ============           ===========
</TABLE>
                                       43
<PAGE>

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                                 -------------------------------   -------------------------------------------------
                                                       As of March 31, 1999                     As of December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>               <C>              <C>          <C>           <C>          <C>        <C>
Airport Road
Associates, Limited               Slidell,
                                  Louisiana         $    334,000     $   334,000  $  1,450,000  $ 1,858,000  $  580,000 $  1,278,000

Am-Kent Associates, Ltd.          Amite &
                                  Kentwood,
                                  Louisiana              232,000         232,000     1,119,000    1,585,000     424,000    1,161,000
Arizona I Limited
Partnership                       Showlow,
                                  Arizona                320,000         320,000     1,487,000    1,968,000     412,000    1,556,000

Ashland Investment Group, an      Ashland,
Oregon LimitedPartnership         Oregon                 300,000         300,000     1,390,000    1,824,000     351,000    1,473,000

Brantley Housing, Ltd.            Brantley,
                                  Alabama                108,000         108,000       575,000      699,000     139,000      560,000

Brian's Village Apartments,       Mannford,
an OklahomaLimited Partnership.   Oklahoma               176,000         176,000       757,000      974,000     292,000      682,000

Candleridge                       Perry,
Apartments of Perry, L.P.         Iowa                    93,000          93,000       595,000      747,000     180,000      567,000
Candleridge Apartments            Runnells,
of Runnells, L.P.                 Iowa                    58,000          58,000       377,000      471,000     114,000      357,000

Casa Allegre                      Las Vegas,
Limited Partnership               New Mexico             318,000         318,000     1,394,000    1,835,000     374,000    1,461,000

Castroville                       Castroville,
Village, Ltd.                     Texas                  165,000         165,000       954,000    1,151,000     165,000      986,000

</TABLE>


<PAGE>

                                     44
WNC Housing TaxCredit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                                 -------------------------------   -------------------------------------------------
                                                     As of March 31, 1999                     As of December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                    <C>             <C>         <C>         <C>           <C>         <C>
Cherokee                          Rogersville,
Square, L.P.                      Tennessee              202,000         202,000       978,000   1,225,000     202,000     1,023,000

Divall Midland                    Port
Associates Limited                Washington,
Partnership II                    Wisconsin              234,000         234,000     1,159,000   1,483,000     425,000     1,058,000

Eclectic                          Eclectic,
Housing, Ltd.                     Alabama                 74,000          74,000       414,000     499,000     108,000       391,000

Elizabeth Square                  Raceland,
Associates, Ltd.                  Louisiana              356,000         356,000     1,477,000   2,063,000     487,000     1,576,000

Emory Capital, L.P.               Emory, Texas            85,000          85,000       369,000     486,000     150,000       336,000

Emory Manor, L.P.                 Emory, Texas           128,000         128,000       552,000     740,000     211,000       529,000

Idalou Manor, L.P.                Idalou, Texas          122,000         122,000       619,000     773,000     135,000       638,000

Jefferson Capital, L.P.           Jefferson,
                                  Texas                  167,000         167,000       714,000     962,000     286,000       676,000
Jefferson Manor, L.P.             Jefferson,
                                  Texas                  179,000         179,000       763,000   1,004,000     304,000       700,000
</TABLE>
                                       45

<PAGE>


WNC Housing Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                                 -------------------------------   -------------------------------------------------
                                                     As of March 31, 1999                     As of December 31, 1998
------------------------------------------------------------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                                               <C>              <C>           <C>          <C>          <C>          <C>
Lakeview Limited                  Beaver Dam,
Partnership                       Wisconsin             264,000          264,000    1,240,000    1,585,000     325,000     1,260,000

Littlefield                       Littlefield,
Manor, L.P.                       Texas                 117,000          117,000      595,000      744,000     133,000       611,000

Perry County                      Uniontown,
Housing, Ltd.                     Alabama                82,000           82,000      440,000      523,000     107,000       416,000
Pine Hill                         Pine Hill,
Housing, Ltd.                     Alabama               105,000          105,000      564,000      668,000     125,000       543,000

Rociada Partners                  Hereford,
 Ltd.                             Texas                 154,000          154,000      731,000      922,000     195,000       727,000

Wadley Housing,                   Wadley,
Ltd.                              Alabama                76,000           76,000      440,000      521,000     102,000       419,000

Whitewater Woods                  Whitewater,
Limited Partnership               Wisconsin             301,000          301,000    1,297,000    1,687,000     351,000     1,336,000

Willcox Investment Group,         Willcox,
an Arizona LimitedPartnership     Arizona               246,000          246,000    1,060,000    1,322,000     263,000     1,059,000
                                                       --------         --------   ----------    ----------   --------     ---------

                                                  $   4,996,000    $   4,996,000 $ 23,510,000 $ 30,319,000 $ 6,940,000  $ 23,379,000
                                                 ==============   =============  ============  ===========  ===========  ===========


</TABLE>
                                       46


<PAGE>


WNC Housing Tin
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 1998
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                <C>                      <C>              <C>                     <C>
Airport Road
Associates, Limited                 $    152,000       $      (39,000)          1990             Completed               27.5

Am-Kent Associates, Ltd.                 123,000              (40,000)          1991             Completed               27.5

Arizona I Limited Partnership            129,000              (65,000)          1990             Completed                 35

