WNC HOUSING TAX CREDIT FUND VI LP SERIES 7
POS AM, 2000-10-17
OPERATORS OF APARTMENT BUILDINGS
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                                                     Registration No. 333-76435
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                        POST-EFFECTIVE AMENDMENT NO. 4 TO

                                    FORM S-11
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
                         (Exact names of registrants as
                       specified in governing instruments)


        3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626-3416
                                 (714) 662-5565
          (Address and telephone number of principal executive offices)

                              DAVID N. SHAFER, ESQ.
                             WNC & Associates, Inc.
        3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626-3416
                                 (714) 662-5565
            (Name, address and telephone number of agent for service)

                                    Copy to:
                            PAUL G. DANNHAUSER, ESQ.
                             Derenthal & Dannhauser
           One Post Street, Suite 575, San Francisco, California 94104
                                 (415) 981-4844

Commencement of sale to the public: September 3, 1999

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the  Securities  Act,  check the following box and list the
Securities  Act  registration   statement   number  of  the  earlier   effective
registration statement for the same offering. ------

If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration number of the earlier effective registration statement for the same
offering. ------

If this Form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box and  list the  Securities  Act
registration  statement number of the earlier effective  registration  statement
for the same offering. ------

If  delivery  of  the  prospectus  is  expected to be made pursuant to Rule 434,
please check the following box. ------


<PAGE>


           WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7 and SERIES 8
                      Units of Limited Partnership Interest

    WNC Housing Tax Credit Fund VI,  L.P.,  Series 7 and Series 8 will invest in
other entities owning low income apartment  complexes.  Federal tax law provides
tax credits to investors in low income apartment  complexes.  Investors in Units
can use these tax credits to reduce  their own Federal  income tax  liabilities.
Approximately  75% of  the  Series'  capital  will  be  invested  in low  income
apartment  complexes.  Approximately 15% will be used to pay fees to or expenses
of WNC & Associates, Inc. and its affiliates.

    A purchase of  Units  involves  risks.  See "Risk Factors" on page 23. Risks
include:

    o   There can be no  assurance  as to the  amount  of  tax  credits  because
        compliance with the tax credit rules is complicated.
    o   An individual's  ability to use tax credits is limited.  See "Who Should
        Invest; Limitations on Use of Credits and Losses."
    o   An investor's ability to sell Units is limited.  See "Transferability of
        Units."
    o   A market for Units probably will not develop.
    o   If mortgage payments  for  an apartment complex are not made, the lender
        could foreclose on the apartment complex.

                 Per     Total       Total       The Units  are offered  in  two
                 Unit   Minimum     Maximum      Series of 25,000 Units each  by
Public Price    $1,000  $1,400,000  $50,000,000  WNC  Capital  Corporation.  WNC
Selling Com-                                     Capital  Corporation   in  turn
missions and                                     is offering the  Units  through
Dealer Man-                                      other broker-dealers which  are
ager Fee...     $   90  $  126,000  $ 4,500,000  members   of   the  NASD.   The
Proceeds to                                      broker-dealers are not required
Series.....     $  910  $1,274,000  $45,500,000  to sell any specific  number of
                                                 Units,  but will use their best
                                                 efforts to sell the Units.

    No Units in a Series will be sold unless a minimum of  $1,400,000 in cash is
received  within one year from the start of the  Series'  offering.  Each Series
will deposit its  subscriptions  in an escrow  account with Southern  California
Bank.

    Neither the  Securities  and Exchange  Commission  nor any state  securities
commission has approved or  disapproved  of these  securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal  offense.  The use of forecasts  in this  offering is  prohibited.  Any
representations to the contrary and any predictions,  written or oral, as to the
amount or  certainty  of any present or future cash  benefit or tax  consequence
which may flow from an investment in this program is not permitted.

                 The date of this prospectus is September 3, 1999


<PAGE>



                                TABLE OF CONTENTS


SUMMARY OF THE OFFERING.......................................................10
    The Series................................................................10
    Management................................................................10
    Investment Objectives and Policies........................................11
    The Low Income Housing Tax Credit.........................................12
    Risk Factors..............................................................14
    Who Should Invest; Limitations on Use of Credits and Losses...............15
    Estimated Use of Proceeds.................................................16
    Management Compensation...................................................17
    Conflicts of Interest.....................................................18
    Fiduciary Responsibility..................................................19
    Local Limited Partnership Investment Protection Policies..................19
    Prior Performance Summary.................................................20
    Federal Income Tax Considerations.........................................21
    Profits and Losses, Tax Credits and Cash Distributions....................21
    Summary of Certain Provisions of the Partnership Agreement................21
    Transfer of Units.........................................................22
    Terms of the Offering and Plan of Distribution............................23

RISK FACTORS..................................................................23
    Risks arising from the Internal Revenue Code rules governing tax credits..23
     Low income housing tax credits might not be available....................23
     Low income housing tax credits might be less than anticipated............23
     Unless a bond is posted low income housing tax credits are
         recaptured if apartment complexes are not owned for 15 years.........23
     Sales of apartment complexes after 15 years are subject to limitations
         which may impact a local limited partnership's ability to
         sell its apartment complex...........................................24
     Investors can only use low income housing tax credits in limited amounts.24
     Historic tax credits may be unavailable or may be recaptured.............25
    Risks related to investment in local limited partnerships and
         apartment complexes..................................................26
     If a Series has few investments, each investment will have a great
         impact on the Series' results of operations..........................26
     The failure to pay mortgage debt could result in a forced sale of an
         apartment complex....................................................26
     The Series will not control the local limited partnerships and must
         rely on the local general partners...................................27


                                        2


<PAGE>



     Projects subsidized by other government  programs are subject to additional
         rules which may make it difficult to operate and sell
         apartment complexes..................................................27
     Keen competition may increase the price of investments...................28
     Uninsured casualties could result in losses and recapture................28
     Apartment complexes without financing or operating subsidies may
         be unable to pay operating expenses..................................29
     Investors may be unable to evaluate their Series' investments............29
     A Series' local limited partnership investment protection policies will
         be worthless if the net worth of the local general partners is not
         sufficient to satisfy their obligations..............................29
     Fluctuating economic conditions can reduce the value of real estate......30
     Properties under development may not be completed........................30
     Investments made before the sale of Units may be subject to loss.........30
     If a loan made to a local limited partnership is not repaid the amount
         of capital available for investment would be reduced.................31
     Lack of control or risk of impasse in joint investments..................31
    Tax risks other than those relating to tax credits........................31
     No opinion of counsel as to certain matters..............................31
     Passive activity rules will limit deduction of Series' losses and impose
         tax on interest income...............................................32
     At risk rules might limit deduction of Series' losses....................33
     Tax liability on sale of apartment complex or local limited partnership
     interest may exceed the cash available from the sale.....................33
     Alternative minimum tax liability could reduce an investor's
         tax benefits.........................................................34
     IRS could audit the returns of the Series, the local limited
         partnerships or the investors........................................34
     A successful IRS challenge to tax allocations of the Series and the
         local limited partnerships would reduce the tax benefits of an
         investment in the Series.............................................34
     Tax liabilities could arise in later years of the Series.................35
     IRS challenge to tax treatment of expenditures could reduce losses.......35
     Changes in tax law might reduce the value of tax credits.................36
     New administrative or judicial interpretations of the law might reduce
         the value of tax credits.............................................36
     State income tax laws may adversely affect the investors.................36
    Risks related to the Series and the Series' partnership agreement.........37
     A Series may be unable to timely provide financial reports to the
         investors which would adversely affect the investors' ability to
         monitor Series' operations...........................................37
     Lack of liquidity of investment..........................................38
     The investors will not control their Series and must rely totally on
         WNC & Associates, Inc................................................38

                                        3


<PAGE>



     Individual investors will have no recourse if they disagree with
         actions authorized by a vote of the majority.........................38
     Limitations on liability of WNC & Associates, Inc. to the Series.........38
     Payment of fees to WNC & Associates, Inc. and its affiliates will reduce
         cash available for investment in local limited partnerships .........39
     Investors in one Series may be subject to different risks and receive
         different yields than investors in another Series....................39
     Obligations of investors paying for Units with promissory notes
         is unconditional.....................................................39
     Lack of operating history................................................40
     Year 2000 issues ........................................................40
     Geographic concentration of properties in previous WNC-partnerships and
         the Series may affect their ability to rent apartment units .........40
WHO SHOULD INVEST;
LIMITATIONS ON USE OF CREDITS AND LOSSES......................................41
    All Investors.............................................................41
    Individual Investors......................................................42
    Corporate and Other Entity Investors......................................43
     Trusts and Estates.......................................................43
     Corporations.............................................................43
     Partnerships.............................................................44
     Entity Financial Reports.................................................44
    Minimum State Suitability Requirements....................................46

ESTIMATED USE OF PROCEEDS.....................................................53

MANAGEMENT COMPENSATION.......................................................56
    Organizational and Offering Stage.........................................56
    Acquisition Stage.........................................................57
    Operating Stage...........................................................57
    Liquidation Stage.........................................................60
    Interest in Series........................................................61

CONFLICTS OF INTEREST.........................................................63
    Receipt of Fees and Other Compensation by WNC & Associates, Inc.
         and its Affiliates...................................................63
    Other Business Activities of WNC & Associates, Inc. and its Affiliates....63
    Competition with WNC & Associates, Inc. and its Affiliates with Respect
         to the Purchase or Ownership of Properties...........................64

                                        4


<PAGE>


    Other Transactions with Developers, Local General Partners, Lenders
         and Joint Venturers..................................................65
    Representation in Tax Audit Proceedings...................................65
    Distribution of Units.....................................................65
    Joint Investments.........................................................66
    Resolution of Conflicts of Interest.......................................66
    Lack of Separate Representation...........................................66
    Organizational Diagram....................................................67

FIDUCIARY RESPONSIBILITY......................................................68

INVESTMENT OBJECTIVES AND POLICIES............................................70
    Principal Investment Objectives...........................................70
    Investment Policies.......................................................73
     Investment Criteria......................................................73
     Eligibility for Low Income Housing Tax Credits...........................76
     Historic Tax Credits.....................................................76
     Types of Properties......................................................77
     Location of Properties...................................................77
     Number of Investments....................................................78
     Timing of Investments....................................................78
     Payment for Investments..................................................79
    The Local General Partners................................................80
     Financial Condition and Experience of Local General Partners.............80
     Compensation of Local General Partners...................................81
     Withdrawal of Local General Partners.....................................81
    Terms of the Local Limited Partnership Agreements.........................81
     Development Obligation...................................................82
     Operating Guarantees.....................................................82
     Protection Against Reduction or Loss of Tax Credits......................82
     Repurchase Obligation....................................................84
     Rights of Limited Partner................................................84
     Role of Special Limited Partner..........................................85
     Interests in Profits, Losses and Distributions...........................86
    Joint Investments.........................................................87
    Use of Leverage...........................................................88
    Sale or Other Disposition of Investments..................................89
    Reserves..................................................................90
    Other Policies............................................................90

                                        5


<PAGE>


THE LOW INCOME HOUSING TAX CREDIT.............................................92
    Summary...................................................................92
    Qualified Properties......................................................95
     Qualified Low Income Projects............................................95
     Eligible Basis...........................................................97
     Qualified Basis..........................................................99
    Maximum Amount of Credit.................................................100
    Credits Subject to State Allocation......................................101
    Utilization of the Low Income Housing Tax Credit ........................105
     Reduction for Partial Year of Operations................................105
     Low Income Housing Tax Credit At Risk Rules.............................105
     Other Limitations.......................................................107
    Recapture of Low Income Housing Tax Credits..............................107
    State Low Income Housing Tax Credits.....................................109

OTHER GOVERNMENT ASSISTANCE PROGRAMS.........................................110
    RD Financing and Rural Rental Assistance Programs........................110
    Home Investment Partnership Program......................................111
    State and Local Bond Programs............................................113
    HUD Section 8 Rental Assistance Programs.................................115

MANAGEMENT...................................................................116
    WNC & Associates, Inc....................................................116
     Statement of Purpose....................................................120
    Change in Management.....................................................120
    WNC Capital Corporation..................................................120
    WNC Management, Inc......................................................121

PRIOR PERFORMANCE SUMMARY....................................................122
    Introduction.............................................................122
    All WNC-Partnerships.....................................................122
    Public Partnerships Sponsored in Last Ten Years..........................127
    Private Partnerships Sponsored in Last Ten Years.........................132
    Sales of Properties; Terminations of Partnerships .......................135
    Major Adverse Events.....................................................136

FEDERAL INCOME TAX CONSIDERATIONS............................................139
    Introduction.............................................................139
    Summary..................................................................139
     Opinion of Counsel......................................................139
     Classification as a Partnership.........................................139

                                        6


<PAGE>


     Tax Treatment of Investors..............................................139
     Historic Tax Credits and Recapture......................................140
     Series Allocations......................................................141
     Series Deductions.......................................................141
     Sale of Apartment Complexes.............................................141
     Transfers of Units......................................................141
     Liquidation.............................................................142
     Section 754 Election....................................................142
    Opinion of Counsel.......................................................142
    Classification as a Partnership..........................................145
    Investment in Local Limited Partnerships.................................147
    Tax Treatment of Investors...............................................148
    Limitations on Losses and Credits from Passive Activities................150
     A. General Limitations..................................................150
     B.  Exception for Low Income Housing Tax Credits and Historic
         Tax Credits.........................................................152
         1.       Individuals................................................152
         2.       Other Investors............................................156
    Historic Tax Credit......................................................157
    Historic Tax Credit Recapture............................................158
    General Business Tax Credit Limitations..................................159
    Tax Basis for the Units..................................................160
    Application of At Risk Limitations.......................................161
    Series Allocations.......................................................162
    Allocations Before Admission.............................................166
    Basis of Local Limited Partnerships in Their Apartment Complexes.........166
    Depreciation.............................................................167
    Deductibility of Fees....................................................168
     A. Development Fees and Acquisition and Investment Management Fees......168
     B.  Ongoing Management Fees.............................................168
    Organization and Offering Expenses.......................................169
    Start-Up Expenditures....................................................169
    Sales or Exchanges of Local Limited Partnership Property;
     Depreciation Recapture..................................................169
    Tax Liabilities in Later Years...........................................171
    Treatment of Mortgage Loans..............................................171
    Sales or Exchanges of Units and Local Limited Partnership Interests;
     Transfers by Gift or at Death...........................................172
    Dissolution and Liquidation of a Series or Local Limited Partnership.....173
    Elections................................................................173
    Transfer of Units; Termination of a Series...............................174

                                        7


<PAGE>


    Profit Motive............................................................174
    Other Important Tax Considerations.......................................174
     A.  Tax Rates...........................................................175
     B.  Alternative Minimum Tax.............................................177
     C.  Deduction of Investment Interest....................................180
    Tax Returns and Tax Information..........................................181
     A. Audit and Assessment Procedure.......................................181
     B.  Imposition of Penalties.............................................182
         Document and Information Return Penalties...........................182
         Accuracy-Related and Fraud Penalties................................182
    Tax Shelter Registration.................................................183
    Changes in Tax Law.......................................................184

STATE AND LOCAL TAX CONSIDERATIONS...........................................184

PROFITS AND LOSSES, TAX CREDITS
AND CASH DISTRIBUTIONS.......................................................185
    Tiered Investment........................................................185
    Cash Available for Distribution..........................................185
    Sale or Refinancing Proceeds.............................................186
    Capital Accounts.........................................................187
    Allocations of Profits and Losses and Tax Credits........................187
     General Allocations.....................................................187
     Special Allocations.....................................................189
    Determination of Distributions and Allocations Among Investors...........190
    Allocations for Community Reinvestment Act Purposes......................190

SUMMARY OF CERTAIN PROVISIONS OF THE
PARTNERSHIP AGREEMENT........................................................191
    Default by an Investor in Payment of the Deferred Capital Contribution...191
    Liability of Investors to Third Parties..................................192
    Dissolution and Liquidation..............................................192
    Removal of WNC & Associates, Inc.........................................193
    Voting Rights............................................................193
    Meetings.................................................................194
    Books and Records........................................................195

TRANSFERABILITY OF UNITS.....................................................195

REPORTS......................................................................198

                                        8


<PAGE>


TERMS OF THE OFFERING AND PLAN OF DISTRIBUTION...............................199
    Issuance of Units in Series..............................................199
    Underwriting Arrangements................................................199
    Volume Discounts.........................................................201
    Purchases by Affiliates..................................................203
    Purchases at No Commission...............................................203
    How To Subscribe.........................................................204
     Deferred Installments...................................................205
     Business Development Plan...............................................206
     Policies as to Pledges of Promissory Notes..............................207
    Escrow Arrangements......................................................207

SALES MATERIAL...............................................................208

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION.......................................................209
    Year 2000 Issues - the Series and WNC & Associates, Inc..................211
     Status of Readiness.....................................................211
         Information Technology Systems......................................211
         Non-IT Systems......................................................211
         Service Providers...................................................211
     Costs to Address Year 2000 Issues.......................................212
     Risk of Year 2000 Issues................................................212
    Year 2000 Issues - the Local Limited Partnerships........................212
     Status of Readiness.....................................................212
     Costs to Address Year 2000 Issues.......................................213
     Risk of Year 2000 Issues................................................213

LEGAL MATTERS................................................................213

EXPERTS......................................................................213

FURTHER INFORMATION..........................................................214

Financial Statements........................................................FS-i
Exhibit A - Prior Performance Tables.........................................A-1
Exhibit B - First Amended and Restated Agreement of Limited Partnership......B-1
Exhibit C - Investor Form....................................................C-1

                                        9


<PAGE>



                             SUMMARY OF THE OFFERING

This  summary  outlines the main points of the  offering.  This summary does not
replace a full and careful reading of this prospectus. This summary is qualified
by the remainder of this prospectus. All prospective investors are urged to read
this prospectus in its entirety.

The Series

WNC  Housing  Tax  Credit  Fund  VI, L.P.,  Series 7 and Series 8 are California
limited  partnerships.  Series 7 and  Series 8 have been  organized  as  limited
partnerships  because that structure permits the pass through of tax benefits to
investors.  The principal  place of business of Series 7 and Series 8 is that of
management:  3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626. The telephone
number is 714-662-5565.

Management

The fund manager is WNC & Associates, Inc., a California corporation. Management
personnel of WNC & Associates,  Inc. will be  responsible  for the management of
each Series. Affiliates of WNC & Associates,  Inc. will also provide services to
the Series. As used herein, an affiliate of a specified person includes:

o   any person who controls, is controlled by, or is under  common  control with
    the specified person;

o   any person  who  is  an  officer or director of or partner in the  specified
    person;

o   any person of which the specified person is an officer, director or partner;

o   any person having a 10% or more interest in the specified person;

o   any person as to which the specified person has a 10% or more interest.


                                       10

<PAGE>



Investment
Objectives and
Policies

Each Series' principal  investment  objective is to generate tax credits for its
investors  over a period of 10 to 12 years.  To do this each Series will acquire
interests in  residential  properties  which qualify for low income  housing tax
credits under Section 42 of the Internal Revenue Code of 1986, as amended.  Some
residential  properties may qualify for historic tax credits under Section 47 of
the Internal Revenue Code.

The Series will not directly purchase apartment  complexes.  Rather, each Series
will invest in other limited  partnerships or limited liability companies owning
apartment  complexes.  These other  entities in which the Series will invest are
referred  to  herein  as  local  limited  partnerships.  The  developers  of the
apartment  complexes  will  not be  affiliates  of WNC &  Associates,  Inc.  The
developer or an affiliated  company will be the sponsor and the general  partner
of the local  limited  partnership.  The general  partners of the local  limited
partnerships are referred to herein as the local general  partners.  In addition
to a  Series,  other  persons  may be  limited  partners  of the  local  limited
partnerships.  These other  persons may include  affiliates of WNC & Associates,
Inc.:

o   investing on the same terms as the Series, or

o   serving as the special limited partner.

None of the local limited partnerships have been selected yet.

This  two-tier  limited  partnership  form  for  investing in low income housing
is common practice. The two-tier form:

o   gives a Series the same tax benefits  which would be available if the Series
    invested directly in the housing, and

o   insulates  the  investors by providing a Series with limited  liability  for
    each of its investments.

Each  Series  will try to invest in a  geographically-diversified  portfolio  of
apartment complexes. There are no parameters concerning the types of communities
in which the apartment complexes will be located. The apartment complexes can be
located in rural areas, suburban communities or in urban areas.

                                       11

<PAGE>



The  properties  will be rented either to senior  citizens  only, or to a mix of
senior citizens, families and others.

The  low  income  housing  tax  credit  rules  impose   penalties  if  apartment
complexes  are sold before the  sixteenth  year.  The rules of other  government
subsidy programs also can limit the sale of apartment  complexes.  And it can be
hard to sell apartment complexes rented to low income tenants unless the Federal
government provides tax incentives to new owners. Under current law, tax credits
are awarded to investors who purchase a qualifying  apartment  complex more than
10 years  after it was last  placed in service  if the new owners  substantially
rehabilitate  the apartment  complex.  Nonetheless,  it is hard to tell  when or
whether a Series will be able to sell an apartment complex. Each Series will try
to liquidate its investments after 15 years, but whether it can and for how much
is impossible to predict.

The Low Income Housing Tax Credit

Section 42 of the Internal  Revenue Code awards  valuable low income housing tax
credits to  investors in low income  housing.  These tax credits are designed to
attract private  capital to build and preserve low income  housing.  They are an
integral element of the nation's low income housing program.

The Federal  government  has  provided  tax  benefits to investors in low income
housing for more than three  decades.  Tax credits are the latest  component  of
that policy.  Internal Revenue Code Section 42 gives taxpayers an alternative to
paying  Federal  income taxes.  Taxpayers can invest in a Series and receive tax
credits which will directly reduce their taxes each year for 10 to 12 years.

Internal Revenue Code Section 42 and the rules the IRS has adopted to administer
these  tax  credits  are  extremely  complicated.  WNC  &  Associates,  Inc.  is
experienced in working with these laws and rules, and will do its best to follow
them.  However, no one is guaranteeing that a Series will comply with all of the
laws and rules.


                                       12

<PAGE>

Other  rules  govern  the  investors'  ability  to claim  tax  credits  on their
individual tax returns. For example,  natural persons generally can only use tax
credits to shelter:

o   income from other limited partnerships and other similar sources, and

o   up to $25,000 of other income.

The low income  housing tax credit rules  include a complicated  concept  called
recapture.  Congress created this concept to ensure that apartment complexes are
rented as low income housing for at least a 15-year period,  even though the tax
credits are claimed over a 10-year  period.  These are referred to herein as the
15-year compliance period and the 10-year credit period.  Recapture means that a
taxpayer  must  include in taxable  income a portion of tax  credits  previously
claimed if there is non-compliance  with the tax credit rules during the 15-year
compliance  period.  Recapture  applies  to the  accelerated  portion of the low
income housing tax credits, as follows:

    Year of Event Giving               Portion
      Rise to Recapture             Recaptured

            1-11                         5/15
              12                         4/15
              13                         3/15
              14                         2/15
              15                         1/15

Interest is also imposed on the amount recaptured.  The dollar amount recaptured
will be additional taxes owed in the year of recapture.


                                       13

<PAGE>



Risk Factors

An investment in the Series involves risks, including the following:

o    Risks Related to Low Income Housing Tax Credits:

    o    The low income  housing  tax credit  rules are  extremely  complicated.
         Noncompliance  with  these  rules  results  in the loss of  future  tax
         credits and the fractional recapture of tax credits already taken.

    o    In most cases the annual amount of tax credits that an  individual  can
         use is limited to the tax liability due on the person's last $25,000 of
         taxable income.

    o    The local  limited  partnerships  may be  unable to sell the  apartment
         complexes  at  a  profit.  Accordingly,  a  Series  may  be  unable  to
         distribute  any  cash to its  investors.  Tax  credits  may be the only
         benefit from an investment in a Series.

o   Investment Risks:

    o    If a Series  does not raise much  capital  it will  invest in a limited
         number of local limited partnerships. Such limited diversity means that
         the results of operation of each single  apartment  complex will have a
         greater impact on the Series. With limited diversity,  poor performance
         of one apartment  complex could impair a Series' ability to satisfy its
         investment objectives.

    o    Each apartment complex will be subject to  mortgage indebtedness.  If a
         local limited partnership failed to  pay its mortgage it could lose its
         apartment complex in foreclosure.  Foreclosure would result in:

         o      a loss of future tax credits, if the foreclosure occurred during
                the first 10 years,

         o      a fractional recapture of  prior tax credits, if the foreclosure
                occurred during the first 15 years, and

                                       14

<PAGE>



         o      a loss of the Series' investment in the apartment complex.

    o    A Series will be a limited partner or non-managing member of each local
         limited  partnership.  Accordingly,  each Series will have very limited
         rights with respect to management  of the local  limited  partnerships.
         Each Series will rely totally on the local general partners.

o   Other Tax Risks:

    o    The IRS may audit a Series or a local limited partnership and challenge
         the tax  treatment  of tax  items.  The amount of tax  credits  and tax
         losses  allocated  to the  investors  could be  reduced if the IRS were
         successful in such a challenge.

o   Series-Related Risks:

    o    No trading  market for the Units will develop.  Investors may be unable
         to sell their  Units  except at a discount  and should  consider  their
         Units to be a long-term investment.

Who Should
Invest;
Limitations on
Use of Credits
and Losses

Natural  persons  should invest in a Series only if they have Federal income tax
liabilities  against  which the tax credits can be applied.  In most cases,  the
annual amount of tax credits that a natural person can use is limited to the tax
liability due on the person's  last $25,000 of taxable  income.  For example,  a
person in the 36% Federal tax bracket could use up to a maximum annual amount of
$9,000 in tax  credits  because  $25,000 x 36% =  $9,000.  Generally,  a natural
person can claim a Series' tax losses only in very limited circumstances.

Closely-held  and personal  service  corporations are subject to other limits on
the use of tax credits and tax losses.


                                       15

<PAGE>




For all investors:

o   Tax credits cannot be used to reduce the Federal alternative minimum tax.

o   Tax  credits  are  subject  to  the  general  limitations  on the use of all
    business tax credits.

An IRA, Keogh or other retirement plan cannot buy Units.

Estimated Use of
Proceeds

Each  Series  will  invest  approximately  75% of its  capital in local  limited
partnerships, will hold 3% in working capital reserves, and will use the balance
to pay fees and expenses to WNC & Associates,  Inc.,  its affiliates and others.
Working  capital  reserves  are amounts set aside for  contingencies  and to pay
administrative expenses.









                                       16

<PAGE>



Management
Compensation

WNC & Associates, Inc.  will  manage  the  business  of each Series. Each Series
will pay WNC & Associates,  Inc. and its affiliates  compensation for management
services. The following are the most significant items:


Selling commissions                up to 7% of the capital raised,
                                   all or almost all of which will
                                   be reallowed to non-affiliated
                                   broker-dealers
Dealer manager fee                 up to 2% of the capital raised

Acquisition and                    up to 7% of the capital raised
investment
management fee

Nonaccountable                     4% of the capital raised in
reimbursement                      exchange for an agreement to
                                   pay all of the expenses in
                                   connection with the formation
                                   of each Series and the sale of
                                   the Units

Nonaccountable                     2% of the capital raised in
reimbursement                      exchange for an agreement to
                                   pay all of the expenses related
                                   to the selection and acquisition
                                   of local limited partnerships

Asset management fee               0.2% of the sum of a Series'
                                   cash investments in local
                                   limited partnerships plus the
                                   mortgage  debts of the local
                                   limited partnerships

Subordinated                       up to 10% of the sales price of
disposition fee                    the apartment complexes

There  are  a  number  of  other items of compensation and  reimbursement  which
WNC & Associates, Inc. and its affiliates may receive.


                                       17

<PAGE>



Conflicts of
Interest

WNC & Associates,  Inc. and its  affiliates  have conflicts of interest in their
organization and management of the Series, including the following:

o   The  compensation  to  WNC &  Associates, Inc. and its affiliates is not the
    result  of arm's-length  negotiations.  The  manner  in  which  the  Series'
    investments  are  purchased,  managed  and sold will determine the amount of
    some compensation.  As a result, a Series:

    o    might make investments which  are less desirable to the investors but
         more desirable to WNC & Associates, Inc. and its affiliates, or

    o    might  retain an  investment  at a time  when a sale of the  investment
         could generate distributions to the investors.

o   WNC & Associates,  Inc.  and its affiliates must allocate their time between
    the activities of each Series  and the other activities of WNC & Associates,
    Inc. and  its  affiliates.  Although not anticipated, WNC & Associates, Inc.
    and its  affiliates  might be unable to fully discharge their duties to each
    Series.

o   WNC &  Associates,  Inc. and its  affiliates  have some  interests  that are
    inconsistent  with those of the  investors.  For example,  WNC & Associates,
    Inc.  can  engage in  activities  without  providing  the  benefits  of such
    activities  to the  Series.  As a result,  an  affiliate  might  purchase an
    investment which is suitable for purchase by a Series.


                                       18

<PAGE>



Fiduciary
Responsibility

WNC & Associates, Inc.  is  a  fiduciary  to  each Series. This means that WNC &
Associates,  Inc. owes the investors the utmost good faith and loyalty. However,
each Series will hold WNC &  Associates,  Inc.  harmless  from  liability to the
Series for its actions and will  compensate  WNC & Associates,  Inc. for damages
suffered from its actions, provided the actions:

o   did not constitute negligence or misconduct, and

o   were  the  result  of  a   course of  conduct  which  WNC & Associates, Inc.
    determined was in the best interests of the Series.

As  a  result  an  investor's  ability  to  pursue  an   action  against  WNC  &
Associates, Inc. or its affiliates is diminished.

Local Limited
Partnership
Investment
Protection Policies

The most uncertain stages of an investment in a local limited  partnership occur
during  construction  and rent-up of the local limited  partnership's  apartment
complex.  Each  Series  will try to protect  its  investments  in local  limited
partnerships during these stages in the following ways:

o   Staged  Pay-In.  Each Series  will stage its capital  payments to each local
    limited  partnership.  Capital  payments  will  be due  when  conditions  or
    benchmarks   regarding   construction  or  rental  of  apartment  units  are
    satisfied.

o   Development  Obligations.  The local general  partners will agree to provide
    all funds needed through  completion of development and construction,  after
    applying mortgage loan proceeds and the Series' capital  contribution.  This
    policy is intended to cause  completion of an apartment  complex at no extra
    cost to the Series where construction costs exceed the budgeted amount.

o   Credit Adjuster. In the event the tax credits actually allocated to a Series
    are less than the  amount  agreed  to, the local  limited  partnership  will
    reduce the Series' capital contribution.


                                       19

<PAGE>



o   Operating Deficit Guarantees.  If a local limited partnership's revenues are
    less  than  its  expenses,  the  local  general  partners  will  make up the
    difference   for  a  minimum  of  three  years   following   completion   of
    construction.

o   Voting Rights.  The Series will have the right to approve or  disapprove the
    sale or refinancing of the apartment complexes.

WNC & Associates,  Inc.  will  agree  to  eliminate  these  provisions  only  in
unusual circumstances.

There  can  be  no  absolute  guarantee  that  these  policies  will  protect  a
Series' investment.

Prior
Performance
Summary

Through June 30, 1999, WNC & Associates, Inc. and its affiliates have raised and
invested equity as follows:

o   more  than  14,600  investors,  including  more than 13,700 investors in tax
    credit offerings,

o   more than 600 properties, including more than 490  properties  in tax credit
    offerings,

o   more than  22,900  apartment  units  located in 39 states,  the  District of
    Columbia, and the U.S. Virgin Islands,  including more than 19,500 apartment
    units  located  in 36 states  and the  District  of  Columbia  in tax credit
    offerings,

o   more than $1,000,000,000 in aggregate acquisition costs, including more than
    $885,000,000 in aggregate acquisition costs in tax credit offerings.

Of the 52 tax credit  partnerships  organized by WNC & Associates,  Inc. through
June 30, 1999,  13 have  apartment  complexes  which have  completed the 10-year
credit period.  None have apartment  complexes  which have completed the 15-year
compliance period. None have sold an apartment complex.


                                       20

<PAGE>



Federal
Income Tax
Considerations

The section of this  prospectus  entitled  "Federal  Income Tax  Considerations"
includes a discussion  of numerous  Federal  income tax issues  pertinent to the
Series. That section also contains a description of the Federal income tax legal
opinions that the Series will receive from Derenthal & Dannhauser,  tax counsel.

Profits and Losses,
Tax Credits and Cash
Distributions

Generally,  99.9%  of  the  tax  credits,  profits  and  losses  of a Series are
allocated to its  investors  and 0.1% to WNC &  Associates,  Inc. It is unlikely
that a  Series  will  distribute  cash  from  operations.  The  section  of this
prospectus  entitled  "Profits and Losses,  Tax Credits and Cash  Distributions"
includes a discussion of how each Series will  distribute  net proceeds from the
liquidation of its investments.

Summary of
Certain Provisions
of the Partnership
Agreement

The First  Amended and  Restated  Agreement of Limited  Partnership  included as
Exhibit B is the  governing  document  for  each Series.  A Series'  partnership
agreement  governs the relationship  between the investors and WNC & Associates,
Inc. It is a complex  legal document. Portions of the  partnership agreement are
summarized throughout this prospectus.

Investors  should be aware of the  following  terms of each  Series' partnership
agreement:

o   Investors  owning  more  than  50% of the  Units  in a  Series  can take the
    following actions with respect to the Series:

    o    amend the Series' partnership agreement,

    o    remove WNC & Associates, Inc. and elect its replacement, and

    o    approve the dissolution of the Series.

o   Each Series is organized as a separate California limited partnership.

o   No  investor  will have any control  over the  business of his Series or any
    right to act in the Series name.

                                       21

<PAGE>


o   The books and records of each Series  are kept at 3158 Redhill Avenue, Suite
    120, Costa Mesa, California.   An investor may examine his Series' books and
    records at any and all reasonable times.

Transfer of Units

Under the terms of the Series'  partnership  agreement,  investors  may transfer
their Units, except where the transfer would result in adverse tax consequences.
Investors may not transfer Units to a foreign person or a tax-exempt entity. The
Units will not be listed on a securities exchange,  and no market will exist for
the Units. It is unlikely that an investor will be able to sell his Units except
at a discount.  A Series can require that a transfer fee be paid in an amount up
to $100.

Terms of the
Offering and Plan
of Distribution

The Units are  offered in two  Series on an  all-or-none  minimum,  best-efforts
maximum basis, which means that:

o   no one is guaranteeing that any specified amount of capital will be raised,

o   no Units in a Series will be  sold  unless  at  least  $1,400,000 in cash is
    raised, and

o   as much as $25,000,000 in Units may be sold by each Series.

WNC &  Associates,  Inc.  will decide in its  discretion  when to terminate  the
Series 7 offering and commence the Series 8 offering.


                                       22

<PAGE>



                                  RISK FACTORS

    The purchase of Units  involves a number of  significant  risk factors.  The
material risk factors that prospective purchasers should consider are:

Risks arising from the Internal Revenue Code rules governing tax credits

    Each  prospective  investor is  urged to carefully read and understand  this
section  and the  section  entitled  "The Low  Income  Housing  Tax  Credit"  to
determine  whether an  investment  in a Series is suitable  for the  prospective
investor.

    Low income  housing tax  credits  might not be  available.  Each Series will
acquire an interest in apartment  complexes to be rented to low income  tenants.
Each Series  expects to claim low income  housing tax credits for each apartment
complex.  However,  if an apartment complex does not satisfy the requirements of
Internal  Revenue  Code  Section  42,  then the  apartment  complex  will not be
eligible for low income housing tax credits.

    An apartment  complex  cannot comply with  Internal  Revenue Code Section 42
until it is placed in  service.  In many  instances  a Series  will  acquire  an
apartment complex which is still under construction.  If so, the Series would be
relying only upon guarantees and  representations  of the local general partners
that the  apartment  complex will  satisfy the Internal  Revenue Code Section 42
requirements.  If it ultimately did not, the Series would not receive low income
housing tax credits from the investment.

    Low income  housing tax credits  might be less than  anticipated.  The local
general  partners  will  calculate  the  amount of the low  income  housing  tax
credits.  No opinion of counsel will cover the  calculation of the amount of low
income housing tax credits. The IRS could challenge the amount of the low income
housing tax credits  claimed for any apartment  complex under any of a number of
provisions set forth in Internal Revenue Code Section 42. A successful challenge
by the IRS would  decrease the amount of the low income housing tax credits from
the amount paid for by the Series.

    To date,  52  partnerships  have been  formed by WNC &  Associates,  Inc. to
generate  low  income  housing  tax  credits.  Currently,  only four of them are
expected  to  generate  less  than 95% of the low  income  housing  tax  credits
originally anticipated.

    Unless a bond is posted low income  housing tax  credits are  recaptured  if
apartment complexes are not owned for 15 years.  Apartment complexes must comply
with  Internal  Revenue Code  Section 42 for a 15-year  compliance  period.  Low
income  housing tax credits will be recaptured  with interest to the extent that
an  apartment  complex is not rented as low income  housing or in some other way
does not satisfy the requirements of Internal Revenue Code Section 42 during

                                       23

<PAGE>



the 15-year compliance  period. For example, recapture with interest would occur
if:

o   a local limited partnership disposed of its interest in an apartment complex
    during the 15-year compliance period, or

o   a Series disposed of its interest in a local limited  partnership during the
    15-year compliance period.

For these purposes, disposition includes transfer by way of foreclosure.

    There can be no assurance that recapture will not occur.

    Sales of apartment complexes after 15 years are subject to limitations which
may  impact  a  local  limited  partnership's  ability  to  sell  its  apartment
complex.  Each local  limited  partnership  will  execute an extended low income
housing commitment with the state in which the apartment complex is located. The
extended low income housing  commitment  will state the number of years that the
local  limited  partnership  and any  subsequent  owners must rent the apartment
complex as low income  housing.  Under Federal law the commitment must be for at
least 30 years. The commitment  actually agreed to may be  significantly  longer
than 30 years. In prioritizing applicants for low income housing tax credits, 34
states give additional  points for commitment  periods in excess of 30 years. On
any sale of the apartment  complex during the commitment  period,  the purchaser
would  have to agree to  continue  to rent the  apartment  complex as low income
housing for the duration of the commitment period.  This requirement reduces the
potential market, and possibly the sales price, for the apartment complexes. The
sale of an apartment complex may be subject to other restrictions.  For example,
Federal  lenders or  subsidizers  may have the right to approve or  disapprove a
purchase of an apartment complex. Accordingly,  there can be no assurance that a
local limited partnership will be able to sell its apartment complex. Even if it
does so, there can be no assurance that any  significant  amount of cash will be
distributed to the investors.  As a result, a material portion of the low income
housing tax credits may represent a return of the money  originally  invested in
the Series.

    Investors  can only use low income  housing tax credits in limited  amounts.
The ability of an individual or other non-corporate investor to claim low income
housing tax credits on his  individual  tax return is limited.  For example,  an
individual  investor  can use low income  housing  tax credits to reduce his tax
liability on:

o   an unlimited amount of passive income, which is income from entities such as
    the Series, and


                                       24

<PAGE>



o   $25,000 in income from other sources.

However,  the use of low income  housing  tax credits by an  individual  against
these types of income is subject to ordering rules,  which may further limit the
use of low income housing tax credits.  Some corporate  investors are subject to
similar and other limitations.  They include corporations which provide personal
services, and corporations which are owned by five or fewer shareholders.

    Any  portion of a low  income  housing  tax  credit  which is allowed  to an
investor under such rules is then  aggregated  with all of the investor's  other
business credits. The aggregate is then subject to the general limitation on all
business  credits.  That  limitation  provides that an investor can use business
credits to offset the investor's  annual tax liability equal to $25,000 plus 75%
of the investor's tax liability in excess of $25,000.  However, business credits
may not be used to offset any alternative minimum tax. All of these concepts are
extremely  complicated.  Investors are urged to read "The Low Income Housing Tax
Credit" and  "Federal  Income Tax  Considerations  -  Limitations  on Losses and
Credits from Passive  Activities," "- General  Business Tax Credit  Limitations"
and  "-  Other  Important  Tax  Considerations  Alternative  Minimum  Tax,"  for
examples.

    Historic tax credits may be unavailable or may be recaptured. It is possible
that a Series will invest in a local  limited  partnership  intending  to obtain
historic tax credits.  There can be no assurance that an apartment  complex will
meet the  requirements for the historic tax credit set forth in Internal Revenue
Code Section 47. In order for an  apartment  complex to be eligible for historic
tax credits, it must:

o   meet the statutory requirements of Internal Revenue Code Section 47, and

o   be certified by the Department of the Interior.

Even  if   it  does  meet   the   requirements,   the  IRS  may   challenge  the
calculation  of the  historic  tax  credit.  The  local  general  partners  will
calculate the amount of the historic tax credit.  That  calculation  will not be
the subject of an opinion of counsel.

    An investor must recapture historic tax credits if:

o   the local limited partnership sells the apartment  complex  during the first
    five years of operation,

o   the Series sells the interest in the local limited  partnership  during  the
    first five years of operation, or


                                       25

<PAGE>



o   the investor sells his Units during the first five years of operation.

Risks related to investment in local limited partnerships and apartment
complexes

    If a Series has few investments, each investment will have a great impact on
the Series'  results of operations.  Geographic and other  diversification  of a
Series' investments will depend upon the amount of capital raised by the Series.
The less  capital  received  by the  Series,  the fewer  number  of  investments
purchased by the Series. The risks of limited  diversification will exist if any
Series:

o   invests in a few local limited partnerships owning large apartment complexes
    rather than a greater  number of local limited  partnerships  owning smaller
    apartment complexes,

o   invests in local limited partnerships which  have  the  same  or  affiliated
    local general partners, or

o   invests in local limited  partnerships which own apartment complexes located
    in the same area.  If a Series'  investments  are not  diversified  then any
    single apartment complex experiencing poor operating performance, impairment
    of value or  recapture  of low  income  housing  tax  credits  would  have a
    significant impact upon the Series as a whole.

    The  failure  to pay  mortgage  debt  could  result  in a forced  sale of an
apartment  complex.  Each  local  limited  partnership  will  leverage a Series'
investment therein by incurring mortgage debt. If a local limited  partnership's
revenues are less than its debt  payments and taxes and other  operating  costs,
the local limited  partnership would have to use working capital reserves,  seek
additional funds, or suffer a forced sale of its apartment complex,  which could
include a  foreclosure.  The same results  could occur if  government  subsidies
ceased.  If the  apartment  complex is  highly-leveraged,  a  relatively  slight
decrease  in the  rental  revenues  could  adversely  affect  the local  limited
partnership's ability to pay its debt service requirements. Mortgage debt may:

o   have either fixed or variable interest rates, or

o   be repayable in a  self-amortizing  series of equal  installments  or with a
    large balloon final payment.

Variable rate loans create the risk that debt service could rise during  periods
of high  interest  rates.  Balloon  payments  maturing  prior  to the end of the
anticipated holding period for the apartment complex create the risk of a forced
sale if the debt cannot be refinanced. There can be no assurance that additional
funds will be available to any local limited partnership if needed on acceptable
terms or at all.

                                       26

<PAGE>



    The Series will not control the local limited  partnerships and must rely on
the local general partners.  The local general partners will make all management
decisions for the local limited partnerships and the apartment  complexes.  Each
Series will have very  limited  rights with respect to  management  of the local
limited  partnerships.  Neither Series will be able to exercise any control with
respect to its business decisions and operations.  Consequently,  the success of
each  Series  will  depend  on the  abilities  of the  local  general  partners.
Investors may not have the  opportunity to judge the local general  partners for
themselves.