Ashland Investment Group,
an Oregon Limited Partnership.           168,000               27,000           1990             Completed                 50

Brantley Housing, Ltd.                    54,000              (12,000)          1992             Completed                 40

Brian's Village Apartments, an
Oklahoma Limited Partnership.            102,000              (14,000)          1990             Completed                 30

Candleridge Apartments
of Perry, L.P.                           117,000               (9,000)          1992             Completed               27.5
Candleridge Apartments
of Runnells, L.P.                         88,000               (5,000)          1992             Completed               27.5

Casa Allegre Limited Partnership         172,000               20,000           1990             Completed                 40

Castroville Village, Ltd.                146,000               (8,000)          1991             Completed                 50

Cherokee Square, L.P.                     87,000              (19,000)          1990             Completed                 50
Divall Midland Associates
Limited Partnership II                   126,000              (31,000)          1990             Completed               27.5

Eclectic Housing, Ltd.                    41,000              (10,000)          1992             Completed                 40
Elizabeth Square
Associates, Ltd.                         158,000              (45,000)          1994             Completed               27.5

Emory Capital, L.P.                       52,000              (12,000)          1990             Completed               27.5


</TABLE>
                                       47
<PAGE>


WNCing Tin
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>

                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 1998
                                   -------------------------------------------------------------------------------------------------
                                                                                Year Investment                    Estimated Useful
          Partnership Name         Rental Income     Net Income\(Loss)          Acquired            Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                 <C>               <C>              <C>                       <C>
Emory Manor, L.P.                         77,000              (30,000)          1990             Completed                 30

Idalou Manor, L.P.                        75,000              (15,000)          1992             Completed                 40

Jefferson Capital, L.P.                   82,000              (11,000)          1990             Completed                 50

Jefferson Manor, L.P.                     78,000              (13,000)          1990             Completed                 50

Lakeview Limited Partnership             142,000              (21,000)          1991             Completed                 35

Littlefield Manor, L.P.                   75,000              (15,000)          1991             Completed                 40

Perry County Housing, Ltd.                50,000               (9,000)          1992             Completed                 40

Pine Hill Housing, Ltd.                   58,000              (10,000)          1992             Completed                 40

Rociada Partners Ltd.                     85,000              (21,000)          1990             Completed                 40

Wadley Housing, Ltd.                      43,000              (13,000)          1992             Completed                 40

Whitewater Woods
Limited Partnership                      146,000              (39,000)          1991             Completed                 35

Willcox Investment Group, an
Arizona Limited Partnership              119,000               (3,000)          1990             Completed                 50
                                        ---------              -------


                                    $  2,745,000         $    (462,000)
                                    =============        ==============




</TABLE>
                                       48
<PAGE>


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

WNC HOUSING TAX CREDIT FUND II, L.P.

By:  WNC Financial Group, L.P.      General Partner of the Registrant
By:  WNC & Associates, Inc.         General Partner of WNC Financial Group, L.P.


By:  /s/ Wilfred N. Cooper, Jr.
     --------------------------
Wilfred N. Cooper, Jr., President-Chief
Operating Officer of WNC & Associates, Inc.

JUNE 18,2001
--------------------

By:  /s/ Thomas J. Riha
Thomas J. Riha, Vice-President - Chief Financial
Officer of WNC & Associates, Inc.

JUNE 18,  2001
----------------------

By:  /s/ Wilfred N. Cooper, Sr.
     --------------------------
Wilfred N. Cooper, Sr., General Partner

JUNE 18, 2001
----------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


By  /s/ Wilfred N. Cooper, Sr.
    --------------------------
Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc.

JUNE 18 , 2001
----------------------


By: /s/ John B. Lester, Jr.
    -----------------------
John B. Lester, Jr., Director of WNC & Associates, Inc.
JUNE 18 , 2001
----------------------

By:  /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.

JUNE 18 , 2001
----------------------

                                       49

<PAGE>



                            FINANCIAL STATEMENTS AND
                          INDEPENDENT AUDITOR'S REPORT

                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                           DECEMBER 31, 2000 AND 1999






                                       1
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-72113265

                                TABLE OF CONTENTS


                                                                            PAGE
INDEPENDENT AUDITOR'S REPORT                                                  3


FINANCIAL STATEMENTS:        BALANCE SHEETS                                   5

         STATEMENTS OF OPERATIONS                                             7

         STATEMENTS OF CHANGES IN PARTNERS' EQUITY                            8

         STATEMENTS OF CASH FLOWS                                             9

         NOTES TO FINANCIAL STATEMENTS                                       10


ACCOMPANYING INFORMATION

         INDEPENDENT AUDITOR'S REPORT ON INFORMATION
           ACCOMPANYING THE BASIC FINANCIAL STATEMENTS                       16

         SUPPLEMENTAL INFORMATION REQUIRED BY RHS                            17


INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL                             25

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE                                   27



                                       2
<PAGE>



                       PAILET, MEUNIER and LeBLANC, L.L.P.
                          Certified Public Accountants
                             Management Consultants





                          INDEPENDENT AUDITOR'S REPORT



To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED

We have audited the  accompanying  balance  sheets of AIRPORT  ROAD  ASSOCIATES,
LIMITED, RHS PROJECT NO.:  22-052-721132657 as of December 31, 2000 and 1999 and
the related statements of operations,  changes in partners' equity (deficit) and
cash  flows  for the  years  then  ended.  These  financial  statements  are the
responsibility of the partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
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 AIRPORT  ROAD  ASSOCIATES,
LIMITED as of  December  31,  2000 and 1999 and the  results of its  operations,
changes  in  partners'  equity  and  cash  flows  for the  years  then  ended in
conformity with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The supplemental information presented on
pages 16 through 24, is presented for purposes of additional analysis and is not
a required part of the basic  financial  statements.  Such  information 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
relation to the basic financial statements taken as a whole.

   3421 N. Causeway Blvd., Suite 701.        201 St. Charles Ave., Suite 2559.
   Metairie, LA 70002                        New Orleans, LA 70170
   Telephone (504) 837-0770                  Telephone (504) 522-0504
   Fax (504) 837-7102                        Fax (504) 837-710
                                    Member of
 IGAF - International Group of                 Member Firms in Principal Cities
         Accounting Firms
   AICPA SEC Practice Section . AICPA Private Companies Practice Section


                                       3
<PAGE>





In accordance with Government Auditing  Standards,  we have also issued a report
dated  February  10,  2001 on our  consideration  of  AIRPORT  ROAD  ASSOCIATES,
LIMITED's  internal  control  and a  report  dated  February  10,  2001  on  its
compliance with laws and regulations applicable to the financial statements.



/s/PAILET, MEUNIER and LeBLANC, L.L.P.
Metairie, Louisiana
February 10, 2001






                                       4
<PAGE>



                       AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                                 Balance Sheets

                            December 31,200 and 1999


                                                     2000           1999

ASETS

 CURRENT ASSETS
 CASH AND EQUIVALENTS                               $     8,752           5,020
 PREPAID EXPENSES                                         2,218           1,767
                                                      -----------    -----------
  TOTAL CURRENT ASSETS                                    10,970          6,787
                                                      -----------    -----------

RESTRICTED CASH
RESERVE FUNDS                                            137,118        144,286
ESCROW FUNDS                                               1,201          5,916
SECURITY DEPOSITS                                         11,835         12,068
                                                      -----------     ----------
  TOTAL RESTRICTED CASH                                  150,154        162,270
                                                      ------------     ---------

RENTAL PROPERTY-AT COST
 BUILDINGS                                             1,768,384      1,768.384
 FURNITURE & FIXTURES                                      2,356          2,356
                                                       ------------   ----------

                                                       1,770,740      1,770,740
ACCUMULATED DEPRECIATION                                (709.269)      (644,964)
LAND                                                      87,500         87,500
                                                      -----------     ----------
 TOTAL RENTAL PROPERTY-AT COST                         1,148,971      1,213,276
                                                      -----------     ----------
OTHER ASSETS
 DEPOSITS                                                    300            300
                                                      -----------     ----------
  TOTAL ASSETS
                                                    $    1,310,395 $  1,382,633
                                                    ============== =============


               SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.

                                       5
<PAGE>




                       AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                                 Balance Sheets

                            December 31,200 and 1999


                                                     2000           1999

         LIABILITIES AND PARTNERS' EQUITY

 CURRENT LIABILITIES
 ACCOUNTS PAYABLE                                   $    10,193       $   4,764
 ACCRUED INTEREST PAYABLE                                 2,841           2,866
 CURRENT PORTION OF LONG TERM DEBT                        3,360           3,000
                                                      -----------    ----------
  TOTAL CURRENT  LIABILITIES                             16,394          10,630
                                                      -----------    -----------
 DEPOSITS & PREPAYMENT LIABILITIES
 TENANTS' SECURITY DEPOSITS                              11,835          10,992
                                                      -----------     ----------
  TOTAL DEPOSITS AND PREPAYMENT LIA                      11.835          10,992
                                                      ------------     ---------

LONG TERM LIABILITIES
 MORTGAGE PAYABLE-RHS                                 1,444,135       1,447,183
LESS: CURRENT PORTION                                    (3,360)         (3,000)
DUE TO RELATED PARTIES                                   24,539          28,159
                                                       ------------   ----------

TOTAL LONG TERM LIABILITIES                           1,465,314       1,472,342
                                                      -------------   ---------
PARTENRS' EQUITY
PARTENRS' EQUITY                                       (183,148)       (111,331)
                                                      -----------     ----------
  TOTAL PARTENRS' EQUITY                               (183,148)       (111,331)
                                                      -----------     ----------
  TOTAL LIABILITIES AND EQUITY                   $    1,310,395    $  1,382,633
                                                    ============== =============


               SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
                                        6
<PAGE>

                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                             STAMENTS OF OPERATIONS