    Projects  subsidized by other government  programs are subject to additional
rules which may make it difficult to operate and sell apartment complexes. It is
anticipated  that  most  of the  apartment  complexes  will  receive  government
financing or operating  subsidies in addition to the tax credits.  The following
are risks associated with some such subsidy programs:

o   Obtaining tenants for the apartment complexes.  Government regulations limit
    the types of people who can rent subsidized  housing.  These regulations may
    make it more  difficult  to rent  the  residential  units  in the  apartment
    complexes.

o   Obtaining rent increases. In many cases rents can only be increased with the
    prior approval of the subsidizing agency.

o   Limitations  on  cash  distributions.   The  amount  of  cash  that  may  be
    distributed  to owners of  subsidized  apartment  complexes is less than the
    amount  that  could be earned  by the  owners  of  non-subsidized  apartment
    complexes.

o   Limitations  on sale or  refinancing  of the  apartment  complexes.  A local
    limited  partnership  may be  unable  to sell its  apartment  complex  or to
    refinance  its mortgage loan without the prior  approval of the  subsidizer.
    The  subsidizer  may  withhold  such  approval  in  the  discretion  of  the
    subsidizer.  Approval  may  be  subject  to  conditions.  In  addition,  any
    prepayment  of a  mortgage  may  result in the  assessment  of a  prepayment
    penalty.

o   Limitations  on  transfers of interests  in local  limited  partnerships.  A
    Series may be unable to sell its  interest  in a local  limited  partnership
    without the prior  approval of the  subsidizer.  The subsidizer may withhold
    such approval in the discretion of the  subsidizer.  Approval may be subject
    to conditions.

o   Limitations on removal and admission of local general partners. A Series may
    be unable to remove a local general partner from a local limited partnership
    except  for cause,  such as the  violation  of the rules of the  subsidizer.
    Regulations  may prohibit the removal of a local  general  partner or permit
    removal only with the prior approval of the subsidizer. Regulations may also
    require  approval of the admission of a successor local general partner even
    upon the death or other disability of a local general partner.

                                       27

<PAGE>



o   Limitations on subsidy payments. Subsidy payments may be fixed in amount and
    subject to annual  legislative  appropriations.  The rental  revenues  of an
    apartment complex,  when combined with the maximum committed subsidy, may be
    insufficient to meet obligations.  Congress or the state legislature, as the
    case may be, may fail to appropriate or increase the necessary  subsidy.  In
    those events,  the mortgage  lender could foreclose on the property unless a
    workout arrangement could be negotiated.

o   Possible changes in applicable regulations. Legislation may be enacted which
    adversely revises provisions of outstanding mortgage loans. Such legislation
    has been enacted in the past.  The Farmers Home Administration  of  the U.S.
    Department of Agriculture no longer permits prepayment of mortgage loans.

    Keen  competition  may increase the price of  investments.  Each Series will
compete for investments with other entities. Such other entities include limited
partnerships,  limited  liability  companies and other entities  engaged in real
estate  investment  activities,  and may  include  the  other  Series  and other
affiliates of WNC & Associates, Inc.

    The  availability of such  investments is limited in that there is a maximum
amount of low income  housing tax credits that may be allocated  each year under
Internal  Revenue Code Section 42. Other factors may also limit  availability of
investments.   Consequently,   competition  for  desirable  investments  may  be
particularly  keen. The purchase prices paid for such investments could increase
as a result.  In this  connection,  a  state's  allocation  plan for low  income
housing tax credits must:

o   give preference to applicants serving the lowest income tenants,

o   give preference to applicants serving  qualified  tenants  for  the  longest
    periods, and

o   allocate  no more tax  credits to an  applicant  than is  necessary  for its
    project's  financial  feasibility  and  viability.  The state may reduce the
    amount of the low income housing tax credits below the amounts for which the
    applicant would  otherwise be eligible,  if the state believes that the full
    amounts are not necessary in light of other  sources of assistance  that are
    available to the applicant.

    In the recent past,  heightened demand for apartment complexes has increased
the  purchase  prices  thereof.  Further  increases  would  reduce the return to
investors  and  hamper a Series'  ability to satisfy  its  principal  investment
objective.

    Uninsured  casualties  could  result  in  losses  and  recapture.  There are
casualties  which are either  uninsurable or not economically  insurable.  These
include earthquakes,  floods, wars and losses relating to hazardous materials or
environmental  matters.  If  an  apartment  complex  experienced  an   uninsured

                                       28

<PAGE>



casualty,  a  Series  could  lose  both  its  invested  capital and  anticipated
profits in such  property.  Even if the casualty were an insured loss, the local
limited partnership might be unable to rebuild the destroyed property. A portion
of prior tax credits could be recaptured and future tax credits could be lost if
the apartment  complex were not restored within a reasonable period of time. And
liability judgments against the local limited partnership could exceed available
insurance  proceeds  or  otherwise  materially  and  adversely  affect the local
limited partnership.  The cost of liability and casualty insurance has increased
in recent years.  Casualty insurance has become more difficult to obtain and may
require large deductible amounts.

    Apartment  complexes without financing or operating subsidies may  be unable
to pay operating  expenses.  If a local limited  partnership  were unable to pay
operating  expenses,  one result  could be a forced sale of the  property.  If a
forced sale occurs during the first 15 years of an apartment  complex, a partial
recapture of tax credits could occur. In this regard,  some of the local limited
partnerships may own apartment  complexes which have no subsidies other than low
income housing credits.  Those apartment  complexes will not have the benefit of
below-market-interest-rate  financing  or  operating  subsidies  which often are
important to the  feasibility of low income housing.  Those apartment  complexes
will have to rely  solely on rents to pay  expenses.  However,  in order for any
apartment  complex to be eligible for low income  housing tax  credits,  it must
restrict the rent which may be charged to tenants. Over time, the expenses of an
apartment complex will increase.  If a local limited partnership cannot increase
its rents, it may be unable to pay increased operating expenses.

    Investors  may be unable to evaluate  their Series'  investments.  Except as
otherwise  set forth in a  supplement  to this  prospectus,  the Series have not
identified   any  of  the  apartment   complexes  in  which  they  will  invest.
Accordingly,  investors may not have the  opportunity to evaluate for themselves
the  Series'  investments.  An  investor  who  acquires  his Units  later in the
offering  period  may  have  more  information   available  concerning  specific
apartment complexes than the earlier purchaser.

    There can be no  assurance  that any  apartment  complexes in which a Series
invests will actually meet the investment objectives of the Series.

    A Series' local limited partnership  investment  protection policies will be
worthless if the net worth of the local  general  partners is not  sufficient to
satisfy their obligations.  There is a risk that the local general partners will
be  unable  to  perform  their  financial  obligations  to  the  Series.  WNC  &
Associates,  Inc. has not  established a minimum net worth  requirement  for the
local general  partners.  Rather,  each local general partner must demonstrate a
net  worth  which WNC &  Associates,  Inc.  believes  is  appropriate  under the
circumstances.  The assets of the local  general  partners are likely to consist
primarily of real estate holdings and similar  assets.  The fair market value of
these types of assets is difficult to estimate. These types of assets  cannot be

                                       29

<PAGE>



readily  liquidated  to  satisfy  the  financial   guarantees   and  commitments
which  the  local  general  partners  will  make to a  Series.  Moreover,  other
creditors may have claims on these assets.  No escrow accounts or other security
arrangements  will be  established  to  ensure  performance  of a local  general
partner's obligations. The cost to enforce a local general partner's obligations
may be high. If a local  general  partner does not satisfy its  obligations  the
Series may have no remedy,  or the remedy may be limited to  removing  the local
general partner as general partner of the local limited partnership.

    Fluctuating  economic  conditions  can reduce the value of real estate.  Any
investment  in real  estate  is  subject  to  risks  from  fluctuating  economic
conditions.  These  conditions  can adversely  affect an  investor's  ability to
realize a profit or even to recover his invested capital. Among these conditions
are:

o   the general and local job market,

o   the availability and cost of mortgage financing,

o   monetary inflation,

o   tax, environmental, land use and zoning policies,

o   the supply of and demand for similar properties,

o   neighborhood conditions,

o   the availability and cost of utilities and water.

    Properties  under  development may not be completed.  A Series may invest in
apartment  complexes which are under development.  In general,  investment in an
uncompleted  apartment  complex  involves  more  risk  than  the  purchase  of a
completed property.  The local general partners' ability to complete development
and   construction   may  be  affected  by  conditions   beyond  their  control.
Furthermore,  a decision to invest in an uncompleted  apartment  complex is made
based on  projections  of rental income and expenses.  Whether the property will
operate at such projected income and expense levels cannot be known.

    To date,  only  two low income  housing tax credit  properties of prior WNC-
partnerships suffered any material delay in completion.

    Investments  made before the sale of Units may be subject to loss.  A Series
may  invest  in  apartment  complexes  at a  time  before  the  commencement  or
completion  of its  offering  of  Units.  Such  investments  would  be  made  in
anticipation of the receipt of offering proceeds.

                                       30

<PAGE>



The Series may borrow funds from WNC &  Associates,  Inc. or its  affiliates  or
others  for such  purposes.  The  Series  ultimately  may be  unable  to pay its
obligations  with  respect  to such  investments.  If a  Series  didn't  pay its
obligations to a local limited partnership,  the local limited partnership could
reduce or terminate the Series' interest  without  returning the amounts paid by
the  Series.  The local  limited  partnership  could sue the  Series to  require
performance of such obligations.  If tax credits had already been claimed by the
Series, the credits could be recaptured under Internal Revenue Code Section 42.

    If a loan made to a local  limited  partnership  is not repaid the amount of
capital available for investment would be reduced. A Series may make a loan to a
local limited partnership before the Series' acquisition of an interest therein.
If the Series didn't invest in the local limited partnership,  the local limited
partnership  might not repay the loan. If the local limited  partnership  didn't
repay the loan, the amount of capital  available for investment in local limited
partnerships would be reduced. Historically,  only one local limited partnership
failed to repay  its loan.  WNC &  Associates,  Inc.  has borne the loss of that
loan.

    Lack of control or risk of impasse in joint investments. A Series may invest
in local  limited  partnerships  jointly with the other Series or other  limited
partnerships, including partnerships formed by WNC & Associates, Inc. There is a
risk that a Series may not acquire a controlling interest in a joint investment.
There is also a risk of impasse on decisions if the Series and its joint venture
partner acquire equal interests in the joint venture.

Tax risks other than those relating to tax credits

    In addition to the risks pertaining  specifically to tax credits,  there are
other Federal income tax risks  associated with an investment in Units.  Neither
Series will request rulings on any income tax matters from the IRS. Rather, they
will rely on opinions of Derenthal &  Dannhauser,  counsel to the Series,  WNC &
Associates,  Inc.  and their  affiliates,  and  opinions of counsel to the local
limited partnerships. Unlike a ruling from the IRS, an opinion of counsel has no
binding  effect or official  status of any kind.  No assurance can be given that
the IRS will not contest any conclusions reached in an opinion.

    These  additional  Federal income tax risks associated with the ownership of
Units  and the  operations  of the  Series  and the local  limited  partnerships
include, but are not limited to, the following:

    No  opinion of counsel as  to  certain  matters.  No legal  opinion  will be
obtained regarding matters:

o   the determination of which depends on future factual circumstances,


                                       31

<PAGE>



o   which are peculiar to individual investors, or

o   which are not customarily the subject of an opinion.

The more significant of these matters include:

o   allocating  purchase price among  components of a property,  particularly as
    between  buildings and fixtures,  the cost of which is depreciable,  and the
    underlying land, the cost of which is not depreciable,

o   characterizing expenses and payments made to or  by  a  Series  or  a  local
    limited partnership,

o   identifying the portion of the costs of any apartment complex  which qualify
    for historic tax credits,

o   applying to any specific investor the limitation on the use of  tax  credits
    and tax losses. Investors must determine for themselves the extent  to which
    they can use tax credits and tax losses, and

o   the application of the alternative minimum tax to any specific investor,  or
    the  calculation  of  the  alternative  minimum  tax by  any  investor.  The
    alternative  minimum tax could reduce the tax benefits from an investment in
    a Series.

    There can be no assurance,  therefore,  that the IRS will not challenge some
of the tax  positions  adopted  by a Series.  The  courts  could  sustain an IRS
challenge. An IRS challenge, if successful, could have a detrimental effect on a
Series' ability to realize its investment objectives.

    Passive activity rules will limit deduction of Series' losses and impose tax
on interest  income.  The Internal Revenue Code imposes limits on the ability of
most investors to claim losses from  investments  in real estate.  An individual
may claim  these  so-called  passive  losses  only as an  offset to income  from
investments  in real estate or rental  activities.  An individual  may not claim
passive  losses as an offset  against  other types of income,  such as salaries,
wages,  dividends and interest.  These passive  activity rules will restrict the
ability  of  most  investors  to  use  losses  from a  Series  as an  offset  of
non-passive income.

    A Series may earn  interest  income on its reserves  and loans.  The passive
activity rules generally will categorize  interest as portfolio income,  and not
passive income.  Passive losses cannot be used as an offset to portfolio income.
Consequently,  an  investor in a Series  could pay tax  liability  on  portfolio
income from the Series.


                                       32

<PAGE>


    At risk rules might limit  deduction  of Series'  losses.  If a  significant
portion of the financing used to purchase  apartment  complexes does not consist
of qualified nonrecourse  financing,  the at risk rules will limit an investor's
ability to claim Series losses to the amount the investor invests in the Series.
The at risk rules of the Internal  Revenue Code  generally  limit an  investor's
ability to deduct Series losses to the sum of:

o   the amount of cash the investor invests in the Series, and

o   the investor's share of Series qualified nonrecourse financing.

Qualified nonrecourse financing  is  non-convertible,  nonrecourse debt which is
borrowed from:

o   a government, or

o   with exceptions,  any person actively and regularly  engaged in the business
    of lending money.

    Tax  liability on sale of  apartment  complex or local  limited  partnership
interest  may  exceed the cash  available  from the sale.  When a local  limited
partnership  sells an apartment  complex it will  recognize  gain.  Such gain is
equal to the difference between:

o   the sales proceeds plus the amount of indebtedness secured by  the apartment
    complex, and

o   the adjusted  basis for the  apartment  complex.  The adjusted  basis for an
    apartment  complex is its original cost,  plus capital  expenditures,  minus
    depreciation.

Similarly,  when a Series sells an interest in a local limited  partnership  the
Series will recognize gain. Such gain is equal to the difference between:

o   the sales proceeds plus the Series' share  of  the  amount  of  indebtedness
    secured by the apartment complex, and

o   the adjusted basis for the interest. The adjusted basis for an interest in a
    local limited  partnership is the amount paid for the interest,  plus income
    allocations and cash distributions, less loss allocations.

Accordingly,  gain will be increased by the depreciation deductions taken during
the holding period for the apartment  complex.  In some cases, an investor could
have a tax  liability  from a sale  greater  than  the cash  distributed  to the
investor from the sale.


                                       33

<PAGE>



    Alternative  minimum tax liability  could reduce an investor's tax benefits.
If an investor  pays  alternative  minimum  tax,  the  investor  could  suffer a
reduction in benefits  from an investment in a Series.  The  application  of the
alternative minimum tax is personal to each investor. Accordingly, each investor
is urged to consult his own tax adviser  regarding how the  alternative  minimum
tax will  impact his  investment  in Units.  Tax  credits may not be utilized to
reduce alternative minimum tax liability.

    IRS could audit the returns of the Series, the local limited partnerships or
the investors.  The IRS can audit a Series or a local limited partnership at the
entity level with regard to issues  affecting the entity.  The IRS does not have
to audit each  investor in order to challenge a position  taken by a Series or a
local limited partnership.  Similarly, only one judicial proceeding can be filed
to  contest  an  IRS  determination.   A  contest  by  the  Series  of  any  IRS
determination might result in high legal fees.

    In 1997 the IRS  issued  notices of  adjustment  regarding  five  properties
owned by four local limited partnerships or prior WNC-partnerships and entailing
the same  local  general  partner.  A  settlement  was  reached  in 1998 with no
material impact on a per unit basis.

    An audit of a Series or a local limited  partnership also could result in an
audit of an  investor.  An audit of an  investor's  tax returns  could result in
adjustments  both to items  that are  related  to the  investor's  Series and to
unrelated items. The investor could then be required to file amended tax returns
and pay additional tax plus interest and penalties.

    Each Series must  register  under the tax shelter  registration  provisions.
Under those  provisions,  the IRS assigns a registration  number to each Series.
The investors must enter that number on their tax returns.  An investor could be
subject to a penalty if the investor does not enter the  registration  number on
the investor's tax return. It is uncertain whether registration as a tax shelter
materially increases the risk of IRS audit. Registration does not imply that the
IRS has reviewed, examined or approved the investment or the claimed benefits of
the investment.

    A successful  IRS challenge to tax  allocations  of the Series and the local
limited  partnerships  would  reduce the tax  benefits of an  investment  in the
Series.  Under the Internal Revenue Code, a partnership's  allocation of income,
gains, deductions, losses and tax credits must have substantial economic effect.
Substantial  economic  effect is a  highly-technical  concept.  The  fundamental
principle is two-fold.  If a partner will benefit  economically  from an item of
partnership  income or gain, that item must be allocated to him so that he bears
the correlative tax burden.  Conversely,  if a partner will suffer  economically
from an item of  partnership  deduction or loss,  that item must be allocated to
him so that he bears the correlative tax benefit. If a partnership's allocations
do not have substantial economic effect,  then  the  partnership's tax items are

                                       34

<PAGE>



allocated  in  accordance  with  each  partner's  interest  in the  partnership.
The IRS might challenge the allocations made by a Series:

o   between its investors and WNC & Associates, Inc.,

o   among its investors, or

o   between the Series and a local general partner.

If any allocations were successfully  challenged,  a greater share of the income
or gain or a lesser share of the losses or tax credits might be allocated to the
investors.  This would  increase the tax liability or reduce the tax benefits to
the investors.

    Tax liabilities could arise in later years of the Series.  After a period of
years following  commencement of operations by a local limited partnership,  the
local limited  partnership may generate profits rather than losses.  An investor
would have tax liability on his share of such profits unless he could offset the
income with:

o   unused passive losses from his Series or other investments, or

o   current passive losses from other  investments.

In such  circumstances  the investor would not receive a cash  distribution from
his Series with which to pay any tax liability.

    IRS challenge to tax treatment of expenditures  could reduce losses. The IRS
may contend that fees and payments of a Series or a local limited partnership:

o   should be deductible over a longer period of time or in a later year,

o   are excessive and may not be capitalized or deducted in full,

o   should be capitalized and not deducted, or

o   may not be included as part of the basis for computing tax credits.

Any such contention by the IRS could adversely impact, among other things:

o   the eligible basis of an  apartment  complex  used  to  compute  low  income
    housing tax credits,

o   the adjusted basis of an apartment complex used to compute depreciation,

                                       35

<PAGE>


o   the correct deduction of fees,

o   the  amortization  of  organization  and   offering  expenses  and  start-up
    expenditures.

If the IRS were successful in any such  contention,  the anticipated tax credits
and losses of the Series would be reduced, perhaps substantially.

    Changes in tax law might reduce the value of tax  credits.  Although all low
income housing tax credits are allocated to an apartment complex at commencement
of the 10-year credit period,  there can be no assurance that future legislation
may not adversely  affect an investment  in a Series.  For example,  legislation
could reduce or eliminate the value of tax credits. In this regard, before 1986,
the principal tax benefit of an investment in low income housing was tax losses.
These tax losses  generally  were used to reduce an  investor's  income from all
sources on a  dollar-for-dollar  basis.  Investments  in low income housing were
made  in  reliance  on the  availability  of such  tax  benefits.  However,  tax
legislation  enacted in 1986 severely curtailed  deduction of such losses. It is
unlikely  that  the  pre-enactment   limited  partnerships  will  provide  their
investors  with all of the tax benefits  expected at the  commencement  of those
partnerships.

    New  administrative or judicial  interpretations of the law might reduce the
value of tax  credits.  Many of the  provisions  of the  Internal  Revenue  Code
related  to low  income  housing  and  real  estate  investments  have  not been
interpreted by the IRS in regulations,  rulings or public  announcements,  or by
the courts.  In the future,  these provisions may be interpreted or clarified by
the IRS or the courts in a manner  adverse  to the  Series or the local  limited
partnerships.  The IRS constantly  reviews the Federal tax rules, and can revise
its interpretations of established concepts.  Any such revisions could reduce or
eliminate tax benefits associated with an investment in a Series.

    State income tax laws may adversely affect the investors. An investor may be
required to file income tax  returns  and be subject to tax and  withholding  in
each state or local taxing jurisdiction in which:

o   an apartment complex is located,

o   the investor's Series or a local limited  partnership  engages  in  business
    activities, or

o   the investor is a resident.

    Corporate investors may be required to pay state franchise taxes.

    The tax treatment of  particular  items under state or local income tax laws
may vary  materially  from the  Federal  income  tax  treatment  of such  items.


                                       36

<PAGE>


Nonetheless,  many of the Federal income tax risks associated with an investment
in a Series may also apply under state or local  income tax law. A Series may be
required to withhold state taxes  from  distributions  or income  allocations to
investors  in  some  instances.  In  deciding  whether  to  invest  in a Series,
prospective investors should consider the additional cost of preparing state and
local tax returns,  as well as the additional state and local taxes which may be
payable.  This prospectus  makes no attempt to summarize the state and local tax
consequences to an investor in any state or locality.  Accordingly,  prospective
investors are urged to consult their tax advisers in this regard.

Risks related to the Series and the Series' partnership agreement

    A Series may be unable to timely provide  financial reports to the investors
which  would  adversely  affect  the  investors'   ability  to  monitor  Series'
operations.  The  failure  of the  local  general  partners  to  timely  provide
financial  information to the Series would result in the investors' inability to
timely receive reports.  Such failure could result in reduced  liquidity for the
Units, and sanctions by the SEC.

    Each  local  general   partner  is  required  to retain  independent  public
accountants  and to  report  financial  information  to the  Series  in a timely
manner.  There cannot be any  assurance  that the local  general  partners  will
satisfy  these  obligations.  If not, a Series would be unable to provide to its
investors in a timely manner its financial  statements and other  reports.  That
would impact the investors'  ability to monitor Series  operations.  The Series'
failure to meet its filing  requirements  under the  Securities  Exchange Act of
1934, if any, could reduce the liquidity for the Units due to the unavailability
of public  information  concerning  the  Series.  The failure to file could also
result in sanctions imposed by the SEC. Any defense mounted by the Series in the
face of such sanctions  could entail legal and other fees,  which would diminish
cash reserves.

    In recent  years  many of the tax  credit  partnerships  sponsored  by WNC &
Associates,  Inc.  have been  unable to satisfy  financial  statement  reporting
requirements  to their  investors on a timely  basis.  Specifically,  during the
period  from  January  1,  1994  to  March  31,  1999,  the  50  tax  credits
partnerships  sponsored  by WNC &  Associates,  Inc.  failed to  timely  provide
approximately 51 annual reports and approximately 66 quarterly  reports.  Annual
reports  include audited  financial  statements,  and quarterly  reports include
unaudited financial statements. Such failure was due to the failure of the local
general  partners  to provide  reports to the  WNC-partnerships.  Except for two
WNC-partnerships,  the  deficiencies  were  resolved  within  five months of the
original  due  dates.  For one  partnership  an  annual  report  and  subsequent
quarterly reports were delayed for 2 3/4 years, and for another an annual report
was delayed for six months. In an attempt to rectify this situation, in 1999 WNC


                                       37

<PAGE>


& Associates,  Inc. changed  the  fiscal  year-end,  but  not  the tax year-end,
of the tax credit partnerships sponsored by WNC & Associates,  Inc. to March 31.
In effect,  this grants the local general  partners  additional  time to satisfy
their obligations to such  WNC-partnerships.  There can be no assurance that the
local general partners'  performances will improve.  Some of those local general
partners may be general partners of the local limited  partnerships in which the
Series invest.

    Lack of liquidity of  investment.  It is unlikely  that a public market will
develop for the purchase and sale of Units.  Accordingly,  investors  may not be
able to sell their Units  promptly or at a  reasonable  price.  Units  should be
considered as a long-term investment because the Series are unlikely to sell any
local limited partnership interests for at least 15 years.

    The investors  will  not control their Series and must rely totally on WNC &
Associates,  Inc. WNC & Associates,  Inc. will make all management decisions for
each Series. Management decisions include:

o   selecting apartment complexes,

o   selecting the date on which a Series will terminate its offering, and

o   exercising powers granted to a Series by a local limited partnership.

Investors  have no  right or power  to take  part in their  Series'  management.
Accordingly,  a person  should not purchase  Units if he is unwilling to entrust
all aspects of management to WNC & Associates, Inc.

    Individual  investors  will have no recourse if they  disagree  with actions
authorized by a vote of the majority.  The partnership  agreement of each Series
grants to  investors  owning  more than 50% of the Units in the Series the right
to:

o   remove WNC & Associates, Inc. and elect a replacement fund manager,

o   amend the Series' agreement of limited partnership, and

o   terminate the Series.

Accordingly, a majority-in-interest of the investors in a Series could cause any
such events to occur,  even if  investors  owning 49% of the Units in the Series
opposed such action.

    Limitations  on  liability  of  WNC &  Associates,  Inc. to the Series.  The
investors' ability to sue WNC & Associates, Inc. is subject to limitations.  The
partnership  agreement of each Series  limits the liability of WNC & Associates,


                                       38

<PAGE>



Inc.  and its  affiliates  to the  investors.  WNC &  Associates,  Inc.  and its
affiliates will not be liable to the investors for acts and omissions:

o   performed or omitted in good faith, and

o   performed or omitted in a manner which WNC  &  Associates,  Inc.  reasonably
    believed to be within the scope of its authority and in the best interest of
    the investors,

provided

o   such conduct did not constitute negligence or misconduct.

Therefore,  investors  may be less able to sue WNC &  Associates,  Inc.  and its
affiliates  than would be the case if such  provisions  were not included in the
Series' partnership agreement.

    Payment of fees to WNC & Associates,  Inc.  and its  affiliates  will reduce
cash available for investment in local limited  partnerships.  WNC & Associates,
Inc. and its affiliates will perform many services for the Series.  They will be
paid fees for these  services,  which will reduce the amount of the Series' cash
available  for  investment  in local limited  partnerships.  The  nonaccountable
acquisition expense reimbursement payable to WNC & Associates,  Inc. will exceed
the amount of expenses  historically  incurred by the  WNC-partnerships  and may
exceed the actual  amount of expenses  incurred by the Series.  Accordingly,  an
investor investing directly in a low income housing apartment complex would have
a greater  amount  available for  investment  than an investor  investing in low
income housing through a Series.

    Investors  in one  Series  may be subject  to  different  risks and  receive
different  yields than investors in another Series.  Each Series has been formed
as a separate  partnership  under California law. Each Series will invest in its
own local limited partnerships.  Therefore,  investors in one Series may receive
different yields than investors in the other Series. Investors in one Series may
be subject to different risks regarding that Series'  investments than investors
in the other Series.

    Obligations  of  investors   paying  for  Units  with  promissory  notes  is
unconditional.  Each investor who  subscribes  for 20 or more Units may elect to
pay  one-half  of the  purchase  price of his Units  upon  subscription  and the
balance in accordance with a promissory  note. If an electing  investor fails to
pay the deferred installment when due, he will face serious consequences.  These
consequences include the foreclosure and sale of his Units, and the recapture of
tax  credits  previously  claimed by the  investor.  The Series may impose  late
charges.  The investor may also be liable for attorneys' fees and other costs of
collection incurred by the Series.

                                       39

<PAGE>


    A Series may be at risk if its investors fail to pay their promissory notes.
The Series may be unable to meet its obligations to local limited  partnerships,
and could suffer a dilution or  termination  of its interest in a local  limited
partnership. That could cause

o   recapture and loss of tax credits, and

o   legal actions by the local general  partners to require  performance  and to
    recover damages and costs.

Therefore, defaulting investors could adversely affect non-defaulting investors.

    Lack of  operating  history.  Neither  Series has an operating  history.  No
assurance can be given that  operations will be successful or that a Series will
meet its stated investment objectives.

    Year 2000 issues.  Throughout the world there is a question as to whether or
not computer systems will function beyond 1999. WNC & Associates,  Inc. believes
that its computer  systems are Y2K  compliant.  WNC & Associates,  Inc. has been
informed by its utilities  suppliers and banks that their  critical  systems are
Y2K  compliant.  However,  because WNC & Associates,  Inc. has no authority over
those entities,  there can be no assurance that such information is correct.  If
not, there could be disruptions in the business of the Series,  which could cost
the Series  money.  The local  general  partners  have not yet been  identified.
Accordingly,  there is no way to tell if their computer  systems or the computer
systems of their suppliers are Y2K compliant. If not, there could be disruptions
in the business of a local limited partnership. Investors could suffer a loss or
a delay in receipt of their tax benefits as a result of such disruptions.

     Geographic concentration of properties in previous WNC-partnerships and the
Series may affect their ability to rent apartment units. A significant number of
the  apartment  complexes  owned by  previous  WNC-partnerships  are  located in
California  and Texas.  It is  possible  that a Series may invest in  properties
located in  California  and Texas.  To the  extent any of these  properties  are
located in the same competitive  area,  there could be risks to the Series,  the
previous  partnerships and to WNC & Associates,  Inc., as general  partner.  For
example,  if demand for the  available  apartment  units is less than the supply
within an area, some units would be vacant,  and the others might be rented at a
rate which is less than that otherwise attainable.

                                       40

<PAGE>



                               WHO SHOULD INVEST;
                    LIMITATIONS ON USE OF CREDITS AND LOSSES

All Investors

    An investor should invest in a Series only if he:

o   reasonably  expects to have Federal tax  liabilities  which can be offset by
    tax credits during the next 10 to 12 years, and

o   has adequate financial means to bear the risks associated  with  the  Units.
    See "Risk Factors."

    An investment in Units is not suitable for  tax-exempt  entities,  including
pension or profit-sharing plans, Keogh plans and Individual Retirement Accounts.
Accordingly, such entities cannot invest in a Series.

    There are many different financial investments available to investors. These
include mutual funds, stocks, bonds, annuities, insurance and real estate, among
others. An investor's decision as to the appropriate  investment depends in part
on the  investor's  goals and the aspects of each of the available  investments.
Tax  reduction  is an  element  of the  investment  decision.  Many  people  and
corporations  have used low  income  housing  tax  credits  as a  long-term  tax
reduction tool.

    The  alternative  minimum  tax may limit the  benefit  of tax  credits to an
investor.  The  alternative  minimum tax is a complex concept which is discussed
under "Federal Income Tax  Considerations - Other Important Tax Considerations -
Alternative  Minimum  Tax." The Internal  Revenue  Code  imposes an  alternative
minimum  tax if a  taxpayer's  alternative  minimum  tax  liability  exceeds his
regular tax liability.  Tax credits cannot be used to reduce alternative minimum
tax  liability.  Even where a taxpayer  does not have  alternative  minimum  tax
liability,  the  taxpayer  cannot  use tax  credits to reduce  his  regular  tax
liability  to an  amount  less  than  his  alternative  minimum  tax  liability.
Accordingly,  investors  are urged to consult  their tax  advisers to  determine
whether the  alternative  minimum tax limits  their  ability to benefit from tax
credits.

    The  broker-dealers  selling  the  Units  have  agreed  to  ask  prospective
investors   whether  an   investment   in  Units  is  suitable  for  them.   The
broker-dealers   have   agreed  to   maintain   records  of  their   suitability
determinations. Each broker-dealer has agreed to make every reasonable effort to
determine  that an  investment  in  Units  is  suitable  and  appropriate  for a
potential investor,  based on information  provided by the potential investor as
to   his   financial  situation   and  investment  objectives.  In  making  this

                                       41

<PAGE>



determination,  a  broker-dealer  will  have  reasonable grounds to believe that
the prospective investor:

o   meets the minimum income and net worth standards set forth below,

o   is or will be in a financial  position  appropriate to enable him to realize
    to a significant extent the benefits described in this prospectus, including
    the Federal income tax benefits,

o   has an overall financial position  sufficient  to  bear  the  risks  of  the
    investment, and

o   understands the Federal income tax benefits and risks.

Individual Investors

    Low income housing tax credits and,  possibly,  historic tax credits are the
principal  benefits  from  an  investment  in  Units.  The  extent  to  which  a
prospective  investor can use these tax benefits will help determine  whether or
not he is a suitable investor.

    With respect to natural persons,  Federal tax law imposes limitations on the
utilization  of credits from passive  activities and general  business  credits.
Each of those  categories  includes low income  housing tax credits and historic
tax credits. A Series will generate tax credits over a period of 10 to 12 years.
Accordingly,  an  investment  in a  Series  is not  suitable  for a  prospective
investor  unless for the next 12 years he will be able to  utilize  his share of
tax credits under:

o   the passive activity rules discussed below,

o   the general business credit rules discussed below, and

o   the alternative minimum tax rules referred to above.

    The Internal Revenue Code sorts income into  several categories.  Income can
be:

o   active, such as salaries and wages,

o   portfolio, such as interest and dividends,

o   passive, such as income from limited partnerships, or

o   the result of material participation in real estate activities,  such as the
    income of a landlord who invests significant amounts of time in managing his
    property.

                                       42

<PAGE>



Prospective  non-corporate  investors can use an unlimited  amount of low income
housing tax credits and historic tax credits against income taxes due on passive
income.  They can also use tax credits  against income taxes due on a maximum of
$25,000  of  active or  portfolio  income  each  year if they do not  materially
participate  in rental  real  estate  activities.  This is known as the  $25,000
deduction  equivalent  rule.  However,  a natural  person can use  historic  tax
credits in this manner  only to the extent his  adjusted  gross  income does not
exceed  $200,000.  A natural  person's  ability to use  historic  tax credits is
phased out if his gross income is between $200,000 and $250,000,  and eliminated
if his gross income exceeds $250,000.

    In general, a natural person can use losses from a Series only to the extent
he has passive income.

     Investors  should  read the entire  discussion  under  "Federal  Income Tax
Considerations Limitations on Losses and Credits from Passive Activities" and "-
General Business Tax Credit Limitations." That section includes more information
regarding the principal limitations on the use of tax credits and losses from an
investment in Units.

Corporate and Other Entity Investors

    Trusts and Estates.  A trust other than a grantor trust is a taxable  entity
and should  consider  an  investment  in a Series  only if it will have  passive
income against which the Series' tax credits and losses can be used. There is no
$25,000 deduction equivalent for non-grantor trusts.

    A grantor  trust is not a taxable  entity.  The  grantor of a grantor  trust
includes  the tax items of the  trust in his tax  return.  Therefore,  a grantor
trust  should  consider an  investment  only if the grantor  meets the  criteria
applicable to it.

    Generally,  an  estate  has  no  $25,000  deduction  equivalent.  A  limited
exception permits estates to use the $25,000 deduction  equivalent in a tax year
ending less than two years after the decedent's death.

    Corporations.   The  passive   activity  rules  do   not  apply  to  regular
corporations.  A regular  corporation  should consider an investment in a Series
only if it will have during the next 12 years sufficient income from all sources
to use the Series' tax credits and losses. Regular corporations are corporations
which:

o   have not elected to be subject to Subchapter S  under  the  Internal Revenue
    Code,

o   are not closely-held, and


                                       43

<PAGE>



o   are not personal service corporations.

A  corporation  is  closely-held  for  these  purposes  if more  than 50% of the
corporation is owned,  directly or indirectly,  by five or fewer shareholders at
any time  during the last half of its  relevant  tax year.  A  corporation  is a
personal  service  corporation if it performs  services in the fields of health,
law, engineering,  architecture,  accounting, actuarial science, performing arts
or consulting.

    Special  rules  apply  to all  types  of  corporations  other  than  regular
corporations.  A corporation other than a regular corporation should consider an
investment in a Series only as follows:

o   A personal service corporation must have during the next 12 years sufficient
    passive income to use the Series' tax credits and losses.

o   A  corporation  which has  elected  to be  subject  to  Subchapter  S of the
    Internal  Revenue  Code  must  have   shareholders  who  meet  the  criteria
    applicable  to  such  shareholders.   Thus,  if  all  the  shareholders  are
    individuals,  the  shareholders  must meet the criteria  described above for
    individuals.

o   A closely-held  corporation which is not a personal service  corporation and
    which has not elected to be subject to Subchapter S of the Internal  Revenue
    Code must have during the next 12 years sufficient passive income and active
    income to use the Series' tax credits and losses.

    Partnerships.  A partnership  should  consider an investment only if each of
its partners meets the investment criteria  applicable to the partner.  Thus, if
all the partners are individuals,  the partners must meet the criteria described
above for individuals.

    See "Federal Income Tax Considerations - Limitations on Losses  and  Credits
from Passive Activities."

    Entity Financial Reports. An entity investor should also consider the effect
of an investment in a Series on the entity's financial reports.

    The actual effect on an entity investor's net income for financial reporting
purposes  will depend upon the results of Series'  operations  and the method of
accounting  adopted by the investor to record its investment in the Series.  The
Emerging Issues Task Force of the Financial  Accounting Standards Board has been
examining  the methods of  accounting  used by entities  investing in low income
housing through limited  partnerships.  In general,  as of the date hereof,  the
Emerging Issues Task Force has determined that the permissible  methods  used to

                                       44

<PAGE>



account for such investments are the modified cost  method,  the  equity method,
the effective yield method and the full consolidation method.

    Under the modified cost method, an entity investor initially capitalizes the
cost of its  investment  in the  limited  partnership,  and then  amortizes  the
difference between the carrying cost and the aggregate  estimated residual value
of the limited  partnership's  property  portfolio over the tax credit period of
such  portfolio.  The  estimated  residual  value of a property is its estimated
residual  value at the end of the last period in which tax credits are allocated
to the investor and will not reflect anticipated inflation.

    Under the equity method, an entity investor  initially  capitalizes the cost
of its investment in the limited partnership,  and then reduces or increases the
carrying  value  by  the  investor's   allocable  share  of  losses  or  income,
respectively,  from the  limited  partnership.  The  carrying  value  may not be
reduced below zero.

    Under the effective yield method, an entity investor  initially  capitalizes
the cost of its  investment in the limited  partnership,  and then amortizes the
cost to provide a constant  effective yield over the period that the tax credits
are  allocated to the  investor.  The  effective  yield is the internal  rate of
return  on the  investment,  based  on the  cost of the  investment  and the tax
credits allocated to the investor. Any expected residual value of the investment
is excluded from the effective yield calculation.

    Under the full  consolidation  method,  the low  income  housing  properties
themselves,  and the results of operations  therefrom are included in the entity
investor's financial statements.

    Regardless of the method  selected,  the Emerging  Issues Task Force has not
changed the requirement that an investment be reviewed periodically to determine
impairment of value.

    With the exception of the effective  yield method,  the method of accounting
to be used by an entity  investor in a low income housing  program  generally is
not elective but rather is determined by the level of the entity's investment in
the  limited  partnership  and/or the  ability of the  investor  to control  the
limited partnership. The effective yield method may be elected if:

o   the tax credits allocable to the investor are guaranteed by  a  creditworthy
    entity,

o   the investor's yield based solely on the cash flows from the guaranteed  tax
    credits is positive, and

o   the  investor  is a  limited  partner  for legal  and tax  purposes  and the
    investor's liability is limited to its capital investment.

                                       45

<PAGE>



    If the investor is unable to or does not elect to use  the  effective  yield
method, the appropriate method will be:

o   the  modified  cost  method,  if the  investor's  interest  in  the  limited
    partnership is so minor as to give the investor  virtually no influence over
    partnership operating and financial policies;

o   the  equity  method,  if the  investor  owns  less  than 50% of the  limited
    partnership and has no significant control over partnership policies; or

o   the  full  consolidation  method,  if the  investor  owns 50% or more of the
    limited  partnership  unless the  investor has no  significant  control over
    partnership policies, in which event the equity method is to be used.

To date, the Emerging  Issues Task Force has provided no  bright-line  ownership
test for use in determining  when an investor's  interest is so minor as to give
the investor  "virtually no influence over  partnership  operating and financial
policies." The staff of the SEC, however,  understands that accounting  practice
generally has viewed investments of more than 3% to 5% to be more than minor.

    It is  anticipated  that  entity  investors  in a Series will use either the
modified cost method or the equity method. As indicated above,  under the equity
method an investor will actually  report its share of Series'  losses or income.
In this regard, for financial  reporting purposes each Series is expected to use
the equity  method,  which will result in recognition by the Series of its share
of losses or income from the limited partnerships in which it invests.

Minimum State Suitability Requirements

    The Series have established the subjective standards described  above. These
subjective  standards  apply  to  all  investors.  Each  state  has  established
objective  standards  for  individuals  which  also  must  be  satisfied.  These
standards are set forth below.  An individual  must satisfy the standard for his
state of residency before he can consider an investment in Units. In the case of
sales to fiduciary accounts,  these minimum suitability standards must be met by
the beneficiary,  the fiduciary account, or by the donor or grantor who directly
or  indirectly  supplies the funds to purchase the Units if the donor or grantor
is one of the fiduciaries.

    The Units may be offered and sold only in those  jurisdictions in which they
have been registered or qualified for sale, or are exempt from the  registration
or qualification requirement.

    Set forth below are the minimum  suitability  standards for residents of the
District of Columbia  and of each state in which the Series have applied to have

                                       46

<PAGE>



the  Units  registered  or  qualified  for sale or in which the sale of Units is
exempt from  registration.  For these purposes,  net worth is exclusive of home,
furnishings and automobiles.

Alabama                      annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Alaska                       annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Arizona                      annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Arkansas                     annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

California                   annual gross income of at least $50,000
                             and a net worth of at least $65,000 or a net
                             worth of at least $200,000

Colorado                     annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Connecticut                  annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Delaware                     annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

District of Columbia         annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Florida                      annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000


                                       47

<PAGE>




Georgia                      annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Hawaii                       annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Idaho                        annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Illinois                     annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Indiana                      annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Iowa                         annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000 for cash
                             purchasers; annual gross income of at least
                             $60,000 and a net worth of at least
                             $60,000 or a net worth of at least
                             $225,000 for purchasers using promissory
                             notes

Kansas                       annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Kentucky                     annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Louisiana                    annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000


                                       48

<PAGE>




Maine                        annual  gross  income  of at least $50,000
                             and  a  net worth of at least $50,000 or
                             a net worth of at least $200,000; investors
                             must  purchase on an all-cash basis

Maryland                     annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000

Massachusetts                annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000 for cash
                             purchasers; annual gross income of at least
                             $60,000 and a net worth of at least
                             $60,000 or a net worth of at least
                             $225,000 for purchasers using promissory
                             notes

Michigan                     annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Minnesota                    annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000 for cash
                             purchasers; annual gross income of at least
                             $60,000 and a net worth of at least
                             $60,000 or a net worth of at least
                             $225,000 for purchasers using promissory
                             notes

Mississippi                  annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Missouri                     annual gross income of at least $45,000
                             and a net worth of at least $45,000 or a net
                             worth of at least $150,000

Montana                      annual gross income of at least $35,000
                             and a net worth of at least $35,000 or a net
                             worth of at least $75,000


                                       49

<PAGE>




Nebraska                    annual  gross income of at least $45,000
                            and  a  net worth of at least $45,000 or
                            a  net  worth  of  at  least $150,000;
                            no  investor  may  invest  more than 10%
                            of his net worth in a Series

Nevada                      annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000

New Hampshire               annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

New Jersey                  annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000

New Mexico                  annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

North Carolina              annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

North Dakota                annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Ohio                        annual gross income of at least $45,000
                            and  a  net worth of at least $45,000 or
                            a  net  worth  of  at  least $150,000;
                            no  investor  may invest  more than 10%
                            of his net worth in a Series

Oklahoma                    annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Oregon                      annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000


                                       50

<PAGE>




Pennsylvania                annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000; no investor
                            may invest more than 10% of his net
                            worth in a Series. Because the minimum
                            closing amount for each Series is less than
                            $2,500,000, the amount suggested by
                            Pennsylvania regulations, prospective
                            investors who are Pennsylvania residents
                            are cautioned to carefully evaluate the
                            ability of the Series to accomplish its stated
                            objectives and to inquire as to the current
                            dollar volume of Series' subscriptions.

Rhode Island                annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000

South Carolina              annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000

South Dakota                annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000 for cash
                            purchasers; annual gross income of at least
                            $60,000 and a net worth of at least
                            $60,000 or a net worth of at least
                            $225,000 for purchasers using promissory
                            notes

Tennessee                   annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Texas                       annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Utah                        annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000


                                       51

<PAGE>




Vermont                     annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Virginia                    annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Washington                  annual gross income of at least $50,000
                            and a net worth of at least $65,000 or a net
                            worth of at least $200,000

West Virginia               annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000

Wisconsin                   annual gross income of at least $45,000
                            and a net worth of at least $45,000 or a net
                            worth of at least $150,000

Wyoming                     annual gross income of at least $35,000
                            and a net worth of at least $35,000 or a net
                            worth of at least $75,000


                                       52

<PAGE>



                            ESTIMATED USE OF PROCEEDS

    The  following  table sets forth the  estimated use of the proceeds from the
sale of the Units. As indicated herein,  approximately 75% of the total proceeds
will be  invested  in local  limited  partnerships.  The  amounts  in the  table
represent WNC & Associates,  Inc.'s present estimates and the actual amounts may
be  different.   At  a  minimum,  each  Series  must  invest  in  local  limited
partnerships and in reserves the greater of:

o   80% of the gross  offering  proceeds  reduced by 0.1625%  for each 1% of the
    Series' share of the mortgage financing encumbering the apartment complexes,
    or

o   70% of the gross offering proceeds.