                  FOR the years ended December 31,200 and 1999


                                                     2000           1999

REVENUE
 RENTS                                           $     162,161      $   161,631
 LATE FEES,MISC.,ETC.                                    6,624            5,330
 INTEREST REDUCTION SUBSIDY                            104,637          104,300
                                                      -----------    ----------
  TOTAL REVENUE                                        273,422          271,261
                                                      -----------    -----------
  EXPENSES
OPERATING AND MAINTENANCE                               76,834           56,707
UTILITIES                                               21,328           20,371
ADMINISTRATIVE                                          37,691           35,055
TAXES AND INSURANCE                                     12,510           11,915
INTEREST                                               140,941          141,226
DEPRECIATION                                            64,305           64,470
                                                      ------------    ----------
TOTAL EXPENSES                                         353,609          329,744
                                                      ------------     ---------
INCOME(LOSS) FROM RENTAL OPERATIONS                    (80,187)         (58,483)
                                                     -------------    ----------
OTHER INCOME AND EPENSES
  INTEREST INCOME                                        8,370            6,352
                                                       ------------    ---------
  TOTAL OTHER INCOME AND EPENSES                         8,370            6,352
                                                      -------------    ---------

NET INCOME (LOSS)                                  $   (71,817)      $  (52,131)
                                                    ============== =============


               SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
                                       7
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                     STAMENTS OF CHANGES IN PARTNERS'EQUITY

                  FOR the years ended  December 31,200 and 1999


                                                     2000           1999


Partners' Equity-Ja                              $    (111,331)     $   (59,200)

Contributions by Partners                                    0                0

Net Income (Loss)                                      (71,817)         (52,131)


Distributions to Partners                                    0                0
                                                  --------------      ----------
Partners' Equity- December 31,
                                                 $    (183,148)     $  (111,331)
                                                 ===============    ============





              SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
                                       8
<PAGE>

                      AIRPORT ROAD ASSOCIATES, LIMITED
                               : 22-052-721132657

                             STAMENTS OF CASH FLOWS

                  FOR the years ended  December 31,200 and 1999


                                                     2000           1999

CASH flowa from operating activities:
 Net Income                                     $    (71,817)       $   (52,131)
Adjustments to reconciile net income to net cash ------------       -----------
Provided by operating activities:
Depreciation and amortization                         64,305             64,469
(Increase) decrease in prepaid expenses                 (451)                50
Increase(decrease in accounts payable                  5,429              2,850
Increase(decrease in accrued liabilites                  (25)               (22)
Increase(decrease in security deposits                   843              2,573
Increase(decrease in  current portion of debt            360                400
                                                 -------------      ------------
Total adjustments                                     70,461             70,320
                                                 -------------      ------------
Net cash provided(used)
by operating activities                               (1,356)            18,189
                                                 -------------      ------------
Cash flow from investing activites:
  (Deposit)withdrawal resrve                           7,168            (20,332)
  (Deposit)withdrawal escrow                           4,715              9,596
  (Deposit)withdrawal security deposit account           233             (3,347)
                                                ---------------      -----------
Net cash provided(used) by investing activites        12,116            (14,083)
                                                ---------------      -----------

Cash flow from financing activites:
 Owner's cash used to pay related prty debts          (3,620)            (3,620)
Principal payments on long-term debt                  (3,408)            (3,165)
                                                 ---------------     -----------
net cash provided(used) by financing activites        (7,028)            (6,785)
                                                 ---------------     -----------
Net increase(decreae) in cash and equivalents          3,732             (2,679)
Cash and equivalents,beginning of year                 5,020              7,699
                                                  --------------      ----------
Cash and equivalents, end of year                      8,752              5,020
                                                $   =============  $  ==========

Supplemental discolsures of cash flow information:
Cash paid during the year for:
Interest expense                                $     140,966       $   141,248
                                                   =============    ============


               SEE AUDITOR'S REPORT NOTES TO FINANCIAL STATEMENTS.
                                       9
<PAGE>





                       AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE A - NATURE OF OPERATIONS

AIRPORT  ROAD  ASSOCIATES,  LIMITED was  organized as a limited  partnership  to
develop,  construct,  own, maintain and operate a 40-unit rental housing project
for persons of low and moderate  income  pursuant to Sections 515 (b) and 521 of
the Housing Act of 1949,  as amended,  which  provides  for  interest and rental
subsidies.  The project is located in Slidell,  Louisiana . The major activities
of the  partnership  are  governed by the  partnership  agreement  and the Rural
Housing  Service  (RHS),  formerly  the  Farmers'  Home  Administration.  Annual
distributions  to the  partners  are  limited  by RHS  regulations  to 8% of the
borrower's  initial  capital  investment of $45,300.  Undistributed  amounts may
accumulate for payment the following year.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Accounting

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

Cash and Cash Equivalents

For purposes of statements of cash flows,  cash and cash  equivalents  represent
unrestricted  cash and  certificates  of deposit with original  maturities of 90
days or less. The carrying amount  approximates  fair value because of the short
period to maturity of the instruments.

Cash and Other Deposits

All bank balances of deposits, up to $100,000 in amount, as of December 31, 2000
are  deposited  in  institutions  insured  by the FDIC.  Account  balances  over
$100,000 have been collateralized with the Federal Reserve.

                                       10
<PAGE>




                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Capitalization and Depreciation

Land, buildings and improvements are recorded at cost.  Depreciation is provided
for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives using the straight-line method.  Improvements
are capitalized,  while  expenditures for maintenance and repairs are charged to
expense as incurred.  Upon disposal of  depreciable  property,  the  appropriate
property accounts are reduced by the related costs and accumulated depreciation.
The resulting gains and losses are reflected in the statement of operations.

Tenants' Security Deposits

Tenants'  security  deposits are held in a separate  bank account in the name of
the project.  At December 31, 2000 this account was funded in an amount equal to
the security deposit liability.