Assuming that a Series share of the financing encumbering apartment complexes is
40%, the calculation is: 40 x 0.1625% = 6.5%; 80% - 6.5% = 73.5%. If the Series'
share of financing is 61.75%,  the  calculation is: 61.75 x 0.1625% = 10%; 80% -
10% = 70%. In performing this calculation,  there is a limit on the amount which
may be invested in reserves.  No more than 5% of gross offering  proceeds may be
considered  as  reserves  at the  Series  level,  and no more  than 5% of  gross
offering proceeds may be considered as reserves at the local limited partnership
level.

    The  following  table  excludes one Unit  purchased  by the initial  limited
partner in  connection  with the  organization  of the Series.  It also excludes
interest due under the investors'  promissory notes. The amount of that interest
to be received  cannot be estimated.  It will depend on the amounts and dates of
payment of the investor promissory notes. Any such interest will constitute cash
flow  under the  Series'  partnership  agreement.  As such it may be used to pay
administrative costs, or to increase reserves.

    Some investors  may purchase Units with a reduced  selling  commission.  The
following table assumes that the maximum selling commissions will be paid on all
purchases of Units.






                                       53

<PAGE>


<TABLE>


                                                        Percentage                       Percentage
                                         Minimum        of Gross          Maximum         of Gross
                                         Proceeds       Proceeds          Proceeds        Proceeds

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

Gross Offering Proceeds                $1,400,000        100.00%       $50,000,000        100.00%

Less Public Offering Expenses:

Selling Commissions                        98,000          7.00%         3,500,000          7.00%
Dealer Manager Fee                         28,000          2.00%         1,000,000          2.00%
Other Organizational and
     Offering Expenses                     56,000          4.00%         2,000,000          4.00%
                                           ------          -----         ---------          -----

Public Offering Expenses                  182,000         13.00%         6,500,000         13.00%
                                          -------         ------         ---------         ------

Amount Available for Investment        $1,218,000         87.00%       $43,500,000         87.00%
                                       ----------         ------       -----------         ------

Acquisition Expenses                       28,000          2.00%         1,000,000         2.00%

Acquisition and Investment
Management Fees                            98,000          7.00%         3,500,000         7.00%

Working Capital Reserves                   42,000          3.00%         1,500,000         3.00
                                           ------          -----         ---------         ----

Proceeds Invested                      $1,050,000         75.00%       $37,500,000        75.00%
                                       ----------         ------       -----------        ------
</TABLE>


Proceeds invested as set forth in the table above represent amounts to be paid:

o    to acquire interests in local limited partnerships, and

o    possibly,  to  repay  loans  incurred  to acquire such interests and to pay
     interest and carrying

     Proceeds  invested in local limited  partnerships will be used by the local
limited  partnerships to pay or reimburse  costs,  to fund reserves,  and to pay
fees to the local general partners. These costs will consist of:

o    acquisition costs,

o    construction costs,

                                       54

<PAGE>



o     construction interest and taxes,

o     financing fees, and

o     developmental and organizational expenses.

The  exact  manner  in  which  a local limited partnership will use the proceeds
will be  negotiated  in each  case.  It is  anticipated  that the local  general
partners  will be paid  approximately  10% to 30% of the  cost of the  apartment
complex as a development fee and other compensation.  In some cases it may be as
much as 40%. In the  discretion  of WNC &  Associates,  Inc. this amount will be
paid:

o     over a period of two to three years,  coinciding with the payments of  the
      Series' capital contributions, or

o     pursuant to an interest-bearing note payable no later  than  the  eleventh
      year of the note.

Additional  compensation  will  be  payable  to  the local general partners from
local limited  partnership  cash flow for their services in managing and selling
apartment complexes. See "Investment Objectives and Policies - The Local General
Partners - Compensation of Local General Partners."








                                       55

<PAGE>




                             MANAGEMENT COMPENSATION

     The  following  table  summarizes  the  types  and  estimated   amounts  of
compensation  to be paid to WNC &  Associates,  Inc.  and its  affiliates.  Such
compensation  was not determined by  arm's-length  negotiations.  Investment and
management  decisions  which such  persons  make for the Series  will affect the
amount of the compensation actually to be received. See "Conflicts of Interest."
Other  than  as  set  forth  herein,  no  compensation  is to be  paid  to WNC &
Associates,  Inc. or its affiliates.  Such  compensation  cannot be increased by
reclassifying  into different  categories  fees or  reimbursements  which are in
excess of the limitations set forth herein.


Type, Payee and      Determination                          Minimum    Maximum
Recipient            of Amount                              Amount     Amount


                        Organizational and Offering Stage

Selling commis-     Up to 7% of the capital contributions,  Up to     Up to
sions payable by    or all a portion of which will be       $98,000   $3,500,000
Series to WNC       reallowed to participating broker-
Capital Corpora-    dealers
tion

Dealer manager      Up to 2% of the capital contributions   Up to     Up to
fees payable by                                             $28,000   $1,000,000
Series to WNC
Capital Corpora
tion

Nonaccountable      4% of the capital  contributions, in    $56,000   $2,000,000
organizational      exchange for which WNC & Associates,
& offering expense  Inc. will pay all organizational and
reimbursement       offering expenses,  with the excep-
payable by Series   tion of the 7% selling commissions,
to WNC & Associ-    the 2% dealer manager fee, and this
ates, Inc.          4%  nonaccountable expense reimburse-
                    ment. Organizational  and  offering
                    expenses include all expenses incurred
                    in connection  with the  formation of
                    a Series,  the registration and quali-
                    fication of its Units under Federal
                    and state securities laws and its offer-
                    ing, and all advertising expenses.



                                       56

<PAGE>



                              Acquisition Stage (1)

Nonaccountable     2% of the capital  contributions,       $28,000   $1,000,000
acquisition         in exchange for which WNC &
expense reim-       Associates,  Inc. will pay all
bursement pay -     acquisition expenses. Acquisition ex-
able by Series      penses include legal fees and
to WNC &            expenses, travel and communications
Associates, Inc.    expenses, costs of appraisals, non-
                    refundable option payments on property
                    not acquired,  accounting  fees and
                    expenses,  title insurance and
                    miscellaneous  expenses related to the
                    selection and acquisition of local
                    limited partnerships and apart ment
                    complexes.

Acquisition and     Up to 7% of the capital contributions   Up to     Up to
investment manage-                                          $98,000   $3,500,000
ment fees payable
by Series to WNC
& Associates, Inc.

Interest payable    WNC & Associates, Inc. may make         Actual amounts are
by Series to WNC    short-term  loans to a Series.          not determinable at
& Associates, Inc.  Interest cannot exceed the prime or     this time.
                    reference rate of Southern California
                    Bank charged by it on short-term
                    unsecured loans to its most credit-
                    worthy  customers.

                                 Operating Stage

Asset manage-       An  annual  fee in an  amount  not      Actual amounts are
ment fees pay-      to exceed  0.2% of  invested  assets    not determinable at
able by Series      in local limited partnerships which     this time.
to WNC & Asso-      are subsidized  under one or more
ciates, Inc.        Federal, state or local government
                    programs. Invested assets means the
                    sum of a Series' investment in local
                    limited partnerships and the Series'
                    allocable share of the amount of the
                    mortgage loans on, and other debts
                    related to, the apartment complexes.

                                       57

<PAGE>



Property            At competitive rates for comparable     Actual amounts are
management fees     services, not to exceed 5% of gross     not determinable
payable by a        property revenues  plus a fee  for      at this time.
local limited       the  one-time  initial  rent-up  or
partnership to      leasing-up  of a newly-constructed
WNC Management,     or  totally-rehabilitated apartment
Inc. if WNC         complex.
Management, Inc.
acts as the
management and
leasing agent
for the local
limited partner-
ship

Reimbursement       The  actual  amount of any of a         Actual    Actual
payable by          Series' operating cash  expenses        amounts   amounts
Series of           advanced. Operating cash expenses       are not   are not
operating cash      include expenses for  management,       deter-    deter-
expenses ad-        on-site  property  personnel,           minable   minable
vanced by WNC &     utilities,  repair and maintenance,     at this   at this
Associates, Inc.    insurance, investor communications,     time.     time.
                    legal,  accounting, statistical and               WNC &
                    bookkeeping services, use of                      Assoc
                    computing or accounting equipment,                -iates,
                    travel and telephone expenses,                    Inc.,
                    salaries and direct expenses of                   estimates
                    Series employees while engaged in                 that the
                    Series business,  and any other                   total
                    operational and administrative                    amount
                    expenses necessary for the prudent                of reim-
                    operation of the Series. Operating                bursable
                    cash expenses include the actual                  operating
                    cost of goods, materials and admini-              cash ex-
                    strative services used for or by the              penses
                    Series, whether incurred  by WNC &                during
                    Associates, Inc. or a non-affiliated              each
                    person. As used in the preceding                  Series'
                    sentence:                                         first full
                                                                      year of
                    o   actual cost of goods and materials            operations
                        means the actual cost of goods and            after
                        materials used for or by the Series           termina-
                        and obtained from entities not                tion of
                        affiliated with WNC & Associates,             the
                        Inc., and                                     offering,
                                                                      assuming

                                       58

<PAGE>



                    o   actual cost of administrative                 receipt of
                        services means the pro rata                   the
                        cost of personnel, but in no                  maximum
                        event to exceed a competitive                 offering
                        amount.                                       proceeds,
                                                                      may be
                                                                      approxi-
                                                                      mately
                                                                      $20,000 to
                                                                      $30,000.

                    In no event will reimbursements be
                    permitted for:

                    o   services for which WNC & Associates,
                        Inc. is entitled to compensation by
                        way of a separate fee,

                    o   rent, depreciation or other admini-
                        strative items, or

                    o   salaries, fringe benefits or travel
                        expenses of a controlling person of
                        WNC & Associates, Inc.

Share of Series'    0.1% of cash available for distribu-    Actual amounts are
cash available      tion. Cash available for distribution   not determinable
for distribution    means, with respect to any period,      at this time.
to WNC & Assoc-     cash flow less any amounts added to
iates, Inc.         reserves. Cash flow means:

                    o   the Series' cash distributions
                        from the local limited
                        partnerships other than cash
                        derived from the sale, financing
                        or refinancing of apartment com-
                        plexes, plus

                    o   all cash funds generated by the
                        Series, after deducting cash funds
                        used to pay expenses, debt service
                        and capital expenditures.


                                       59

<PAGE>



Share of local      Up to 0.1% of all allocations           Actual amounts are
limited part-       by local limited partnerships           not determinable
nership's           of profits, losses and tax              at this time.
allocations         credits and up to 0.1% of
and operating       distributions  from  operating
cash distri-        cash flow(2)
butions to WNC
Housing, L.P.
as special
limited part-
ner of local
limited
partnerships

Share of local      As determined by the provisions of      Actual amounts are
limited part-       the partnership agreement of the        not determinable
nership's           local limited partnership in effect     at this time.
allocations         prior to the time such person
and operating       becomes the local general partner.(2)
cash distri-
butions if WNC
& Associates,
Inc. or an
affiliate
becomes the
local general
partner



                                Liquidation Stage

Share of Series'    After:                                  Actual amounts are
sale or refi-                                               not determinable
nancing pro-        o   a Series' investors have received   at this time.
ceeds to WNC            sale or refinancing  proceeds
& Associates,           equal to the amounts of their
Inc.                    capital contributions and their
                        preferred return, and

                    o   WNC & Associates, Inc. has received
                        sale or refinancing proceeds
                        equal to the amount of its capital
                        contributions and any subordinated
                        disposition fee,

                    the Series will distribute any addi-
                    tional sale or refinancing proceeds 90%
                    to its investors and 10% to WNC &
                    Associates, Inc. Sale or refinancing
                    proceeds are the Series' cash

                                       60

<PAGE>



                    distributions  from a local limited
                    partnership's  sale,  financing or
                    refinancing  of an apartment complex,
                    less any reserves funded with such
                    proceeds.  The investors'  preferred
                    return is an annual, cumulative, but
                    not compounded, return to the Series'
                    investors on their capital contribu-
                    tions equal to 11% through December
                    31, 2010, and 6% for the balance of
                    the Series' term.(2)



Subordinated        Subject to payment of preferred         Actual amounts are
disposition         distributions to the investors,         not determinable
fee payable         a fee equal to 1% of the  sales         at this time.
by Series to        price of the apartment complexes
WNC & Assoc-
iates, Inc.

Share of local      As determined by the provisions of      Actual amounts are
limited             the partnership agreement of the        not determinable
partnership's       local limited partnership in effect     at this time.
distributions       prior to the time such person
from a sale or      becomes the local general partner.(2)
refinancing
transaction if
WNC &  Associates,
Inc. or an
affiliate becomes
the local general
partner

                               Interest in Series

Share of Series'    Generally, 0.1% of profits, losses      Actual amounts are
profits, losses     and tax credits, except that in the     not determinable
and tax credits     case of profits from a sale or          at this time.
to WNC & Associ-    refinancing, the percentage may be
ates, Inc.          increased to as much as 10%. See
                    "Profits and Losses, Tax Credits and
                    Cash Distributions."



(1)      It is possible that a local limited  partnership  may generate  federal
         tax credits and state tax credits.  If so, WNC &  Associates,  Inc. may
         organize another entity to invest in

                                       61

<PAGE>



        the state tax credits. See "Investment  Objectives and Policies - Terms
        of the Local  Limited  Partnership  Agreements  - Interests in Profits,
        Losses  and  Distributions."  WNC  &  Associates,  Inc.  would  receive
        compensation from the other entity in connection with such activities.

(2)     Despite the information in the tables, the interest of WNC & Associates,
        Inc. and each of its affiliates in cash to be distributed  by the Series
        from cash available for distribution and sale or  refinancing  proceeds,
        and from similar sources in the case of the local limited  partnerships,
        will not exceed, in the case of cash available for  distribution, 10% of
        total cash  available  for  distribution  and,  in  the  case of sale or
        refinancing proceeds,  15%  of  sale or   refinancing proceeds remaining
        after required payments to the investors.    For  a  discussion  of  the
        required payments to investors, see "Profits and Losses, Tax Credits and
        Cash Distributions.











                                       62

<PAGE>



                              CONFLICTS OF INTEREST

    The interests of WNC & Associates, Inc. and its affiliates may conflict with
the interests of the investors.  These conflicts include:

Receipt of Fees and Other Compensation by WNC & Associates, Inc. and its
Affiliates

    WNC & Associates, Inc. will decide:

o   which investments will be made by the Series,

o   in what manner the acquisitions will occur,

o   how the investments will be managed, and

o   when the investments will be sold.

As a result of these  transactions,  WNC & Associates,  Inc. and its  affiliates
will receive fees, compensation and other income. See "Management Compensation."
Such  compensation  arrangements  were not  negotiated  at arm's  length and may
create  conflicts  between  the  interests  of WNC &  Associates,  Inc.  and its
affiliates and those of the investors.

    For example, the consent of a Series may be necessary in connection with the
sale of an apartment complex by a local limited  partnership.  WNC & Associates,
Inc.  may face a conflict in these  circumstances  because its share of fees and
cash  distributions  from the  transaction may be more or less than its expected
share of fees if the apartment  complex were not sold.  And in its  negotiations
with local  general  partners over the terms of the Series'  investments,  WNC &
Associates,  Inc. may request that WNC  Management,  Inc.  serve as the property
manager for the apartment  complex.  As property manager,  WNC Management,  Inc.
would earn property  management  fees from the local limited  partnerships.  The
result of these conflicts could be that a Series may make investments  which are
less desirable,  or on terms which are less favorable,  to the Series than might
otherwise be the case.

Other Business Activities of WNC & Associates, Inc. and its Affiliates

    WNC &  Associates,  Inc. and its  affiliates  have formed and are serving as
general  partners of other public and private real estate limited  partnerships.
They also are providing  administrative  and consulting  services for other real
estate limited partnerships of which they were not the original managing general
partners.  See "Management" and "Prior Performance Summary." In addition,  WNC &
Associates, Inc.  and its affiliates may become general partners or other public

                                       63

<PAGE>

or private real estate limited  partnerships  and  may  become involved in other
business activities unrelated to the business of the Series.

    Under the Series' partnership agreement, WNC & Associates,  Inc. is required
to devote to  Series'  affairs  only such time as is  necessary  for the  proper
performance of its duties to the Series.  The officers,  directors and employees
of WNC &  Associates,  Inc.  will  perform its duties.  None of them will devote
their full time to the  performance  of such duties.  Therefore,  conflicts  may
arise in the  allocation of the time of such people among the activities of each
Series and the other activities of WNC & Associates, Inc. WNC & Associates, Inc.
believes that it has sufficient  personnel to fully  discharge its duties to the
Series and to all other entities to which it is responsible.

Competition with WNC & Associates, Inc. and its Affiliates with Respect to the
Purchase or Ownership of Properties

    WNC & Associates,  Inc. and its affiliates are also general partners of more
than 68  other  real  estate  limited  partnerships  and will  form  and  manage
additional real estate entities. The other existing partnerships have, and it is
expected that any entities to be organized in the future will have,  the same or
similar investment objectives as the Series.

    WNC & Associates,  Inc.  might be presented  with an investment  opportunity
which is appropriate for a Series and one or more other entities  managed by WNC
& Associates,  Inc.,  including the other  Series.  WNC & Associates,  Inc. will
decide which entity will make the  investment.  That decision will be based upon
such factors as:

o   the  effect  of  the  acquisition  on  the  diversification of each entity's
    portfolio,

o   the estimated income tax effects of the purchase on each entity,

o   the amount of funds of each entity available for investment, and

o   the length of time funds have been available for investment.

    If a particular  investment  is  determined to be suitable for more than one
entity,  the entity having  uninvested funds for the longest period of time will
have  priority over the other  entities.  However,  if an  investment  generates
federal  and state low income  housing  tax  credits,  then an entity  formed to
provide  federal and state tax credits to its investors  will have priority over
each Series and other  entities  which are not formed to provide  such state tax
credits.

    WNC & Associates,  Inc., the local general partners and their affiliates may
own or  acquire  interests  in  properties  near or  adjacent  to the  apartment
complexes in which a Series may invest.  It is possible  that the  value of such

                                       64

<PAGE>



persons'  properties   may  be  enhanced  by  their  proximity  to  the  Series'
apartment  complexes.  It is  also  possible  that  such  properties  may  be in
competition  with the Series'  apartment  complexes for  prospective  tenants or
purchasers.  As a result,  the  interests of WNC & Associates,  Inc.,  the local
general partners and their affiliates may conflict with those of a Series.

Other Transactions with Developers, Local General Partners, Lenders and Joint
Venturers

    Certain  persons  controlling or having  business  dealings with some of the
local limited  partnerships,  such as general partners,  developers and lenders,
will be persons with whom WNC & Associates, Inc. and its affiliates do business.
WNC & Associates,  Inc. may receive  compensation,  profits or other benefits in
connection  with  such  other  transactions.  As a result,  conflicts  may arise
between  their  interests and the  interests of the Series.  For example,  WNC &
Associates, Inc. generally is entitled to remove a local general partner without
the consent of the  investors.  If WNC &  Associates,  Inc.  has other  business
dealings  with the  local  general  partner,  WNC &  Associates,  Inc.  might be
reluctant  to  remove  the  local  general  partner  under  circumstances  which
otherwise would warrant removal.

Representation in Tax Audit Proceedings

    WNC & Associates,  Inc. has been  designated the tax matters partner of each
Series.  As such, it is authorized and directed to represent each Series and its
investors at the expense of the Series in connection  with all  examinations  of
the Series' affairs by tax authorities,  including any resulting  administrative
or judicial proceedings. Such proceedings may involve or affect the other Series
and  other  partnerships  and  limited  liability  companies  managed  by  WNC &
Associates,  Inc. In such  situations,  the positions taken by WNC & Associates,
Inc. with respect to the Series may have differing effects on the Series and the
other entities.

Distribution of Units

    The Series  have not engaged an  independent  managing  underwriter  for the
distribution of the Units.  WNC Capital  Corporation,  as the dealer manager for
the offering of Units, may sell Units and will perform wholesaling  services for
the Series.  WNC Capital  Corporation has not retained counsel separate from the
Series'  counsel  but has  conducted  such  due  diligence  review  as it  deems
necessary under the circumstances.  However, investors will not have the benefit
of an  independent  investigation  of the Series  performed  by an  independent,
unaffiliated underwriter.


                                       65

<PAGE>



Joint Investments

    A Series  may invest in local  limited  partnerships  jointly with the other
Series,  other limited  partnerships  formed by WNC & Associates,  Inc. or other
limited  partnerships if the conditions set forth under  "Investment  Objectives
and  Policies - Joint  Investments"  are met.  There is always a risk that joint
venture  partners will reach an impasse  respecting  the activities of the joint
venture.  For  example,  it may be in the best  interest  of a Series  to sell a
jointly-held local limited partnership interest at a time when it is in the best
interest of its co-venturer to retain such investment. In such event, the Series
may be unable to sell the local limited partnership interest.

Resolution of Conflicts of Interest

    Except as set forth above,  the Series have not developed any formal process
for resolving conflicts of interest.  However, WNC & Associates, Inc. is subject
to a fiduciary duty to exercise good faith and integrity in handling the affairs
of each Series,  and that duty will govern its actions in all such matters.  See
"Fiduciary Responsibility." Furthermore, the manner in which the Series can make
investments  and the  manner in which the  Series  can  operate  are  subject to
restrictions  contained in the Series'  partnership  agreement.  See "Investment
Objectives and Policies."  Nonetheless,  the conflicts described in this section
could result in materially adverse effects on the investors,  particularly where
WNC &  Associates,  Inc. has a fiduciary  duty to more than one entity.  In such
cases, WNC & Associates,  Inc. will resolve the conflicts by exercising its best
business judgment.

Lack of Separate Representation

    The  Series,  WNC & Associates,  Inc. and its affiliates,  and the investors
are not  represented  by  separate  counsel.  See  "Legal  Matters."  All of the
attorneys, accountants and other experts performing services for the Series also
perform  services for WNC & Associates,  Inc. and its affiliates.  Following the
termination of the offering, if any controversy arises in which the interests of
a Series appear to be in conflict with those of:

o    the other Series,

o    WNC & Associates, Inc. or its affiliates, or

o    a local limited partnership,

other counsel would be retained for one or more of the parties.


                                       66

<PAGE>



Organizational Diagram

    The following diagram  illustrates the relationships among the Series, WNC &
Associates, Inc., certain of its affiliates, and certain other parties:



 owner of                     WNC & Associates, Inc.                  general
                                                                      partner of



 WNC Capital                      fund manager
 Corporation                           of




 owner of                    WNC Housing Tax Credit            WNC Housing, L.P.
                                 Fund VI, L.P.,
                              Series 7 and Series 8



      WNC                        limited partners
Management, Inc.                        of



 managing
 general
partner of


68 other limited partnerships      Local Limited                 special limited
 structured or sponsored by         Partnerships                    partner of
   WNC & Associates, Inc.



     Neither WNC &  Associates,  Inc. nor an affiliate  can be the local general
partner of a local limited partnership at the time of the Series' acquisition of
an interest therein.  WNC & Associates,  Inc. or an affiliate can become a local
general  partner  after  acquisition of  the local  limited partnership interest
only:

o    upon request by a lender that such action be taken,

o    in the event of the  bankruptcy, death, dissolution, withdrawal, removal or
     adjudication of incompetence of a local general partner,


                                       67

<PAGE>



o    in  the  event  of  a  material  default  by a local general partner in the
     performance of its duties, or

o    in the event of a material default by the local limited  partnership  under
     its mortgage loan.

     In addition to the relationships  described herein, WNC & Associates,  Inc.
and its  affiliates  are serving as general  partners of 68 real estate  limited
partnerships,  including  50 tax credit  partnerships.  See  "Prior  Performance
Summary."

                            FIDUCIARY RESPONSIBILITY

     WNC & Associates,  Inc. is accountable  to each Series as a fiduciary.  The
Series  have been  advised by counsel  that the laws of the State of  California
govern the fiduciary  obligations  of WNC & Associates,  Inc. to each Series and
its investors.  Under such laws, a general  partner owes its partners the utmost
good faith and loyalty. The Series' partnership  agreement does not modify these
fiduciary  obligations  provided  under  California  law.  Rather,  the  Series'
partnership agreement expressly provides that WNC & Associates, Inc.:

o    has fiduciary responsibility for the safekeeping and use of  all  funds and
     assets of each Series,  whether  or  not  in  its  immediate  possession or
     control,

o    may not employ or permit another to employ such funds or assets in any
     manner except for the exclusive benefit of the Series,

o    may not contract away its fiduciary duty, and

o    may engage in other business activities  independent of the Series provided
     that the right to  engage  in such  activities  does not  relieve it of its
     general fiduciary obligation to the Series.

     Subject to the rules of  California  law, a limited  partner may  institute
legal action on behalf of a partnership to recover damages from third parties or
to recover damages for a breach by a general partner of its fiduciary duty. This
is known as a partnership  derivative action. In addition, a limited partner may
institute a legal action on behalf of himself and all other  similarly  situated
limited  partners to recover  damages  for a breach by a general  partner of its
fiduciary  duties,  subject to California  rules. This is known as a partnership
class action. In any such action,  WNC & Associates,  Inc. could assert defenses
based  on the  exculpation  provision  in  the  Series'  partnership  agreement,
described in the following  paragraph.  If WNC & Associates,  Inc. satisfied the
standards for exculpation, it would be deemed not to have breached its fiduciary
obligation.  This area of the law is changing and  developing  and investors who
have  questions  concerning the fiduciary  duties of WNC & Associates,  Inc. are
urged to consult with their counsel.

                                       68

<PAGE>



     The exculpation  provision of the Series' partnership agreement holds WNC &
Associates,  Inc. and its affiliates harmless from liability for losses suffered
by the Series due to acts or  omissions  that any of them  performs  or fails to
perform:

o    in good faith, and

o    in a manner which WNC & Associates, Inc. reasonably believes to  be  within
     the scope of authority granted to it  and  in  the  best  interest  of  the
     Series,

provided

o    the acts or omissions did not constitute negligence or misconduct.

     The Series' partnership  agreement also indemnifies WNC & Associates,  Inc.
and its affiliates against losses and liabilities  sustained by them when acting
on behalf of the Series or  performing  services for the Series,  provided  such
conduct:

o    did not constitute negligence or misconduct, and

o    was the result of a course of conduct which WNC & Associates, Inc., in good
     faith,  determined  was in the best interests of the Series.

Indemnification means the Series will pay any losses  or liabilities suffered by
WNC & Associates, Inc. or its affiliates.

     As a  result  of  these  exculpation  and  indemnification  provisions,  an
investor may have a more limited right of action against WNC & Associates,  Inc.
and its  affiliates  than he would  otherwise  have had in the  absence  of such
provisions.   In  the  opinion  of  the  Securities  and  Exchange   Commission,
indemnification  for  liabilities  arising under the  Securities  Act of 1933 is
against public policy and therefore unenforceable.



                                       69

<PAGE>



                       INVESTMENT OBJECTIVES AND POLICIES

Principal Investment Objectives

         Each Series' principal  investment objective is to provide tax benefits
in the form of:

         (a)     A predictable stream of tax credits which investors  may use to
                 offset their Federal income tax liabilities.

         (b)     Tax losses which:

                  o     some corporations may use to offset any type of income,
                        and

                  o     other corporations and individuals  may  use  to  offset
                        passive income. See "Federal Income Tax Considerations -
                        Limitations   on   Losses   and   Credits  from  Passive
                        Activities."

     In  addition,  each Series will seek to preserve  and protect its  invested
capital and to return such capital  through cash  distributions  resulting  from
sale or refinancing transactions. See "Sale or Other Disposition of Investments"
below in this section.

     The Series will not seek to provide cash distributions from operations.

     There  can  be no  assurance  that  these  investment  objectives  will  be
achieved.  In addition,  the degree to which each Series achieves its objectives
may vary.

     This prospectus will be supplemented to identify a specific investment when
WNC &  Associates,  Inc.  believes  a  reasonable  probability  exists  that the
investment  will be acquired.  Any such supplement will set forth available data
with respect to the  investment,  including  the proposed  terms of purchase,  a
description  of the  apartment  complex and local  general  partners,  and other
information considered appropriate for an understanding of the transaction.  The
consummation of any pending  acquisition will be subject to further  negotiation
with the local general partners and execution of a final  agreement.  Such final
agreement  may  differ  in  material  respects  from  prior   understandings  or
agreements   between  the  local  general  partners  and  the  Series.  And  the
acquisition  or  retention of each  investment  will be subject to the terms and
conditions of closing. Accordingly, there can be no assurance that any potential
investment   initially  disclosed  in  a  supplement  to  this  prospectus  will
ultimately  be acquired,  or that the terms of any  acquisition  will not differ
substantially from those which were initially disclosed.


                                       70

<PAGE>



     Low income housing tax credits are available for an apartment  complex over
a 10-year period commencing with the date that the property is placed in service
and  otherwise  meets the  requirements  for the  credit.  It is  expected  that
investors will be allocated low income housing tax credits beginning in the year
they are admitted to the Series or the next year.  It is also  expected that the
amount of low income  housing tax credits  available to investors will be higher
in later years because of the time that is necessary:

o    to identify the local limited partnerships in which a Series  will  invest,
     and

o    for such local limited partnerships to complete construction of their
     respective apartment complexes.

Any  reduction  in  low  income  housing  tax  credits  in  the first and second
years of a Series should result in additional  low income housing tax credits in
the  eleventh and twelfth  years of a Series.  A Series will be able to identify
the annual amount of its tax credits and the month it will  commence  generating
its stream of tax credits  when its  investments  are  identified  and  commence
operations.   Historically,   investors  in  partnerships  sponsored  by  WNC  &
Associates,  Inc.  generally have been allocated some tax credits in the year of
investment  and the next year,  and the full amount of annual tax credits in the
second full year following investment.

     WNC & Associates,  Inc. believes that each Series will be able to acquire a
sufficient  number of  investments  at a purchase  price  which will  enable the
Series to provide the amounts of tax credits  anticipated at commencement of the
Series'  offering.  This  belief is based upon the  general  knowledge  that the
management personnel of WNC & Associates,  Inc. have with respect to the current
and past purchase prices for tax credit properties.  In negotiating the purchase
price to be paid by a Series for its  interest in a local  limited  partnership,
WNC & Associates, Inc. will determine the portion of the Series capital that can
be paid for such  interest  which will  enable  the  investors  to  receive  the
anticipated  amount  of tax  credits.  WNC &  Associates,  Inc.  will  take into
consideration the possibility that a local limited  partnership will not provide
all of the tax credits that are  expected.  To the extent a Series does not make
distributions  in respect of a Unit  equal to the $1,000  purchase  price of the
Unit, the tax credits generated by the Series would in effect represent a return
of and not a return on the investor's investment in the Series.

     Among other things, WNC & Associates,  Inc.'s estimate of the amount of tax
credits that will be provided by each Series is based upon the  assumption  that
demand  for  tax  credit  properties  does  not  increase  the  price  for  such
properties.  In the past,  heightened  demand  for  interests  in local  limited
partnerships increased the purchase price for such interests.  Further increases
could impair the ability of a Series to provide  investors with the  anticipated
amount of tax credits.


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     WNC &  Associates,  Inc.'s  estimate of the amount of the tax credits  that
will be provided by each Series is based upon additional assumptions, including,
that:

o    no tax laws or regulations or court interpretations thereof will be enacted
     or adopted or issued which would adversely affect the Series,

o    the apartment complexes will qualify for the anticipated tax credits at the
     appropriate times,

o    that  portion  of  thecosts of  the  low income residential  units  in each
     apartment  complex  expected  to qualify  for  the  low income housing  tax
     credits in fact will qualify for the low income housing tax credits,

o    the low income residential units in each apartment  complex will be  rented
     to eligible tenants,

o    the  qualified basis of each  apartment complex  used to calculate  the low
     income  housing   tax   credits   will  not  decrease  during  the  15-year
     compliance period,

o    each  local  limited  partnership  will  continually  meet  the rental  and
     occupancy  tests for the low  income  residential units during  the 15-year
     compliance period,

o    development fees to the local general partners or their affiliates  will be
     included in the qualified basis of each apartment complex used to calculate
     the low income housing tax credits, and

o    in the case of an existing  apartment complex, the acquisition thereof will
     constitute a purchase for purposes of Internal Revenue Code Section 42.

See "The Low Income Housing Tax Credit."

     Events  occurring  after the  acquisition  of  interests  in local  limited
partnerships  could  materially  affect a Series'  ability to provide all of the
anticipated tax credits.  For example,  the amount of tax credits for a property
depends,  in part,  on the  costs to  construct  the  property.  If the costs to
construct are less than anticipated,  the amount of the tax credits will be less
than  anticipated.  Also,  the amount of tax credits is based in part on current
interest  rates.  If there is a change in interest rates from the time a Series'
agrees to acquire a property and the time the property is placed in service, the
tax  credits  will be less or more than  anticipated.  The amount of tax credits
could also be materially  and adversely  affected by the failure of any other of
the assumptions listed above.  However, as discussed below in this section under
"Terms of the Local Limited Partnership  Agreements," the partnership agreements


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of   the   local   limited    partnerships   will  include  adjuster  and  other
provisions intended to reduce these adverse consequences to a Series.

     The  foregoing  investment  objectives  are set  forth  in the  partnership
agreement  of  each  Series  and can  only be  changed  by an  amendment  to the
partnership agreement.

Investment Policies

     Investment Criteria.  In selecting apartment  complexes,  WNC & Associates,
Inc. will evaluate, among other factors:

o    the amount of low income housing tax credits which are anticipated,

o    the amount of cash flow from operations, if any, which is anticipated,

o    the location of the apartment complex,

o    general rental  market  conditions  in  the  area of the apartment complex,
     including vacancy rates and  information  as  to  the  numbers  of eligible
     tenants in the area,

o    the  expenses,  rental  rates  and  costs of construction of the apartment
     complex and comparable apartment complexes,

o    the data supplied to the agency providing government financing subsidies or
     other lender,

o    the financial strength of the local general partners,

o    the prior performance of the local general partners,

o    the experience and prior performance of the property manager,

o    the types of guarantees which  can  be  obtained  from  the  local  general
     partners and other sellers and developers, and

o    the prior experience and reputation of the  builder  and  architect  of the
     apartment complex.

     The  criteria  for  selecting  a  particular  investment  for a Series will
include the following:

o    The apartment complex must  be  completed,  under  development  or  in  the
     process of being rehabilitated. For these  purposes, development activities
     include:


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    o     engaging contractors,

    o     engaging architects and other artisans,

    o     applying for loan commitments,

    o     applying for tax credit reservation, and

    o     applying for building permits.

o    In the case of a newly constructed or rehabilitated  apartment  complex, no
     substantial part of the  Series' investment can be made before receipt of a
     commitment for the construction loan and  no  more  than 75% of the Series'
     investment  can  be made  before  receipt of a commitment for the permanent
     loan.

o    The local general partners must represent that  a  specified  percentage of
     the residential units comprising the apartment  complex will  be  set aside
     for low income tenants. In compliance with the rules under Internal Revenue
     Code Section 42, the local general partners must represent that  either 20%
     or  more  of  the residential  units  will  be set aside for occupants with
     incomes of 50% or less of area  median  income,  or  40%  or  more  of  the
     residential  units will be  set aside for occupants  with incomes of 60% or
     less or area median income.

o    The  local  limited  partnership must agree to provide the  Series  with  a
     specific amount of tax credits.

o    In no case shall the Series invest in any local limited partnership if, at
     the date of initial investment, WNC  &  Associates,  Inc.  or  any  of  its
     affiliates is a local general partner or an affiliate of   a local  general
     partner, or otherwise has an interest therein, except that:

    o    a Series may purchase the interest of the Series' joint venture partner
         in a local limited partnership interest,

    o    a Series  may purchase  an interest in a local limited partnership from
         WNC &  Associates,  Inc. or  an affiliate  if such person purchased the
         interest  in  its name in  order  to  facilitate the acquisition by the
         Series, and

    o    WNC Housing, L.P. may be a special limited partner in the local limited
         partnership as  described  below  in  this  section under "Terms of the
         Local  Limited  Partnership  Agreements  -  Role  of   Special  Limited
         Partner."

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     This limitation does not prevent a Series from investing in a local limited
partnership which is an affiliate of another local limited  partnership in which
a Series or another WNC-  partnership has invested.  Also, this does not prevent
WNC & Associates,  Inc. or an affiliate from becoming a local general partner of
a local limited  partnership after a Series has acquired an investment  therein.
However,  WNC &  Associates,  Inc. or an affiliate  would become a local general
partner only under the  circumstances  described under  "Conflicts of Interest -
Organizational Diagram."

o    A real estate  developer with at least two years'  experience must agree to
     supervise  management  of the  apartment  complex or to serve as the  local
     general partner for a period of time acceptable to WNC & Associates, Inc.

     WNC & Associates, Inc. will seek to ascertain the status of certain matters
with respect to a local limited  partnership as a condition to a Series becoming
a limited partner or member of the local limited partnership.  These matters are
expected to include:

o    assurance that the local limited partnership has  title  to  its  apartment
     complex,

o    assurance that the local limited partnership is duly formed  as  a  limited
     partnership or limited  liability company under the  laws  of  its state of
     origin, and

o    receipt of an opinion of counsel for the local limited  partnership  as  to
     the limited liability of the Series as a limited partner or member thereof.

     Such counsel's  opinion will also include,  or permit the Series counsel to
render, an opinion that:

o    the local limited partnership is  a  partnership  for  Federal  income  tax
     purposes,

o    the allocation provisions of the partnership agreement of the local limited
     partnership will not be significantly modified by the IRS, and

o    based on the assumption that the local limited partnership  will operate as
     represented  by the  local  general  partners,  that the  apartment complex
     will qualify for the anticipated tax credits.

     A Series will not acquire an interest in a local limited partnership unless
the Series has  received,  with respect to the  apartment  complex of such local
limited partnership, either

o    an appraisal prepared by a competent, independent appraiser, or


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o     a form of a state or  other  governmental  agency setting forth  estimates
      with respect to  construction  and mortgage  financing  costs and initial
      rental income and operating expenses. These forms may include:

    o     Forms 1924-13 (estimate and certificate of actual cost) and 1930-7
          (statement of budget, income and expense) or comparable forms of the
          U.S. Department of Agriculture, Rural Development,

    o     Form 2264 (project cost and budget analysis) or comparable form of the
          U.S. Department of Housing and Urban Development,

    o     a  comparable  form  of  any  successor  of  the  U.S.  Department  of
          Agriculture, Rural Development or the U.S.  Department  of Housing and
          Urban Development, or

    o     a form of any applicable tax credit allocation agency.

     In any case the appraisal or form will be maintained in the Series' records
for at least five years, and will be available for inspection and duplication by
any investor.

     Each Series intends to invest only in local limited partnerships which will
arrange for  comprehensive  insurance  coverage for their  apartment  complexes,
including  liability,   fire  and  extended  coverage,  of  the  type  which  is
customarily obtained for similar properties. See, however, "Risk Factors - Risks
related to investments in local limited partnerships and apartment complexes."

     Eligibility for Low Income Housing Tax Credits.  Each Series will invest in
local  limited  partnerships  which own and operate  apartment  complexes  to be
eligible for low income  housing tax credits and/or  historic tax credits.  With
respect to  apartment  complexes  which will  generate  low income  housing  tax
credits, at a minimum, at least:

o    40% of the residential units in each apartment complex, and

o    70% of the total number of  residential  units  in  all  of  the  apartment
     complexes, will be expected to be set aside for low income tenants.

     Historic Tax Credits.  Some of the local  limited  partnerships  in which a
Series  invests may own  apartment  complexes  which  qualify for  historic  tax
credits in addition to, or instead of, low income housing tax credits.  Historic
tax credits are available for rehabilitation  expenditures incurred in improving
certified historic structures. The historic tax credit is generally equal to 20%
of  the  qualified  rehabilitation  expenditures.  Unlike low income housing tax

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credits,  the full amount of the historic tax credit is claimed in  the  year in
which the  rehabilitated  structure  is  placed  in service.  The  historic  tax
credit is more fully discussed in "Federal Income Tax  Considerations - Historic
Tax Credit" and "- Historic Tax Credit Recapture."

     Types of  Properties.  Each  Series  might  invest  in two  basic  types of
apartment   complexes.   The  first  type  consists  of   newly-constructed   or
substantially  rehabilitated apartment complexes comprised of one or a number of
buildings generally  containing a total of from 15 to 200 apartment units. These
projects will be financed either by:

o    the U.S. Department of Agriculture, Rural Development,

o    under the Home Investment Partnership program,

o    with the proceeds of tax-exempt bonds or of state and local bonds which are
     not tax-exempt, or

o    with other below-market-interest-rate indebtedness.

These properties may also receive rental assistance.

     The  second   type   consists   of   newly-constructed   or   substantially
rehabilitated apartment complexes without Federal or state government subsidies,
but which otherwise  qualify for tax credits,  including  single-room  occupancy
complexes.

     Location of  Properties.  The apartment  complexes may be located in any of
the United  States,  or the  territories  or  possessions  of the United States.
Apartment  complexes  assisted  by the U.S.  Department  of  Agriculture,  Rural
Development  will be  located in towns with a  population  of less than  50,000.
Apartment  complexes  assisted  by the U.S.  Department  of  Housing  and  Urban
Development  will be located in cities with medium to large  populations.  Other
apartment  complexes  may be located in urban,  suburban or rural  areas.  WNC &
Associates,  Inc. will seek as much  diversity as is reasonably  possible in the
locations of the apartment complexes. However, a Series' ability to provide such
diversification  will be substantially  influenced by the amount of the proceeds
it receives from its offering and the purchase  prices of its  investments.  See
"Number of Investments"  below in this section and "Risk Factors - Risks related
to  investments  in local limited  partnerships  and apartment  complexes."  The
Series do not intend to invest in any  distressed  low income  areas with a high
risk of property deterioration and neighborhood  instability,  but may invest in
renewal  areas  where  WNC  &  Associates,  Inc.  believes  there  is  a  strong
probability of economic success.


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     Number of Investments.  The number of apartment complexes in which a Series
invests  will depend on the amount of the  proceeds  from its  offering  and the
purchase  prices  of its  investments.  If a Series  receives  only the  minimum
proceeds of $1,400,000,  it is expected that the Series would invest in three to
five  apartment  complexes.  If  a  Series  receives  the  maximum  proceeds  of
$25,000,000,   the  number  of  the  Series'   apartment   complexes   would  be
substantially  greater. A Series has no policy or limitation as to the amount or
percentage  of its  proceeds  which may be  invested  in any one  local  limited
partnership or group of local limited partnerships or local limited partnerships
with which any person or group of persons is affiliated.

     Timing of Investments. Subject to the limitations discussed below, a Series
may make or commit  to make  investments  in  apartment  complexes  at any time,
including a time before the completion of its offering. There are risks involved
in making or  committing  to make  investments  before the  receipt of  offering
proceeds.  See "Risk  Factors - Risks  related to  investments  in local limited
partnerships  and apartment  complexes." WNC & Associates,  Inc. will attempt to
mitigate  the  risks  by  limiting  such  investments  and  commitments  and  by
attempting  to negotiate  protective  provisions  in the related  agreements  or
commitments.  Such  provisions  may  include  extensions  of the due  dates  for
payment,  releases from commitments if proceeds are not available,  or reduction
of an interest in a local limited partnership.

     Any portion of a Series' capital  contributions which has not been invested
or committed to investment in local limited  partnerships or reserves within the
later of:

o    24 months from the date of commencement of the Series' offering, or

o    12 months after termination of the offering,

will be  returned   by  the  Series  to  its  investors.  No  interest  will  be
payable  to the  investors  if  uninvested  funds are  returned  to them.  WNC &
Associates,  Inc. will not receive any fees from capital  returned to investors.
For these purposes,  capital will be deemed  committed to an investment no later
than the date a Series  executes a written  agreement in  principle,  commitment
letter,  letter of intent or  understanding,  option  agreement or other similar
understanding  or contract  with  respect to such  investment.  Once  capital is
treated as  committed  under that  policy it need not later be  returned  to the
investors even if the identified  investment is not  consummated.  Rather,  such
capital could be used for another investment.

     Until  required by a Series for use in  connection  with its  business  and
operations as described in this prospectus,  all funds received by a Series from
its offering will be held by the Series in:

o    United States government securities,

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o    securities issued or fully guaranteed by United States government agencies,

o    certificates  of  deposit and time  or demand  deposits  in, or  repurchase
     agreements  constituting  obligations  of,  commercial  banks with deposits
     insured by the Federal Deposit Insurance Corporation, or

o    other short-term, highly-liquid investments.

The rate of return on such types of  investments  has  been  relatively  low  in
recent years and may be significantly less than that obtainable from investments
in apartment complexes.

     Payment  for   Investments.   A  Series  will  normally  make  its  capital
contributions to a local limited partnership in stages over a period of from one
to two years, with each contribution due when conditions regarding  construction
or  operation of the  apartment  complex  have been  fulfilled.  In this way the
Series  will risk as little  capital as is  possible  during the most  uncertain
stages of an  apartment  complex.  For  example,  and  solely  for  illustrative
purposes,  the Series' contribution could be made over a one- to two-year period
subject to satisfaction of some or all of the following requirements:

o    reservation of low income housing credits and receipt of IRS Form 8609 (Low
     Income Credit Allocation Certification),

o    admission of the Series as a limited partner or member in the local limited
     partnership,

o    receipt of a commitment for or closing of the construction loan,

o    substantial completion of the apartment complex,

o    receipt of a commitment for or closing of the permanent loan, or

o    occupancy by qualified tenants.

In  connection   with  the  acquisition  of  an  interest  in  a  local  limited
partnership   owning  a  completed  project,  a  Series  may  make  its  capital
contribution  in  stages,  as  described  above,  or in  full  at  the  time  of
acquisition.

     In general,  each of the Series'  payments to a local  limited  partnership
will be made only after receipt of  representations  and warranties of the local
general  partners to the effect  that there is no material  default by the local
limited  partnership  under  any  mortgage  loan or  under  any  other  material
agreements.  See "Terms of the Local Limited  Partnership  Agreements"  below in
this section.

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     Once an investment has been selected, the asset management personnel of WNC
&  Associates,  Inc.  will monitor the  apartment  complex  monthly to determine
compliance with construction and rent-up schedules.  After stabilized  occupancy
has  been  achieved,  quarterly  reviews  and  regular  on-site  visits  will be
conducted to monitor  building  maintenance,  occupancy and other operations and
maintenance of reserves.

     In  determining  whether or not to acquire an interest  in a local  limited
partnership,  a Series may make a loan to the local limited  partnership  before
acquiring the interest. Any such loan must be for a term of one year or less and
must,  unless  earlier  repaid,  be  repaid  from the  Series'  initial  capital
contribution to the local limited  partnership.  The amount of any such loan may
not exceed 50% of the total capital contribution to be made to the local limited
partnership.  If a Series  does  not make an  investment  in the  local  limited
partnership  and the local  limited  partnership  does not  repay the loan,  the
amount of capital the Series has available for investment in other local limited
partnerships  would be reduced.  See "Risk  Factors -  Investment  Risks  -Risks
related to investments in local limited partnerships and apartment complexes."

The Local General Partners

     The local  general  partners  will  operate and control the business of the
local limited partnerships.  The role of a Series in a local limited partnership
will be limited to that of a limited partner or non-managing member.  Hence, the
experience  and the financial  condition of the local  general  partners will be
crucial to the success of any apartment complex.

     Financial  Condition and Experience of Local General  Partners.  Before any
investment in a local limited  partnership,  WNC & Associates,  Inc. will obtain
financial  statements from the local general partners.  The financial statements
may be  unaudited.  WNC &  Associates,  Inc.  will also obtain  information  and
representations  with respect to the prior real estate and tax credit experience
of the local general partners.  Except in the case of non-profit  organizations,
the local general  partners or the person  guaranteeing  the  obligations of any
local general partner will be required to demonstrate an aggregate net worth:

o    which is in an amount deemed appropriate by WNC & Associates, Inc., and

o    which is  sufficiently  liquid or otherwise readily available to be able to
     protect the local limited partnership in view of:

    o     the size and scope of the apartment complex,

    o     the obligations of the local general partners and their  affiliates to
          the local limited partnership,

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    o     any security or other assurances or measures  taken  to  perform  such
          obligations, and

    o     the material contingent liabilities of the local general partners.

Despite  the  preceding,  there cannot  be any assurance  that full and accurate
disclosure will be made by local general partners of their financial  condition,
or that their financial condition will not change during the term of the Series'
investment in the local limited partnership.

     Except in the case of non-profit organizations,  the local general partners
generally will be individuals or closely-held  entities which depend,  for their
successful  management  and  operation,  on  one  or a very  limited  number  of
principal  owners.  In a typical  apartment  complex the principal  owners will,
directly or through  entities  controlled  by them,  provide  rent-up,  property
management and other services related to ownership of the apartment complex, and
may also construct the apartment complex.

    Compensation of  Local General  Partners.  As discussed under "Estimated Use
of Proceeds," the local general partners will receive  compensation payable from
the Series' capital contributions to the local limited partnerships.  Each local
general  partner  also will  receive  fees  from cash flow of the local  limited
partnership in consideration of:

o    management of the local limited partnership and the apartment complex, and

o    the sale of the apartment complex.

Fees  payable  from  local  limited  partnership  cash  flow  are not  set forth
under "Management Compensation" or "Estimated Use of Proceeds" but are set forth
under "Terms of the Local Limited Partnership  Agreement - Interests in Profits,
Losses and Distributions" below.

     Withdrawal of Local General  Partners.  A local general partner will not be
permitted to withdraw from the local limited  partnership without the consent of
the Series,  unless a designated  successor acceptable to the Series is admitted
in its place.

Terms of the Local Limited Partnership Agreements

     Through the partnership agreement of each local limited partnership,  WNC &
Associates,  Inc. will impose significant  responsibilities on the local general
partners.  The  precise  terms  of such  responsibilities,  and the  limitations
thereon,  will  be  subject  to  negotiation.  However  WNC &  Associates,  Inc.
anticipates  that the terms of the  partnership  agreement of each local limited
partnership  may  include  the  provisions   described  below.  Except  for  the
provisions  concerning  the  allocations  of  tax items and distributions,  each
of the following provisions is designed to protect the Series' investments.

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     Development  Obligation.   In  the  case  of  an  apartment  complex  under
development,  the local general partners of the local limited partnership owning
the  apartment  complex  will agree in the  partnership  agreement  of the local
limited  partnership to complete  development and construction or rehabilitation
in a timely  manner.  Such  partnership  agreement  also will  include the local
general  partners'  agreement to provide all funds needed through the completion
of  development  and  construction  or  rehabilitation  and the  closing  of the
permanent  mortgage  financing,  after  applying  mortgage loan proceeds and the
Series' capital contribution.  Historically, this provision has been included by
all prior  WNC-partnerships since 1989. In all but the rarest of cases the local
general  partners  historically  have not be  entitled  under the terms of their
respective local limited partnership's partnership agreement to reimbursement of
such funds by the local limited partnership. Those rare cases occur when a local
general partner refuses to agree to a provision in the partnership  agreement of
the local limited partnership barring reimbursement.

     Operating  Guarantees.  The local  general  partners  will agree to provide
funds to the local limited  partnership  to defray any operating  deficits for a
minimum  of  three  years  following  the  completion  of  the  development  and
construction  or  rehabilitation  of the  apartment  complex.  A  local  limited
partnership will have an operating  deficit if its cash expenses exceed its cash
receipts.   Historically,   this  provision  has  been  included  by  all  prior
WNC-partnerships  since 1989. The amounts advanced by the local general partners
historically  have  been  treated  as a loan,  repayable  by the  local  limited
partnership.

     Protection  Against  Reduction or Loss of Tax Credits.  It is possible that
the amount of tax  credits  actually  allocated  to a Series by a local  limited
partnership  could be less than the amount  expected when the  investment in the
local limited  partnership was made. The difference  between the amount expected
and the  amount  actually  allocated  is a  shortfall.  To  reduce  the  adverse
consequences from a shortfall,  the partnership  agreements of the local limited
partnerships  will include adjuster  provisions.  These adjuster  provisions are
designed to provide the Series with a substantially  similar aggregate return on
investment  as would  have been  received  had  there  been no  shortfall.  Such
partnership agreement provisions will provide for one or more of the following:

o    a reduction in the Series' capital contribution or a payment by the local
     general partners to the Series.

    o    If the total  amount of tax credits  evidenced by IRS Form 8609 and the
         audited  construction  cost  certificate is less than  the total amount
         originally anticipated for the 10-year credit  period,  the partnership
         agreement of the  local  limited  partnership  will  provide  that  the
         Series' capital  contribution  will be reduced so that the Series  will
         pay the  same  dollar amount per  tax  redit  as originally  agreed to.
         Form 8609 and the cost  certificate  are  issued  after  completion  of
         construction. If  the  shortfall  exceeds  the unpaid  portion  of  the

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          capital  contribution,  the partnership agreement of the local limited
          partnership  will  provide that the local general partner must pay the
          difference to the Series within 90 days after notice  is  provided  by
          the Series.

    o     If the specific amount  of  tax  credits  actually  allocated  to  the
          Series for the first and second years of operations are less than  the
          anticipated  amount, the partnership  agreement of  the local  limited
          partnership will provide that the Series' capital contribution will be
          reduced so that the Series will pay the same  dollar  amount  per  tax
          credit as originally agreed to. If the  shortfall  exceeds  the unpaid
          portion of the capital contribution, the partnership  agreement of the
          local  limited partnership may provide that  the local general partner
          must pay the difference to the Series within 90 days  after  notice is
          provided  by  the  Series.  This  provision  is  not  included  in the
          partnership agreement  of  a  local  limited  partnership  when  it is
          objected to by the local general partners.

    o     If the specific amount of tax credits actually allocated to the Series
          during the  first  five  years  of  operations  following the year the
          apartment complex is placed  in  service  are  less  than  the  amount
          originally anticipated, the partnership agreement of the local limited
          partnership will provide that the Series' capital contribution will be
          reduced by the actual shortfall. If the shortfall exceeds  the  unpaid
          portion of the capital contribution, the partnership agreement of  the
          local limited partnership will provide that the local general  partner
          will be required to pay the difference to the Series within 90 days
          after notice is provided by the Series.

o    a reduction in the local general partners' share of distributions.

    o     If the amount of tax credits actually allocated to a Series  after the
          first five years of operations following the year an apartment complex
          is placed in service are less than the amount originally  anticipated,
          the  partnership  agreement  of  the  local  limited  partnership will
          provide that the local general partners' share of  distributions  will
          instead be paid to the Series until the Series has received the amount
          of the actual shortfall.

Except as otherwise provided  above, historically,  these  provisions concerning
a  reduction  in  tax  credits  have been included by all prior WNC-partnerships
since 1996.

     If the IRS audits a local  limited  partnership,  it is  possible  that the
qualified  basis of the apartment  complex could be reduced and that tax credits
could be recaptured.  If so, the local general partner might be obligated to pay
to the Series an amount equal to any tax deficiency  plus interest or penalties.
Historically, this  provision  has  been  included  in  60% to  80% of the prior

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<PAGE>



WNC-partnerships  since   1998.   This   provision   is   not  included  in  the
partnership  agreement of a local limited  partnership when it is objected to by
the local general partners.

     Repurchase  Obligation.  The local  general  partners  will be obligated to
repurchase the Series'  interest in a local limited  partnership  for the amount
paid by the Series if the local limited partnership fails to:

o    receive an allocation of low income housing tax credits,

o    place the apartment complex in service in a timely manner,

o    obtain permanent mortgage loan financing, or

o    remain eligible for low income housing tax  credits during  the period when
     the  Series is required to make its capital contributions.

Historically, this provision  has been  included in  all  WNC-partnerships since
1996.

     In general,  WNC & Associates,  Inc. intends to require the obligations and
guarantees described in the preceding paragraphs in the partnership agreement of
each local limited partnership. However, such provisions will not be included if
WNC & Associates,  Inc.  considers one or more of them to be unnecessary for the
protection  of the  Series  or if it  determines  that  it is  otherwise  in the
interest of the Series to modify or eliminate such provisions. For example, such
provisions may be eliminated in connection  with the  acquisition of an interest
in a completed apartment complex.

     To  the  extent  WNC  &  Associates,   Inc.  successfully   negotiates  the
obligations and guarantees  described in the preceding  paragraphs or otherwise,
the price paid by a Series for the investment may be higher than would otherwise
be the case.

     Rights of Limited Partner. As a limited partner or non-managing member of a
local limited partnership, a Series will have no right to manage its operations.
However, the Series will have voting rights, including the rights:

o    to replace the local  general  partner on the  basis of the performance and
     discharge of the local general partner's obligations,

o    to approve or disapprove a sale or refinancing of the apartment complex,

o    to approve or disapprove the dissolution of the local limited  partnership,
     and


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<PAGE>



o    to approve or disapprove amendments to the partnership agreement of the
     local limited partnership.

However,  in  the  case  of   an   apartment   complex  which   has  government-
subsidized  financing  or rental  assistance,  the  ability  of  the  Series  to
take such actions may be subject to the prior approval of the government  agency
providing the assistance.  See "Other Government  Assistance Programs" and "Risk
Factors  - Risks  related  to  investments  in local  limited  partnerships  and
apartment complexes."

     The partnership  agreement of each local limited  partnership  will provide
the Series  with other  rights,  including  rights  relating  to the  calling of
meetings,  reports  and access to  records  comparable  to those  granted to the
investors by each Series. Generally, WNC & Associates, Inc. or an affiliate will
exercise each of the foregoing  voting and other rights on behalf of the Series,
and investors will not have any right to participate  therein. See "Conflicts of
Interest" above and "Role of Special Limited Partner" below.  However,  if WNC &
Associates, Inc. or one of its affiliates serves as a local general partner of a
local  limited  partnership,  then the Series'  voting and other  rights will be
exercisable by the Series' investors.

     Historically, these provisions concerning the rights of the limited partner
have been included by all prior WNC-partnerships.

     Role of Special Limited Partner. WNC Housing,  L.P. is a California limited
partnership.  The general partner of WNC Housing, L.P. is WNC & Associates, Inc.
WNC Housing,  L.P. was formed in 1996 to act as a special limited partner in all
limited partnerships invested in by WNC-partnerships. It is anticipated that WNC
Housing,  L.P.  will be a special  limited  partner in each of the local limited
partnerships and will be granted most of the following rights:

o    to assume the duties and receive the benefits of the local general partner
     upon the removal or withdrawal of the local general partner,

o    to approve the selection of, and/or dismiss, any manager of  the  apartment
     complex,

o    to approve the selection of, and/or dismiss,  the accountants for the local
     limited partnership,

o    to direct  the  decisions  of the tax matters  partner of the local limited
     partnership,  including the  right  to  bring and defend administrative and
     judicial actions and make tax elections,

o    to compel the local general partner to locate a  buyer  for  the  apartment
     complex or the Series' interest in the local limited partnership, and

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<PAGE>



o    to approve or disapprove transactions outside  of  the  ordinary  course of
     business proposed by the local limited partnership.

In the case of an apartment complex  which  has  government-subsidized financing
or rental  assistance,  the  ability  of  the special  limited  partner  to take
such  actions  may be subject to the prior  approval  of the  government  agency
providing such assistance.  See "Other Government Assistance Programs" and "Risk
Factors  - Risks  related  to  investments  in local  limited  partnerships  and
apartment complexes."

     An  explanation  of the laws  concerning  limited  liability  is helpful to
understand why WNC Housing,  L.P. serves in this capacity.  A limited partner is
referred to as such because his liability for his  partnership's  obligations is
limited.  A limited  partner's  exposure is limited to the amount of his capital
contribution.  In order to preserve  his status as a limited  partner,  a person
named as a limited  partner must not  participate in the control of the business
of the  partnership.  The  meaning of control for these  purposes  may vary from
jurisdiction to jurisdiction.  It is possible that the powers listed above could
be found to  constitute  control of a local limited  partnership.  If so, and if
they were performed by a Series, the Series would have general liability for the
obligations of the local limited partnership.  Accordingly, in order to avoid to
the extent  possible  exposure for general  liability,  WNC Housing,  L.P.  will
possess and exercise such powers on behalf of the Series. WNC Housing, L.P. will
receive  no  compensation  for  acting  in this  fashion,  and will  receive  an
immaterial  interest  in the tax items of the local  limited  partnerships.  See
"Management Compensation."

     Interests in Profits,  Losses and  Distributions.  In almost all  instances
each Series will  acquire at least a 90%  interest  in the  profits,  losses and
Federal tax credits of each local limited partnership.  Only in rare cases would
a Series acquire a lesser  interest in the profits,  losses and tax credits of a
local limited partnership.  See, for example,  "Joint Investments" below in this
section. Except for an immaterial interest in each local limited partnership not
to exceed 0.1% which will go to WNC  Housing,  L.P.,  the balance of 10% or less
will go to the local general partners and their affiliates.  The exact amount to
be allocated to each party will be negotiated in each instance.

     It is possible  that a local  limited  partnership  may generate  state low
income housing tax credits as well as Federal low income housing tax credits. If
so,  the  state tax  credits  may be  allocated  entirely  to the local  general
partners  or to a special or other  limited  partner  which may or may not be an
affiliate of the local general partners or WNC & Associates, Inc. If the special
or other  limited  partner were an affiliate of WNC &  Associates,  Inc.,  WNC &
Associates, Inc. would receive compensation from the affiliate for arranging the
transaction.

     The local  general  partners will receive  reimbursements  of expenses from
cash flow from  operations and  distributions  of a portion of such cash flow as
management fees and/or partnership  participations.  The Series will receive 95%

                                       86

<PAGE>


to 100% of  distributions  of sale or  refinancing  proceeds  from an  apartment
complex  until  it  has  received  a full  return of its investment in the local
limited  partnership,  which  may  be  reduced  by  any cash flow  distributions
previously  received.  The Series will receive from 10% to 50% of the  remaining
sale  or  refinancing   proceeds.   The  sharing   arrangements   for  all  cash
distributions will depend upon:

o    the competition for interests in apartment complexes,

o    the proportion of residential units in the apartment complex eligible for
     low income housing tax credits,

o    the amount invested in the apartment complex by the Series relative to the
     other sources of financing,

o    the  percentage  interest  in the profits and losses of the  local  limited
     partnership  acquired by the Series relative to the interests held by other
     parties, and

o    the amounts of cash flow and appreciation anticipated.

Joint Investments

     A Series may invest in a local limited  partnership  jointly with the other
Series or limited partnerships, including WNC-partnerships, provided that:

o    the partnerships have similar investment objectives,

o    there are no duplicate property management or other fees,

o    the compensation to the sponsors of each partnership is substantially
     similar,

o    the investment of each partnership is on substantially the same  terms  and
     conditions,

o     if any other limited partnership

    o     is   controlled  by WNC  &  Associates,  Inc.,  then the other limited
          partnership  must  be  publicly registered under the Securities Act of
          1933, or

    o     is not  controlled  by WNC &  Associates,  Inc., then the Series alone
          or  together  with  a   WNC-partnership   must  acquire  a controlling
          interest in the joint venture, and


                                       87

<PAGE>



o    each partnership will have a right of first refusal if another partnership
     wishes to sell its interest in the local limited partnership.  There  is  a
     risk that a partnership may not have sufficient  resources  to  make such a
     purchase.

See  "Risk  Factors  -  Risks  related   to   investments   in   local   limited
partnerships  and  apartment  complexes"  and  "Conflicts of Interest." A Series
cannot engage in activities  through a joint venture that it could not undertake
alone.

Use of Leverage

     The Series may borrow funds to make initial  investments  in local  limited
partnerships before the sale of Units.  Otherwise,  the Series do not anticipate
borrowing  funds,  although  they have full  authority to borrow money as deemed
necessary or appropriate to achieving the Series' investment objectives.

     WNC &  Associates,  Inc. or its  affiliates  may advance funds from time to
time to a Series so that the Series may make initial  investments,  loans and/or
deposits in local  limited  partnerships  before the sale of the Series'  Units.
Such advances,  together with interest thereon, will be repaid from the proceeds
of the  offering.  See  "Estimated  Use of  Proceeds."  Loans  provided by WNC &
Associates, Inc. or an affiliate must:

o    be on a short-term basis,

o    not be subject to any prepayment charge or penalty, and

o    not bear any interest, charges or fees in excess of the amounts which would
     be charged by  unrelated  ending  nstitutions  on  comparable loans for the
     same purpose in the same locality.

     In no event may interest be more than the prime rate of Southern California
Bank plus 2% per annum. The prime rate is the prime or reference rate charged by
Southern California Bank to its most creditworthy customers.

     The ability of a Series to generate tax credits in the amounts  anticipated
will depend in part on the use of leverage  by the local  limited  partnerships.
Accordingly,  WNC & Associates, Inc. expects that the local limited partnerships
will  use  debt  to  finance  approximately  30% to 80% of the  acquisition  and
development  costs of their  apartment  complexes.  Financing  may include loans
made,  guaranteed  or  subsidized  by  agencies  of  Federal,   state  or  local
governments, including:

o    state or local government bond financing,

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<PAGE>



o    mortgages which are not amortized over their terms but which require large
     payments on maturity,

o    loans providing for variable interest rates after 15 years,

o    loans with renegotiable interest rates, and

o    loans from non-profit organizations.

See  "Other  Government  Assistance  Programs"   and   "Risk   Factors  -  Risks
related to investments in local limited  partnerships and apartment  complexes."
The Series  will not  impose any  limitation  on the  indebtedness  which may be
incurred by any local limited partnership. However, following the termination of
its offering, a Series' share of indebtedness may not exceed:

o    with respect to non-subsidized  apartment  complexes, the sum of 85% of the
     aggregate  purchase price of all apartment  complexes which have  not  been
     refinanced, and 85% of the aggregate fair  market  value  of  all apartment
     complexes which have been refinanced, and

o    with  respect  to  subsidized  apartment  complexes, the sum of 100% of the
     aggregate  purchase  price of all apartment  complexes  which have not been
     refinanced, and 100% of the aggregate  fair  market  value of all apartment
     complexes  which have been refinanced.

Sale or Other Disposition of Investments

     In  general,  the sale of an  apartment  complex  or the sale of a  Series'
interest in a local limited  partnership will be subject to restrictions.  These
restrictions will require that the investments be held for substantial  periods.
A Series will hold its investments for the 15-year compliance period in order to
avoid recapture of tax credits. See "The Low Income Housing Tax Credit." Subject
to the  restrictions  discussed  below,  after the 15-year  compliance  period a
Series will attempt to sell its  investments  with the objective of returning to
its investors, at a minimum, their invested capital.  However, WNC & Associates,
Inc. may cause a Series to sell or refinance  any  investments  at an earlier or
later time if it decides that it is in the best interests of the Series to do so
under all of the then applicable circumstances.

     The low income  residential units in an apartment complex generally must be
rented as low income  housing for at least 30 years and,  possibly,  of up to 55
years or longer.  As a result,  any sale of an  apartment  complex  during  that
period must be to a purchaser  who agrees to maintain the  apartment  complex as
low income housing for the duration of such period.


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<PAGE>



     Additional  restrictions  on sale will be  imposed on  apartment  complexes
receiving  government  financing or operating  subsidies.  For example,  current
regulations of the United States  Department of Agriculture,  Rural  Development
permit the sale of a property which is financed by Rural  Development  only with
the approval of Rural  Development.  Mortgage loans funded by Rural  Development
cannot be prepaid at any time during their terms. Similarly, current regulations
of the U.S.  Department of Housing and Urban  Development  require that HUD must
approve the sale of more than 50% of the interests in any limited partnership or
limited  liability  company  which  owns a property  receiving  some form of HUD
subsidies.

     However,  consistent  with the  foregoing and other  applicable  regulatory
restrictions,   WNC  &  Associates,   Inc.   believes  that  the  local  limited
partnerships  should  be able to sell  the  apartment  complexes  after a 15- to
20-year holding period to:

o    an entity similar to the Series or  the  local  limited  partnership  which
     would agree to  continue  to  operate  the apartment  complex as low income
     housing for the balance of the required period. Such a sale would be likely
     only if at the time of sale the Internal Revenue Code  offered  benefits to
     the owners of existing low income housing; or

o    other types of purchasers which may have incentives to acquire and operate
     the low income  housing,  such as an  organization  formed on behalf of the
     tenants or a state agency or non-profit organization.

Reserves

     Each Series  initially will set aside at least 3% of the offering  proceeds
as reserves for contingencies and to pay expenses.  WNC & Associates,  Inc. will
increase  or  decrease  the  reserve  balance  from  time to  time  as it  deems
appropriate.  The  reserves  may be used to cure any  problems of the  apartment
complexes,  although most apartment  complexes  will have their own reserves.  A
Series may also use its reserves to pay its expenses, including the annual asset
management fee, to the extent cash flow is insufficient for such purposes.

Other Policies

     Until  required by a Series for use in  connection  with its  business  and
operations as described in this prospectus,  all funds received by a Series from
its offering will be held in:

o    United States government securities,

o    securities issued or fully guaranteed by United States government agencies,


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<PAGE>



o    certificates  of deposit and  time  or demand  deposits  in, or  repurchase
     agreements  constituting  obligations of,  commercial banks  with  deposits
     insured by the Federal Deposit Insurance Corporation, or

o    other short-term, highly-liquid investments, excluding common stock.

     No Series will lend funds, except that a Series may:

o    make loans to, or post letters of credit for, a local limited partnership,
     and

o    may make temporary investments of the type described in the preceding
     paragraph.

No Series will:

o    underwrite securities of other issuers,

o    offer securities in exchange for property,

o    except  in  connection  with  the  investments  of  funds  in local limited
     partnerships,  invest  in  securities  of  other  issuers,  other  than  in
     temporary investments as described above,

o    utilize cash from operations to acquire interests in local limited
     partnerships, or

o    reinvest proceeds from a sale or refinancing transaction unless the  Series
     distributes  to each  investor an amount equal to the  Federal,  state  and
     local income tax liability  of  the  investor  arising  from  the  sale  or
     refinancing transaction. In computing tax liability for these  purposes the
     Series will assume that each investor is in a combined Federal,  state  and
     local marginal  income  tax  bracket  of  30%.  In no  event  will  sale or
     refinancing  proceeds be reinvested following the second anniversary of the
     termination of the Series' offering.

     After the conclusion of its offering a Series may repurchase Units upon the
written  request of an investor.  No Series is obligated to repurchase any Units
at any  time,  and  there  is no  assurance  that a  Series  will in  fact  ever
repurchase any Units. No Units will be repurchased  from WNC & Associates,  Inc.
or any of its affiliates.

     Neither Series is a real estate investment trust and, therefore, neither is
subject to the  restrictions  imposed on such  entities by the Internal  Revenue
Code.  Each Series will use its best efforts to conduct its operations so as not
to be required to register as an investment company under the Investment Company
Act of 1940.


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<PAGE>



     Neither  Series will engage in any  transaction  which would  result in the
receipt by WNC & Associates,  Inc. or any affiliate of any undisclosed rebate or
give-up. Neither Series will engage in any reciprocal business arrangement which
would  result  in  the  circumvention  of  the  restrictions  contained  in  its
partnership agreement.

                        THE LOW INCOME HOUSING TAX CREDIT

Summary

     Section 42 of the  Internal  Revenue Code  provides low income  housing tax
credits  to  investors  in low  income  housing.  Following  is a summary of the
material  concepts  included  in  Internal  Revenue  Code  Section  42  and  its
interrelation  with  other  Internal  Revenue  Code  provisions.  Each of  these
provisions  is discussed in greater  detail in the  subsections  below and under
"Federal Income Tax Considerations."

     Low income housing tax credits are indirect Federal subsidies of low income
housing.  They  are  being  used by  individuals,  small  businesses  and  large
corporations.   Low  income   housing   tax   credits   offset   tax   liability
dollar-for-dollar  regardless of a taxpayer's  tax bracket  because they are tax
credits and not tax  deductions.  Therefore,  tax credits are more valuable than
tax deductions or tax deferrals.  Taxes are one of the largest expenses faced by
taxpayers and one of the greatest barriers to retaining earned income. According
to a report issued by the Tax Foundation, in 1999 the average American will have
to work two hours and 51  minutes of each  eight-hour  workday to pay all taxes.
Federal  taxes  used one hour and 57 minutes  of  earnings,  and state and local
taxes used 57 minutes of  earnings.  The report  states  that  American  workers
utilized  a greater  portion  of the  workday to pay taxes than to pay for food,
clothing,  and housing and  household  operations.  An  investment in low income
housing  tax credits  reduces  Federal tax  liability  and thereby can  increase
after-tax spendable income.

     As stated above, low income housing tax credits are tax credits rather than
the  more   familiar  tax   deductions.   Tax  credits   offset  tax   liability
dollar-for-dollar.  For example,  a married  couple filing  jointly with taxable
income of $125,000 in 1999 would be subject to Federal  income tax  liability in
the amount of approximately $30,000, or approximately 24% of taxable income. The
tax liability for later years could be different due to changes in the tax rates
resulting from inflation adjustments or amendments to the tax laws. See "Federal
Income Tax  Considerations - Other Important Tax Considerations - Tax Rates" and
"- Changes in Tax Law."


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<PAGE>

















If the couple had $7,750 in low income  housing tax credits,  their  Federal tax
liability of $30,000 would be reduced by $7,750 to $22,250.  As discussed  under
"Federal  Income Tax  Considerations  -  Limitations  on Losses and Credits from
Passive  Activities - Exception for Low Income  Housing Tax Credits and Historic
Tax Credits," the maximum  permissible  amount of low income housing tax credits
to the couple under the so-called $25,000 deduction equivalent is $7,750.
















These pie charts are  intended  to display  that low income  housing tax credits
reduce  income  taxes  dollar-for-dollar.  They  are  not,  nor  should  they be
interpreted as, predictions of low income housing tax credits to be allocated to
an investor. The absolute and/or relative percentage reduction in Federal income
taxes to be realized by any investor  will depend on his actual tax  liabilities
and his actual low income housing tax credits.

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<PAGE>



    According to  the 1999 Housing  Credit  Conference &  Marketplace  Reference
Manual,  National  Council of State  Housing  Agencies,  low income  housing tax
credits  accounted for the  construction of  approximately  70,000 housing units
annually in 1997 and 1998.  Nonetheless,  the availability of low income housing
has  declined.  According to The State of the Nation's  Housing,  a study of the
Joint  Center  for  Housing  Studies of Harvard  University  published  in 1999,
"Indeed,  with housing costs on the rise, expanding the supply of low-cost units
and  preserving  the  subsidized  stock  will be  especially  important  housing
challenges... The booming economy has done little to relieve the chronic housing
problems of low-income  households.  The supply of low-cost  unsubsidized rental
units  continues to dwindle."  According to another study, In Search of Shelter,
Center On Budget and Policy  Priorities,  based on information from the American
Housing Survey  through 1995, the shortage of affordable  rental housing for low
income  renters  is not a new  problem,  but one that  dates  back to the  early
1970's.  Since  1970,  the  number of low rent  units has  continued  to fall in
relation to the number of people in need of these  units.  The study states that
this persistent  decline has created a shortage of 4.4 million affordable rental
units nationwide for low income renters.  Among the problems the nation faces is
the loss of low-cost rental units that provide shelter for families, the elderly
and other citizens of modest means.

    Low income  housing tax credits are designed to subsidize  either 70% or 30%
of the  costs  of the low  income  residential  units in an  apartment  complex.
Accordingly,  the amount of low income  housing tax credits is based on the cost
of  a  property,   rather  than  the   operations  of  the  property,   and  are
pre-determined  when the property is placed in service.  The subsidy is realized
by claiming low income housing tax credits every year for 10 years. This results
in a steady and  predictable  stream of tax credits.  Unlike other  investments,
once determined, the amount of tax credits does not fluctuate.

    In exchange for the right to claim low income housing tax credits, the owner
of the apartment complex must:

o   itself rent the low income  residential  units to low income  individuals at
    reduced rental rates for at least 15 years, and

o   grant the state in which the  property is located the power to require  that
    the  property be rented as low income  housing  for a total  period of 30 or
    more years.

Failure to comply with the first  requirement  results in ineligibility  for the
low income housing tax credits not yet claimed and the recapture of a portion of
credits previously claimed.

    Low income  housing  tax  credits  are  allocated  by the state in which the
housing is located.  Internal  Revenue Code Section 42 authorizes a fixed amount
of low income housing tax credits which any state may allocate in any year.


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<PAGE>



    Most  taxpayers  are not able to claim low  income  housing  tax  credits in
unlimited  amounts.  Rather,  the  ability to use tax  credits is limited by the
provisions of the Internal Revenue Code known as the passive activity rules, the
at risk rules, the overall  limitation on general business tax credits,  and the
alternative  minimum  tax rules.  Each of these  rules is  discussed  in greater
detail under "Federal Income Tax Considerations."

    The low income housing tax credit program is extremely  technical in nature.
The U.S.  Department  of the  Treasury has issued  Regulations  with regard to a
portion of the program's rules, but not with regard to other important portions,
and there can be no assurance  that the provisions of Section 42 of the Internal
Revenue Code will be interpreted in a manner consistent with the description set
forth  below.  Furthermore,  the  discussion  that follows is general in nature.
Because the Series have not yet identified any of the local limited partnerships
in which they will invest,  it is impossible to predict how specific  provisions
of the low  income  housing  tax  credit  program  will  apply to the  apartment
complexes.

Qualified Properties

    Qualified Low Income Projects.  Low income housing tax credits are available
only for qualified low income  housing  projects.  Qualified low income  housing
projects are residential rental properties in which:

o   20% or more of the residential rental units are occupied by individuals with
    incomes of 50% or less of area median  income,  as adjusted for family size,
    or

o   40% or more of the residential rental units are occupied by individuals with
    incomes of 60% or less of area median income, as adjusted for family size.

    This minimum  set-aside  requirement must be met in order for any portion of
an  apartment  complex  to be  eligible  for low  income  housing  tax  credits.
Additional  residential  rental units in an apartment complex beyond the minimum
set-aside also can qualify for low income housing tax credits.





                                       95

<PAGE>




                      Minimum Set-Aside Income Computation

   Applicable Minimum         X       Area Median            =        Allowable
   Set-Aside Percentage               Gross Income                    Household
   (50% or 60%)                       (Based on Actual                Income
                                      Number of Persons)


    Additionally, the gross rent charged to low income tenants cannot exceed 30%
of the applicable  minimum  set-aside income.  The applicable  minimum set-aside
income is 50% or 60% of area median income.  This rent  restriction  test uses a
statutory  assumption that, in the case of a unit which does not have a separate
bedroom,  the unit is occupied by one individual,  and, in all other cases, that
the unit is occupied by one and one-half individuals per separate bedroom. Gross
rent for this purpose includes the cost of any utilities,  other than telephone,
and any mandatory costs for services such as meals and social services. Federal,
state and local rental assistance  payments are not included in gross rent. Thus
an owner may receive a rental subsidy  payment in addition to the amount paid by
the tenant.



                          Rent Restriction Computation

  1.  Number of                X        1.5               =        Imputed
       bedrooms                                                    Household*

  2.  Area Median              X        Applicable        =        Imputed
       Gross Income                     Minimum                    Income
       (Based on                        Set-Aside
       Imputed                          Percentage
       Household)                       (50% or 60%)

  3.  Imputed Income           X        .30               =        Maximum
                                                                   Gross Rent

                  *Imputed household =1 if studio apartment.


    Units which satisfy both the minimum set-aside test and the rent restriction
test are low income  residential  units.  To qualify for low income  housing tax
credits low income residential units cannot be used on a transient basis.


                                       96

<PAGE>



    Under Internal Revenue Code Section 42(g)(3) an apartment  complex must meet
the minimum  set-aside  requirements  as well as the rent  restriction  test not
later than the close of the first year of the 15-year  compliance period for the
property.  The owner may elect which of the 20-50 minimum  set-aside test or the
40-60 minimum set-aside test it proposes to meet but, once made, the election is
irrevocable.  In order to avoid tax credit recapture, the apartment complex must
remain in compliance  with the rules governing the low income housing tax credit
program for the 15-year compliance period.

    Eligible Basis.  The qualified basis of an apartment complex with respect to
which low income housing tax credits are computed is generally:

o   the applicable fraction of

o   the eligible basis in a building attributable to the low income  residential
    units.

    In  general,  the  eligible  basis of a building is its  adjusted  basis for
Federal income tax purposes. Eligible basis is determined as of the close of the
first year of the 15-year compliance  period. For a newly constructed  building,
eligible  basis is the cost of  construction,  including  all  direct  costs and
related  soft costs,  such as  construction  period  interest,  developer's  and
architects' fees, other  compensation,  insurance and general and administrative
expenses related to construction.  For a substantially  rehabilitated  building,
eligible  basis is  comprised  of the  rehabilitation  costs  aggregated  over a
24-month period. Acquisition costs may only be included in eligible basis to the
extent they satisfy the principles for inclusion discussed below in this section
under  "Maximum  Amount of  Credit."  Land costs may not be included in eligible
basis. Because only the adjusted basis of a building may be included in eligible
basis,  an owner must take into account the  adjustments  to basis  described in
Section 1016 of the Internal Revenue Code, except for depreciation. For example,
a reduction in basis equal to any historic tax credit  allowed with respect to a
property  would be taken into  account.  No opinion of counsel  will be rendered
with respect to the calculation of an apartment complex's adjusted basis.

    It is likely that the IRS will give careful  attention to the calculation of
eligible basis if the IRS audits the owner of a low income housing property.  In
particular,  the IRS may review the  inclusion of  developer's  fees in eligible
basis. In the recent past the IRS has taken the position that  developer's  fees
were paid for more than developer's  services.  Depending on the  circumstances,
the IRS has  asserted  that the fee also covered  land  acquisition  activities,
syndication  activities  and  organization  activities.  Fees for those types of
activities are not properly  included in eligible basis. The IRS could also take
adverse positions  concerning  developer's fees paid with a promissory note. The
IRS could contend that fees paid with a promissory note:


                                       97

<PAGE>



o   cannot be included in eligible  basis at all, as  discussed  under  "Federal
    Income Tax  Considerations  - Basis of Local Limited  Partnerships  in Their
    Apartment Complexes,"

o   must be allocated  to the general  partners of the owner and not the limited
    partners,  as  discussed  under  "Profits  and Losses,  Tax Credits and Cash
    Distributions - Allocations of Profits and Losses - Special Allocations," or

o   do not satisfy the at risk rules, as discussed under "Utilization of the Low
    Income Housing Tax Credit - Low Income Housing Tax Credit At Risk Rules."

    The eligible basis of any building is reduced by the portion of the adjusted
basis of the building which is attributable  to residential  rental units in the
building which:

o   are not low income residential units, and

o   which are above the average quality standard of the low  income  residential
    units.

However,  at the election of the taxpayer,  the cost of a residential  unit that
would  otherwise be excluded from eligible basis under this rule may be included
in eligible basis if:

o   the excess of the cost of such unit over the average  cost of the low income
    residential  units does not exceed 15% of the average cost of the low income
    residential units, and

o   the excess cost is excluded from eligible basis.

    For all types of buildings,  eligible  basis  includes not only the adjusted
basis of the  residential  rental units but also the adjusted  basis of property
used in common areas and amenities used by the tenants.  Amenities include major
appliances.  The costs of amenities in the non-low income  residential units may
only be included if the  amenities  are  comparable to the costs of amenities in
the low income residential units. Also, the allocable costs of tenant facilities
such as swimming pools or other recreational facilities and parking areas may be
included  provided  there is not a separate fee for use of these  facilities and
they are available on a comparable basis to all tenants.

    Residential  rental  property may qualify for low income housing tax credits
even though a portion of the building is available for commercial use.  However,
no  portion  of the cost of such  nonresidential  property  may be  included  in
eligible basis.

    Eligible basis may not include the amount of any Federal  grant,  whether or
not such grant is includable  in gross income.  A Federal grant for such purpose
includes any grant to the extent it is Federally  funded.  A Federal  grant does
not include a federal loan or rental subsidy.

                                       98

<PAGE>



    The eligible basis of a building  located in an area  designated by the U.S.
Department of Housing and Urban  Development  as a qualified  census tract or as
difficult to develop will be deemed to be 130% of the eligible basis  determined
under the principles  outlined  above.  A qualified  census tract means a census
tract or an enumeration  district  designated by HUD in which 50% or more of the
households  have an  income  which is less  than 60% of the  area  median  gross
income. An area is treated as difficult to develop if it has high  construction,
land and utility costs relative to area median gross income.


                         Determination of Eligible Basis

Eligible Basis Can Include:                    Eligible Basis Excludes:

o   Construction and rehabilitation costs      o   Depreciation

o   Acquisition costs                          o   Land

o   Site improvements                          o   Historic tax credits claimed

o   Developer's and architects' fees           o   Federal grants

o   Comparable non-low income                  o   Non-comparable non-low income
    residential units                              residential units

o   Common facilities available to all if      o   Commercial portion of
    no separate fee                                mixed-use properties

o   Personal property



    Qualified Basis. The qualified basis of an apartment complex with respect to
which low income  housing tax credits are computed is generally  the  applicable
fraction of the eligible  basis in the building  attributable  to the low income
residential units.

    The applicable fraction is the lesser of:

o   the proportion of occupied low income residential units to all residential
    rental units, whether or not occupied, or

o   the proportion of floor space in the occupied low income  residential  units
    to the total floor space of all  residential  rental  units,  whether or not
    occupied.

                                       99

<PAGE>



                          Qualified Basis Computation

  Eligible                 Unit Applicable Fraction                  Qualified
  Basis         X                  or                       =        Basis
                        Floor Space Applicable Fraction


Maximum Amount of Credit

    Under  Internal  Revenue  Code  Section  42, an owner of low income  housing
receives  tax credits for a 10-year  credit  period.  The ceiling on tax credits
limits the present  value of the 10-year  stream of credits to 70% or 30% of the
qualified  basis of the housing.  The present  value  percentage  is  determined
primarily  by  long-term  interest  rates at the  outset of the  10-year  credit
period,  and does not fluctuate  with stock or bond prices.  There are two basic
credit categories:

    1.  Properties  which  are not  Federally  subsidized  and  which  are newly
constructed or substantially  rehabilitated  receive a maximum credit which will
yield a present  value of 70% of the qualified  basis of the property.  Congress
determined  that for 1987 a 9% annual  credit would have a present value of 70%;
thus 9% was the applicable percentage for 1987. For years after 1987, each month
the  Treasury   Department   redetermines  the  appropriate   yearly  applicable
percentage  that  will  yield a 70%  present  value  over 10 years  utilizing  a
prescribed  discounting  methodology.  For  properties  placed in service in May
1999, the yearly percentage is 8.27%.

    2. Properties which are Federally subsidized and which are newly constructed
or  substantially  rehabilitated  receive a maximum  credit  which  will yield a
present value of 30% of the qualified basis of the property. Congress determined
that for 1987 a 4% annual  credit would have a present value of 30%; thus 4% was
the  applicable  percentage  for  1987.  For  years  after  1987,  the  Treasury
Department  makes monthly  redeterminations  in a manner  corresponding  to that
described for the 70% present value credit.  For properties placed in service in
May 1999, the yearly applicable percentage is 3.54%.

    For purposes of the low income housing tax credit program, Federal subsidies
include only tax-exempt financing and below-market-interest-rate  Federal loans.
See the material below under the caption "Other Government  Assistance Programs"
for a discussion of whether the loan programs which may be used by local limited
partnerships are considered  Federal subsidies for these purposes.  An owner has
the option of excluding Federally subsidized loans from qualified basis and then
using the 70% present value credit against the remaining qualified basis.

                                       100

<PAGE>


                  Calculation of Low Income Housing Tax Credit

 Qualified          X             Applicable        =         Low Income
 Basis                            Percentage                  Housing Tax Credit


    Substantial  rehabilitation  is defined as capital  expenditures  other than
acquisition  costs incurred in connection with the  rehabilitation of a property
aggregated  over a 24-month period in an amount equal to at least the greater of
10% of adjusted basis or $3,000 per low income residential unit.

    The  acquisition  costs of existing  buildings  will only be eligible  for a
credit if the  buildings  are  subject  to  substantial  rehabilitation.  If the
substantial  rehabilitation test is satisfied the acquisition costs are eligible
for the 30% present value credit.  However,  acquisition costs are not available
for the 30% present value credit if the property was last transferred,  or if it
underwent rehabilitation work, during the prior 10 years, although the Secretary
of the Treasury may waive this rule in defined instances.