Income Taxes

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

Rental Income

Rental income is recognized as rentals become due. Rental payments received in
advance are deferred until earned. All leases between the partnership and the
tenants of the property are operating leases.


NOTE C - PARTNERS' CAPITAL CONTRIBUTIONS

The  partnership  has two  general  partners  -  Clifford  E.  Olsen  and  Olsen
Securities  Corp., and one special limited partner - WNC Housing Tax Credit Fund
II LP. Each general  partner and the special  limited  partner have made capital
contributions of $45,300 and $333,700, respectively.


                                       11
<PAGE>




                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE D - ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles 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  reporting  period.
Actual results could differ from those estimates.

NOTE E - LONG-TERM DEBT

The  project is financed by a 50-year  mortgage  payable to RHS in the  original
amount of $1,465,473.  The 9.75% mortgage is payable in monthly  installments of
$3,095 through  February 23, 2040. The  partnership has entered into an interest
subsidy  agreement  with RHS which  effectively  reduces  the  interest  rate to
approximately  1% over the term of the loan.  Monthly  payments to RHS of $3,109
are required under the terms of the mortgage.

The  liability  of the  partnership  under the  mortgage  note is limited to the
underlying value of the real estate collateral plus other amounts deposited with
the lender.

In accordance with the loan agreement with RHS, a reserve for replacements is to
be funded $14,627 annually until the account reaches a balance of $146,270.  The
required  amount of reserves as of December 31, 2000,  amounted to $86,453.  The
amount on hand at December 31, 2000, was $137,117  which was funded.  See Item D
on page 19.

The apartment  project is pledged as collateral  for the mortgage.  The mortgage
loan is nonrecourse debt secured by deeds of trust on the related real estate.

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

                           December 31, 2001                        $      3,360
                                                   2002                    3,650
                                                   2003                    3,900
                                                   2004                    4,250
                                                   2005                    4,500
                                            and Thereafter             1,424,475
                                                                       ---------

                                            Total                     $1,444,135
                                                                      ==========

                                       12
<PAGE>




                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE E - LONG-TERM DEBT (CONTINUED)

The fair value of the mortgage  note  payable is estimated  based on the current
rates  offered to the  project  for debt of the same  remaining  maturities.  At
December  31,  2000,  the fair  value of the  mortgage  approximates  the amount
recorded in the financial statements.


NOTE F - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

Management Fee

In  accordance  with  the  partnership  agreement,   the  partnership  paid  OSC
Management,  Inc.,  an  affiliate  of the general  partner,  management  fees of
$15,645 in 2000 and $15,855 in 1999 for services rendered in connection with the
leasing and operation of the project. The fee for its services is equal to 9.65%
in 2000 and 9.70% in 1999 of the project's gross rental income.

Amounts Due to Related Parties

Amounts  due to related  parties at December  31, 2000 and 1999,  consist of the
following:

                                                         2000            1999
                                                          ----              ----

General partner-non-interest bearing working
 capital loans                                          $24,539         $28,159
                                                        -------        ---------

                                                        $24,539         $28,159
                                                        ========       ========


The amounts due to related  parties at December 31, 2000 are unsecured,  without
interest,  have no repayment schedule, and may be repaid only with RECD approval
or from use of owners  return.  These  loans  are not due on demand  and are not
expected to require the use of existing  current assets,  and  accordingly,  are
reported as noncurrent.

                                       13
<PAGE>




                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 2000 and 1999


NOTE G - PARTNERSHIP PROFITS AND LOSSES AND DISTRIBUTIONS

Ownership is 5% to the general partner and 95% to the limited partners.  Profits
and losses are distributed as outlined in the partnership agreement.

Distributable  cash flow is defined in the  partnership  agreement as the sum of
all  cash  receipts  less  cash  disbursements  for  operating   activities  and
replacement reserve funding.

During  2000 and 1999,  $3,620 and  $3,620,  respectively,  was  distributed  as
owners' cash, and used to pay principal and interest on other long-term debt.


NOTE H - ADVERTISING

The partnership incurred advertising costs of $69 in 2000 and $19 in 1999. These
costs are expensed in the financial statements as incurred.

                                       14
<PAGE>




                    SUPPLEMENTAL INFORMATION REQUIRED BY RHS

                                       15
<PAGE>


                       PAILET, MEUNIER and LeBLANC, L.L.P.
                          Certified Public Accountants
                             Management Consultants








                   INDEPENDENT AUDITOR'S REPORT ON INFORMATION
                   ACCOMPANYING THE BASIC FINANCIAL STATEMENTS





To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED



Our audit of the 2000 financial statements presented in the preceding section of
this  report  was for the  purpose  of  forming  an  opinion  on such  financial
statements taken as a whole. The accompanying information shown on the following
pages is  presented  for purposes of  additional  analysis and is not a required
part of the basic financial  statements.  Such information has been subjected to
the auditing procedures applied in the audits of the basic financial  statements
and, in our opinion,  is fairly  stated in all material  respects in relation to
the 2000 basic financial statements taken as a whole.