    The applicable percentage for a property is determined in the earlier of:

o   the month in which the property is placed in service, or

o   at the  election  of the  owner,  the month in which the owner and the state
    housing credit agency enter into an agreement to allocate low income housing
    tax credits to the property.

Credits Subject to State Allocation

    The  Internal  Revenue  Code  limits the  amounts of low income  housing tax
credits which can be allocated in any year.  Low income  housing tax credits are
allocated by the states.  In most cases, a state  directly  allocates low income
housing tax credits to  properties.  A state can allocate a maximum of $1.25 per
resident of the state in tax credits per year.  If a state fails to allocate its
maximum tax credits in a year,  the  Internal  Revenue  Code  permits a one-year
carry  forward of the unused  amount by that state.  If the unused amount is not
used by the state during the  carryforward  period,  it is  reallocated to other
states through a national pool.

    In other cases, a state indirectly  allocates tax credits by authorizing the
issuance  of  tax-exempt  bonds,  the  proceeds of which are used to finance the
construction of low income housing.  The ability of a state to issue  tax-exempt
bonds is subject to a ceiling included in the Internal Revenue Code.


                                       101

<PAGE>



    Once tax credits are allocated to an apartment complex, the development does
not have to reapply for tax credits in later years. Accordingly,  all low income
housing tax credits to be claimed by investors  over the 10-year  credit  period
are allocated at the outset of the 10-year period.

    Generally,  a building  must be placed in service  during the year for which
the low income  housing tax credits are allocated by the housing  credit agency.
There are  exceptions to this general rule,  the most  important of which is the
10% carryover rule.  Under this  exception,  a building can be placed in service
not later than the close of the second calendar year following the calendar year
in which the  allocation is made.  This exception is available if the taxpayer's
basis  in the  building  as of the  close  of the  calendar  year in  which  the
allocation is made is more than 10% of the taxpayer's  reasonably expected basis
in such building as of the close of such second  calendar year. For this purpose
only, basis includes the cost of land.

    Low income  housing tax credits may not be allocated to any property  unless
the owner and the state execute an extended low income  housing  commitment  for
the apartment  complex.  In general,  the extended low income housing commitment
will require  that the  building be rented as low income  housing for the period
agreed to by the owner and the state.  The period  cannot be less than 30 years,
and might be substantially  longer.  The extended low income housing  commitment
does not prevent the sale of the building to a new owner.  It only requires that
the new owner continue to rent the building as low income housing.

    The extended low income housing commitment must be:

o   binding on all successors of the owner,

o   grant all individuals  meeting  the  income  limitation  applicable  to  the
    building the right to enforce its terms in state court,

o   be recorded as a restrictive covenant,

o   prohibit  any increase in the gross rent for a low income  residential  unit
    not otherwise permitted by Internal Revenue Code Section 42,

o   prohibit  the  refusal  to lease to a  holder  of a  Section  8  voucher  or
    certificate of eligibility  because of the status of the prospective  tenant
    as such a holder, and

o   prohibit  the  disposition  to any  person of any  portion of the low income
    residential  units  unless  all of the  low  income  residential  units  are
    disposed of to such person.


                                       102

<PAGE>



    After a period of 14 years, the owner may make a request that the state find
someone to buy the building. The state will have one year to locate a buyer at a
price no less than:

o   with respect to the portion of the building  which does not  constitute  low
    income residential units, the fair market value thereof, and

o   with respect to the low income residential units, the applicable fraction of

    o    the outstanding indebtedness secured by the building, plus

    o    the adjusted investor equity in the building, minus

    o    cash distributions made or available from the building.

For these purposes,  adjusted  investor  equity is the aggregate  amount of cash
invested in the building increased by a cost of living adjustment.



                     Price for Low Income Residential Units

  Step 1. Debt               +      Adjusted Investor Equity   -   Distributions

  Step 2. Unit Applicable
  Fraction
  or
  Floor Space                X      Result of Step 1
  Applicable
  Fraction


If no buyer is located the building may be  converted  to  market-rate  use. Low
income tenants may not be evicted for a three-year period.

    Despite the preceding, the one-year notice provision outlined above will not
apply to the extent more stringent  requirements  are imposed under the extended
low income housing commitment or state law.

    Internal  Revenue  Code  Section  42(m)  imposes  requirements  on the state
agencies  which  allocate  low  income  housing  tax  credits.  In  general,  an
allocating  agency must  develop and follow a  qualified  allocation  plan which
ranks the  developments  applying for tax credits.  The selection  criteria must
address:

                                       103

<PAGE>



o   location  factors,  e.g., broad geographic  distribution,  designated target
    areas such as inner cities, Community Development Block Grant neighborhoods,
    distressed communities, pockets of poverty and rural areas,

o   housing needs characteristics, e.g., low vacancy rate, income mix of tenants
    within the  development  and meeting state,  regional or local housing needs
    and priorities,

o   development  characteristics,  e.g.,  whether the development  increases the
    stock of low-income housing, whether substantial rehabilitation expenditures
    are needed by the  development,  energy  conservation,  quality of units and
    type of financing,

o   sponsor   characteristics,   e.g.,   nonprofit   sponsorship   and  minority
    participation in development and management,

o   tenant populations with special housing needs, e.g.,  elderly,  handicapped,
    disabled, homeless, large families and the displaced, and

o   public housing waiting lists.

    Once the agency has selected its developments,  it must allocate tax credits
by giving  preference  to  developments  serving the lowest  income  tenants and
developments  obligated to serve tenants for the longest  periods.  Further,  an
allocating agency must use good faith efforts to allocate no more tax credits to
a development than are necessary for the development's financial feasibility and
viability as low income housing  through the 10-year  credit  period.  In making
this determination the agency must consider:

o   the sources and uses of funds,

o   the   available  Federal,   state  and  local  subsidies  committed  to  the
    development,

o   the total financing planned for the development,

o   the proceeds or receipts expected to be generated by reason of tax benefits,

o   the percentage of the tax credits to be used for project  costs  other  than
    the cost of intermediaries, and

o   the reasonableness of the developmental and operational costs.


                                       104

<PAGE>



The allocating state agency may reduce the tax credits for which the development
would otherwise be eligible if the agency believes that the full amounts are not
necessary  in light of other  sources of  assistance  that are  available to the
development.

    At least 10% of a state's annual tax credits must be allocated to properties
in which a qualified nonprofit organization:

o   has an ownership interest, and

o   materially participates in the development and operation.

    Each state is required to monitor all developments for  non-compliance  with
the   provisions  of  the  Internal   Revenue  Code.   Each  state  must  report
non-compliance to the IRS.

Utilization of the Low Income Housing Tax Credit

    Reduction for Partial Year of Operations. Low income housing tax credits are
claimed over a 10-year  credit period.  In the first year, the allowable  credit
amount is based on the number of months the low  income  residential  units were
occupied  by low  income  individuals.  This  determination  uses  an  averaging
convention.  For example, if half of the low income residential units were first
occupied in October and the remaining  half were first  occupied in December,  a
calendar  year  taxpayer  would  adjust the amount of his tax credits to reflect
that the units were  occupied on average only 2 months,  or 1/6 of the year.  To
the extent that there is a reduction of tax credits in the first year,  there is
an addition to tax credits in the eleventh year.

    Low Income Housing Tax Credit At Risk Rules.  In order to fully utilize low
income housing tax credits, a taxpayer who is:

o   an individual,

o   an S corporation, or

o   a closely-held corporation,

must be at risk with respect to the  investment in the low income  housing.  For
these purposes an S corporation  is a corporation  which elects to be subject to
Subchapter S under the Internal Revenue Code. A closely-held  corporation is one
in which five or fewer shareholders  directly or indirectly own more than 50% of
the  stock at any  time  during  the  last  half of its  relevant  fiscal  year.
Generally,  the qualified  basis to any such taxpayer for the low income housing
is reduced for at risk purposes by the amount of any  non-qualified  nonrecourse
financing.

                                       105

<PAGE>



Qualified  commercial  financing  is not  considered  non-qualified  nonrecourse
financing.  Therefore,  a taxpayer will be considered to be at risk for purposes
of  low  income  housing  tax  credits  with  respect  to  qualified  commercial
financing.  Qualified  commercial  financing  is  financing  with respect to any
property if the taxpayer acquires the property from an unrelated person, and the
financing is borrowed from:

o   any Federal, state or local government,

o   a person who is actively and regularly engaged in the  business  of  lending
    money and who is not:

    o    a person from whom the taxpayer acquired the property, or

    o    a person who receives a fee with respect to the  taxpayer's  investment
         in the property, or

o   a nonprofit organization which:

    o    is not affiliated with or controlled by a for-profit organization,

    o    has the purpose of fostering low-income housing, and

    o    does not receive a fee with respect to the taxpayer's investment in the
         property,

    if the financing from the nonprofit organization is:

    o    not in excess of 60% of the eligible basis of the apartment complex,

    o    secured by the building, and

    o    fully repaid on or before the earliest of:

         o     the maturity date,

         o     the date the building is sold or the loan is refinanced, or

         o     90 days after the close of the 15-year compliance period.  If the
               nonprofit organization or an affiliate did not sell the property
               to the taxpayer, this is extended to  90 days  after the  earlier
               of:


                                       106

<PAGE>



                  o      the date the apartment complex ceases to be a qualified
                         low income project, or

                  o      the  date  which  is  15  years  after the close of the
                         15-year compliance period.

    WNC &  Associates,  Inc. does not  anticipate  that the amount of low income
housing tax credits  allowable  to investors  will be limited  under the at risk
rules because each Series intends to invest in local limited  partnerships  that
obtain qualified commercial financing as described above.  However,  counsel has
rendered no opinion on this issue because it depends upon the specific nature of
each apartment complex and its financing.

    Other  Limitations.  Most  investors  are limited in their use of low income
housing tax credits. Generally,  individuals who have no passive income can only
use low income housing tax credits and historic tax credits to shelter up to the
equivalent  of $25,000  of active or  portfolio  income.  The  allowance  of tax
credits is subject to other limitations. For a more complete discussion of these
limitations see "Federal Income Tax  Considerations  - Limitations on Losses and
Credits from Passive  Activities," "- General  Business Tax Credit  Limitations"
and " - Other Important Tax Considerations - Alternative Minimum Tax."

Recapture of Low Income Housing Tax Credits

    During each year of the 15-year  compliance period the owner must certify to
the Secretary of the Treasury that its apartment complex has complied throughout
the year with the requirements for the tax credits. The owner must also report:

o   the qualified basis of the development, and

o   the maximum applicable  percentage and qualified basis taken into account by
    the state allocating agency.

    A Series will lose  unclaimed tax credits and the investors will be required
to recapture  with  interest a portion of any tax credits  previously  taken if,
during the 15-year compliance period, any of the following events occur:

o   an apartment complex is sold,

o   an interest in a local limited partnership is sold,


                                       107

<PAGE>



o   the qualified  basis of the apartment  complex is reduced.  Events causing a
    reduction in qualified basis can include  casualty losses and the failure to
    meet the minimum set-aside test or the rent restriction test.

    The Internal Revenue Code provides rules for avoiding  recapture  penalties.
For  example,  no  recapture  applies  if the  failure to  satisfy  the  minimum
set-aside requirement is:

o   a de minimis error, and

o   the failure is waived by the Secretary of the Treasury.  No recapture occurs
    if the reduction in qualified basis is corrected within a reasonable period,
    although the term reasonable is not defined in the Internal  Revenue Code. A
    tenant's  income may rise by as much as 140% over the qualifying  income for
    that unit and the unit may still be considered a low income residential unit
    if it continues to be rent-restricted. Even if the tenant's income increases
    by more than that 140% amount,  no recapture  results unless any vacant unit
    of  comparable  or  smaller  size  in  the   development   is  rented  to  a
    non-qualifying tenant.

    A local  limited  partnership or a Series can avoid recapture upon change of
ownership by posting a bond with the Secretary of the  Treasury,  but only if it
can be expected that the development  will be operated as a qualified low income
project for the remainder of the 15- year compliance  period.  As an alternative
to posting a bond,  a local  limited  partnership  or a Series may  establish  a
Treasury  Direct  Account.  To do so, the local limited  partnership or a Series
would pledge Treasury securities to the IRS as security for the continued use of
the development as a qualified low income project.

    There is no recapture of low income  housing tax credits if a casualty  loss
causes a reduction in qualified basis and the loss is restored by reconstruction
or replacement within a reasonable period of time.

    The amount of recapture is the accelerated portion of the low income housing
tax credits on the project for all prior years.  In addition,  interest  will be
charged on the recapture  amount.  Interest is calculated  from the due date for
the  return  for the year the  recapture  amount  was  originally  claimed.  For
example, if the recapture amount was originally claimed in 1995 and the investor
is a natural person, interest will be calculated from April 15, 1996.

    The accelerated portion of low income housing tax credits in any year is the
amount of the credit  determined  for the year less the amount  which would have
been determined for the year if all credits had been allowable  ratably over the
15-year compliance period rather than the 10- year credit period.


                                       108

<PAGE>



     Year of Event Giving
      Rise to Recapture                          Portion Recaptured

               1-11                                         5/15
               12                                           4/15
               13                                           3/15
               14                                           2/15
               15                                           1/15
        After Year 15                                        0


State Low Income Housing Tax Credits

    A few states  offer tax credits for low income  housing  located  within the
respective  state.  However,  WNC &  Associates,  Inc.  does not  expect  that a
significant  number, if any, of the Series' investments will qualify for a state
tax  credit.  For those that do, the state tax  credits  may be  allocated  to a
partner or member of the local limited  partnership  other than the Series.  See
"Investment  Objectives  and Policies - Terms of the Local  Limited  Partnership
Agreements - Interests in Profits, Losses and Distributions."









                                       109

<PAGE>



                      OTHER GOVERNMENT ASSISTANCE PROGRAMS

    The  discussion  which  follows   describes  Federal  and  state  government
financing  subsidy  programs and operating  subsidy programs used in the past by
WNC-partnerships.  Some of a Series' apartment complexes may use these programs.
The discussion is not all-inclusive. There can be no assurance that the terms of
the programs discussed below will remain the same. WNC & Associates, Inc. cannot
predict which of these programs will be used by the local limited  partnerships,
or the  percentage  of apartment  complexes  which will  receive any  government
financing  subsidies or operating  subsidies,  until its  investments  have been
selected.

    Low income  housing tax credits can be available  for projects  that receive
financing subsidies or operating subsidies, as well as those that do not receive
such  subsidies.  If a financing  subsidy  constitutes  a Federal  subsidy under
Internal  Revenue Code Section 42, only the 30% present  value tax credit can be
available.

RD Financing and Rural Rental Assistance Programs

    Section  515 of the  Housing  Act  of  1949  authorizes  the  United  States
Department   of    Agriculture,    Rural    Development    to   provide   direct
below-market-interest-rate  mortgage  loans for  rural  rental  housing.  RD was
formerly known as the Farmers Home Administration of the USDA. Such loans are in
amounts of up to 95% of costs and for terms of up to 50 years.  In addition,  RD
may provide an owner with mortgage interest  subsidies,  which effectively lower
the  interest  rate of the loan to 1% per  annum  after  the  completion  of the
apartment complex. The owner must pass the benefits of the reduced interest rate
on to  tenants  in the form of lower  rents.  A Section  515-financed  apartment
complex may be eligible  for low income  housing tax  credits.  However,  if the
financing is a  below-market-interest-rate  loan, the apartment complex would be
considered Federally subsidized and thus eligible only for the 30% present value
credit.

    RD  regulations  govern  the  operation  of Section  515-financed  apartment
complexes.  Failure of an owner to operate its  apartment  complex in compliance
with RD regulations could result in termination of RD assistance.

    RD  regulations  limit owners' cash  distributions  to a maximum  cumulative
return of 8% per annum on their equity  investments.  RD also  requires  monthly
payments to a reserve  account until 10% of the total  construction  cost of the
apartment complex has been set aside. Among other things, RD must approve:

o   the management agent,


                                       110

<PAGE>



o   the management agreement,

o   any rent increases,

o   a transfer or encumbrance of the apartment complex,

o   the admission or removal of a general partner to  a  partnership  owner or a
    manager to a limited liability company owner, and

o   the reduction of a general partner's interest in a partnership owner.

Prepayment of an RD mortgage loan is prohibited.

    In its  application  to RD for interest  credit  subsidies,  the owner of an
apartment  complex  must submit  budgets for market  rents and budgets for basic
rents. Market rents are rents required to operate on a limited profit basis with
mortgage  payments  based on the interest rate provided in the RD mortgage loan.
Budget rents are rents  required to operate on a limited profit basis assuming a
mortgage  bearing  interest  at 1% per annum.  The owner will have the option of
charging basic rent or rent equal to 30% of a tenant's  monthly  adjusted income
less a utility allowance.  In neither case would the tenant be charged more than
the market  rent or less than the basic  rent.  Utilities  are not  included  in
either the basic rent or market rent. The owner will receive interest  subsidies
so that the  amount  which it must  pay for debt  service  is the same as if the
interest rate on its RD mortgage loan were 1% per annum,  rather than the actual
interest rate on the RD mortgage loan, plus the amount of overage for the month.
Overage is the amount by which 30% of one-twelfth  of a tenant's  adjusted gross
annual income exceeds the basic rent for his unit.

    RD also provides rent subsidies,  known as Rental  Assistance  Payments.  In
order  to  obtain  Rental  Assistance   Payments  for  a  newly  constructed  or
substantially  rehabilitated  apartment complex, the owner must execute a rental
assistance  agreement  with  RD  for a term  of up to 20  years.  However,  some
contracts  may have only a five-year  term.  Upon  expiration of the term of the
agreement,  a new  agreement  may be executed  for a period of up to five years.
Additional  units in the  apartment  complex  may later be eligible if funds are
available.

Home Investment Partnership Program

    The Home Investment Partnership program was authorized under Title II of the
Cranston-Gonzalez  National  Affordable  Housing Act,  enacted into law in 1990.
The Home program is a Federal housing program intended to support a wide variety
of state and local low income housing programs.


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    Home program funds are allocated by HUD on a formula basis to  participating
state and local governments. Home program funds can be used to expand the supply
of low  income  housing  and to  increase  the  number of  households  served by
assisted  housing  programs.  Funds can be used for  acquisition,  construction,
moderate or substantial  rehabilitation  activities or for  tenant-based  rental
assistance programs.

    State and local  jurisdictions  are  statutorily  required to meet  matching
requirements in order to qualify for Home program  funding.  This requires a 30%
match  for  new  construction  activities  and a 25%  match  for  rehabilitation
activities.

    Participating jurisdictions are allowed to use funds for:

o   equity investments,

o   interest-bearing or non-interest-bearing loans,

o   advances,

o   interest subsidies, or

o   other forms of assistance that HUD finds to be consistent  with  the purpose
    of the program.

    Apartment  complexes  which are  assisted  with Home  program  funds must be
occupied by low income families. For this purpose, low income families are those
whose incomes do not exceed 80% of area median income, adjusted for family size.
At least 20% of  the dwelling units must be occupied by very low income families
who pay rent equal to no more than:

o   30% of their adjusted income, or

o   the amount permitted under the low income housing tax credit program.

Very low income  families are those whose  incomes do not exceed 50% of the area
median  income,  adjusted for family size.  The other 80% of the dwelling  units
must be rented at amounts which do not exceed the lesser of:

o   the existing fair market rent under the HUD Section 8 program, or

o   30% of the  adjusted  income  of a family  whose  income  is 65% of the area
    median income, adjusted for family size.


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Accordingly,  the rents  allowed  for the other  80% of the  dwelling  units may
exceed the amounts permitted under the low income housing tax credit program.

    If  an   apartment   complex   receives  a  Home   program   loan  having  a
below-market-interest-  rate,  the apartment  complex would be eligible only for
the 30%  present  value low income  housing  tax credit  because  the  apartment
complex would be considered to be Federally subsidized.

State and Local Bond Programs

    A number of states and some local  jurisdictions  have  established  housing
finance  agencies to assist in the development and financing of low and moderate
income  housing.  Housing  finance  agencies  are  empowered  to issue their own
obligations  which may be exempt  from  Federal  income  tax. If so, the housing
finance agencies sell the obligations in the tax-exempt municipal bond market at
interest  costs below  conventional  money  market  rates.  The housing  finance
agencies  then use the  proceeds  of the sale of  their  obligations  to make or
purchase mortgage loans for low and moderate income apartment complexes.

    Generally, in cases where the mortgage loans of housing finance agencies are
also  insured  by  HUD,  the  HUD  underwriting  and  regulatory  standards  and
procedures are employed without any substantial additional requirements.

    When a housing  finance agency provides  direct  construction  and permanent
mortgage loans for  multi-family  housing  without HUD mortgage  insurance,  the
housing finance agency itself generally determines the:

o   economic feasibility of,

o   market need for,

o   demand for, and

o   architectural construction characteristics of,

the apartment complex.  In such cases, the housing finance agency generally also
monitors the progress of construction,  marketing, rent-up and management of the
completed apartment complex.

    Although the  criteria  and  requirements  of housing  finance  agencies for
non-HUD-insured  direct mortgage loans vary,  generally such loans are available
in an amount of up to 90% of a housing  finance  agency's  estimate of the total
development  cost  of  the  apartment  complex  for  terms  of  up  to 40 years.

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Generally,  the  owner  must  accept  a  limit on the amount of operating income
which may be distributed  annually.  The direct loan programs of housing finance
agencies  frequently include  requirements as to operating  assurances,  escrow,
working capital and other deposits.

    In order to maintain the tax-exempt nature of obligations  issued by housing
finance agencies:

o   20% of the units in an apartment complex must be rented to households at 50%
    of the area median income as adjusted for family size, or

o   40% of the units in an apartment complex must be rented to households at 60%
    of the area median income as adjusted for family size, and

o   tenants may not pay more than 30% of their adjusted incomes for rent.

These tenant  qualification  requirements  must be satisfied  annually  based on
income  earned  each  year by  tenants  over the term of the  qualified  project
period. This period extends until the latest of:

o   15 years from the date 50% of the units are occupied,

o   redemption of the bonds, or

o   termination of any Section 8 rental assistance.

    Typically,  a mortgage loan  financed with the proceeds of tax-exempt  bonds
may not be prepaid during the qualified  project period.  Thereafter,  it may be
prepaid  only upon payment of amounts  necessary  to redeem the housing  finance
agency's obligations,  including the payment of premiums for early redemption. A
housing finance  agency's direct mortgage loan programs also impose  limitations
on the sale,  refinancing  or change in use of the apartment  complex.  They may
also require that a restrictive covenant be placed on record prohibiting the use
of the apartment complex for anything other than rental housing.  Further,  they
may require  approval of the sale of an  interest  in a  partnership  or limited
liability company owner.

    Apartment  complexes  financed by tax-exempt bonds issued by housing finance
agencies may be eligible for low income housing tax credits. Apartment complexes
financed by housing  finance  agencies  typically  are not  allocated low income
housing tax credits from a state's general pool.  Rather,  the Internal  Revenue
Code imposes a ceiling on the amount of tax-exempt bond authority available to a
state or local agency. Apartment complexes financed by housing  finance agencies

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are considered to be Federally subsidized  for  purposes  of low  income housing
tax credits, and thus eligible only for the 30% present value credit.

HUD Section 8 Rental Assistance Programs

     HUD  administers  the  Existing  Housing  Program  under  Section  8 of the
National  Housing Act. Under the Existing Housing Program low income tenants are
given housing vouchers through a local housing authority.  Tenants can use these
vouchers to pay a significant  portion of the rents for housing available in the
private  market,  but only in  projects  approved by HUD on the basis of housing
quality and suitability standards.

    The  definition  of  Federally  subsidized  for  purposes  of the low income
housing  tax  credits  excludes  all of the  Section 8  programs  except for the
Moderate  Rehabilitation Section 8 program, other than funds disbursed under the
Stewart B. McKinney  Homeless  Assistance  Act of 1988, so that units  receiving
such assistance may be eligible for the 70% present value credit.

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                                   MANAGEMENT

WNC & Associates, Inc.

    WNC & Associates,  Inc. is the fund manager.  Through  the WNC-partnerships,
WNC & Associates Inc. has acquired and oversees more than 600 low income housing
properties.  Accordingly,  WNC & Associates,  Inc. has significant experience in
acquiring and managing  investments  in such rental  housing.  WNC & Associates,
Inc. has the  shareholder's  equity  reflected in its audited balance sheet. See
"Financial Statements."

    WNC & Associates, Inc. will be responsible for all aspects of the operations
of the Series.  WNC & Associates,  Inc. will provide  executive  supervisory and
administrative  services for the operations of the Series.  Property  management
will be  provided at the expense of each local  limited  partnership  by agents,
which may include WNC Management,  Inc., an affiliate of WNC & Associates,  Inc.
See "Management  Compensation." The services provided by WNC & Associates,  Inc.
will include  exercising  all of the rights of the Series under the  partnership
agreements of the local limited  partnerships.  Investors  will have no right to
participate in the management of their Series.

    WNC &  Associates,  Inc.  and its  affiliates  are  serving  as the  general
partners  of  the  sponsored   WNC-partnerships  described  below  under  "Prior
Performance  Summary"  and may serve as general  partners  for other real estate
limited partnerships in the future. It is anticipated that the officers of WNC &
Associates,  Inc. will initially devote approximately 5% to 50% of their time to
the Series.  These individuals will spend significantly less time devoted to the
Series after the investment of the Series capital in local limited partnerships.
See "Conflicts of Interest."

    All investments by the Series and other WNC-partnerships must be approved by
the Acquisition Committee of WNC & Associates, Inc. Project managers employed by
WNC & Associates,  Inc. make  presentations  to the Acquisition  Committee.  The
project manager engages in a due diligence review of his project prior to making
his presentation,  and will only make a presentation once the project manager is
satisfied  that the review has been  completed in  accordance  with  established
guidelines.  The Acquisition  Committee must approve an acquisition by unanimous
vote. The members of the Acquisition Committee are identified below.






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     WNC & Associates,  Inc. is a California  corporation which was organized in
1971. Its officers and significant employees are:

   Wilfred N. Cooper, Sr.............  Chief Executive Officer
   John B. Lester, Jr................  President, Chief Operating Officer and
                                       Secretary
   Wilfred N. Cooper, Jr.............  Executive Vice President
   David N. Shafer, Esq..............  Senior Vice President and General Counsel
   Michael L. Dickenson, CPA.........  Vice President - Chief Financial Officer
   Thomas J. Riha....................  Vice President - Asset Management
   Sy P. Garban......................  Vice President - National Sales
   N. Paul Buckland..................  Vice President - Acquisitions
   David T. Turek....................  Vice President - Originations

    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 Wilfred N. Cooper, Sr. and John B. Lester, Jr.

    Wilfred N. Cooper, Sr., age 68, is the founder,  Chief Executive Officer and
a Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and
a general  partner in some of the  partnerships  previously  sponsored  by WNC &
Associates, Inc. Mr. Cooper has been actively involved in the affordable housing
industry  since 1968.  Previously,  during  1970 and 1971,  he was founder and a
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  before  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 and a National Trustee for
NAHB's Political Action Committee, a Director of the National Housing Conference
and a member  of NHC's  Executive  Committee,  and a  Director  of the  National
Multi-Housing  Council.  He is the husband of Kay Cooper,  the brother-in-law of
John Lester and the father of Wilfred N. Cooper,  Jr. Mr. Cooper  graduated from
Pomona College in 1956 with a Bachelor of Arts degree.

    John B.  Lester,  Jr., age 65, is  President,  a Director,  Secretary  and a
member of the Acquisition Committee of WNC & Associates, Inc., and a Director of
WNC  Capital  Corporation.  He has 27 years of  experience  in  engineering  and
construction and has been involved with real estate  investments since 1986 when
he joined WNC & Associates,  Inc.  Previously,  he was the 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

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industries  which  he  co-founded  in 1973. He is the brother of Kay Cooper, the
brother-in-law  of  Wilfred Cooper,  Sr. and  the  uncle  of Wilfred Cooper, Jr.
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 36, is Executive Vice President,  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 real
estate  investment and  acquisition  activities  since 1988 when he joined WNC &
Associates,  Inc.  Previously,  he served as a 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 the National  Multi-Housing Council
and an Alternate  Director of the National  Association of Home Builders.  He is
the son of Wilfred Cooper, Sr. and Kay Cooper and the nephew of John Lester. Mr.
Cooper  graduated  from The American  University in 1985 with a Bachelor of Arts
degree.

    David N.  Shafer,  age 47, is Senior 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 active
in the real estate industry since 1984. Before joining WNC & Associates, Inc. in
1990,  he was  engaged as an  attorney  in the  private  practice  of 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.

    Michael L. Dickenson,  age 42, is Vice President - Chief  Financial  Officer
and a member of the  Acquisition  Committee of WNC & Associates,  Inc. and Chief
Financial  Officer  of WNC  Management,  Inc.  His  experience  in  real  estate
activities began in 1985.  Before joining WNC & Associates,  Inc. in March 1999,
he was the  Director of  Financial  Reporting  at  TrizeeHahn  Centers  Inc.,  a
developer  and operator of commercial  real estate,  from 1995 to 1999, a Senior
Manager with E&Y Kenneth  Leventhal Real Estate Group,  Ernst & Young, LLP, from
1988 to 1995, and Vice President of Finance with Great  Southwest  Companies,  a
commercial  and  residential  real  estate  developer,  from  1985 to 1988.  Mr.
Dickenson is a member of the Financial  Accounting  Standards  Committee for the
National  Association of Real Estate  Companies,  and the American  Institute of
Certified Public Accountants,  and a Director of HomeAid Southern California,  a
charitable organization affiliated with the building industry. He graduated from
Texas Tech  University  in 1978 with a Bachelor  of  Business  Administration  -
Accounting degree, and is a Certified Public Accountant.

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    Thomas J. Riha, age 44, is 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. He has been involved in real estate
acquisition  and  investment   activities  since  1979.  Before  joining  WNC  &
Associates,  Inc. 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  53,  is  Vice  President  -  National  Sales  of  WNC &
Associates,  Inc.  Mr.  Garban  has  been  involved  in real  estate  investment
activities since 1978. Before joining WNC & Associates,  Inc. in 1989, he served
as  Executive  Vice  President  with 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  36,  is Vice  President  -  Acquisitions  of WNC &
Associates,   Inc.  He  has  been  involved  in  real  estate  acquisitions  and
investments  since 1986 and has been  employed by WNC & Associates,  Inc.  since
1994.  Before that, he served on the  development  team of the Bixby Ranch which
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  the  California  State  University,  Fullerton  in 1992  with a
Bachelor of Science degree in Business Finance.

    David  T.  Turek,  age  44,  is  Vice  President  -  Originations  of  WNC &
Associates,  Inc. His experience  with real estate  investments  and finance has
continued  since 1976, and he has been employed by WNC & Associates,  Inc. since
1996.  Previously,  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 1992 to 1995
he  served  as  Executive  Vice  President  for  Levcor,  Inc.,  a  multi-family
development  company,  and from 1990 to 1992 he served as Vice President for the
Paragon Group where he was  responsible for tax credit  development  activities.
Mr. Turek graduated from Southern  Methodist  University in 1976 with a Bachelor
of Business Administration degree.

    Kay L. Cooper, age 62, is a Director of WNC & Associates,  Inc.  Mrs. Cooper
was the sole  proprietor  of Agate  108, a  manufacturer  and  retailer  of home
accessory products, from 1975 until its sale in 1998. She is the wife of Wilfred
Cooper,  Sr., the mother of Wilfred  Cooper,  Jr. and the sister of John Lester.
Ms. Cooper  graduated from the University of Southern  California in 1958 with a
Bachelor of Science degree.

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    Statement of Purpose. Since its organization in 1971, WNC & Associates, Inc.
has specialized in providing quality investment opportunities exclusively in the
field of affordable housing. WNC & Associates, Inc. has a time-honored tradition
of prudent  investing and is one of the nation's  oldest  sponsors of tax credit
investments.  Its officers believe that WNC & Associates,  Inc. has developed an
insight  into  the  affordable  housing  business  based  upon  the  fundamental
principles  of  diversification  and market  need that few other  companies  can
match.  Using a  disciplined  selection  process  it  evaluates  all  investment
properties  for value and  location,  placing  particular  emphasis on long-term
economic stability and rental demand.

Change in Management

    The management  and control of WNC & Associates,  Inc. may be changed at any
time in accordance  with its  organizational  documents,  without the consent or
approval of the investors. In addition, the partnership agreements of the Series
provide for the admission of one or more  additional or successor  fund managers
to a Series as set forth below.

    First,  with the  consent  of any other  fund  managers  of the Series and a
majority-in-interest of the investors, WNC & Associates,  Inc. may designate one
or more persons to be successor or additional  fund  managers to the Series.  In
addition,  WNC &  Associates,  Inc.  may,  without the consent of any other fund
manager or the investors:

o   substitute  in its stead as fund  manager  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

o   cause to be admitted to the Series an  additional  fund  manager if it deems
    such admission to be necessary or desirable for classification of the Series
    as a partnership for Federal income tax purposes.

Finally,  a  majority-in-interest  of the investors may at any time remove WNC &
Associates,  Inc. and elect a successor  fund  manager.  If at any time a Series
does not have a fund manager  which is an affiliate of WNC &  Associates,  Inc.,
the Series cannot include the initials "WNC"in its name.

WNC Capital Corporation

    WNC Capital Corporation,  a California  corporation which is wholly-owned by
WNC & Associates,  Inc.,  was organized in 1994  principally  to facilitate  the
distribution of securities of partnerships  sponsored by WNC & Associates,  Inc.
WNC Capital  Corporation  is a member firm with the NASD, and is registered as a

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broker-dealer  with  the  Securities and  Exchange  Commission,  the  California
Department of Corporations and regulatory agencies of other states.

WNC Management, Inc.

    WNC Management,  Inc., a California corporation which is wholly-owned by WNC
&  Associates,  Inc.,  was organized in 1997 to manage  properties,  principally
those owned by local limited partnerships invested in by WNC-partnerships.











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                            PRIOR PERFORMANCE SUMMARY

Introduction

     Before  1982 WNC &  Associates,  Inc.  assisted  developers  of low  income
housing to structure  investments which could be sold in private placements.  In
connection with these 57 structured partnerships, WNC & Associates, Inc.:

o   provided  structuring and consulting  services to developers  concerning the
    organization  of the limited  partnerships  which were to own the low income
    housing developments,

o   arranged for  preparation  of  partnership  agreements  and other  requisite
    documents for the projects,  including  legal  opinions as to Federal income
    tax and organizational matters, and

o   arranged for the  placement of  securities,  typically  in  accordance  with
    Regulation D under the  Securities  Act of 1933.  The  developers  relied on
    independent broker-dealers to place such securities.

WNC & Associates,  Inc.  was  not  an  initial  managing general  partner of any
of the structured  partnerships.  In the years immediately following the sale of
the structured  partnerships'  interests,  WNC & Associates,  Inc. monitored the
structured partnerships' activities and results of operations. Since then, WNC &
Associates,  Inc. has provided administrative services to some of the structured
partnerships  such as the  preparation  of partnership  income tax  information.
Except for two structured  partnerships  as to which WNC & Associates,  Inc. has
become the substituted managing general partner,  WNC & Associates,  Inc. has no
role in the ongoing management of the structured partnerships.  Accordingly, the
structured  partnerships are distinguished from the partnerships as to which WNC
&  Associates,  Inc. was an initial  managing  general  partner and continues to
serve as managing general  partner.  Unlike the structured  partnerships,  these
sponsored partnerships are similar to the Series in that WNC & Associates,  Inc.
is or was solely responsible for the conduct of the offering, the identification
and acquisition of local limited  partnership  interests,  and the management of
the sponsored partnerships.

All WNC-Partnerships

    From its formation  through June 30, 1999,  WNC &  Associates,  Inc. and its
affiliates  have  raised  equity  from more than  14,600  investors  to  acquire
interests  in more than 600  properties  located in 39 states,  the  District of
Columbia, and the U.S. Virgin Islands, and representing more than $1,000,000,000
in aggregate  acquisition  costs.  Estimates of  acquisition  costs are equal to
equity contributions and debt financing.


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    As of December  31, 1998 WNC &  Associates,  Inc.  and its  affiliates  have
structured  or  sponsored  a total of 16 public and 107  non-public  real estate
partnerships,  excluding  the  Series.  As  of  December  31,  1998,  these  123
partnerships  had raised an  aggregate  of  approximately  $380,425,000  and had
invested in a total of 572 apartment  properties in the  jurisdictions set forth
below.

    Of the 572  properties,  nine of the 57 properties  owned by the  structured
partnerships  had been sold or refinanced as of December 31, 1998 and six of the
515 properties owned by the sponsored  partnerships had been sold as of December
31, 1998. See "Sales of Properties; Terminations of Partnerships" below. None of
these properties were tax credit properties.

    Nine  of the  57  structured  partnerships  and  one  of  the  66  sponsored
partnerships  had completed  operations  as of December 31, 1998.  See "Sales of
Properties; Terminations of Partnerships" below. None of these partnerships were
tax credit partnerships.

    Exhibit A to this  prospectus  includes  Tables I, II and III which  contain
additional  information  with  regard  to  some  of the  more  recent  sponsored
partnerships.  Tables IV and V included  in Exhibit A contain  information  with
regard to sales of  properties or  terminations  of  partnerships  within recent
years.

    Reference  also is made to Table VI included in the  Registration  Statement
which  describes  in  greater  detail the  properties  in which some of the more
recent sponsored partnerships have invested. WNC & Associates, Inc. will send to
any prospective investor upon request and without a charge a copy of Table VI.

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     None of the 57  structured  partnerships  entailed  low income  housing tax
credit offerings. Of the 66 sponsored partnerships,  14 public and 36 non-public
partnerships  entailed low income housing tax credit  offerings.  As of December
31,  1998,  the  50  tax  credit   partnerships   had  raised  an  aggregate  of
approximately  $349,270,000 from more than 13,100 investors, and had invested in
a  total  of  474  apartment  complexes  at an  aggregate  acquisition  cost  of
approximately $830,296,000 in the jurisdictions set forth below. Thirteen of the
50 tax credit  partnerships  have held one or more of their apartment  complexes
for the full 10-year credit period.












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<PAGE>


               All                                          All
               Structured                                   Structured
               and             Tax                          and         Tax
               Sponsored       Credit                       Sponsored   Credit
               Partner-        Partner-                     Partner-    Partner-
               ships           ships                        ships       ships


Alabama             18             18        Nebraska             8         7
Arizona             11              8        Nevada               3         3
Arkansas            17             17        New Mexico          17        16
California         136             95        New York             5         5
Colorado             1            ---        North Carolina      33        33
Florida             14              8        Ohio                10         4
Georgia              6              5        Oklahoma            13        10
Idaho                2              2        Oregon               5         5
Illinois            16             16        Pennsylvania         3         3
Indiana              6              6        South Carolina      18        12
Iowa                10             10        South Dakota         1         1
Kansas               4              3        Tennessee           28        27
Kentucky             4              3        Texas               94        83
Louisiana           15             12        U.S. Virgin Islands  1       ---
Maryland             2              2        Utah                 1       ---
Michigan             3              3        Virginia             6         5
Minnesota            2              2        Washington           3         2
Mississippi         12             11        West Virginia        4       ---
Missouri            20             17        Wisconsin           18        18
Montana              1              1        Wyoming              1         1



    Of the 50 tax credit sponsored partnerships and their 474 properties,

    o     approximately 70 different local limited partnership sponsor/property
          developer teams were involved,

    o     no sponsor/developer team was involved in more than 5% of the
          properties,

    o     approximately 1% of the properties generated historic tax credits,

    o     approximately 38% of the properties are rented exclusively to seniors;
          seniors may be tenants in the other properties as well,



                                       125

<PAGE>

    o     as to financing,

         o        approximately  70% of the properties  were financed using debt
                  provided  by the  Farmers  Home  Administration  or the  Rural
                  Development of the U.S.
                  Department of Agriculture,

         o        approximately 1.5% of the properties were financed using state
                  or local bonds, and

         o        approximately  19% of the properties were financed using other
                  below-market-  interest-rate   indebtedness,   including  debt
                  provided under the Home Investment Partnership program,

    o    after investment of their capital and other than in connection with the
         sale of property, only one of the partnerships allocated taxable income
         other than portfolio income to its investors,

    o    all of the  local  general  partners  or the  guarantor's  of the local
         general  partners'   obligations   satisfied  the  financial  condition
         requirement set forth under  "Investment  Objectives and Policies - The
         Local General Partners,"

    o     the WNC-partnerships have an interest of:

        o         90% to 99.99% in more than 99% of the properties,

        o         50% to 90% in approximately 0.2% of the properties, and

        o         less than 50% in approximately 0.6%  of the properties, and

        o         as to location,

        o         approximately 70% are located in rural communities,

        o         approximately 12% are located in suburban areas,

        o         approximately 16% are located in small cities,

        o         approximately 2% are located in large cities, and

        o         there is no geographic concentration of better or worse
                  performing properties


                                       126

<PAGE>



    Of the 50 tax  credit  sponsored  partnerships,  14  public  and 22  private
partnerships commenced their offerings during the period between January 1, 1989
and December 31, 1998. See "Public Partnerships Sponsored in Last Ten Years" and
"Private Partnerships  Sponsored in Last Ten Years" below. These 36 partnerships
were  organized  to  invest  in  other  limited  partnerships  owning  apartment
complexes  benefitting  from  low  income  housing  tax  credits  and,  in  most
instances,  one or more other  forms of  government  assistance.  Other forms of
government  assistance include mortgage loan subsidies,  which may be availed of
by the Series. See "Other Government Assistance Programs."

Public Partnerships Sponsored in Last Ten Years

    The 14 public partnerships sponsored in the last 10 years are:

o   WNC Housing Tax Credit Fund, L.P. ("HTCF"),

o   WNC California Housing Tax Credits, L.P. ("CHTC"),

o   WNC Housing Tax Credit Fund II, L.P. ("HTCFII"),

o   WNC California Housing Tax Credits II, L.P. ("CHTCII"),

o   WNC Housing Tax Credit Fund III, L.P. ("HTCFIII"),

o   WNC California Housing Tax Credits III, L.P. ("CHTCIII"),

o   WNC Housing Tax Credit Fund IV, L.P., Series 1 ("HTCFIV Series 1"),

o   WNC Housing Tax Credit Fund IV, L.P., Series 2 ("HTCFIV Series 2"),

o   WNC California Housing Tax Credits IV, L.P., Series 4 ("CHTCIV Series 4"),

o   WNC California Housing Tax Credits IV, L.P., Series 5 ("CHTCIV Series 5"),

o   WNC Housing Tax Credit Fund V, L.P., Series 3 ("HTCFV Series 3"),

o   WNC Housing Tax Credit Fund V, L.P., Series 4 ("HTCFV Series 4"),

o   WNC Housing Tax Credit Fund VI, L.P., Series 5 ("HTCFVI Series 5"), and

o   WNC Housing Tax Credit Fund VI, L.P., Series 6 ("HTCFVI Series 6").

                                       127

<PAGE>



With the  exception of HTCFVI Series 6, each of the 14 public  partnerships  had
completed  its  offering  as of December  31,  1998.  HTCFVI  Series 6 has since
completed its offering.

    WNC & Associates,  Inc. will send to any  prospective  investor upon request
and without charge copies of the most recent report on Form 10-K filed by any of
the  public  partnerships  with the SEC which  have done so,  and will send upon
request, for a reasonable fee, the exhibits to such Form 10-K.

    Through December 31, 1998, the 14 public  sponsored  partnerships had raised
an aggregate of  approximately  $183,900,000  in capital  contributions  from an
aggregate  of  approximately  11,100  investors  and  invested in a total of 239
apartment properties located in the following jurisdictions:

Alabama             16             Mississippi               7
Arizona              4             Missouri                  9
Arkansas             8             Nebraska                  7
California          49             New Mexico                8
Florida              2             New York                  3
Georgia              2             North Carolina           16
Idaho                1             Ohio                      4
Illinois             8             Oklahoma                  4
Indiana              4             Oregon                    3
Iowa                 8             South Carolina            2
Kansas               2             South Dakota              1
Kentucky             1             Tennessee                 9
Louisiana            3             Texas                    41
Maryland             1             Virginia                  4
Michigan             1             Wisconsin                11

    The aggregate  mortgage debt  encumbering  the properties was  approximately
$284,900,000   and  the  aggregate   acquisition  cost  of  the  properties  was
approximately   $426,700,000.   At  the  times  of  the  14   public   sponsored
partnership's  investments  therein 81 of the properties were existing apartment
complexes  and  158  were  under   development  or  construction  by  the  local
partnerships which own them.

    All of  the  14  public  sponsored  partnerships  have  as  their  principal
investment  objective  providing Federal low income housing tax credits to their
investors.  CHTC, CHTCII, CHTCIII, CHTCIV Series 4, and CHTCIV Series 5 have the
additional objective of providing California low income housing tax credits.


                                       128

<PAGE>



    Tax credit  information with regard to the 14 public sponsored  partnerships
is set forth in the tables which follow:


















                                       129

<PAGE>

<TABLE>

                              Federal Credit Partnerships


Offering                                              Credits Received Per $10,000 Investment                        Federal
Commence-    Partnership                                                                                        Credit Years
ment         Name       Total   1998    1997     1996     1995   1994    1993    1992   1991    1990   1989     Remaining(1)
----         ----       -----   ----    ----     ----     ----   ----    ----    ----   ----    ----   ----     ------------

<C>          <S>         <C>     <C>    <C>      <C>      <C>    <C>     <C>     <C>    <C>     <C>    <C>         <C>
1989         HTCF     $12,990 $1,410  $1,410   $1,410   $1,410 $1,410  $1,410  $1,410 $1,400  $1,640   $80          3
1990         HTCFII    11,480  1,020   1,450    1,450    1,450  1,460   1,380   1,210  1,300     760    --          5
1992         HTCFIII    8,140  1,570   1,570    1,570    1,520  1,190     680      40     --      --    --          7
1993         HTCFIV
              Series 1  5,540  1,420   1,430    1,360    1,010    320      --      --     --      --    --          8
1994         HTCFIV
              Series 2  4,330  1,240   1,130    1,050      700    210      --      --     --      --    --          8
1995         HTCFV
              Series 3  2,790  1,300     840      620       30     --      --      --     --      --    --          9
1996         HTCFV
              Series 4  1,130    800     190      140       --     --      --      --     --      --    --         10(2)
1997         HTCFVI
              Series 5    200    200      --       --       --     --      --      --     --      --    --         11
1998         HTCFVI
              Series 6     --     --      --       --       --     --      --      --     --      --    --         --

</TABLE>

                                        130

<PAGE>

<TABLE>




                             Federal and California Credit Partnerships


Offering                                            Credits Received Per $10,000 Investment                          Federal
Commence-    Partnership                                                                                        Credit Years
ment         Name       Total    1998   1997   1996    1995     1994     1993    1992   1991    1990   1989     Remaining(1)
----         ----       -----    ----   ----   ----    ----     ----     ----    ----   ----    ----   ----     ------------

<C>          <S>         <C>      <C>    <C>    <C>     <C>     <C>      <C>     <C>    <C>     <C>      <C>        <C>
1989         CHTC     $15,640 $   990 $  990 $  990  $  990   $1,180   $1,720  $2,360 $2,590  $2,270   $1,560        3
1991         CHTCII    12,460   1,250  1,440  1,530   2,060    1,940    1,780   1,810    650      --       --        2(2)
1993         CHTCIII    7,720   1,300  1,790  1,970   1,800      800       60      --     --      --       --        8
1994         CHTCIV
               Series 4 5,480   1,660  1,770  1,340     710       --       --      --     --      --       --        8
1995         CHTCIV
               Series 5 2,410   1,430    980     --      --       --       --      --     --      --       --        9

<FN>
(1)  As of December 31, 1998.
(2)  These sponsored partnerships will generate a small amount of low income
     housing tax credits for four years beyond the stated number of years due to
     increases in qualified basis.
</FN>
</TABLE>

                                        131

<PAGE>



Private Partnerships Sponsored in Last Ten Years

    As of December 31, 1998, the 22 private  partnerships  sponsored in the last
10 years involved an aggregate of approximately  $145,400,000 in commitments for
capital contributions payable in installments from an aggregate of approximately
908 investors.  These 22 private sponsored  partnerships  invested in a total of
182 apartment properties located in the following jurisdictions:

Alabama                   2             Montana              1
Arizona                   4             Nebraska             1
Arkansas                  7             Nevada               3
California               25             New Mexico           7
Florida                   3             North Carolina      13
Georgia                   3             Oklahoma             4
Idaho                     1             Oregon               2
Illinois                  7             Pennsylvania         3
Iowa                      2             South Carolina       9
Kentucky                  2             Tennessee            9
Louisiana                 9             Texas               42
Maryland                  1             Virginia             1
Michigan                  1             Washington           1
Minnesota                 2             Wisconsin            3
Mississippi               5             Wyoming              1
Missouri                  8

    The aggregate  mortgage debt  encumbering  the properties was  approximately
$212,200,000   and  the  aggregate   acquisition  cost  of  the  properties  was
approximately $327,500,000.

    All of  the 22  private  sponsored  partnerships  have  as  their  principal
investment  objective  providing Federal low income housing tax credits to their
investors.  Five of the 22 private  sponsored  partnerships  have the additional
objective of providing California low income housing tax credits.

    Tax credit information with regard to the 22 private sponsored  partnerships
discussed herein and the 14 other private  sponsored  partnerships  organized to
provide low income housing tax credits is set forth in the tables which follow:


                                       132

<PAGE>

<TABLE>



                              Federal Credit Partnerships

Offering                                                                                                                     Federal
Commence-  Partnership                                            Credits Received Per $10,000 Investment(1)            Credit Years
ment       Name          Total     1998   1997   1996    1995    1994   1993    1992    1991 1990(3)  1989   1988  1987 Remaining(2)
----       ----          -----     ----   ----   ----    ----    ----   ----    ----    ---- -------  ----   ----  ---- ------------

<C>     <S>                 <C>     <C>   <C>    <C>     <C>     <C>    <C>     <C>     <C>    <C>    <C>    <C>     <C>      <C>
1987    Pepper Tree (4)  $15,660 $  660 $1,350  1,470   1,470  $1,470 $1,470  $1,470  $1,470 $2,370 $1,530 $  900 $   30       0
1987    East Bay          14,320     --    380  1,360   1,350   1,360  1,360   1,360   1,360  1,670  1,700  1,400  1,020       0
1987    Sequoia Manor     14,990    160  1,390  1,370   1,370   1,370  1,370   1,350   1,380  2,220  1,460  1,340    210       0
1987    Bayou             13,890     --  1,000  1,290   1,290   1,290  1,290   1,290   1,290  2,110  1,400  1,330    310       0
1987    Laurel Hill       15,130  1,180  1,180  1,320   1,320   1,320  1,320   1,320   1,300  2,090  1,320  1,230    230       0(5)
1988    Ridgetop          14,980  1,280  1,390  1,390   1,390   1,390  1,390   1,390   1,390  2,250  1,500    220     --       0(6)
1989    Alta Mesa         13,050  1,320  1,320  1,320   1,320   1,320  1,320   1,320   1,320  1,950    540     --     --       2
1990    WNC-90            11,450  1,400  1,400  1,400   1,400   1,400  1,400   1,400   1,400    250     --     --     --       2
1991    Shelter Resource
          XIX             10,780  1,420  1,440  1,440   1,440   1,440  1,440   1,440     720     --     --     --     --       3
1991    WNC Tax Credits
           XX             11,130  1,430  1,460  1,460   1,460   1,460  1,460   1,460     940     --     --     --     --       3
1991    WNC Tax Credits
           XXI             9,240  1,360  1,360  1,360   1,360   1,360  1,360   1,030      50     --     --     --     --       4
1992    WNC Tax Credits
           XXII            9,550  1,410  1,410  1,410   1,410   1,410  1,410   1,090      --     --     --     --     --       4
1992    WNC Tax Credits
           XXIII           9,240  1,400  1,400  1,400   1,400   1,400  1,370     870      --     --     --     --     --       4
1992    WNC Tax Credits
           XXV             7,820  1,380  1,380  1,380   1,380   1,280    870     150      --     --     --     --     --       6
1993    WNC Tax Credits
           XXVI            7,480  1,330  1,330  1,330   1,330   1,320    840      --      --     --     --     --     --       5
1993    WNC Tax Credits
           XXVIII          5,950  1,300  1,300  1,300   1,300     640    110      --      --     --     --     --     --       6
1993    WNC Tax Credits
           XXIX            5,840  1,310  1,310  1,290   1,110     790     30      --      --     --     --     --     --       7
1994    WNC Tax Credits
           XXX             4,790  1,230  1,230  1,220   1,000     110     --      --      --     --     --     --     --       7
1994    ITC I              5,910  1,520  1,530  1,670     780     410     --      --      --     --     --     --     --       8
1995    ITC II             3,420  1,470  1,290    590      70      --     --      --      --     --     --     --     --       9
1996    ITC III            1,380  1,000    380     --      --      --     --      --      --     --     --     --     --      11
1997    ITC V                680    660     20     --      --      --     --      --      --     --     --     --     --      11
1998    ITC VI               220    220     --     --      --      --     --      --      --     --     --     --     --      12

</TABLE>


                                       133

<PAGE>

<TABLE>


                                          Federal and California Credit Partnerships

Offering                                                                                                                     Federal
Commence- Partnership                                              Credits Received Per $10,000 Investment(1)           Credit Years
ment      Name           Total   1998   1997    1996   1995   1994    1993    1992   1991 1990(3)    1989    1988  1987 Remaining(2)
----      ----           -----   ----   ----    ----   ----   ----    ----    ----   ---- -------    ----    ----  ---- ------------

<C>       <S>            <C>      <C>    <C>    <C>    <C>    <C>     <C>     <C>    <C>     <C>     <C>     <C>    <C>       <C>
1987      Beech Villa  $18,610 $   --   $860  $1,360 $1,360 $1,350  $1,350  $1,350 $1,350  $2,670  $3,210  $3,210  $540        0
1988      Elmwood Villa 18,590    570    990     990    990    990     990   1,330  2,610   4,010   3,460   1,660    --        1
1988      Poplar Villa  18,150    530    970     970    970    970     970     970  2,280   3,420   3,410   2,690    --        0
1988      Olive Tree    18,220    760    970     970    970    970     970     970  1,620   3,990   3,310   2,720    --        0
1988      Pine Rock     17,410    940    940     940    940    940     880   1,220  3,280   3,810   3,240     280    --        1
1988      Mesa Verde    17,030    970  1,030   1,020  1,030  1,030   1,030   1,870  1,690   3,610   2,760     990    --        1
1988      Sunfield      16,790  1,140  1,340   1,340  1,340  1,340   1,340   1,340  1,650   3,090   2,080     790    --        1
1988      Foxglove      14,600  1,360  1,360   1,360  1,360  1,360   1,550   2,020  2,020   1,920     290      --    --        2
1989      Elliot Place  16,500  1,140  1,200   1,200  1,200  1,200   1,200   1,670  2,460   3,200   2,030      --    --        2
1990      Wheatridge    13,120  1,120  1,120   1,120  1,120  1,120   1,480   2,240  2,230   1,570      --      --    --        3
1992      WNC Tax Credits
                XXIV    11,110  1,260  1,260   1,260  1,740  2,180   2,180   1,230     --      --      --      --    --        4
1993      WNC Tax Credits
                XXVII    8,630  1.270  1,290   1,560  1,750  1,740   1,020      --     --      --      --      --    --        6
1997      CTC            1,080    870    210      --     --     --      --      --     --      --      --      --    --       11
<FN>
(1)  Represents the return received by investors utilizing deferred payment
     purchase plans.  In many instances the respective returns to cash investors
     were higher than those listed above because the use of
     deferred payment purchase notes entailed the payment of interest.
(2)  As of December 31, 1998.
(3)  In 1990 certain partnerships were permitted to, and did, elect to utilize
     150% of the Federal low income housing tax credit otherwise allowable for
     1990.
(4)  Pepper Tree originally offered Federal low income housing tax credits only.
     After the investors were admitted to Pepper Tree, the local general
     partners obtained California low income housing tax credits as well, which
     are not reflected in this chart.
(5)  These sponsored  partnerships  will  generate  a small amount of low income
     housing tax credits for five years beyond the stated number of years due to
     increases in qualified basis.
(6)  These sponsored  partnerships  will  generate  a small amount of low income
     housing tax credits  for four years beyond the stated number  of  years due
     to increases in qualified basis.
</FN>
</TABLE>

                                      134

<PAGE>



Sales of Properties; Terminations of Partnerships

    As of December 31, 1998,  nine of the  structured  partnerships  had  either
sold or  refinanced  nine  apartment  complexes,  returning  to their  investors
between  approximately  100% and 200% of their  invested  capital in addition to
providing tax deductions  averaging in excess of 200% of their invested capital.
One structured  partnership  sold its property and terminated  operations.  Five
structured partnerships refinanced their properties and liquidated the interests
of the original limited partners.  Limited partnership interests were offered to
new investors. WNC & Associates,  Inc. has no involvement with the reconstituted
partnerships.  Three of the  structured  partnerships  sold their  properties to
three  other  partnerships.  After the  general  partner  of those  three  other
partnerships obtained tax credits for the properties, a partnership sponsored by
WNC & Associates,  Inc.  purchased the limited  partnership  interests  therein.
These events  occurred  prior to 1994 and,  consequently,  are not  reflected in
Table IV or Table V.

    As of  December 31, 1998,  six  properties  had been sold by five sponsored
partnerships.  All of these  transactions are included in Table V. Of these five
sponsored  partnerships,  one  terminated  its  operations.  The results of that
program are described in Table IV.




                                       135

<PAGE>


Major Adverse Events

     In  cases  where  projects  have  failed  to  perform  as  expected,  WNC &
Associates, Inc. has:

o   intensified its monitoring operations,

o   visited the projects,

o   attempted to provide general advice to the local general partners,

o   removed and replaced the local general partners, and/or

o   attempted to help seek a resolution of pending problems.

Specifically, in the last ten years, the following events occurred:

o   In a private  WNC-partnership  sponsored  in 1996,  WNC &  Associates,  Inc.
    removed  MidSouth  Development,  Inc.  as local  general  partner of a local
    limited  partnership in 1997 after construction  defects were discovered and
    the local general partner declared bankruptcy. The WNC-partnership purchased
    the bridge loan at its face value upon maturity  thereof.  The local limited
    partnership  completed  construction  using  other  funds  loaned  by  WNC &
    Associates,  Inc. and the WNC-partnership.  Thereafter, the WNC- partnership
    sold its interest in the local limited partnership.

o   In a public  WNC-partnership  sponsored  in  1993,  WNC &  Associates,  Inc.
    removed six local general partners from a local limited  partnership in 1997
    after  they  violated   provisions   of  the  local  limited   partnership's
    partnership  agreement.  The local  general  partners  failed to obtain  the
    approval of the WNC-partnership  prior to refinancing the existing debt. The
    remaining  local  general  partner,  an  agency  of the  county in which the
    property is located, has been replaced by an experienced non-profit entity.

o   In 1997 the IRS issued notices of adjustment regarding five properties owned
    by four prior private  partnerships  and developed by the same local general
    partner. Four private WNC- partnerships were involved.  The IRS claimed that
    development  fees  paid to the  local  general  partner  were  not  properly
    includable  in  the   depreciable  and  eligible  bases  of  the  respective
    properties.  After  filing a  petition  for  readjustment  before the United
    States  Tax  Court,   each  of  the  local  limited   partnerships  and  the
    WNC-partnerships  reached a settlement  with the IRS in 1998 which  provided
    that, for each property:

    o    the depreciable basis thereof was unchanged,


                                       136

<PAGE>


    o    the eligible basis thereof was reduced by a portion of the development
         fees,

    o    a  portion  of  the  reduction  in  eligible  basis  was  eligible  for
         amortization as organization expenses, and

    o    the actual  deficiency  for 1993 to 1996, in an immaterial  amount on a
         per unit basis for each WNC-partnership,  was assessed for 1996 and was
         equal to the:

         o     reduction of tax credits resulting from the reduction in eligible
               basis, less

         o     the deduction resulting from the amortization of the reclassified
               organization expenses.

    Tax credits for 1997 and all years  thereafter  are reduced in an immaterial
    amount on a per unit basis as a result of the  reduction in eligible  basis.
    Unless  prohibited by law WNC & Associates,  Inc. will pay the  deficiencies
    for 1996 and  1997.  The  partnership  agreements  of  these  local  limited
    partnerships  were  negotiated  in 1990,  prior to the  time  local  general
    partners were required to pay tax deficiencies.

o   Also in 1997,  Howard  Miller,  the local  general  partner  of three  local
    limited  partnerships  which were  invested in by a private  WNC-partnership
    sponsored  in  1984,   transferred  the  properties  of  the  local  limited
    partnerships  to  one  transferee   without  seeking  the  approval  of  the
    WNC-partnership.  The  transfers  were  made in  consideration  of relief of
    indebtedness  owed by the local general  partner.  Each of the local limited
    partnerships has brought  an action to have the  transfer  set aside and  to
    remove  the local general  partner.  As the  properties are located in three
    states,  three lawsuits have been commenced.   In all three of those actions
    the court ruled to  remove the local general  partner  and to  declare  null
    and void the transfer.  The only  outstanding  issue is whether or  not  the
    local  limited partnerships are entitled to punitive damages.

o   In a private WNC-partnership  sponsored in 1997, a local limited partnership
    encountered  significant  construction  cost  overruns.  The  local  general
    partners agreed to defer receipt of their development fee and paid  one-half
    of the construction cost overruns. The WNC-partnership paid the balance. The
    construction loan was converted to a permanent loan secured by a first trust
    deed, and all junior indebtedness originally anticipated was obtained by the
    local limited partnership.  The property is successfully  operating  and  is
    paying all its obligations. The local general partners and WNC & Associates,
    Inc. are seeking a new first permanent loan because the interest rate on the
    converted loan is very high.

o   In a public WNC-partnership  sponsored  in  1997,  an apartment complex of a
    local limited partnership has been operating at a deficit since construction


                                       137

<PAGE>

    completion in the first calendar quarter of 1999.  The local general partner
    has been paying the operating deficit, but has threatened to stop doing  so.
    The operating deficit arises from an occupancy rate of from only 10% to 15%.
    No action will be taken against the local general partner  as  long  as  the
    local general  partner  continues  to  comply  with  his  obligation to fund
    operating deficits. However, WNC & Associates, Inc. is investigating whether
    another property manager could increase the occupancy rate.

o   WNC & Associates, Inc. has  identified a  potential problem with a developer
    who is the local general  partner of six local limited partnerships invested
    in  by  three  public  WNC-partnerships sponsored in 1994 and 1995.  Five of
    the  properties  have an operating deficit. Two of the properties still have
    construction  debt  in place. Until approximately $400,000 per each  of  the
    latter two properties is paid to the  lender,  the  construction  loans will
    not  be  converted  to permanent loans.  Although the local general  partner
    is paying the operating deficit,  WNC  &  Associates,  Inc.  has  reason  to
    believe  that  he  has substantial  indebtedness.  WNC & Associates, Inc. is
    still analyzing its potential courses of action.

    To the  knowledge  of WNC &  Associates,  Inc.,  there  have  been no  major
adverse events concerning the structured  partnerships  during the last 10 years
which would be of material  interest to the  investors.  However,  because WNC &
Associates,  Inc.  has  limited or no  involvement  with many of the  structured
partnerships,  it  may  be  unaware  of  the existence of such events. Investors
should not take the lack of disclosure of such major adverse events to mean that
the structured partnerships have not encountered such major adverse events.






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                        FEDERAL INCOME TAX CONSIDERATIONS

Introduction

    The following discussion  summarizes the material Federal income tax aspects
of the purchase,  ownership and  disposition  of Units.  It also  summarizes the
Federal income tax opinion of Derenthal & Dannhauser, counsel to the Series, WNC
& Associates,  Inc. and their affiliates. The low income housing tax credits are
not  discussed  below,  but are  discussed  under  "The Low Income  Housing  Tax
Credit." This discussion, Derenthal & Dannhauser's opinion and the discussion of
the low income  housing  tax  credits are based on the  Internal  Revenue  Code,
Treasury Regulations thereunder,  published administrative rulings, and judicial
decisions in effect on the date of this prospectus.  Legislation  enacted in the
years  since 1986 has  substantially  altered  the  Federal  income tax  system,
particularly  as it relates to the tax  consequences  of  investments by limited
partnerships  in  real  estate.  Consequently,  significant  uncertainty  exists
regarding  aspects of the  taxation of limited  partnerships.  Furthermore,  IRS
regulations  and  interpretations  in this area have not yet been written or are
under continuing  review.  No assurance can be given that future  legislative or
administrative  changes or court  decisions  will not  significantly  modify the
statements  and  opinions  expressed in this  prospectus.  If such changes had a
retroactive effect, they could adversely affect an investment in the Units.

Summary

    The  following  is a summary  of, and is  qualified  by, the more  extensive
discussion  of the  Federal  income  tax  consequences  set forth  below in this
section.

    Opinion of Counsel.  In  connection  with its  preparation  of the following
discussion  Derenthal & Dannhauser has rendered its opinion as to certain of the
material Federal income tax issues. With regard to certain other matters counsel
is unable to render an opinion.  See "Opinion of  Counsel."  The Series will not
apply for a ruling from the IRS with respect to any Federal income tax matters.

    Classification  as a Partnership.  As indicated  throughout this prospectus,
the low income  housing tax credits will be the primary tax benefit to investors
in Units.  However, the low income housing tax credits will only be available to
investors  in a Series if, among other  things,  the Series is  classified  as a
partnership  for Federal income tax purposes.  As indicated  below,  Derenthal &
Dannhauser  has rendered its opinion  that each Series will be  classified  as a
partnership in this regard. See "Classification as a Partnership."

    Tax Treatment of Investors.  The Series  themselves  will not be subject  to
Federal income tax. See "Tax Treatment of Investors." Rather, each investor will

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report  on  his  own  income  tax  return  his  share  of  his  Series'  taxable
income,  tax losses and tax  credits,  which  includes  his share of the Series'
share of such items from the local  limited  partnerships.  See  "Investment  in
Local Limited Partnerships."

    An investor's  share of cash from the sale of an apartment  complex will not
ordinarily  equal his share of  taxable  income  from the  sale.  Therefore,  an
investor  may have  taxable  income for a year in an amount  which  exceeds  his
distributions  for the year. See "Tax Treatment of Investors,"  "Tax Liabilities
in Later  Years,"  "Sales or Exchanges of Local  Limited  Partnership  Property;
Depreciation  Recapture"  and  "Sales or  Exchanges  of Units and Local  Limited
Partnership Interests; Transfers by Gift or at Death."

    An  investor's  ability to claim his tax credits and to deduct tax losses is
limited. For example,  because the Series' credits and losses will be classified
as from a passive  activity for most  investors,  an investor  might need income
from other sources to fully use his tax credits.  In most instances he will need
income from other sources to deduct his tax losses.  See  "Limitations on Losses
and  Credits  from  Passive   Activities"  and  "General   Business  Tax  Credit
Limitations." In addition:

o   An investor may not deduct tax losses in excess of his basis in his Units.
    See "Tax Basis for the Units."

o   An investor may not deduct tax losses in excess of his amount at risk in his
    Series' activities.  See "Application of At Risk Limitations."

o   An investor may not claim low income housing tax credits  in excess  of  the
    amount he has at risk with respect to expenditures  qualifying for  the  tax
    credits.  See "The Low Income Housing Tax  Credit - Utilization of  the  Low
    Income Housing Tax Credit."

o   An investor may not claim tax losses if his investment in his Series  and/or
    the Series' activities are not engaged in for profit.  See "Profit Motive."

    Historic Tax Credits and  Recapture.  In addition to  low income housing tax
credits,   historic  tax  credits   generally   are   available   for  qualified
rehabilitation expenditures incurred in improving certified historic structures.
If an expenditure respecting such a building is a qualified expenditure,  20% of
the  expenditure  will give rise to an historic tax credit.  See  "Historic  Tax
Credit."

    Historic  tax  credits  are  subject  to  recapture  in  the  event of early
disposition of the building. See "Historic Tax Credit Recapture."


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     Series  Allocations.  The Internal  Revenue  Code and Treasury  Regulations
include  highly-technical  and  complex  rules  regarding  the  tax  allocations
provisions which are included in a partnership agreement. WNC & Associates, Inc.
has drafted  the  partnership  agreement  of each Series in an attempt to comply
with such rules. For a discussion of the rules see "Series Allocations."

     The Internal  Revenue Code also  prohibits  the  allocation to a partner of
partnership items incurred before the admission of the partner as a partner. See
"Allocations Before Admission."

     Series Deductions.  In general, the Internal Revenue Code requires that the
Series use the  accrual  method of  accounting  rather  than the cash  method of
accounting.  However,  the Internal  Revenue Code provides special rules for the
treatment of such items as:

o   depreciation,

o   costs and expenses of capital assets,

o   fees to partners,

o   organization expenses,

o   syndication expenses, and

o   other items.

See  "Basis  of  Local  Limited  Partnerships  in  Their  Apartment  Complexes,"
"Depreciation,"  "Deductibility of Fees,"  "Organization and Offering  Expenses"
and "Start-Up Expenditures."

     Sale of  Apartment  Complexes.  Gain or  loss on the  sale of an  apartment
complex will equal the amount of consideration received, minus the local limited
partnership's  basis in the apartment complex.  For these purposes the amount of
consideration  received  will  include the amount of any  liability to which the
apartment  complex was  subject.  This rule  applies to all  dispositions  of an
apartment  complex,  including a  foreclosure,  so that the tax  liability  on a
disposition may exceed the cash received therefor. The manner in which the local
limited  partnership  held the property will  determine the character of gain or
loss as  ordinary  or  capital,  and as  passive  or  portfolio.  See  "Sales or
Exchanges of Local Limited Partnership Property; Depreciation Recapture."

     Transfers  of Units.  On a sale of his Units,  an investor  will  recognize
taxable  gain in an amount  equal to the excess,  if any,  of the  consideration
received for the Units, over his basis in  the  Units.  For these  purposes  the

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<PAGE>



amount  of  consideration   received   will  include  the  investor's  share  of
Series  or  local  limited   partnership   nonrecourse   liabilities.   The  tax
consequences  of a transfer  of Units as a gift or upon the death of an investor
will depend upon, among other things, the investor's  particular  circumstances.
See  "Sales  or  Exchanges  of Units and Local  Limited  Partnership  Interests;
Transfers by Gift or at Death."

     Liquidation.  Upon  liquidation  of his Series,  an investor will recognize
gain if the cash  received  by him and his  share  of  Series  or local  limited
partnership  nonrecourse  liabilities  exceeds  his  basis  in  his  Units.  See
"Dissolution and Liquidation of a Series or Local Limited Partnership."

     Section 754  Election.  No Series is  expected  to file an  election  under
Section 754 of the Internal Revenue Code. The absence of an election may have an
adverse effect on the marketability and sales price of Units. See "Elections."

     These and other Federal income tax issues are discussed below. However, the
following  discussion  does  not  deal  with  Federal  income  tax  consequences
applicable  to all  categories  of  investors,  some of which may be  subject to
special  rules.  The following  discussion  is not a substitute  for careful tax
planning  and  should  not be used as one.  Prospective  investors  are urged to
consult their own tax advisers, attorneys or accountants with specific reference
to their own tax  situations  and the  effect  thereon of an  investment  in the
Units.

Opinion of Counsel

    Derenthal & Dannhauser has reviewed the sections of this prospectus entitled
"Federal  Income Tax  Considerations,"  "Risk  Factors - Risks  arising from the
Internal  Revenue Code rules  governing tax credits" and "- Tax risks other than
those  relating  to tax  credits"  and  "The Low  Income  Housing  Tax  Credit."
Derenthal  &  Dannhauser  has  rendered  its  opinion  that,  to the  extent the
summaries of Federal income tax consequences to the investors set forth in those
sections involve matters of law:

o   such  statements  are accurate in all material  respects  under the Internal
    Revenue Code, Treasury Regulations and existing interpretations thereof, and

o   such  statements  address  fairly the  principal  aspects  of each  material
    Federal income tax issue relating to an investment in the Series.

Derenthal & Dannhauser is of the opinion that, for Federal income tax purposes:

o   each Series is classified as a partnership and not as an association taxable
    as a corporation,


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o   upon admission, an investor will be a limited partner of his Series,

o   each  investor  will include in his tax basis of his Units his share of bona
    fide nonrecourse  liabilities of his Series,  including his Series' share of
    bona fide nonrecourse liabilities of each local limited partnership,

o   the IRS will not significantly modify the allocations of taxable income, tax
    losses and tax credits provided for in the Series' partnership agreement,

o   taxable  income,  tax losses and tax credits of the  Series,  other than the
    portion thereof  classified as portfolio income,  will be treated as derived
    from a passive activity, and

o   no Series  will be  considered  a  publicly  traded  partnership  within the
    meaning of Section 7704 of the Internal Revenue Code.

Each  of  these  opinions  is  discussed  in  greater  detail  below  under  the
appropriate  heading.  Each of these  opinions  is subject to and based upon the
assumptions and representations described therein.

    Despite the  foregoing,  no Series has yet  acquired any interest in a local
limited partnership. Tax benefits to the investors depend in large part upon the
characteristics of the Series' particular investments. Derenthal & Dannhauser is
unable to render  an  opinion  at this time  regarding  the  application  of the
Federal  income tax laws to such  investments.  However,  as a condition  to its
investment  in a local limited  partnership,  a Series will obtain an opinion of
counsel,  which may or may not be Derenthal & Dannhauser,  substantially  to the
effect that for Federal income tax purposes:

o   the local limited partnership is classified as a partnership and  not  as an
    association taxable as a corporation,

o   the local limited  partnership  is  the  owner  of  the  relevant  apartment
    complex,

o   upon admission, the Series  will  be  a limited partner of the local limited
    partnership,

o   the IRS will not significantly modify the allocations of taxable income, tax
    losses and tax credits  contained in the partnership  agreement of the local
    limited partnership,

o   for purposes of  determining  its tax basis and amount at risk for the local
    limited  partnership  under  Internal  Revenue Code Sections 42 and 465, the
    Series  will be  permitted  to take into  account  its  share of such  local
    limited partnership's nonrecourse liabilities,


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<PAGE>



o   the apartment complex will qualify for tax credits, and

o   the local  limited  partnership  will not be  considered  a publicly  traded
    partnership within the meaning of Section 7704 of the Internal Revenue Code.

Any such opinion may be based on assumptions and on  representations  from WNC &
Associates,  Inc. and the local  general  partners.  In addition to reaching the
foregoing  conclusions,  such opinion will conclude that the Series will realize
substantially  more  than  half of the  material  Federal  income  tax  benefits
anticipated from such investment.

     No legal opinion has  been obtained,  and WNC &  Associates,  Inc. does not
anticipate that an opinion will be obtained, regarding:

o   determinations, the correctness of  which depends  in  significant  part  on
    future factual circumstances,

o   matters peculiar to individual investors, or

o   matters in which opinions are not customarily obtained.

Such determinations and matters include:

o   the allocation of basis among the components of a property,  particularly as
    between  buildings,  the cost of which is  depreciable,  and the  underlying
    land, the cost of which is not depreciable,

o   the  estimated  useful  lives  for   depreciation   purposes  of  properties
    ineligible for the cost recovery methods of the Internal Revenue Code,

o   the  characterization  of expenses and payments  made to or by a Series or a
    local  limited  partnership,  including  the extent to which  such  payments
    represent deductible fees or interest,

o   the portion  of the cost of any apartment  complex  that  qualifies  for tax
    credits,

o   the application to any specific investor  of the  limitation  on the  use of
    passive activity losses and credits. Investors must determine for themselves
    the extent to which they may claim tax credits and tax losses,

o   the  classification  of any Series as a dealer in interests in local limited
    partnerships  or of any local limited  partnership  as a dealer in apartment
    complexes, and

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<PAGE>



o   the  application  of  the  alternative  minimum  tax  to, or the calculation
    thereof by, any investor.

    There can be no assurance,  therefore,  that the IRS will not challenge some
of the  deductions to be claimed by a Series,  or the allocation of its items of
taxable income,  tax losses and tax credits among its partners.  Such challenge,
if  successful,  could have a  detrimental  effect on the ability of a Series to
realize its investment  objectives.  See also "Risk Factors Tax risks other than
those relating to tax credits."

Classification as a Partnership

    Neither Series will apply for an IRS ruling regarding the  classification of
the  Series  for  Federal  income  tax  purposes.  WNC &  Associates,  Inc.  has
represented  that neither  Series will elect to be treated as a corporation  for
Federal  income tax  purposes  under the  Internal  Revenue  Code  Section  7701
Treasury Regulations.  Derenthal & Dannhauser has rendered its opinion that each
Series  will be  classified  as a  partnership  and  will not be  treated  as an
association taxable as a corporation for Federal income tax purposes.  Derenthal
and  Dannhauser's  opinion is based upon the foregoing  representation  of WNC &
Associates, Inc. and the continued effectiveness of the Treasury Regulations. If
the Treasury  Department were to amend its Regulations,  it is possible that the
Series would not qualify as partnerships under the amended regulations.

    Under  Section  7704 of the Internal  Revenue  Code, a  partnership  will be
treated as a corporation  for Federal income tax purposes if the  partnership is
publicly traded. A partnership is publicly traded if its interests are:

o   traded on an established securities market, or

o   readily tradable  on  a  secondary  market  or  the  substantial  equivalent
    thereof.

    An established securities market includes a securities exchange as well as a
regular over-the-counter market.

    Treasury  Regulations  under Internal Revenue Code Section 7704 state that a
secondary market for interests generally is indicated:

o   by  the  existence  of  a  person  standing  ready  to  make a market in the
    interests, or

o   where a holder of the interests has a readily available, regular and ongoing
    opportunity to sell or exchange his interests.


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The participation of the partnership is relevant.  A partnership will be treated
as  participating  in trading when trading in its interests  actually occurs and
the partnership  agreement imposes no meaningful limit on transfer of interests.
A partnership's  right to refuse to recognize transfers is not meaningful unless
the right is actually exercised.

    The  partnership  agreement  of the Series  provides  that a Series will not
recognize  a  transfer  of a Unit  unless  the  transferor  represents  that the
transfer will not occur:

o   through a market maker in the Units, or

o   through a  broker-dealer  that provides a readily  available,  regular,  and
    ongoing opportunity to Unit holders to sell or exchange their Units.

The  partnership  agreement of the Series also  provides  that a Series will not
recognize a transfer of a Unit if in the opinion of counsel such transfer  would
cause the Series to be considered publicly traded. Furthermore,  the partnership
agreement provides that any transfer of a Unit will be void if:

o   the transfer is not made for investment but for resale, and

o   the transferee is a person who makes a market in securities.

Finally, WNC & Associates,  Inc. can amend the partnership agreement of a Series
to the extent necessary to prevent a Series from being treated as an association
taxable as a corporation.  Based on these provisions of the Series'  partnership
agreement  and  on  representations  that  these  provisions  will  be  enforced
according  to their  terms,  Derenthal &  Dannhauser  is of the opinion that the
Series will not be  publicly  traded  within the meaning of Section  7704 of the
Internal Revenue Code.

    Even if a Series is treated as publicly  traded  under  Section  7704 of the
Internal Revenue Code, it will not be classified as a corporation if 90% or more
of its income for the  taxable  year is  qualifying  income.  Qualifying  income
includes  interest,  dividends,  real  property  rents and gain from the sale or
other disposition of real property. WNC & Associates,  Inc. has represented that
90% or more of the gross  income of each Series will  consist of such  interest,
dividends,  real property rents and gains from the sale or other  disposition of
real property. Accordingly, based on this representation, Derenthal & Dannhauser
is of the opinion that the Series will not be treated as associations taxable as
corporations  for Federal income tax purposes under Section 7704 of the Internal
Revenue Code even if the Series were to be considered publicly traded.  However,
see "Limitations on Losses and Credits from Passive Activities" for a discussion
of  additional  restrictions  that may be imposed if the Series were  considered
publicly traded.

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<PAGE>



    If, for any reason, a Series were treated for Federal income tax purposes as
a corporation in any taxable year, income, gain, loss,  deductions,  tax credits
and tax  preferences of the Series would be reflected only on its own tax return
rather than being passed  through to the  partners.  In that event,  an investor
could not claim the low income housing tax credits, historic tax credits and tax
losses to reduce his tax liability. In addition, the Series would be required to
pay Federal income tax at corporate rates on its net income. All or a portion of
any  distributions  to  investors  could be  treated  as  dividends,  taxable as
ordinary  income to the  extent of the  current  and  accumulated  earnings  and
profits of the Series.  Distributions in excess of earnings and profits would be
treated as a return of capital to the extent of the recipient's basis, while the
remainder would be treated as capital gain if the investor's  Units qualified as
capital  assets.  In addition,  a change in the Series'  status for tax purposes
could be a taxable event, in which case the investors could have a tax liability
under  circumstances  where they would not receive a cash  distribution from the
Series.

Investment in Local Limited Partnerships

    The Series will not invest directly in the apartment complexes.  Rather, the
Series  will  invest in local  limited  partnerships  each of which  will own an
apartment  complex.  The availability of tax benefits to investors is dependent,
in the first  instance,  on the  following  general  principles  of  partnership
taxation:

o   Each of the local limited  partnerships  must be classified as a partnership
    for Federal  income tax  purposes,  and not as an  association  taxable as a
    corporation.

o   Each  local  limited   partnership's   allocation  of  income,  gain,  loss,
    deduction,  and tax  credit to the  Series  must have  substantial  economic
    effect or otherwise be in accordance with the Series' interest in such local
    limited partnership.

o   The Series' tax basis in each of the local limited  partnerships must exceed
    the  amounts  of losses  allocated  to the Series  from such  local  limited
    partnership.

o   The Series'  amount at risk in each of the local limited  partnerships  must
    exceed the amount of losses and deductions allocated to the Series from such
    local limited partnership.

o   The  Series'  amount at risk with  respect  to  expenditures  of each  local
    limited  partnership  that  qualify for low income  housing tax credits must
    exceed the amount of such expenditures allocated to the Series.

    The  application of these general  principles of Federal income  taxation to
any  investment  by a Series in a local limited  partnership  will depend on the
specific facts associated with that investment,  including the provisions of the


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partnership  agreement of such local  limited  partnership  and  the  nature  of
the debts  incurred by such local limited  partnership to finance its investment
in its apartment complex.

    As indicated  above in "Opinion of Counsel," a Series will obtain an opinion
of counsel  regarding  its  investment in each local  limited  partnership.  The
discussion set forth below and opinions of counsel  described herein assume that
the Series will obtain such opinions  regarding each of their  investments,  and
rely on the  accuracy  of each of such  opinions.  An  opinion of counsel is not
binding on the IRS and has no  official  status of any kind.  WNC &  Associates,
Inc. will not seek a ruling from the IRS  regarding any of the tax  consequences
of an investment by a Series in any local limited partnership.

    The IRS has rendered several  published rulings regarding the Federal income
tax  consequences  of an  investment by a  partnership  in another  partnership.
Although such rulings have not addressed every Federal income tax consequence of
such an investment, they have addressed the material consequences expected to be
relevant  to the  Series.  Based  on such  rulings  and  general  principles  of
partnership taxation,  except as specifically noted below, the discussion of the
Federal  income  tax  consequences  of an  investment  in the  Units is  equally
applicable  to an investment  by a Series as a limited  partner or  non-managing
member in each local limited partnership.

Tax Treatment of Investors

    Subject to the matters  discussed  under  "Classification  as a Partnership"
above, a Series itself will not be subject to Federal income tax. Instead,  each
investor  will  report on his own income  tax  return  his share of the  Series'
taxable income, tax losses and tax credits.

    An investor's share of his Series tax items is based:

o   first,  on  the  application  to  the  local  limited  partnerships  of  the
    principles  of Federal  income  taxation  discussed  above under the heading
    "Investment in Local Limited Partnerships," and

o   thereafter, the following principles which apply  in  the  order  summarized
    below:

    o    The  allocation  provisions  contained  in  Article  4 of  the  Series'
         partnership   agreement  must  have  substantial   economic  effect  or
         otherwise be in accordance with the investor's interest in a Series.

    o    The investor's tax basis in his Units must  exceed  his  share  of  tax
         losses.

    o    The investor's amount at risk in his Units must exceed his share of tax
         losses.

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<PAGE>



    o    The  investor's  amount at risk with  respect to  expenditures  of each
         local  limited  partnership  that  qualify  for low income  housing tax
         credits must exceed the amount of his share of such expenditures.

    To the extent that the  allocation  of any Series tax item to an investor is
disallowed as a result of any of the  principles  set forth above,  the investor
will not be permitted to take such  allocation  into account in determining  his
Federal  income tax  liability  unless and until that  principle and each of the
principles  stated  thereafter has been satisfied.  Each of these  principles is
described in greater detail below.

    In addition to and after satisfying the foregoing principles, the ability of
an investor to take advantage of any tax credits and tax losses allocated to him
with respect to his Units may be limited by:

o   the passive  activity  rules  described  below in "Limitations on Losses and
    Credits from Passive Activities,"

o   the overall limitation on business credits described  below  under  "General
    Business Tax Credit Limitations,"

o   the  limitations on  miscellaneous  itemized  deductions  described below in
    "Other Important Tax Considerations - Tax Rates," and

o   the  alternative  minimum tax  described  below under "Other  Important  Tax
    Considerations Alternative Minimum Tax."

    An  investor's share of his Series tax items in any year will not ordinarily
be the  same as his  share  of cash  distributions,  if any.  Accordingly,  in a
particular year an investor might be allocated  taxable income without receiving
a cash  distribution.  See,  for  example,  "Tax  Liabilities  in Later  Years."
Conversely,  an investor might receive a cash  distribution in a year when he is
allocated a tax loss.

    An investor's receipt of cash distributions from a Series generally will not
result in taxable income to the investor but,  rather,  will reduce his basis in
his Units.  However, a distribution in excess of an investor's adjusted basis in
his Units will result in the  recognition of taxable income to the extent of the
excess.  Any such taxable income  generally will be treated as capital gain. The
gain  realized  in a non-pro  rata  distribution  may be taxed to  investors  as
ordinary income to the extent attributable to the investor's share of unrealized
receivables  and inventory  that has  substantially  appreciated  in value.  See
"Sales or Exchanges of Units and Local Limited Partnership Interests;  Transfers
by Gift or at Death" below.

    Low income housing tax credits are the most  significant  Federal income tax
benefits to be derived from an  investment  in Units.  As discussed  below,  the

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Internal  Revenue Code imposes  substantial  restrictions   on  the  ability  of
individuals,  trusts,  estates and certain corporations to take advantage of tax
credits generated from so-called passive  activities.  The rules relating to tax
credits  and tax losses  from  passive  activities  are to be applied  after the
application  of the rules  relating to tax basis and  amounts at risk.  See "Tax
Basis for the Units" and "Application of At Risk  Limitations"  below.  However,
the rules  applicable to passive  activity  credits and losses will be described
first due to their importance in evaluating the advisability of an investment in
a Series.

Limitations on Losses and Credits from Passive Activities

A.       General Limitations

    In the  case of  individuals,  trusts,  estates  and  certain  corporations,
Internal  Revenue  Code  Section  469  imposes  limits  on the  ability  of such
taxpayers  to use losses and credits  from  so-called  passive  activities.  The
corporations  subject to Internal  Revenue Code Section 469 are discussed  below
under "Other Investors." A passive activity includes:

o   an activity which involves the conduct of a trade or  business  in which the
    taxpayer does not materially participate, or

o   any   rental   activity,   regardless   of   the   level  of  the taxpayer's
    participation.

Generally,  a limited  partner does not  materially  participate  in his limited
partnership's  activities.  Through the local limited  partnerships  each Series
will be engaged in rental activities.  Accordingly, Derenthal & Dannhauser is of
the opinion that an investor's  share of tax items from a Series will be treated
as derived from a passive  activity,  except to the extent such items constitute
portfolio income.  Counsel's  opinion is based on the anticipated  activities of
the Series and current Treasury Regulations.

    Generally,  a taxpayer's  deductions and credits from passive activities may
be used to reduce his tax  liability  to the extent such  liability  arises from
passive activities.  In determining the amount of income from passive activities
in any taxable year, a taxpayer must exclude portfolio income, that is:

o   any income  from the  activity  that is derived  from  interest,  dividends,
    annuities or royalties, unless such income is derived in the ordinary course
    of a trade or business, less

o   expenses other than interest directly and clearly allocable to such income,
    and


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o   interest expenses properly allocable to such income.