Metairie, Louisiana
February 10, 2001






   Telephone (504) 837-0770                  Telephone (504) 522-0504
   Fax (504) 837-7102                        Fax (504) 837-710
                                    Member of
 IGAF - International Group of                 Member Firms in Principal Cities
         Accounting Firms
   AICPA SEC Practice Sect
                                       16
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.052-721132657

                             STAMENTS OF CASH FLOWS

                  FOR the years ended  December 31,200 and 1999


                                                     2000           1999

A. SCHEDULES OF OPERATING AND MAINTENANCE, UTILITIES,
   ADMINISTRATIVE, TAXS AND INSURANCE


REPAIRS AND MAINTENANCE

MAINTENANCE & REPAIRS- PAYROLL                      $    15,172      $   12,614
MAINTENANCE & REPAIRS- SUPPLY                               847               0
MAINTENANCE & REPAIRS- CONTRACT                          15,320           6,975
PAINTING & DECORATING                                     9,302           7,499
GROUND MAINTENANCE                                        6,407          10,952
SERVICES (EXTERMINATING AND CUSTODIAN)                    1,933           1,483
FURNITURE REPLACEMENT AND APPLIANCES                     27,738          16,186
OTHER OPERTING EXPENSES(INDUSTRY INTERFAC)                  115             998
                                                   -------------    ------------
                              Total                 $    76,834      $   56,707
                                                   ============     ============
UTILITIES
ELECTRICITY                                         $     6,351      $    4,983
WATER                                                     5,664           6,004
GAS AND SEWERAGE                                          5,962           6,240
GARBAGE                                                   3,351           3,144
                                                    -----------    ------------
                                      Total         $    21,328      $   20,371
ADMINISTRATIVE                                      ===========    =============
SITE MANAGER PAYROLL                                $     8,400      $    7,888
MANAGEMENT FEE                                           15,645          15,680
PROJECT AUDITING EXPENSES                                 2,946           2,977
LEGAL EXPENSES                                              838              94
ADVERTISING                                                  69              19
TELEPHONE                                                 1,433           1,257
OFFICE EXPENSES                                           2,992           3,553
OFFICE FURNITURE & EQUIPMENT                                  0             152
TRAINING EXPENSES                                           420             300
HEALTH INSURANCE                                          3,141           1,673
PAYROLL TAXES                                             1,441           1,212
WORKMAN'S COMPENSATION                                      366             250
                                                     -----------    ------------
                             Total                     $ 37,691         $ 35,055
                                                     ===========    ============

                                     17
<PAGE>





                        RHS PROJECT NO.052-721132657

                             STAMENTS OF CASH FLOWS

                  FOR the years ended  December 31,200 and 1999


                                                     2000           1999


TAXS AND INSURANCE

REAL ESTATE TAXES                                  $    7,948         $   7,906
SPECIAL ASSESSMENT (AUDIT)                                280                 0
OTHER TAXES AND PERMITS                                    10               165
PROPERTY AND LIABILTY INSURANCE                         4,000             3,584
FIDELITY COVERAGE INSURANCE                               272               260
                                                    ----------          --------
                                     TOTAL         $   12,510         $  11,915
                                                   ===========        ==========

                                       18
<PAGE>





                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000




B.  SCHEDULE OF ACCOUNTS RECEIVABLE - NONE


C.  SCHEDULE OF ACCOUNTS PAYABLE EXCEEDING 30 DAYS - NONE


D.  SCHEDULE OF RESERVE FUNDING

<TABLE>
<CAPTION>

<S>                                                                            <C>
         Annual Funding Required by Loan Agreement                             $       14,627
                                                                               ==============

         Beginning Balance                                                      $     144,286
         Actual funding including interest income                                      17,809
         Amount of Withdrawals approved by Rural Development
         Actual amount of withdrawals:
                  1.  Capital items                                                   (24,978)
                  2.  O & M Expenses                                                        0
                                                                           ------------------

         Reserve balance at year end                                                  137,117
         Fully funded balance per loan agreement                                       86,453
                                                                                 -------------

         Excess (Underfunded) reserve on hand                                   $      50,664
                                                                                =============


E.       SCHEDULE OF INSURANCE COVERAGE

                                      Name of                 Amount of                 Expiration
                           Insurance Company                  Coverage                    Date

Property          Acordia of Illinois                        $1,318,947                 July, 2001
Liability                  Acordia of Illinois                1,000,000                 July, 2001
Liability Umbrella         Acordia of Illinois                5,000,000                 July, 2001
Fidelity                   Acordia of Illinois                  750,000                 July, 2001
    All policies have been renewed.
F.  SCHEDULE OF DELINQUENT REAL ESTATE TAXES - NONE

</TABLE>

<PAGE>
                                       19







                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


<TABLE>
<CAPTION>


<S>                                <C>              <C>                <C>             <C>
G.  SCHEDULE OF RENTAL INFORMATION:

                                  Market             Basic             Number of
                                  Rate               Rate                 Units         Total

Two Bedroom                       $588               $359                   $40         $172,320
                                                                                        --------

         Total                                                                          $172,320
                                                                                        ========

         Number of Units:                            40

         Number Occupied at year end:                38

         Occupancy rate for the year:                93.13%

         Occupancy rate at year end:                 95.00%


H.       SCHEDULE OF OWNERSHIP:                                                      Percentage
                                                                                        of
         Name                       Position         Address                         Ownership