A Series will generate  portfolio income from the investment of reserves and may
generate  portfolio  income  from  interest  earned  on loans  to local  limited
partnerships.  Portfolio  income  also  includes  any  gain  or  loss  from  the
disposition  of  property  that  produces  portfolio  income or that is held for
investment.  Prospective  investors  should note that  portfolio  income must be
reported as taxable income,  without reduction for any expenses other than those
described above. Each investor will be required to pay Federal income tax on his
share of such portfolio  income,  even if no corresponding  cash distribution is
made and regardless of the fact that overall  operations of his Series result in
tax losses.

    To the extent that a taxpayer's aggregate losses from all passive activities
exceed his aggregate  income from all such  activities  in a taxable  year,  the
taxpayer  has a  passive  activity  loss for such  year.  Similarly,  a  passive
activity credit arises in any year to the extent that the taxpayer's tax credits
arising from all passive activities exceed his tax liabilities  allocable to all
passive  activities.  Such a loss or credit may be carried forward to successive
taxable years until fully  utilized  against  income from passive  activities in
such years.  Unused passive  activity losses and credits may not be carried back
to prior years.

    Treasury  Regulations  generally  provide  that gain on the  disposition  of
property used in an activity will be treated as passive if the activity in which
the property was used in the year of disposition was a passive activity.

    In the  event a  taxpayer  disposes  of his  entire  interest  in a  passive
activity to an unrelated party in a transaction in which all of the gain or loss
realized on such disposition is recognized:

o   any loss,  but not a credit,  from the activity  that was  disallowed by the
    passive  activity rules will cease to be treated as a passive activity loss,
    and

o   any loss on such  disposition  will not be treated as arising from a passive
    activity.

    Such losses will be allowed as  deductions  against  income in the following
order:

o   gain recognized on the disposition,

o   net income or gain for the taxable year from all passive activities, and

o   any other income or gain.


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Suspended tax credits are not made  available as a result of a disposition  of a
taxpayer's  interest  in an  activity.  Rather,  to the  extent  not  subject to
recapture, tax credits are carried forward to later tax years.

    Special rules apply to  dispositions  by gift or by death and to installment
sales.

    Counsel has  rendered no opinion  regarding  the manner in which the passive
activity rules and its exceptions  will apply to any  particular  investor.  The
general rules and the  exceptions  are applied at the investor level rather than
the Series level and depend on the  particular  circumstances  of each investor.
Each investor is urged to consult his own tax adviser as to how these rules:

o   will limit his use of his Series' tax credits and tax losses, or

o   will result in tax liability on his share of his Series' portfolio income.

B.       Exception for Low Income Housing Tax Credits and Historic Tax Credits

    1.  Individuals.  An exception to the general rules  discussed above permits
the  taxpayers  described  below to shelter up to $25,000 of  nonpassive  income
with:

o   losses   from  rental  real  estate  activities  in  which   they   actively
    participate, and

o   low income housing tax credits and historic tax credits.

    The exception is commonly referred to as the $25,000  deduction  equivalent.
It is available to individuals and, in limited circumstances as discussed below,
estates. Special rules apply to married individuals as follows:

o   in the  case  of  married  individuals  filing  jointly,  the  full  $25,000
    deduction equivalent is available,

o   in the case of married  individuals  filing  separately who have lived apart
    for the entire taxable year, the deduction equivalent for each individual is
    $12,500, and

o   in the case of  married  individuals  filing  separately  who have not lived
    apart for the entire taxable year, no deduction equivalent is available.

    There are several  important  ordering rules that  determine  whether and to
what extent the $25,000  deduction  equivalent will be available to an investor.
First,  the investor must offset losses from passive  activities and losses from


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rental real estate  activities  in which the  taxpayer  actively,  as opposed to
materially,  participates,  by  income  from  passive  activities.  The  $25,000
deduction equivalent is then used, in the following order, against:

o   the remaining  passive activity losses generated from the rental real estate
    activities in which the taxpayer actively participates,

o   the passive activity credits generated from rental real estate activities in
    which the taxpayer actively participates,

o   subject to the phase-out  rules  discussed  below,  the historic tax credits
    from passive  activities  other than rental real estate  activities in which
    the taxpayer actively participates, and

o   the low income housing tax credits from passive activities other than rental
    real estate activities in which the taxpayer actively participates.

In this  regard,  it is  unlikely  that  investors  will be treated as  actively
participating in the Series' rental real estate activities.

    The  Series  will not  seek to  determine  the  extent  to  which  potential
investors have losses or credits from passive  activities.  Further,  the Series
have no  limit  on the  number  of  Units  which  may be  purchased  by a single
investor.  Accordingly,  each potential  individual investor is urged to consult
with his own tax advisers as to whether he may fully use any low income  housing
tax credits or historic tax credits of the Series  under the ordering  rules set
forth above.

    Assuming that a prospective individual investor:

o   does not have  passive  activity  losses  generated  from rental real estate
    activities  in which he actively  participates,  or that such losses are not
    allowable under the phase-out rules discussed below, and

o   does not have passive activity income for the taxable year,

such investor could use up to:

o   $7,000 of tax credits a year based on a 28% marginal tax rate,

o   $7,750 a year based on a 31% marginal tax rate,

o   $9,000 a year based on a 36% marginal tax rate, and


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o   $9,900 a year based on a 39.6% marginal tax rate.

See "Other Important Tax Considerations - Tax Rates." In each instance,  because
Federal income tax is imposed at marginal  rates,  the maximum amount of credits
could be used only if the investor has at least $25,000 in income subject to the
marginal rate.

                     Maximum Annual Tax Credits

   Federal                                              Maximum Annual
   Tax Bracket                Income                    Federal Credit

   15%               x        $25,000                   =     $3,750
   28%               x        $25,000                   =     $7,000
   31%               x        $25,000                   =     $7,750
   36%               x        $25,000                   =     $9,000
   39.6%             x        $25,000                   =     $9,900

    Most  taxpayers  pay a  substantial  portion  of their  Federal  annual  tax
liability by way of:

o   regular employer withholding from their salaries, and/or

o   estimated  Federal tax payments  due on the April 15, June 15,  September 15
    and January 15 preceding the filing date of the  taxpayers'  annual  Federal
    income tax returns.

To the extent that an individual taxpayer has tax  credits  which  are otherwise
allowable for a year, the taxpayer may use the tax credits to:

o   reduce his regular withholding amounts, or

o   reduce his estimated tax payments

and  increase  his  available  cash for all  purposes  by the  amount of the tax
credits.  For example,  a married couple filing jointly with a taxable income of
$75,000 in 1999 would be subject to Federal tax liability  before tax credits in
the amount of approximately  $16,000. The tax liability for later years could be
different due to changes in the tax rates  resulting from inflation  adjustments
or amendments to the tax laws.  See "Other  Important Tax  Considerations  - Tax
Rates." If the couple had $7,000 in tax credits  for 1999,  which is the maximum
permissible amount under the $25,000 deduction equivalent,  and the couple would
otherwise  make  estimated  tax payments of their  Federal tax  liability in the
amount of $4,000 each,  the couple could  reduce each  estimated  tax payment by
$1,750,  for a net  payment  of  $2,250.  If a  taxpayer  does  not  adjust  his
withholding or estimated tax payments for allowable tax credits,  his annual tax
refund will be increased or his annual tax liability will be reduced.  Under the

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$25,000  deduction  equivalent  tax credits can be used to reduce tax  liability
from all sources,  including taxable income arising from wages,  self-employment
income, retirement account withdrawals, and capital gains from the sale of stock
and other investments.

    If an investor is able to use tax credits under the passive  activity  rules
and the other deduction limits discussed below, the tax credits would be claimed
on the investor's individual IRS Form 1040 as follows:

o   The  investor   enters  all  taxable  income  and  subtracts  all  available
    deductions and exemptions to compute taxable income.

o   The tax imposed on taxable income is entered on line 40 of the Form 1040.

o   The  investor's  utilizable  tax  credits  are  entered  on  line 47 and are
    subtracted,  on a  dollar-for-dollar  basis,  from the taxes which appear on
    line 40.



















    Under Section 469(k) of the Internal  Revenue Code the limitations on losses
from passive  activities  will be applied  separately to investments in publicly
traded  partnerships.  There is no $25,000  deduction  equivalent  available for
losses from investments in publicly traded partnerships. Section 469(k) does not
apply to low income  housing tax credits and historic tax credits.  As discussed
under the heading  "Classification as a Partnership,"  Derenthal & Dannhauser is

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of  the  opinion  that  the  Series  will  not be  treated  as  publicly  traded
partnerships. If any Series were to be treated as a publicly traded partnership,
investors  could not use the  Series'  tax  losses,  but  could use tax  credits
generated by the Series to offset tax  liability  from all other  sources to the
extent of the $25,000 deduction equivalent. Of course any use of the tax credits
is subject to the ordering rules discussed above.

     Reference is made above to a phase-out of the $25,000 deduction equivalent.
For:

o   all rental real estate losses in which the taxpayer  actively  participates,
    and

o   historic tax credits,

the $25,000  deduction  equivalent  is reduced in the event the  adjusted  gross
income of the taxpayer, and the taxpayer's spouse where a joint return is filed,
exceeds the limits identified herein.

o   In the case of  losses  from  rental  real  estate  activities  in which the
    taxpayer actively participates,  the maximum deduction equivalent is reduced
    by  one-half of the amount by which the  taxpayers'  adjusted  gross  income
    exceeds  $100,000,  or $50,000 in the case of a married  individual filing a
    separate return.

o   In the case of historic tax credits,  the maximum  deduction  equivalent  is
    reduced by one-half  of the amount by which the  taxpayer's  adjusted  gross
    income  exceeds  $200,000,  or $100,000 in the case of a married  individual
    filing a separate return.

Adjusted  gross  income  for  this  purpose  is  determined  without  regard  to
contributions  to  Individual  Retirement  Accounts,   taxable  social  security
benefits and passive activity losses, but is otherwise  determined in accordance
with Section 62 of the Internal Revenue Code.

    2. Other  Investors.  As noted above,  the limitations on the use of passive
losses  and  credits  apply  to  all  individuals  and,  subject  to  additional
limitations,  to all trusts and  estates.  In the case of a grantor  trust,  the
provisions apply at the grantor rather than the trust level. Generally,  neither
a nongrantor  trust nor an estate can take  advantage  of the $25,000  deduction
equivalent. A limited exception is provided to allow an estate to take advantage
of the $25,000  deduction  equivalent  in any taxable  year ending less than two
years after the death of the decedent.

    Certain corporations are also subject to limitations on their use of passive
losses and credits. The corporations subject to these rules are:


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o   closely-held corporations which have not elected to be subject to Subchapter
    S of the Internal  Revenue  Code. A  corporation  is  closely-held  for this
    purpose if more than 50% of the corporation is owned, by value,  directly or
    indirectly, by five or fewer individuals at any time during the last half of
    the relevant tax year.

o   personal  service   corporations.  A  personal  service  corporation   is  a
    corporation whose principal purpose is the performance of personal  services
    in  the  fields  of  health,  law,  engineering,  architecture,  accounting,
    actuarial science, performing arts, or consulting, when  such  services  are
    performed by any employee who owns, on any day during the  year,  any of the
    outstanding  shares of such  corporation. Stock  held  by  related   parties
    is  taken  into  account  under  special attribution rules.

    Closely-held  corporations,  but  not  personal  service  corporations,  are
allowed to use their passive  activity losses and their passive activity credits
to offset their taxable  income and tax  liabilities  from all income other than
portfolio income.  However,  if a Series were to be treated as a publicly traded
partnership,  the Series'  losses could not be used to offset  income from other
sources.

    Personal  service  corporations  are only allowed to use passive  losses and
credits to shelter passive income, subject to the provisions of Internal Revenue
Code Section 469(k) regarding publicly traded partnerships.

    The passive  activity rules are applied to the shareholders of a corporation
which has elected to be subject to  Subchapter S of the Internal  Revenue  Code,
and not the  corporation.  Similarly,  the passive activity rules are applied to
the partners of a general partnership, and not the partnership.

 Historic Tax Credit

    In addition to the low income housing tax credit,  a tax credit is available
for  qualified  rehabilitation  expenditures  incurred  in  improving  certified
historic  structures  and other  buildings  originally  placed in service before
1936.  Internal Revenue Code Section 47 provides for a historic tax credit equal
to  20%  of  the  qualified  rehabilitation  expenditures.  Qualification  of an
expenditure depends upon the approval by the Department of Interior of the plans
and completed rehabilitation work. The historic structure generally must:

o   be left in place, and

o   be rehabilitated in a manner consistent with history.

The rehabilitation expenditures during a 24-month period must exceed the greater
of:


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o   $5,000, or

o   the adjusted basis of the building.

A 10%  credit  is  allowed  in the case of  nonresidential  buildings  placed in
service before 1936, other than certified historic structures.  The tax basis of
property  on  which  a  historic  tax  credit   is claimed is reduced by 100% of
the tax  credit.  Therefore,  the gain upon  disposition  of such a property  is
increased by 100% of the tax credit. See "Depreciation."

    A taxpayer must satisfy at risk  requirements  with regard to any investment
which generates a historic tax credit. These requirements are generally the same
as the at risk rules applicable to low income housing tax credits.  See "The Low
Income Housing Tax Credit." In addition, the amount of all nonrecourse financing
must  not  exceed  80% of  the  credit  base  of  the  qualified  rehabilitation
expenditures. Nonrecourse financing is defined very broadly for this purpose.

    A  Series  may  invest  in  a  local   limited   partnership   that   incurs
rehabilitation  expenditures  qualifying for the historic tax credit. If so, the
tax credit would be allocated to the investors. An investor's ability to use the
historic  tax  credits may be  restricted  by the passive  activity  rules,  the
limitation on general business credits,  and the alternative  minimum tax rules.
See  "Limitations  on Losses and  Credits  from  Passive  Activities,"  "General
Business Tax Credit  Limitations"  and "Other  Important  Tax  Considerations  -
Alternative  Minimum  Tax."  Counsel  has  rendered  no  opinion  regarding  the
qualification of any expenditures for the historic tax credit or the application
of the related at risk rules.

Historic Tax Credit Recapture

    Historic  tax  credits  are  subject  to  recapture  in the  event  of early
disposition  of the  property.  If a local  limited  partnership  disposes  of a
historic tax credit  property  within five years after the property is placed in
service,  investors will suffer recapture. Each investor's tax liability for the
year of  disposition  will be  increased  by an amount equal to the historic tax
credit claimed by the investor multiplied by a recapture percentage. The holding
period for the property determines the recapture percentage, as follows:

o   100% recapture if the property is disposed of less than one year  after  the
    property is first placed in service,

o   80% recapture after one year,

o   60% after two years,


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o   40% after three years,

o   20% after four years, and

o   no recapture after five years.

    Recapture  will also result if an  investor  sells or disposes of his entire
interest  in a Series  within  five years  after the date a historic  tax credit
property was placed in service.  Additionally,  if an investor's interest in the
profits  of his  Series is  reduced to less than 66 2/3% of what it was when the
historic  tax credit  property  was placed in  service,  the  reduction  will be
treated as a  proportional  disposition  of the  property by the  investor.  For
example, if an investor disposes of 50% of his partnership interest in the first
year in which a historic  tax credit is claimed,  then 50% of the  historic  tax
credit will be recaptured.

General Business Tax Credit Limitations

    The ability of taxpayers to use low income  housing tax credits and historic
tax credits is subject to an annual  limitation  on the  allowance  of aggregate
general business tax credits.  In addition to low income housing tax credits and
historic tax credits, general business tax credits include:

o   any other investment tax credit,

o   the targeted jobs credit,

o   the alcohol fuels credit,

o   the research credit,

o   the enhanced oil recovery credit,

o   the disabled access credit,

o   the renewable electricity production credit,

o   the empowerment zone employment credit,

o   the Indian employment credit, and

o   the employer social security credit.


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    The annual  limitation is equal to the first $25,000  of tax liability  plus
75% of tax  liability  in excess of that  amount.  The  $25,000  portion  of the
limitation is reduced to $12,500 for married persons filing separately. However:

o   business tax credits may not be used to offset  any  applicable  alternative
    minimum tax, and

o   even if no alternative  minimum tax is imposed in a particular  year because
    regular tax liability exceeds the amount which would have been imposed under
    the alternative  minimum tax rules,  business tax credits may not be used to
    reduce  regular tax liability  below the amount which would be imposed under
    the alternative minimum tax rules.

See "Other Important Tax Considerations - Alternative Minimum Tax." Business tax
credits limited by this rule are first carried back one year and then forward 20
years.  For purposes of determining  which of a taxpayer's  general business tax
credits exceed the limit in any year, low income housing tax credits are treated
as being used only after all of the other general business tax credits.

    Any tax credit  that is  allowable  in any year under the  passive  activity
rules,  but is  disallowed  as a result of the  limitation  on general  business
credits,  ceases to be subject to the passive activity rules for purposes of any
carryback or carryforward of such tax credit.

Tax Basis for the Units

    An investor's tax basis for his Units generally will be equal to his capital
contribution plus his share of his Series' nonrecourse  liabilities which do not
exceed the fair market value of the assets  subject  thereto.  From time to time
such tax basis will be:

o   increased by the amount of profits allocated to him, and

o   decreased by the amount of losses allocated to him and by the amount of cash
    distributed to him.

    In the opinion of Derenthal & Dannhauser,  a Series' nonrecourse liabilities
will  include its share of the  nonrecourse  liabilities  of each local  limited
partnership,  to the extent that such  liabilities do not exceed the fair market
value of the property  securing the  liabilities.  In the opinion of Derenthal &
Dannhauser,  each  investor will include in his tax basis of his Units his share
of the nonrecourse liabilities of his Series, as so determined.

    Each investor may deduct, on his own Federal income tax return, his share of
his Series' losses to the extent that he has tax basis in his Units.  Any losses
in  excess of an  investor's  tax basis may be  carried  over  indefinitely  and
deducted in future years to the extent that the  investor's  basis has increased


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above  zero.  WNC &  Associates,  Inc.  anticipates  that  at  least  75% of the
liabilities  of the  local  limited  partnerships  will  constitute  nonrecourse
liabilities. Consequently, WNC & Associates, Inc. anticipates that each investor
will have  sufficient  basis in his Units to claim  his  allocable  share of tax
losses.  See,  however,  "Tax Treatment of Investors,"  "Application  of At Risk
Limitations,"  and  "Limitations on Losses and Credits from Passive  Activities"
for other limitations on an investor's ability to claim tax losses.

    A decrease in an  investor's  share of Series'  nonrecourse  liabilities  is
treated  for  tax  purposes  as  though  it  were  a cash  distribution.  Such a
constructive cash distribution reduces an investor's tax basis in his Units, but
not below zero,  and any  remaining  portion is taxable to him as though it were
gain on the sale or exchange of his Units.  See "Sales or Exchanges of Units and
Local Limited  Partnership  Interests;  Transfers by Gift or at Death" below.  A
decrease in an investor's share of Series'  nonrecourse  liabilities could occur
when:

o   a local limited partnership pays a mortgage in whole or in part, or

o   a  local  limited  partnership  sells  an  apartment  complex  subject  to a
    mortgage, or

o   a local limited partnership refinances nonrecourse debt with recourse debt.

Application of At Risk Limitations

    Individuals and  closely-held  corporations are subject to the at risk rules
of Internal Revenue Code Section 465. A corporation is closely-held if more than
50% of the  corporation  is  owned,  directly  or  indirectly,  by five or fewer
shareholders  at any time during the last half of the relevant tax year.  In the
case of a partnership, the at risk limitations are applied at the partner level.
In the case of a corporation  which has elected to be subject to Subchapter S of
the Internal Revenue Code, the limitations are applied at the shareholder level.

    Under the at risk rules,  an investor can deduct his share of Series' losses
otherwise allowable for the year in question to the amount he has at risk in the
Series at the close of the tax year.  An investor  will be at risk to the extent
of the cash he  contributes to his Series.  In addition,  an investor will be at
risk with respect to any qualified  nonrecourse  financing  that is secured by a
local limited partnership's apartment complex. In general, qualified nonrecourse
financing is non-convertible, nonrecourse debt:

o   which   is   borrowed   from   or  is  guaranteed   by  a government  or  an
    instrumentality thereof, or

o   which is borrowed from any person actively  and  regularly  engaged  in  the
    business of lending money, other than:


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    o    the person from whom the taxpayer acquired the property,

    o    a person receiving a fee with respect to the taxpayer's  investment  in
         the property, or

    o    a person related to either of such persons.

However,  if the  lender is related to the  taxpayer,  the loan will  qualify as
qualified nonrecourse financing only if the loan is commercially  reasonable and
on substantially the same terms as loans involving unrelated persons.

    If a taxpayer's  amount at risk is reduced  below zero,  the  taxpayer  must
recapture  the  deficit  amount  and  include  it in gross  income.  The  amount
recaptured is treated in future years as if it were a deduction suspended by the
at  risk  provisions.  To the  extent  that  the  taxpayer's  amount  at risk is
increased  above zero in a later year, an additional  deduction may be allowable
at that time.

    WNC & Associates,  Inc. believes that the at risk rules should not limit the
amount  of an  investor's  deductions,  because  a  substantial  portion  of the
financing  secured  by the  apartment  complexes  should  consist  of  qualified
nonrecourse financing. WNC & Associates, Inc. expects that an opinion of counsel
will be rendered on this issue as a condition to a Series' investment in a local
limited partnership. See "Opinion of Counsel" above.

Series Allocations

    Generally,  a partner's  distributive share of income, gain, loss, deduction
or credit of a partnership  is determined  in  accordance  with the  partnership
agreement.  However,  Section 704 of the Internal  Revenue Code provides that an
allocation  to a partner  under a  partnership  agreement  will not be respected
unless such allocation has substantial  economic  effect.  If an allocation does
not have  substantial  economic  effect,  the  partner's  distributive  share of
income,  gain,  loss,  deduction or credit is determined in accordance  with the
partner's  interest in the  partnership,  by taking  into  account all facts and
circumstances.

    Treasury  Regulations  have been  issued  governing  the  interpretation  of
Section 704 of the Internal  Revenue Code.  The Treasury  Regulations in general
provide that an allocation does not have economic effect unless:

(a) a capital  account is maintained for each partner in accordance with Federal
income tax accounting principles,

(b) allocations of income, gain, loss and deduction are reflected by appropriate
increases, or decreases, to the partners' capital accounts,


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(c) liquidation  proceeds are to be distributed in accordance with the partners'
capital account balances, and

(d) any partner with a deficit in his capital account following the distribution
of  liquidation  proceeds  is  required to restore  such  deficit  amount to the
partnership. The restored amount is to be  distributed  to  the  other  partners
in accordance with their positive capital account balances or paid to creditors.

    The Treasury  Regulations  provide an alternative to requirement  (d). Under
the alternative an allocation will have economic effect:

o   to the extent it does not create a deficit or increase an  existing  deficit
    in any partner's capital account balance, and

o   the  partnership  agreement  has  provisions  allocating  income and gain to
    partners who do have deficit capital account balances.

    The  Series'  partnership  agreement  provides  for  allocations  of taxable
income,  tax losses and tax credits as described under "Profits and Losses,  Tax
Credits and Cash  Distributions."  Derenthal & Dannhauser has advised the Series
that the Series'  partnership  agreement contains  provisions which, if followed
throughout the existence of the Series,  substantially  comply with requirements
(a), (b) and (c) above and the alternative test to requirement (d).

    An allocation  which has economic effect  nevertheless may be disregarded by
the IRS if the economic effect of the allocation is not substantial. The IRS may
assert that the effect of the  allocations  provided in the Series'  partnership
agreement is not substantial.  If at any time the allocations of a Series do not
have  economic  effect  or are  not  substantial,  allocations  will  be made in
accordance with the interests of the Series' partners.  The Treasury Regulations
indicate that the determination of a partner's interest in a partnership is made
by taking into  account  all facts and  circumstances  relating to the  economic
arrangement of the partners.

    The  Treasury  Regulations  state that an  allocation  of an item of loss or
deduction  attributable  to nonrecourse  debt secured by a partnership  property
cannot have substantial  economic effect.  Depreciation is an example of an item
of deduction  attributable to nonrecourse debt.  However,  such an allocation is
deemed to be made in accordance with the partners' interests in the partnership:

o   if requirements (a), (b) and (c) of the economic effect test set forth above
    are satisfied,

o   allocations  of  nonrecourse  deductions  are made among the  partners  in a
    manner  which  is  reasonably  consistent  with  allocations  of some  other
    significant   partnership   item  related  to  the  property   securing  the


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    nonrecourse debt, provided such other allocations have substantial  economic
    effect,

o   the  partnership  agreement  contains a minimum gain  chargeback  provision,
    which is a provision requiring  chargeback of income or gain to partners who
    have been  allocated  nonrecourse  deductions  and who have deficit  capital
    account balances, and

o   all other material  allocations  and capital account  adjustments  under the
    partnership agreement are recognized under the Treasury Regulations.

The Series'  partnership  agreement contains  provisions designed to comply with
the requirements of these Treasury Regulations. If not, the allocations of items
of income,  gain, loss and deduction  attributable  to nonrecourse  indebtedness
would be made in accordance with the overall economic  interests of the partners
in the partnership.

    The Treasury Regulations provide that because allocations of tax credits and
recapture do not give rise to adjustments to partners'  capital  accounts,  they
cannot have economic  effect.  Accordingly,  tax credits and  recapture  must be
allocated in accordance with the partners' interests in the partnership.  In the
case of low income housing tax credits,  the Treasury  Regulations  provide that
allocations  will be deemed to be in accordance with the partners'  interests in
the  partnership  if  made  in  the  ratio  in  which  the  partners  share  the
expenditures  giving rise to the  credits.  In the case of historic tax credits,
they should be allocated in accordance  with the ratio in which  partners  share
the  general  profits of the  partnership.  The  Series'  partnership  agreement
contains  provisions  which are intended to comply with these  provisions of the
Treasury Regulations.

    It is possible that the Treasury Department may modify the existing Treasury
Regulations  under  Section  704(b) of the Internal  Revenue  Code. If so, WNC &
Associates, Inc. is authorized to amend the Series' partnership agreement to the
minimum  extent  necessary to preserve the plan of  allocation  provided in such
partnership agreement.

    Despite the  possibility of challenge by the IRS,  provided that the Series'
partnership agreement is followed throughout the entire term of a Series in:

o   allocating and making distributions,

o   maintaining capital accounts,

o   allocating profits and losses, items of profits and losses, and tax credits,
    and

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o   determining  the   rights  and  obligations  of  the  investors  and  WNC  &
    Associates, Inc. upon dissolution and liquidation of the Series, then

Derenthal  &  Dannhauser  is of the  opinion  that the  investors  would  not be
allocated  significantly  more  profits or less  losses or tax  credits  than is
allocated to them under the Series'  partnership  agreement  if the  allocations
were fully litigated in court.  However,  there can be no assurance that the IRS
will not challenge the allocations in the Series'  partnership  agreement on the
ground  that  they  lack  substantial  economic  effect  or do  not  reflect  an
investor's  interest in his Series.  If such a challenge  were  successful,  all
profits,  losses  and tax  credits  of the Series  would be  reallocated  to its
investors  and WNC &  Associates,  Inc.  in  accordance  with  their  respective
interests in the Series.

    Each Series will enter into a partnership  agreement or operating  agreement
for each local  limited  partnership.  As a condition  to  entering  into such a
partnership agreement or operating agreement,  the Series will obtain an opinion
of tax  counsel  regarding  its  investment  in the local  limited  partnership,
including  an  opinion  that  the  allocation  provisions  of  such  partnership
agreement  will not be  substantially  modified  by the  IRS.  See  "Opinion  of
Counsel." Derenthal & Dannhauser's opinion stated above regarding the allocation
provisions of the Series'  partnership  agreement  assumes and is conditioned on
the receipt and accuracy of such an opinion of tax counsel.

    It is possible  that the IRS will seek to  recharacterize  the  relationship
between a local limited partnership and other parties.  Such  recharacterization
could adversely affect the tax treatment of a local limited  partnership and the
investors.  For example,  the IRS might contend that a lender to a local limited
partnership is actually a partner, because the lender:

o   is entitled to interest measured in whole or in part by the income, or

o   made a subordinated nonrecourse loan the repayment of which is subject to an
    equity-type risk.

In that event,  some or all of the payments to the lender  would be  partnership
distributions.  The  local  limited  partnership  would be  denied  an  interest
deduction  for such  payments,  and the lender might be allocated a share of the
deductions of the local limited partnership attributable to the property.

    Other IRS challenges could affect allocations.  For example, a local limited
partnership might pay a local general partner or an affiliate fees for services.
The IRS  might  contend  that  such fees are not  deductible  expenses,  but are
actually  partnership  distributions,  and that the  general  partner  should be
allocated a larger percentage of the local limited  partnership's taxable income
or tax loss.


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    Whether  the IRS would be  successful  in any  attempted  recharacterization
would depend upon all the facts and circumstances of the transaction, including,
in  the  case  of  fees,  the nature of the services for which the fees actually
are being paid.  Because  such facts and  circumstances  are unknown at present,
counsel has rendered no opinion with respect thereto.

Allocations Before Admission

    Items of partnership income,  gain, loss,  deduction or credit are allocable
to a partner only if realized,  paid or incurred by the  partnership  during the
portion of the year in which the partner is a member of the  partnership.  Items
realized, paid or incurred during periods before the partner's admission may not
be  allocated  retroactively  to  the  partner.  In  this  regard,  the  Series'
partnership agreement provides that the items of income, gain, loss deduction or
credit accrued during each month are allocated among persons who are partners of
the Series at the end of that month.

    The Tax Reform  Act of 1984  authorized  the  Treasury  Department  to issue
Treasury  Regulations  concerning  allocations to partners whose  interests in a
partnership vary during the partnership's  tax year. The General  Explanation of
the  Tax  Reform  Act of  1986  indicated  that  Congress  intended  that  these
regulations apply to the allocation of tax credits.  The General  Explanation of
the Tax Reform Act of 1984  indicates that until such Treasury  Regulations  are
issued any reasonable convention will be permissible.  Treasury Regulations have
not been issued. Consequently, Derenthal & Dannhauser is of the opinion that the
method of allocation set forth in the Series'  partnership  agreement is proper.
However,  Treasury Regulations,  when issued, may require that some other method
of allocation be used.

Basis of Local Limited Partnerships in Their Apartment Complexes

     Section  1012 of the  Internal  Revenue  Code  provides  that the  basis of
property  acquired  by  purchase is its cost.  This cost  includes  cash paid to
acquire property and purchase transaction costs such as real estate commissions,
attorneys' fees and appraisal  costs.  The basis of property is increased to the
extent of the cost of the property's capital improvements.

    Where  property is acquired or improved  with  proceeds of the owner's note,
the owner's  basis in the  property  includes the  principal  amount of the note
regardless  of whether the owner is  personally  liable for payment of the note.
The foregoing rule has been applied in cases where little or no downpayment  has
been made, where payments of principal are not made currently and where the note
itself is payable  partially  or entirely  from the proceeds  realized  from the
property acquired.

    The principal amount of a nonrecourse note may not, however,  be included in
the basis of acquired  property  unless it is  recognized  for tax purposes as a
bona fide liability. The rule adopted by the courts which is most often asserted

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by the IRS in attacking the bona fide nature of a nonrecourse  liability is that
the principal amount of a nonrecourse liability may not be included in the basis
of property unless the fair market value of such  property  is  at  least  equal
to the face amount of the nonrecourse note. See Wilman v. Commissioner,  78 T.C.
943 (1982); Narver v. Commissioner, 75 T.C. 53 (1980). Additionally, in Hager v.
Commissioner,  76 T.C. 759 (1981),  the Tax Court  stated that in a  transaction
involving a large  amount of  nonrecourse  debt  incurred  in the  purchase of a
property at an inflated price, the entire sale may be disregarded. Thus, the IRS
will closely  scrutinize  any  transaction  involving  nonrecourse  liability to
determine  whether the principal amount of the liability  approximates the value
of the property purchased.

    Basis is important  because it  determines  the amount of tax credits,  cost
recovery deductions, and interest deductions.

    Nonrecourse  liabilities  will exist only at the local  limited  partnership
level.  If the IRS  successfully  challenges  the  inclusion of any  nonrecourse
liability in basis, an investor's share of tax credits, cost recovery deductions
and interest  deductions  would be reduced.  The  investor's  basis in his Units
would also be reduced. WNC & Associates, Inc. expects that an opinion of counsel
regarding inclusion of liabilities in basis will be rendered as a condition to a
Series' investment in a local limited partnership. See "Opinion of Counsel."

Depreciation

    In determining profits and losses for tax purposes,  a partnership's  income
for any year is reduced by deductions representing depreciation or cost recovery
of the  partnership's  assets.  The larger  the  depreciation  or cost  recovery
deductions, the lesser the partnership's income or the greater the partnership's
loss.

    Internal  Revenue Code Section 168 provides rules for determining the manner
in  which  the  costs  of  tangible  assets  are  to be  recovered.  Subject  to
transitional  rules  that  may  apply  to  one  or  more  apartment   complexes,
residential  rental  property may be  depreciated  over a 27.5-year  period or a
40-year period using the straight-line method.  Personal property is depreciated
over  recovery  periods  of three,  five,  seven,  10,  15 or 20 years  using an
accelerated method.

    Residential  rental property is not subject to  depreciation  recapture upon
disposition.  Prior  depreciation  for all  personal  property  will  result  in
recapture when the property is disposed of at a gain.

    The development  and construction cost or the purchase price of an apartment
complex must be allocated between depreciable assets and nondepreciable  assets.
Depreciable  assets include  improvements on real estate and personal  property.

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Nondepreciable  assets  include  land.  Such  allocations  are questions of fact
which will not be subject to counsel's review or opinion.  IRS  reallocations of
purchase  price would result in decreased  tax loss and tax credits or increased
taxable income.

Deductibility of Fees

A.       Development Fees and Acquisition and Investment Management Fees

    Each local limited partnership will pay its local general partners a fee for
services in  connection  with the  development  of its apartment  complex.  Each
Series will pay acquisition and investment  management fees to WNC & Associates,
Inc.  for  services  in  connection  with the  investigation  of  local  limited
partnerships  and for  services  in  connection  with  the  organization  and/or
start-up of local  limited  partnerships.  Each local limited  partnership  will
capitalize its  development  fees as part of the basis of its apartment  complex
and will recover the cost thereof through depreciation  deductions to the extent
applicable  to  depreciable  property.  Similarly,  each Series will  capitalize
acquisition  and  investment   management  fees.  Depending  on  the  facts  and
circumstances of the investment in each local limited  partnership,  acquisition
and investment management fees may be:

o   allocated to depreciable property and deducted over the useful life of  such
    property,

o   treated as organization or start-up expenses that may be  amortized  over  a
    60-month period,

o   amortized over the life of the local limited partnership, or

o   treated  as  nondeductible  until  the  termination  of  the  local  limited
    partnership.

    Counsel  has  rendered  no opinion  regarding  the proper  treatment  of any
development  fees or  acquisition  and  investment  management  fees  due to the
inherently factual nature of the issues involved.

B.       Ongoing Management Fees

    Each local limited partnership intends to claim a deduction for fees paid to
its local general partners or their affiliates, including fees paid for property
management services.  Similarly,  each Series intends to deduct asset management
fees paid to WNC & Associates,  Inc. WNC & Associates,  Inc.  believes that such
fees should be deductible as ordinary and necessary business expenses.

    Counsel  has  rendered  no opinion  regarding  the proper  treatment  of any
management fees due to the inherently factual nature of the issues involved.


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Organization and Offering Expenses

    Each Series will incur  expenses in  connection  with its  organization  and
offering.  See "Estimated  Use of Proceeds." The Internal  Revenue Code requires
that such expenses be capitalized.  Each Series will amortize over 60 months the
portion of these  expenditures  which qualify as  organizational  expenses under
Section  709(b)(2)  of the  Internal  Revenue  Code.  Offering  and  syndication
expenses will be capitalized permanently, and no deduction will be obtained by a
Series  with  respect  to such  expenses.  The IRS may  challenge  the amount of
expenses  that a Series  treats  as  organizational  expenses.  The IRS also may
attempt  to  recharacterize  other  payments,  including  a portion  of the fees
described in the preceding  section,  as  nondeductible  offering or syndication
expenses.  Counsel  has  rendered  no  opinion  on  this  issue  because  of its
inherently factual nature.

Start-Up Expenditures

    Section 195 of the Internal  Revenue Code provides that a taxpayer may elect
to amortize  start-up  expenditures  of a business  ratably over a period of not
less than 60 months beginning with the month in which the business begins. If no
election  is  made,  start-up  expenditures  must  be  capitalized  permanently.
Start-up  expenditures  include costs  incurred  before  entering into an active
trade or business  which would have been  deductible  if incurred in  connection
with the  expansion  of an existing  trade or business in the same field as that
entered by the taxpayer.  Start-up expenditures do not include amounts allocable
to  the   acquisition  of  interests  in  local  limited   partnerships  or  the
organization or syndication of a Series as discussed above. The determination of
whether  an  item  is  a  start-up   expenditure  is  based  on  the  facts  and
circumstances in each case.

    A local limited  partnership may deduct  expenses  incurred by it before the
date that it completes the  construction of its apartment  complex or before the
date it generates rental income. If so, a Series will deduct its allocable share
of such  expenses.  The IRS may disallow any such  deductions as not having been
incurred in connection with a trade or business. If the IRS were successful, the
disallowed  expenses would be available as  deductions,  if at all, only through
amortization.  Due to the  inherently  factual  nature of the  issues  involved,
counsel is unable to render an opinion regarding the manner in which Section 195
may apply to any Series or any local limited partnership.

Sales or Exchanges of Local Limited Partnership Property; Depreciation Recapture

    A local limited  partnership's  gain on sale of its  apartment  complex will
equal the  difference  between the sale  proceeds and the adjusted  basis of the
apartment  complex.  For these purposes sale proceeds  include the amount of any
indebtedness  to which the property is subject.  The amount of tax payable by an

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investor  on his share of such gain may  in  some  cases  exceed  his  share  of
the cash  proceeds  distributed  to him.  In the  event of a  foreclosure  of an
apartment  complex,  a Series  would  realize  gain  equal to the  excess of the
indebtedness  secured by the mortgage or trust deed over the  adjusted  basis of
the apartment  complex.  In that event, an investor would realize taxable income
without the receipt of any cash distributions as a result of the foreclosure.

    In other instances a disposition of an apartment complex might result in the
investors   receiving  less  cash  than  the  tax  liability  generated  by  the
disposition. They include:

o   the retention of the sale proceeds by the local limited partnership  or  the
    Series to support its remaining operations, and

o   the sale of the apartment complex for illiquid assets,  such  as  promissory
    notes of the purchaser.  See "Treatment of Mortgage Loans."

    Each  apartment  complex will most likely be considered to be a Section 1231
asset. Section 1231 assets are real property and depreciable assets:

o   used in a trade or business,

o   held for more than one year, and

o   not held for sale to customers in the ordinary course of business.

If so, an investor's share of gain or loss from the sale of an apartment complex
would be combined with any other Section 1231 gains or losses incurred by him in
that year and:

o   his net Section 1231 gains would constitute capital gains, or

o   his net Section 1231 losses would constitute ordinary losses.

Despite the above, to the extent net Section 1231 losses are treated as ordinary
losses in any taxable year,  net Section 1231 gains  recognized  during the next
five years will be treated as ordinary income.

If  an  apartment  complex  is  held  for  sale  to  customers  in the  ordinary
course of business, all gain on the disposition thereof will constitute ordinary
income. Property so held is known as dealer property.  Because the determination
as to whether any apartment  complex is dealer property depends on future facts,
counsel  expresses  no opinion as to that  issue.  In  addition,  the sale of an
apartment complex may give rise to the recapture of tax  credits. See  "Historic

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Tax Credit Recapture" above  and "The Low Income  Housing Tax Credit - Recapture
of Low Income Housing Tax Credits."

    For a discussion  of the income tax  consequences  attendant to a sale of an
apartment  complex on the installment  basis,  see "Treatment of Mortgage Loans"
below.

Tax Liabilities in Later Years

    After a period of years following its  commencement  of operations,  a local
limited  partnership  may generate  taxable  income  rather than tax losses.  In
earlier  years,  depreciation  deductions  are expected to result in tax losses.
However, in later years, as the portion of debt service payments attributable to
deductible  interest  decreases and the portion  attributable to  non-deductible
principal  amortization  increases,  net  operating  income  of a local  limited
partnership  might  exceed  depreciation.  An  investor's  share of such taxable
income would  constitute  passive income taxable at ordinary income rates unless
the investor had unused suspended  passive losses from his Series, or current or
suspended passive losses from other investments.  See "Limitations on Losses and
Credits from Passive Activities" above. In such circumstances the investor would
not  receive  a cash  distribution  from his  Series  with  which to pay any tax
liability  resulting  from the allocation of taxable  income.  The tax liability
would require a nondeductible out-of-pocket payment of tax by such investor.

Treatment of Mortgage Loans

    A local limited  partnership may take back  promissory  notes as part of the
consideration received upon sale of an apartment complex. WNC & Associates, Inc.
anticipates  that any such sale would qualify as an installment sale for Federal
income tax  purposes.  Taxable  income from an  installment  sale  generally  is
recognized  during the periods in which  payments  are  received.  However,  any
depreciation  or other  ordinary  income  recapture is denied  installment  sale
treatment and must be recognized in the year of the sale.

    A taxpayer who disposes of property on an installment  basis may be required
to pay  interest  on the  portion of his tax  liability  deferred  by use of the
installment  method.  This rule  applies  if the  aggregate  face  amount of all
installment  obligations  arising in any one year and  outstanding at the end of
that year exceeds  $5,000,000.  Interest is payable each year at the  short-term
Federal rate plus three  percentage  points in effect for the month in which the
tax year ends. In determining  the application of this rule, all taxpayers under
common control within the meaning of Section 52 of the Internal Revenue Code are
treated as a single taxpayer.  It is likely that a Series and each local limited
partnership will be treated as under common control.


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    The Internal  Revenue Code provides for  recognition  of gain on installment
obligations  that are  pledged  to  secure  indebtedness  of the  taxpayer.  The
proceeds  of the  secured  indebtedness  are  treated as payments on the pledged
installment obligation.

    A sale or exchange of dealer property is not eligible for  installment  sale
treatment.  Accordingly, if a local limited partnership disposes of an apartment
complex  on an  installment  basis and the local  limited  partnership  sold the
apartment complex in the ordinary course of business, all gain on the sale would
be recognized in the year of sale. Tax liability would be payable as a result of
such sale even though no proceeds of the sale had yet been received.

    WNC & Associates, Inc. will take into account the application of these rules
in determining whether to approve the sale of an apartment complex in return for
a purchase money mortgage.

    WNC & Associates,  Inc. anticipates that any purchase money promissory notes
held by a local limited  partnership as a result of an installment  sale will be
secured  by  mortgages  or deeds of trust.  If the  stated  redemption  price at
maturity of such notes  exceeds the issue price,  the  difference  is treated as
original  issue  discount.  In the case of purchase money  financing,  the issue
price is determined by discounting all future payments of principal and interest
to present value  utilizing  specified rates that are intended to reflect market
conditions  at the time of the sale.  The stated  redemption  price at  maturity
generally  consists of the face amount of the notes,  plus deferred interest and
other amounts  payable at maturity.  If original issue discount is present,  the
local limited partnership will be required to accrue each year a ratable portion
of the original issue discount.

Sales or Exchanges of Units and Local Limited Partnership Interests; Transfers
by Gift or at Death

    WNC & Associates,  Inc. will prohibit the  development  of a public  trading
market in the Units.  Accordingly an investor may not be able to sell his Units.
See  "Transferability  of Units."  However,  an investor may be able to sell his
Units in some cases.  Any gain realized on a sale of Units by an investor who is
not a dealer in Units or other  similar  securities  generally  will be  capital
gain, except as set forth below.  However,  as a result of the sale of Units, an
investor  may be subject to the  recapture  of tax credits.  See  "Historic  Tax
Credit  Recapture"  and "The Low Income  Housing Tax Credit -  Recapture  of Low
Income Housing Tax Credits."