Olsen Securities Corp.     General Partner  2701 Houma Blvd.
                                                              Metairie, LA              4.5%
Clifford E. Olsen          General Partner  2701 Houma Blvd.
                                                              Metairie, LA               .5%
WNC housing Tax            Limited Partner  3158 Redhill Costa
Credit Fund                                                   Mesa, CA                   95%
</TABLE>


                                       20
<PAGE>

                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


<TABLE>
<CAPTION>


<S>                                                                             <C>
I.  SCHEDULE OF ALLOWED RETURN TO OWNER:

         Line 31, Form 1930-7                                                   $   5,020
         Line 23, Form 1930-7                                                       3,620
                                                                                 --------

                Subtotal                                                            8,640
         Adjustments for Increase (Decrease) in Accounts Receivable                     0

         Adjustments for Increase (Decrease) in Accounts Payable                   (5,429)
                                                                                ----------

                  Subtotal                                                           3,211
         Less:  Adjustments for prior Reserve Withdrawal for O&M which
                  must be replaced before Return to Owner distribution                   0
                                                                                ----------

         Balance available for return to owner                                  $    3,211
                                                                                ==========

         Amount allowed for return to owner per Loan Agreement                  $    3,624
                                                                                ==========

         Actual return to owner distributed                                     $    3,620
                                                                                ==========
</TABLE>


J.  SCHEDULE OF PHYSICAL  CONDITION  OF PROPERTY  BASED UPON LATEST HUD PHYSICAL
INSPECTION  FORM  9822,  COMPLETED  BY THE RHS  CONSTRUCTION  ANALYST  (WILL  BE
FURNISHED BY MANAGEMENT COMPANY)


K.       SCHEDULE OF FINANCIAL INSTITUTIONS:

         Name                       Location         Bank Accounts     Balance

         Bank One          New Orleans, LA           Operating          $  8,552
         Bank One          New Orleans, LA        Security Deposit        11,835
         Bank One          New Orleans, LA           Escrow                1,200
         First Bank & Trust         New Orleans, LA  Reserve             137,117


                                       21
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


L.       SCHEDULE OF RECONCILIATION OF ACCRUAL TO CASH ACCOUNTING:

<TABLE>
<CAPTION>
                                                                                                2000
<S>                                                                             <C>
         Addition (Subtractions):
                  Tenant rent receivable                                        $       0
                  Rental assistance receivable                                          0
                  Other receivables                                                     0
                  Real estate taxes payable                                             0
                  Prepaid insurance                                                   (451)
                  Other payables                                                     6,247
                                                                                ----------

         Accrual adjustment per line 32 of
            Form 1930-7                                                         $  5,796
                                                                                ========

M.  SCHEDULE OF LIMITED PARTNERSHIP'S STANDING WITH SECRETARY OF
STATE:
                                IN GOOD STANDING


N.  SCHEDULE OF MANAGEMENT FEES RECEIVED:
                               (SEE ATTACHMENT B)


O.  BORROWER CERTIFICATIONS CONCERNING THE ANNUAL AUDIT
    REPORTS:
                               (SEE ATTACHMENT C)


</TABLE>

                                       22
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2000


                                  ATTACHMENT B
<TABLE>
<CAPTION>

                  Units             Units            Allowed  Management
Month             Vacant            Rented               Fee                         Fee           Amount
-----               -------           ------               ---                         ---           ------

<S>                <C>               <C>                  <C>           <C>              <C>
January            3                 37                   X             $35.00           1,295
February           3                 37                   X             $35.00           1,295
March              3                 37                   X             $35.00           1,295
April              2                 38                   X             $35.00           1,330
May                3                 37                   X             $35.00           1,295
June               6                 34                   X             $35.00           1,190
July               3                 37                   X             $35.00           1,295
August             2                 38                   X             $35.00           1,330
September          1                 39                   X             $35.00           1,365
October            3                 37                   X             $35.00           1,295
November           2                 38                   X             $35.00           1,330
December           2                 38                   X             $35.00           1,330

Totals            33                447                   X             $35.00         $15,645
                  ==                ===                                =========       =======

Vacancy Rate % = Total Units Vacant/Total Number of Units

40 Revenue Producing Units at $ 35.00 per month per occupied unit based upon
occupied units on the 1st day of each month.

100% Occupied is:                                                      $16,880
Earned Management Fees:                                                $15,645
Management Fees Collected:                                             $15,645
Previous Years Management Fees Collected
     this year:                                                    $         0
</TABLE>

NOTE:  The resident manager's unit is considered nonoccupied for management fee
purposes unless they are paying
normal rent.

The above figures are true and correct based upon the approved rate of
compensation as stated in the approved Management Agreement.


Borrower/Management Agent _____________________________________________
                                                                 OSC Management

                                       23
<PAGE>


                        AIRPORT ROAD ASSOCIATES, LIMITED
                        RHS PROJECT NO.: 22-052-721132657

                     SUPPLEMENT INFORMATION REQUIRED BY RHS

                                December 31, 2000


                                  ATTACHMENT C



                             CERTIFICATE OF BORROWER



The information provided by AIRPORT ROAD ASSOCIATES, LIMITED to Pailet, Meunier,
and LeBlanc, LLP, Certified Public Accountants,  for the preparation of the 2000
annual audit to which this  certification  is attached is hereby certified to be
true and correct,  and it is further  certified that the handling of the reserve
account,  the operation and maintenance account,  rental receipts,  and interest
credit by AIRPORT  ROAD  ASSOCIATES,  LIMITED was in  accordance  with the USDA,
Rural Development regulations.

                  Done this ___________ day of _______________, 2001.

                           By:  ______________________________________________
                                            General Partner



                                       24
<PAGE>












                       PAILET, MEUNIER and LeBLANC, L.L.P.
                          Certified Public Accountants
                             Management Consultants




                         INDEPENDENT AUDITOR'S REPORT ON
                                INTERNAL CONTROL


To the Partner
AIRPORT ROAD ASSOCIATES LIMITED


         We have audited the financial statements of AIRPORT ROAD ASSOCIATES
LIMITED as of and for the year ended December 31, 2000 and have issued our
report thereon dated February 10, 2001.

We conducted our audit in accordance with generally  accepted auditing standards
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.

The  management  of  AIRPORT  ROAD   ASSOCIATES   LIMITED  is  responsible   for
establishing   and   maintaining    internal   control.   In   fulfilling   this
responsibility, estimates and judgments by management are required to assess the
expected  benefits and related  costs of controls.  The  objectives  of internal
controls are to provide management with reasonable, but not absolute,  assurance
that assets are safeguarded  against loss from  unauthorized use or disposition,
and that transactions are executed in accordance with management's authorization
and  recorded  properly to permit the  preparation  of financial  statements  in
accordance with generally accepted  accounting  principles.  Because of inherent
limitations in any internal control structure,  errors or fraud may nevertheless
occur and not be  detected.  Also,  projection  of any  evaluation  of  internal
control to future  periods is  subject  to the risk that  procedures  may become
inadequate  because of changes in  conditions or that the  effectiveness  of the
design of controls may deteriorate.

In planning and performing our audit of the financial statements of AIRPORT ROAD
ASSOCIATES  LIMITED  for the year  ended  December  31,  2000,  we  obtained  an
understanding of internal control. With respect to internal control, we obtained
an understanding  of the design of relevant  controls and whether they have been
placed in  operation,  and we assessed  control risk in order to  determine  our
auditing  procedures  for the purpose of expressing our opinion on the financial
statements and not to provide an opinion on internal control. Accordingly, we do
not express such an opinion.

             3421 N. Cause770                  Telephone (504) 522-0504
   Fax (504) 837-7102                        Fax (504) 837-710
                                    Member of
 IGAF - International Group of                 Member Firms in Principal Cities
         Accounting Firms
   AICPA SEC Practice Se
                                       25
<PAGE>



         In connection therewith, we have also made a study of those internal
accounting controls and administrative control procedures comprehended in
Paragraph XIII of Exhibit B - Multiple Housing Management Handbook, which is set
forth in Part 1930, Subpart C Title 7CFR. Our study included tests of compliance
with such procedures.

         Our consideration of the internal control structure would not
necessarily disclose all matters of internal control that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. 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 errors or fraud 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 internal
control and its operation that we consider to be material weaknesses as defined
above.

         This report is intended for the information of the audit committee,
management, and the Rural Housing Service. However, this report is a matter of
public record and its distribution is not limited.


/s/PAILET, MEUNIER and LeBLANC, L.L.P.

Metairie, Louisiana
February 10, 2001

                                       26
<PAGE>


                       PAILET, MEUNIER and LeBLANC, L.L.P.
                          Certified Public Accountants
                             Management Consultants





                   INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE



To the Partners
AIRPORT ROAD ASSOCIATES, LIMITED


         We have audited the financial statements of AIRPORT ROAD ASSOCIATES,
LIMITED as of and for the year ended December 31, 2000, and have issued our
report thereon dated February 10, 2001.

         We conducted our audit in accordance with generally accepted auditing
standards 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.

         Compliance with laws, regulations, contracts, and grants applicable to
AIRPORT ROAD ASSOCIATES, LIMITED is the responsibility of AIRPORT ROAD
ASSOCIATES, LIMITED 's management. As part of obtaining reasonable assurance
about whether the financial statements are free of material misstatement, we
performed tests of AIRPORT ROAD ASSOCIATES, LIMITED 's compliance with certain
provisions of laws, regulations, contracts, and grants. However, the objective
of our audit of the financial statements was not to provide an opinion on
overall compliance with such provisions. Accordingly, we do not express such an
opinion.

         We also considered those compliance matters regarding types of services
allowed or unallowed, eligibility, matching, level of effort and earmarking,
reporting and special tests and provisions comprehended in Attachment 2 of the
U. S. Department of Agriculture, Farmers Home Administration Audit Program
Handbook, dated December, 1989.

         The results of our tests disclosed no instances of noncompliance that
are required to be reported herein under Government Auditing Standards or RHS
requirements.



             3421 N. CausN. Cause770                  Telephone (504) 522-0504
   Fax (504) 837-7102                        Fax (504) 837-710
                                    Member of
 IGAF - International Group of                 Member Firms in Principal Cities
         Accounting Firms
   AICPA SEC Practice Se

                                       27
<PAGE>





         This report is intended for the information of management and the
Department of Agriculture, Rural Housing Service. However, this report is a
matter of public record and its distribution is not limited.




Metairie, Louisiana
February 10, 2001





                                       28