    In determining  the amount received upon the sale or exchange of a Unit, the
seller  must  include,  among other  things,  his  allocable  share of all local
limited partnerships' nonrecourse  indebtedness.  Because of the rules regarding
nonrecourse indebtedness, it is possible that the gain realized upon the sale of

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a  Unit  or  an  interest  in a local  limited  partnership  may exceed the cash
proceeds of such sale.  In some cases the income  taxes  payable with respect to
such sale may exceed such cash proceeds.  See,  however,  "Limitations on Losses
and Credits from  Passive  Activities"  regarding  the  allowance of  previously
suspended  passive  activity  losses  and  passive  activity  credits  upon  the
disposition of a taxpayer's entire interest in a passive activity.

    An investor's share of gain on the sale of Units will not be capital gain to
the extent the gain is allocable to unrealized receivables or inventory items of
the  Series,  if any.  Unrealized  receivables  is defined in Section 751 of the
Internal Revenue Code to include unrecognized depreciation recapture.

    Similar  rules will apply in the case of a sale or  exchange  by a Series of
its interest in a local limited partnership.

    In addition to Federal or state gift tax  liabilities,  a gift of a Unit may
result in Federal or state  income tax  liabilities  to the donor.  The IRS will
take the view that an  investor  who makes a gift of a Unit is  relieved  of his
share of nonrecourse indebtedness.  Therefore, the investor will realize gain on
the gift to the extent his share of such  liabilities  exceeds the tax basis for
his Units.  Gain on a gift of Units is taxable in the same manner as gain on the
sale of a Unit.  The donor is not  entitled to use  suspended  passive  activity
losses on the gift of his Units.  Rather the  donee's tax basis for the Units is
increased by the suspended  passive activity losses.  See "Limitations on Losses
and Credits from Passive Activities."

    If an investor  dies,  the fair market value of his Units will be subject to
Federal estate taxation. The basis of a Unit inherited from a decedent generally
is stepped up or stepped  down to its fair market  value for Federal  estate tax
purposes.

Dissolution and Liquidation of a Series or Local Limited Partnership

    Generally,  upon liquidation or termination of his Series,  an investor will
recognize  income only to the extent that the sum of the cash distributed to him
and his share of nonrecourse liabilities exceeds his adjusted basis in his Units
at the date of  distribution.  Similar  rules  will  apply  in the  event of the
dissolution or liquidation of a local limited partnership.

Elections

    Section 754 of the Internal  Revenue Code permits a partnership  to elect to
adjust the basis of partnership property:

o   on the transfer of an interest in the partnership, or

o   on the distribution of property by the partnership to a partner.

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If a Series were to make such an election,  then  transferees  of Units would be
treated,  for  purposes of  depreciation  and taxable  gain,  as though they had
acquired  a  direct  interest  in  the  Series'  assets.  As  a  result  of  the
complexities  of the tax accounting  required,  WNC & Associates,  Inc. does not
presently intend to make a Section 754 election,  although it is empowered to do
so by the Series' partnership  agreement.  The absence of any such election may,
in some circumstances, reduce the value of Units to a potential purchaser.

Transfer of Units; Termination of a Series

    The Internal  Revenue Code  provides  that if 50% or more of the capital and
profits  interests  in a  partnership  are  sold or  exchanged  within  a single
12-month period, the partnership will terminate for Federal income tax purposes.
Under the  Series'  partnership  agreement,  50% or more of the Units may not be
sold or exchanged  within a single 12-month  period.  However,  if a termination
should nonetheless occur, it could cause recapture of tax credits.

Profit Motive

    Under Section 183 of the Internal Revenue Code, expenses from activities not
engaged in for profit are disallowed as deductions from other income. Low income
housing typically does not generate a profit from operations.  Nonetheless,  the
Treasury  Department  has issued  Treasury  Regulations  stating  that  Internal
Revenue  Code  Section  183 will not be applied  to  apartment  complexes  which
qualify for the low income housing tax credit if:

o   the investment in such properties is bona fide, and

o   the investment is not an economic sham.

Based on these  Treasury  Regulations  Derenthal & Dannhauser  is of the opinion
that it is more likely than not that Internal  Revenue Code Section 183 will not
be applied to disallow  deductions  arising from the  ownership of the apartment
complexes.

Other Important Tax Considerations

    In addition to the  provisions  of the  Internal  Revenue  Code  relevant to
investments in limited  partnerships  or in real property,  investors  should be
aware of other important Internal Revenue Code provisions that are applicable to
investments in general, or that may, depending upon the facts and circumstances,
be  applicable  to  individual  taxpayers.  While a detailed  discussion of such
general tax aspects is beyond the scope of this prospectus,  investors should be
aware of the following  matters,  among others, and should consult their own tax
advisers for more details if further information is desired.


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A.       Tax Rates

    The Internal  Revenue Code includes five marginal tax rates for individuals,
as set forth in the following tables:

    Filing                                                    Marginal
    Status        Income                                      Tax

    Married       up to $43,050                               15%
    Filing        between $43,050 and $104,050                28%
    Jointly       between $104,050 and $158,550               31%
                  between $158,550 and $283,150               36%
                  over $283,150                               39.6%

    Head          up to $34,550                               15%
    of            between $34,550 and $89,150                 28%
    household     between $89,150 and $144,400                31%
                  between $144,400 and $283,150               36%
                  over $283,150                               39.6%

    Single        up to $25,750                               15%
                  between $25,750 and $62,450                 28%
                  between $62,450 and $130,250                31%
                  between $130,250 and $283,150               36%
                  over $283,150                               39.6%

    Married       up to $21,525                               15%
    Filing        between $21,525 and $52,025                 28%
    Separate      between $52,025 and $79,275                 31%
                  between $79,275 and $141,575                36%
                  over $141,575                               39.6%

The  dollar  amounts  set forth  above  apply to 1999 and will be  adjusted  for
inflation in each year thereafter.

    Despite the preceding, the maximum tax rate on capital gains is:

o   28% for most assets held for more than 12 but less than 18 months, and

o   20% for most assets held for more than 18 months,


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provided

o   that capital  gains equal to  depreciation  taken on real  property held for
    more than 18 months will be taxed at a maximum rate of 25%.

Capital losses are deductible to the extent of  capital  gains  plus  $3,000  of
ordinary income. The $3,000 figure is reduced to $1,500 in the case of a married
person filing a separate return. The remainder is carried forward.

    The personal  exemption  amount,  established at $2,000 for 1989, is indexed
for inflation after 1989. It is equal to $2,750 for 1999. The personal exemption
is phased out by 2% for each $2,500 by which a taxpayer's  adjusted gross income
exceeds  threshold  amounts.  The phase-out is 4% for a married  person filing a
separate return.

    Under  Internal  Revenue Code Section 67,  noncorporate  investors may claim
most miscellaneous  itemized  deductions only to the extent such expenses exceed
2% of adjusted  gross  income.  Itemized  deductions  include  expenses  paid or
incurred:

o   for the production or collection of income,

o   for the management, conservation, or maintenance of property  held  for  the
    production of income,

o   in connection with the determination, collection or refund of a tax, or

o   for the trade or business of being an employee.

    Internal  Revenue  Code  Section  68  imposes  a  limit  on an  individual's
aggregate itemized deductions, other than:

o   medical expenses under Section 213,

o   investment interest under Section 163, and

o   casualty, theft and wagering losses under Section 165.

For an individual whose adjusted gross income exceeds the applicable amount, the
amount of the itemized deductions will be reduced by the lesser of:

o   3% of the excess of the adjusted gross income over the applicable amount, or


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o   80% of the itemized deductions otherwise allowable for the taxable year.

For these purposes, the applicable amount means $100,000, or $50,000 in the case
of a married person filing a separate return.  The applicable amount is adjusted
for  inflation in tax years  beginning  after  December 31, 1991. It is equal to
$126,600 for 1999.  Internal  Revenue Code Section 68 is to be applied after the
application  of any other Internal  Revenue Code  limitation on the allowance of
itemized deductions.

    With respect to corporations,  other than personal service corporations, the
Internal Revenue Code imposes the following tax rates:

o   5% of so much of the taxable income as does not exceed $50,000,

o   25% of so much of the taxable income as exceeds $50,000 but does not exceed
    $75,000,

o   34% of so much of the taxable income as exceeds $75,000 but does not exceed
    $10,000,000, and

o   35% of so much of the taxable income as exceeds $10,000,000.

    In the  case  of a  corporation  which  has  taxable  income  in  excess  of
$15,000,000,  the amount of the tax determined under the foregoing provisions is
increased by an additional amount equal to the lesser of:

o   3% of such excess, or

o   $100,000.

    With respect to personal  service  corporations,  the Internal  Revenue Code
imposes a single rate of tax equal to 35%.

B.  Alternative Minimum Tax

    In addition to the regular income tax, the Internal Revenue Code includes an
alternative minimum tax for noncorporate and corporate  taxpayers.  In 1986, the
alternative minimum tax base was significantly broadened.  That base is equal to
a:

o   taxpayer's taxable income,

o   subject to adjustments,


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o   increased by items of tax preference, and

o   reduced by an exemption,

all as described below.

    Under the  alternative  minimum  tax,  depreciation  deductions  on personal
property are computed  using the 150%  declining  balance method rather than the
200% declining  balance method. A less favorable net operating loss deduction is
used in lieu of the regular tax net operating loss deduction.

    The itemized deductions  allowable in computing  alternative minimum taxable
income include the following:

o   charitable contributions,

o   medical deductions in excess of 10% of adjusted gross income,

o   casualty losses,

o   interest on personal housing, and

o   other interest to the extent of net investment income.

No standard  deduction  is allowed,  but an  exemption  amount is  available  as
discussed below.

    The Internal  Revenue Code eliminates an incentive for married  taxpayers to
file separate  returns by increasing the amount of alternative  minimum  taxable
income by the lesser of:

o   25% of the excess of alternative minimum taxable income over $165,000, or

o   $22,500.

    For corporations,  the Internal Revenue Code requires an addition to taxable
income  of 75%  of  the  amount  by  which  adjusted  current  earnings  exceeds
alternative minimum taxable income.

    In addition to the adjustments described above,  alternative minimum taxable
income is increased by the amount of items of tax  preference.  Tax  preferences
include  excess  depletion   deductions,   excess  intangible   drilling  costs,

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tax-exempt  interest,  and  the  difference  between  the  fair market value and
the exercise price of stock  acquired by exercise of an incentive  stock option.
No deduction is allowed for losses from a tax shelter farm activity.

    Tax credits cannot be used to offset  alternative  minimum tax. Rather,  tax
credits  may only be utilized to the extent they do not exceed the excess of the
taxpayer's income tax liability over the greater of:

(a) his tentative minimum tax liability, or

(b) 25% of his regular tax liability in excess of $25,000.

Any  excess  tax  credits  are  first  carried back one year and then forward 20
years.

    The alternative minimum tax for individuals is equal to:

o   26% of so much of the taxable excess as does not exceed $175,000, plus

o   28% of so much of the taxable excess as exceeds $175,000.

For this purpose,  taxable excess means the amount by which alternative  minimum
taxable income exceeds the exemption amount. The exemption amount is:

o   $45,000 for a married  couple filing a joint return or a surviving  spouse,
o   $33,750 for a single individual, and
o   $22,500 for a married individual filing a separate return or for an estate
    or trust.

     However,  the  exemption  is  reduced  by 25% of the  amount  by which  the
alternative minimum taxable income exceeds:

o   $150,000 in the case of a married couple filing a joint return,
o   $112,500 in the case of a single individual, and
o   $75,000 in the case of a married individual filing a separate return or for
    an estate or trust.

    The corporate alternative minimum tax is the amount, if any, by which:

o   20% of the excess of

    o    the corporation's alternative minimum taxable income, over

    o    the exemption amount, exceeds


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o    the corporation's regular tax for the year.

The corporate exemption amount is $40,000. However, this exemption is reduced by
25% of the amount by which alternative  minimum taxable income exceeds $150,000.
The corporate  alternative minimum tax does not apply to corporations which have
elected to be subject to Subchapter S of the Internal Revenue Code.  Rather, the
alternative minimum tax applies to the shareholders of an S corporation.

    The corporate  alternative  minimum tax has been repealed for small business
corporations.  A corporation that had average annual gross receipts of less than
$5,000,000  for the  three-year  period  beginning  after December 31, 1993 is a
small business  corporation  for its first taxable year beginning after December
31, 1997. A  corporation  that meets the  $5,000,000  gross  receipts  test will
continue to be treated as a small  business  corporation  so long as its average
gross receipts do not exceed $7,500,000.

    Because the impact of the  alternative  minimum tax is  dependent  upon each
investor's  particular  tax  situation,  each  prospective  investor is urged to
consult his own tax adviser as to the effect an investment in a Series will have
on the calculation of his alternative minimum tax liability.

C.  Deduction of Investment Interest

    The  Internal  Revenue  Code  imposes   substantial   limitations  upon  the
deductibility  of  interest  on funds  borrowed by an investor to purchase or to
carry investment  assets.  Internal Revenue Code Section 163(d) provides that an
individual may take a deduction for such investment  interest only to the extent
of such individual's net investment income for the taxable year.

    Investment  interest  is interest  on  indebtedness  incurred to purchase or
carry investment property. Investment interest includes:

o   interest expense allocable to portfolio income, and

o   investment  and  interest  expense  allocable  to an  activity  in which the
    taxpayer does not materially participate, if such activity is not treated as
    a passive activity under the passive loss rules.

Investment  interest does not include any interest that is taken into account in
determining  a  taxpayer's  income or loss from a passive  activity  or a rental
activity in which a taxpayer actively  participates.  See "Limitations on Losses
and Credits from Passive  Activities."  Accordingly,  the Series are unlikely to
generate any material amounts of investment interest.


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Tax Returns and Tax Information

A.       Audit and Assessment Procedure

    The IRS could audit the tax information returns filed by a Series or a local
limited  partnership.  Any such audit could result in the audit of an investor's
tax return.  An audit of an  investor's  return could result in  adjustments  to
items related to the Series as well as items not related to the Series.

    Under the Internal  Revenue Code the IRS treats a partnership  as a separate
entity for purposes of audit,  settlement and judicial review. Thus, the IRS may
audit  and make a  single  determination  of the  propriety  of a  partnership's
treatment of  partnership  tax items at the  partnership  level.  In general,  a
partnership's tax matters partner represents the partnership and its partners in
the event of an audit of the partnership's tax returns.  WNC & Associates,  Inc.
is the tax matters  partner  for each  Series.  All  partners  are  nevertheless
entitled to participate in an audit and each partner may enter into a settlement
agreement on his own behalf with the IRS.

    Partners  must  report  partnership  items  consistently  with the  position
reported by the  partnership on its tax returns or file a statement  identifying
the inconsistency. If an inconsistency statement is not filed, the IRS may treat
an inconsistency as a computational error on the partner's return and assess any
deficiency resulting from such inconsistency. The IRS can also assess negligence
penalties for failure to comply with the statute.

    If the IRS proposes any adjustments to the tax returns filed by a Series,  a
local  limited  partnership  or an investor,  substantial  legal and  accounting
expenses and  deficiency  interest and penalties may be incurred.  A Series will
not bear any expense that may be incurred by an investor in connection with:

o    the investor's participation in an audit of the Series,

o   the audit of his tax returns, or

o   the  determination  or  redetermination  of his tax  liability  even  though
    resulting  solely  from  adjustments  to  the  Series'  or a  local  limited
    partnership's tax returns.


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B.       Imposition of Penalties

    Document and  Information  Return  Penalties.  Three  separate and  distinct
categories of penalties apply to information  returns and payee  statements,  as
follows:

o   a penalty for failing to file an  information  return or to include  correct
    information  therein. An example is Form 8308, which a partnership must file
    upon a transfer of its partnership interests;

o   a penalty  for  failing  to file a payee  statement  or to  include  correct
    information  on a payee  statement.  An example  is  Schedule  K-1,  which a
    partnership must provide annually to each partner; and

o   a  penalty  for  failure  to  comply   with  other   information   reporting
    requirements.  An example is the  requirement  that a  transferor  must give
    notice to a  partnership  concerning  the  exchange  of an  interest  in the
    partnership.

    The penalties in this category differ in amount. It is possible that a filer
might reduce or avoid some of the penalties by filing  corrected  returns within
specific time limits, or if the omissions and inaccuracies are  inconsequential.
On the other hand,  the  penalties  may be increased if the failure to comply is
due to intentional disregard.

    Accuracy-Related  and  Fraud  Penalties.  The penalty for an inaccurate  tax
return is equal to 20% of the portion of an  underpayment  resulting from one or
more of the following:

o   negligence or disregard of the rules and regulations,

o   any substantial understatement of income tax,

o   any substantial valuation overstatement,

o   any substantial overstatement of pension liabilities, and

o   any substantial estate or gift tax valuation understatement.

    A  substantial  understatement  of income  tax  exists if the  amount of the
understatement exceeds the greater of:

o   10% of the tax required to be shown, or

o   $5,000.  The $5,000 is increased to $10,000 for most corporations.

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    A substantial valuation overstatement exists if:

o   the value or adjusted basis of any property is 200% or more  of  the  amount
    determined to be the correct value or adjusted basis, or

o   the price for  services  or  property  in  transactions  between  affiliated
    entities  is  200%  or more of the  current  price.  In the  case of a gross
    overstatement,  the penalty is  increased to 40%. In no event will a penalty
    be imposed  unless the  underpayment  exceeds  $5,000.  The $5,000 figure is
    increased to $10,000 for most  corporations.  A gross  overstatement  occurs
    when the  value or  adjusted  basis or price is 400% or more of the  correct
    amount.

    Any portion of an  understatement  which is attributable to fraud is subject
to a penalty at the rate of 75% of the understatement.  The 20% accuracy-related
penalty will not apply to any portion of an understatement  subject to the fraud
penalty.

Tax Shelter Registration

    Tax shelter  organizers are required to register their tax shelters with the
IRS.  Furthermore,  tax shelter  organizers  are  required to maintain  lists of
investors  in the tax  shelter.  The lists  must be turned  over to the IRS upon
request.  Both of these  requirements  have  enhanced  the ability of the IRS to
audit tax shelters.

    Each Series has applied to the IRS for a tax  shelter  registration  number.
The registration number and the taxpayer identification number to be assigned to
a Series will be  provided  to the  investors.  Each  investor  must report this
registration  number to the IRS if he claims any  deduction,  loss,  credit,  or
other tax benefit or reports any income by reason of his investment in a Series.

    Each  investor must report the  registration  number as well as the name and
taxpayer identification number of his Series on Form 8271.

    Form 8271 must be  attached  to the return on which an  investor  claims the
deduction, loss, credit, or other tax benefit or reports any income.

    Issuance of a  registration  number does not  indicate  that the  investment
described  herein or that the claimed tax benefits have been reviewed,  examined
or approved by the IRS.

    A local limited partnership may be required to register as a tax shelter. If
such is the case,  each  investor  may be  required  to report the  registration
number of such local limited partnership to the IRS on Form 8271.

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    If an  investor  fails to  include  a  required  registration  number on his
individual tax returns he is subject to a maximum  penalty of $250 for each such
failure.

    Investors  are  required to provide  the  Series'  tax shelter  registration
number to  transferees  of their  Units.  If an  investor  fails to  notify  his
transferee of the  registration  number,  he is subject to a maximum  penalty of
$100 for each such failure.

Changes in Tax Law

    Many of the amendments to the Internal  Revenue Code enacted since 1980 have
not been  interpreted by corresponding  amendments to the Treasury  Regulations.
Also, few judicial decisions or administrative rulings with regard thereto exist
as of the  date of this  prospectus.  Accordingly,  the  Internal  Revenue  Code
provisions  described  above may be further  amended,  modified or  clarified by
Congress, the IRS or the courts so as to have an adverse effect on the Series.

                       STATE AND LOCAL TAX CONSIDERATIONS

    In  addition  to the  Federal  income tax  considerations  described  above,
prospective investors should consider potential state and local tax consequences
of an  investment in a Series.  An investor's  share of Series tax items must be
included  for state or local tax  purposes  in his  jurisdiction  of  residency.
Moreover,  California and other states in which a Series may do business  impose
taxes on  nonresident  investors,  determined  with reference to their shares of
income and gain derived from such states.  Losses from a Series'  operations  in
one state may not be available to offset income from the Series or other sources
taxable in a different state. Personal exemptions are allowed by some states but
not  others.  Those  states that allow  personal  exemptions  may  compute  them
differently. A Series may be required to withhold state taxes from distributions
or allocations to investors in some instances.

    To the extent that an investor  who is not a resident of a state pays tax to
that state by virtue of Series  operations within that state, he may be entitled
to a deduction or credit against tax owed to his state of residency with respect
to the same  income.  Investors  should  consult  their own tax advisers in that
regard.

    Tax benefits that are  available for Federal  income tax purposes may not be
available  for state  income tax  purposes.  For  example,  not all states  have
adopted the Federal cost recovery rules and the Federal  installment sale rules.
Thus, it is possible that investors in some states will be required to recognize
more or less  income  or loss from  operations,  or gain from the sale of Series
investments, for state tax purposes than for Federal tax purposes.


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    Investors  may be  subject to estate or  inheritance  taxes in the states in
which the Series conducts business, as well as in their own states of residency.
Corporate  investors  may be liable for minimum  state  franchise  taxes in such
states.  Each  prospective  investor should consult his own personal tax adviser
concerning  his  individual tax situation and the state and local tax aspects of
investing in a Series.

                         PROFITS AND LOSSES, TAX CREDITS
                             AND CASH DISTRIBUTIONS

    Set forth below in this section of the  prospectus  is a  discussion  of the
allocation and distribution provisions of the Series' partnership agreement.

Tiered Investment

    An investment in a Series represents a tiered investment. In the upper tier,
investors will contribute  capital to the Series.  In the lower tier, the Series
will  contribute  the  capital  received  from  the  investors,  net of fees and
expenses,  to  a  number  of  local  limited  partnerships.  The  local  limited
partnerships will actually own the apartment complexes.

    Profits, losses, tax credits and cash generated by an apartment complex will
initially  be  accounted  for by the local  limited  partnership  which owns the
apartment  complex.  The local limited  partnership will allocate and distribute
these items among its partners.  The general  partners or managing  members of a
local limited  partnership will be the local general  partners,  and the limited
partners or  non-managing  members will be the Series,  WNC Housing,  L.P.  and,
possibly, an affiliate of the local general partners and/or a joint venturer.

    Consequently, the primary source of profits, losses, tax credits and cash of
a Series will be the  allocations and  distributions  it receives from the local
limited  partnerships.  In addition,  each Series will have a less consequential
level of income and expense at the Series'  level.  Each Series will account for
all profits,  losses, tax credits and cash, from all sources,  and then allocate
such items between the investors and WNC & Associates, Inc.

    The manner in which each Series will make its allocations and  distributions
is  summarized  below  and  is set  forth  in its  entirety  in the  partnership
agreement incorporated into this prospectus as Exhibit B.

Cash Available for Distribution

    A Series' cash available for  distribution  means cash flow less any amounts
set aside from cash flow for the restoration or creation of reserves.  Cash flow
means:


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o   all cash distributions made to the Series by the local limited partnerships,
    minus

o   any such cash distributions resulting from the sale or  refinancing  of  the
    apartment complexes, plus

o   all cash funds from Series operations after deducting cash funds used to pay
    expenses, fees, debt service and capital expenditures.

    WNC  &  Associates,  Inc.  does  not  anticipate  that  there  will  be  any
significant   distributions  of  cash  available  for  distribution.   Any  such
distributions  will be paid 99.9% to the investors and 0.1% to WNC & Associates,
Inc.

Sale or Refinancing Proceeds

    Sale proceeds will consist of  net cash receipts arising from sales or other
dispositions of apartment  complexes.  Refinancing  proceeds will consist of net
cash  receipts  arising  from  any  mortgage  refinancing.  Sale or  refinancing
proceeds  will not include any amounts  necessary for the payment of debt or the
funding of reserves.

    A portion of a Series' sale or  refinancing  proceeds may be  reinvested  in
local limited  partnerships during the two-year period following the termination
of  a  Series'  offering.  Otherwise,  sale  or  refinancing  proceeds  will  be
distributed by a Series in the following order:

o   to the investors until each investor has received an amount equal to:

    o    a return of his capital contribution to the Series, to the  extent  not
         previously returned by distributions of sale or  refinancing  proceeds,
         plus

    o    to the extent not already provided by distributions and tax credits, an
         annual,  cumulative,  but not  compounded,  return on their  unreturned
         capital  contributions  equal to 11% through  December 31, 2010, and 6%
         for the balance of the Series' term;

o   to WNC & Associates, Inc.  until  it  has  received  a return of its capital
    contribution to the  Series  plus  any  subordinated  disposition  fees,  as
    discussed under "Management Compensation"; and

o    the balance 90% to its investors and 10% to WNC & Associates, Inc.

    Distributions  made in connection  with the  liquidation of a Series will be
distributed  in accordance  with the positive  capital  account  balances of its
partners.

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Capital Accounts

    Each Series will maintain a capital  account for each investor.  The Series'
partnership agreement provides that an investor's capital account will equal:

o   the investor's capital contribution, minus

o   the amount of losses allocated to the investor, minus

o   the amount of cash distributed to the investor, plus

o   the amount of income allocated to the investor.

For this  purpose,  income and loss  includes  items in the nature of income and
loss but which are not subject to tax or which are not tax  deductible.  Selling
commissions  are items in the nature of losses which are not  deductible for tax
purposes.

    Capital accounts are important because they:

o   determine the manner in which liquidation proceeds are distributed, and

o   support the validity of a partnership's allocations under Treasury
    Regulations.  See "Federal Income Tax Considerations - Series Allocations."

Allocations of Profits and Losses and Tax Credits

    General  Allocations.  Low income  housing  tax  credits of a Series will be
allocated  among its investors and WNC & Associates,  Inc. in the same manner as
depreciation  deductions.  Historic  tax credits of a Series  will be  allocated
among its investors  and WNC &  Associates,  Inc. in the manner in which profits
are or would be allocated for the year in which the historic tax credit property
is placed in service.  In accordance  with these rules,  WNC & Associates,  Inc.
anticipates that low income housing tax credits and historic tax credits of each
Series  will be  allocated  99.9%  to the  Series'  investors  and 0.1% to WNC &
Associates, Inc.

    The Series' partnership  agreement uses the defined terms profits and losses
to  allocate  tax items  other than tax credits  among the  investors  and WNC &
Associates,  Inc. Due to the  requirements of the Internal  Revenue Code,  these
definitions  and the  corresponding  allocation  provisions are  extraordinarily
technical and complex and cannot be easily  explained.  See "Federal  Income Tax
Considerations  - Series  Allocations."  Primarily,  these  provisions have been
drafted  in an  attempt  to  comply  with  Internal  Revenue  Code and  Treasury


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<PAGE>


Regulations  requirements  so  as  to  allocate  all tax credits in the ratio of
99.9% to the investors and 0.1% to WNC & Associates, Inc.

    Profits  and losses  are not the same  as cash  distributions.  Profits  and
losses are determined on a tax accounting  basis for use by the investors in the
preparation  of their income tax returns  and/or for the proper  maintenance  of
capital  accounts.  Because of the effect of non-cash  deductions  allowable for
Federal income tax purposes such as  depreciation,  the amount of income taxable
to each investor may be greater or less than the amount of cash distributable to
him from his Series.  Accordingly,  the Series'  partnership  agreement provides
separately  for  allocations  of  profits  and  losses  on the one hand and cash
distributions on the other.

    A Series' profits and losses for a period means:

o   an amount  equal to the  Series'  taxable  income or tax loss for the period
    determined in accordance  with Section 703(a) of the Internal  Revenue Code.
    For this purpose all items of income, gain, loss or deduction required to be
    stated  separately under Section  703(a)(1) of the Internal Revenue Code are
    included in taxable income or tax loss, minus

o   any  expenditures  of the Series  described in Section  705(a)(2)(B)  of the
    Internal Revenue Code or treated as such under Treasury  Regulation  Section
    1.704-1(b)(2)(iv)(i), excluding

o   any items that are specially allocated under  Section  4.4  of  the  Series'
    partnership agreement. These items are discussed below in this section under
    "Special Allocations."

Other  adjustments  are included in the definition of profits and losses.  These
other  adjustments  are not  expected  to be  relevant to the Series and are not
discussed herein.

    Losses  generally will be allocated 99.9% to the investors and 0.1% to WNC &
Associates,  Inc. However, no person may receive any allocation of losses if the
allocation would cause or increase a deficit in such person's capital account.

    Profits generally will be allocated:

o   first, if the investors have an aggregate  positive  capital account balance
    and WNC & Associates,  Inc. has a negative capital account balance,  or vice
    versa,  to the class of  partners  with and to the  extent of such  negative
    balance,

o   second, to the extent of the aggregate  negative capital account balances of
    the partners, to the investors and WNC & Associates, Inc. in such manner and
    amount as is necessary to cause the negative  capital account balances to be
    in the ratio of 99.9% to the investors  and 0.1% to WNC & Associates,  Inc.,
    and

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o   third, to the investors and WNC & Associates, Inc. in such manner and amount
    as is  necessary  to cause the  positive  capital  account  balances  of the
    partners to be equal to their deemed liquidation  distributions.  A person's
    deemed  liquidation  distribution  generally  is the  amount  that  would be
    distributed to him if his Series were dissolved and liquidated and:

    o    the Series' assets were sold for their Federal adjusted tax basis,

    o    the Series' liabilities were paid,

    o    the Series  remaining  cash were  distributed  in  accordance  with the
         provisions  applicable to sale or  refinancing  proceeds  arising other
         than in liquidation of the Series.

    Special Allocations.  The Series' partnership agreement includes a number of
special allocations,  most of which are required under the Internal Revenue Code
or Treasury  Regulations.  WNC & Associates,  Inc.  anticipates  that several of
those provisions will not affect the Series based on their intended  operations.
The provisions which may to affect the Series and their investors follow.

o   Partnership  Minimum Gain.  Partnership minimum gain generally is the excess
    of the principal amounts of a partnership's nonrecourse debts over its bases
    in the properties  securing the debts.  If, in any year, there is a decrease
    in the aggregate amount of a Series' minimum gain, the Series would allocate
    to each  investor an amount of income equal to the  investor's  share of the
    decrease in Series'  minimum  gain. It is likely that after several years of
    operation each Series will have minimum gain.

o   Partner  Nonrecourse Debt. Partner nonrecourse debt is nonrecourse debt of a
    partnership  as to which a partner or related  party bears the economic risk
    of loss. All deductions  attributable  to partner  nonrecourse  debt must be
    allocated  to  the  partner  with  the  economic  risk  of  loss.  If  WNC &
    Associates,  Inc.  makes a  nonrecourse  loan to a Series the loan will most
    likely be a partner nonrecourse debt to WNC & Associates, Inc.

o   Partner Nonrecourse Debt Minimum Gain. Partner nonrecourse debt minimum gain
    is calculated in the same manner as  partnership  minimum gain,  except that
    only partner  nonrecourse  debts and the related  properties are included in
    the  calculation.  If, in any year,  there is a decrease in the minimum gain
    for any partner  nonrecourse  debt, the partnership  must allocate income to
    each  partner who shares in the partner  nonrecourse  debt  minimum  gain an
    amount of income equal to the partner's share of the decrease in the partner
    nonrecourse debt minimum gain.


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o   Qualified Income Offset. Under the Treasury Regulations, the deficit make-up
    requirement is waived if the  partnership  agreement  includes a  qualified
    income offset and an allocation does not cause or increase a deficit balance
    in  a  partner's   capital  account   balance.   See   "Federal  Income  Tax
    Considerations - Series Allocations."  The qualified income  offset requires
    that the capital accounts must  be  specially adjusted for  this  purpose by
    three items. The most important adjustment for investors in a  Series is the
    adjustment   for  reasonably  anticipated  distributions.   Generally,  this
    adjustment would  require  capital  account  reductions  for the  amount  of
    distributions of sale proceeds which are reasonably anticipated.

o   Negative Capital Account  Balances.  No loss can be allocated to an investor
    to the extent it would cause a negative  balance in the  investor's  capital
    account  to exceed  the  investor's  share of his Series partnership minimum
    gain and partner nonrecourse debt minimum gain.

o   Interest Income.  Any interest income recognized by a Series  in  connection
    with the payment to the Series of a capital contribution  will  be allocated
    to the investor making the payment.

    Prospective investors are urged to read Article 4 of the Series' partnership
agreement in its entirety for a full  description of the  provisions  summarized
above.

Determination of Distributions and Allocations Among Investors

    A Series' cash  distributions  and general  allocations of income and losses
will be made among its  investors in  proportion to the number of Units owned by
each of them.

Allocations for Community Reinvestment Act Purposes

    Each Series may allocate  specific  properties among its investors which are
banks strictly for Community  Reinvestment  Act  regulatory  purposes or related
requirements  only.  The Series'  partnership  agreement  grants each Series the
power to do so. All of the investors  will continue to participate in all of the
Series' properties for Federal income tax purposes.


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                      SUMMARY OF CERTAIN PROVISIONS OF THE
                              PARTNERSHIP AGREEMENT

    The Series' partnership  agreement is the governing instrument  establishing
the rights and  obligations of the investors and WNC & Associates,  Inc. in each
Series.  The  Series'  partnership  agreement  is  included as Exhibit B to this
prospectus.  Each  prospective  investor  is  urged  to  read  that  partnership
agreement in full. Many of the principal  provisions of the Series'  partnership
agreement have been summarized elsewhere in this prospectus. Other provisions of
the  Series'  partnership  agreement  are  summarized  below,  but for  complete
information  reference  should  be made  to the  Series'  partnership  agreement
itself.

Default by an Investor in Payment of the Deferred Capital Contribution

    Investors  purchasing  20 Units or more may elect to pay for one-half of the
purchase price of their Units with promissory  notes. See "Terms of the Offering
and Plan of  Distribution"  below.  Under a promissory note, an event of default
will occur if:

o   the investor fails to make any payment due under his promissory note  within
    30 days after the due date,

o   the investor makes a  material  misrepresentation  in  connection  with  his
    purchase of Units,

o   the investor files a proceeding under the  Federal  bankruptcy  laws  or  an
    involuntary proceeding is filed against the investor,

o   the investor makes an assignment for the benefit of creditors, or

o   a receiver or trustee is appointed for all or any  part  of  the  investor's
    assets.

    In the event of a default  of the type set  forth in the first  bullet,  the
investor will have a right to cure the default.  A defaulting  investor can cure
that type of default by paying  the amount due with late  charges.  The right to
cure will terminate on the date which is 30 days after notice of the default and
intent to foreclose  have been given to the investor.  During that 30-day period
the  investor  will not suffer any  reduction  in interest in the Series and the
Series may not  commence  proceedings  to enforce its  security  interest in the
defaulting investor's Units.

    If an event of default  occurs,  the Series may  declare  the entire  unpaid
balance  of the  promissory  note due and  payable.  The  promissory  note  will
continue to bear interest until paid. The Series will impose a late charge of 5%
on any late  payment.  In  addition,  any  distributions  of cash to  which  the
investor  is  entitled  will  instead be offset  against  amounts  due under the
promissory note. Each investor issuing a promissory note will grant  a  security

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<PAGE>



interest  in his  Units to his  Series.  Therefore,  upon an event of  default a
Series  also will be  entitled  to the  remedies  available  under  the  Uniform
Commercial  Code.  Under the UCC, the Series could  foreclosure on the Units and
bring a proceeding directly against the investor.  The Series may sell the Units
of a  defaulting  investor to the  nondefaulting  investors or to others for the
highest price which the Series can obtain in a commercially reasonable sale. WNC
& Associates,  Inc. and its affiliates may purchase any such Units,  but only if
such  Units  have  first been  offered  to the  nondefaulting  investors.  WNC &
Associates,  Inc.  and its  affiliates  are not  obligated  to purchase any such
Units.  Sale  proceeds are first applied to the amount due to the Series and the
expenses of the sale. Accordingly, the defaulting investor might not receive any
cash from the forced sale of his Units. See "Risk Factors - Risks related to the
Series and the Series' partnership agreement."

    A Series may pledge its investor  promissory  notes as  collateral to secure
Series debt. A Series may sell promissory  notes of  corporations  with a credit
rating by Standard & Poor's of A or better.  If the maker of a  promissory  note
which is sold or pledged defaults under the promissory note, a subsequent holder
of the promissory note will have the rights of the Series as described above.

Liability of Investors to Third Parties

    Under  California  law, an investor is not personally  liable for the debts,
liabilities and obligations of his Series in excess of his capital contribution,
except for the payments due under his promissory  note, if any,  unless he takes
part in the management and control of his Series.

Dissolution and Liquidation

    Each Series is self-liquidating and will be dissolved no later than December
31, 2060, or earlier upon the prior occurrence of certain events, including:

o   the Series' disposition of all interests in local limited  partnerships  and
    other assets of the Series,

o   the vote by investors owning more than 50% of the Series' Units to  dissolve
    the Series, or

o   unless  the  business  of  the  Series  is  continued  by  the  Series  or a
    reconstituted  partnership  under  Section  8.1 of the  Series'  partnership
    agreement, the removal,  bankruptcy,  dissolution,  death or adjudication of
    incompetence of a sole remaining general partner. WNC & Associates, Inc. has
    agreed not to retire or withdraw voluntarily from the Series.


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    Upon dissolution of a Series, unless its business is continued in accordance
with its partnership agreement,  the Series will be liquidated.  The Series will
apply  liquidation  proceeds  first to the  payment of its  obligations  and the
expenses  of its  liquidation,  and  to  the  setting  up of  any  reserves  for
contingencies which WNC & Associates,  Inc. considers  necessary.  Any remaining
proceeds of  liquidation  and any other funds or  properties  of the Series will
then be  distributed  in the manner  described  under  "Profits and Losses,  Tax
Credits and Cash Distributions - Sale or Refinancing Proceeds."

Removal of WNC & Associates, Inc.

    The Series'  partnership  agreement provides that investors owning more than
50% of the Units in a Series  may  remove  WNC &  Associates,  Inc.  as the fund
manager of the Series and elect a new fund manager. If WNC & Associates, Inc. is
removed or  withdraws,  the fair market value of its interest in the Series will
be determined by agreement of WNC & Associates,  Inc. and the Series or, if they
cannot agree, by arbitration. The Series will deliver a promissory note to WNC &
Associates,  Inc. for such fair market value  payable in no less than five equal
consecutive annual installments  commencing on the first anniversary of the date
of such note.  Payments  required under such promissory note could result in the
Series   having  to  sell  one  or  more  of  its  interests  in  local  limited
partnerships. Such promissory note will bear simple interest payable on the last
day of each calendar quarter in arrears at the prime rate of Southern California
Bank.  Such rate is the prime or reference rate of interest  charged by the Bank
on short-term  unsecured loans to its most creditworthy  customers.  Despite the
preceding,  if the note is delivered  following a voluntary  withdrawal of WNC &
Associates, Inc., then:

o   such note will neither be secured nor bear interest, and

o   the  principal  payable  will be  limited  in amount  and date of payment to
    distributions  which WNC & Associates,  Inc.  would have received  under the
    Series' partnership agreement had it not withdrawn.

    Within 120 days after the  determination  of the fair market  value of WNC &
Associates,  Inc.'s interest,  the Series may, with the consent of a majority of
its  investors,  sell such  interest to one or more persons at a purchase  price
equal to its fair market value. The Series may admit the purchaser or purchasers
as a substitute fund manager or fund managers.

Voting Rights

    Investors  owning  more  than 50% of the  Units in a Series  may  amend  the
partnership  agreement of the Series at any time.  However,  an amendment  which
would  adversely  affect the  limited  liability  of an  investor or the rights,

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<PAGE>


powers,  duties  or  compensation  of  WNC &  Associates,  Inc. or  any  of its
affiliates will also require the consent of such person. WNC & Associates,  Inc.
may unilaterally amend the Series' partnership agreement:

o   to admit transferees of Units as described in this prospectus, and

o   for the benefit of, or not adverse to, the  interests  of the  investors  as
    specified in Section 12.1.2 of the Series' partnership agreement.

    Investors  owning  more than 50% of the Units in a Series  must  approve the
removal of WNC & Associates, Inc. and the admission of a successor or additional
fund manager. See "Removal of WNC & Associates,  Inc." above in this section and
"Management."

    WNC & Associates, Inc. may not, without the consent of investors owning more
than 50% of the Units in the Series:

o   sell all or substantially  all the assets of the Series at one time,  except
    in connection  with the  liquidation  and winding up of the Series  business
    upon its dissolution,

o   cause the merger or other reorganization of the Series, or

o   elect to dissolve the Series.

    Section 10.3 of the Series' partnership agreement imposes strict limitations
on the ability of a Series to propose or participate in a roll-up.  A roll-up is
a transaction involving the acquisition,  merger, conversion or consolidation of
a Series and the issuance of securities of another entity. Investors owning more
than 50% of the  Units in a Series  could  vote to  revise  or  eliminate  these
limitations.  Nonetheless,  in addition  to these  limitations,  the  California
Revised  Limited  Partnership  Act,  which  governs each Series,  gives  limited
partners  who  dissent  to a roll-up  the right to require  that  their  limited
partnership  repurchase  their  interests  at a price equal to their fair market
value.

Meetings

    There  will be no  annual  or other  periodic  meetings  of  the  investors.
However, WNC & Associates, Inc.:

o   may call a meeting at any time, and

o   must call a meeting upon written request of investors in a Series owning 10%
    or more of the Units in the Series. In addition, WNC & Associates, Inc. may,
    and upon request of investors owning  10% or more of the Units in a  Series,

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<PAGE>



    must submit any matter upon which they are entitled to vote to the investors
    in the Series for a vote without a meeting.

Books and Records

    Each Series will maintain its books and records at the  principal  office of
WNC & Associates,  Inc.  Currently,  the address is 3158 Redhill  Avenue,  Costa
Mesa,  California  92626.  The investors of a Series may inspect,  reproduce and
examine the Series' books and records at all reasonable times. Upon request, WNC
& Associates,  Inc.  will promptly  deliver to an investor of a Series a copy of
the following books and records of the Series:

o   the Certificate of Limited Partnership and all amendments thereto,

o   the Series' partnership agreement, and all amendments thereto, and

o   a current  list of the full name and last known  address of each  partner in
    the Series. If such a list is requested, WNC & Associates,  Inc. is required
    to provide it within 10 days of the receipt of the request. The list must be
    arranged in  alphabetical  order,  on white paper and in a readily  readable
    form. Under  California law, if WNC & Associates,  Inc. fails to provide the
    list of  partners  and a court  finds that the  failure to do so was without
    justification,  the court may  award,  in  addition  to any  actual  damages
    suffered,  an amount  sufficient  to reimburse the investor  plaintiffs  for
    reasonable expenses.

                            TRANSFERABILITY OF UNITS

     Article 7 of the Series' partnership  agreement imposes restrictions on the
transfer of Units. To transfer Units, a written instrument of assignment must be
signed by both the  transferor  and the  transferee  and returned to the Series,
together  with  payment  of all  reasonable  legal  fees  and  filing  costs  in
connection with the transfer, but not to exceed $100. WNC & Associates, Inc. may
request:

o   additional documentation to evidence the authority of  the  parties  to  the
    assignment. For example, WNC & Associates, Inc. will ask to see the  written
    power of attorney where a person purports to hold a  power of  attorney  for
    another person;

o   compliance of the assignment with  the  terms  of  the  Series'  partnership
    agreement.  For example, WNC & Associates, Inc. will require the  transferee
    to grant a power of attorney to WNC & Associates, Inc.  pursuant  to section
    13.3 of the partnership agreement; and

o   the consent,  if required,  of the Commissioner of Corporations of the State
    of California or of any other state official who asserts  jurisdiction  over
    such  assignment.  For example,  an investor who is a resident of California

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<PAGE>


    may only sell his Units to an unrelated party who is not already an investor
    in the Series with the prior  approval  of the  California  Commissioner  of
    Corporations.

    The Series will not issue any certificates representing the Units.

    An  assignment  will  not  take  effect  for any  purpose  until it has been
registered on the books of the Series.  Similarly, a pledge or other encumbrance
of a Unit will not be effective unless so registered.

    On the death of an  investor,  his executor or  administrator  will have all
rights of the  investor for the purpose of settling  his estate,  including  the
same power as the decedent had to assign his interest to another party.

    WNC & Associates,  Inc.  does not intend or anticipate  that a public market
will  develop for the purchase and sale of Units.  Therefore,  investors  may be
unable to sell their Units promptly or at a reasonable  price.  The Units should
only be considered as a long-term investment.  See "Risk Factors - Risks related
to the Series and the Series' partnership agreement."

    If an investor is able to  negotiate a sale,  exchange or other  transfer of
his Units,  WNC & Associates,  Inc. may deny or defer the  effectiveness  of the
transfer if necessary, in the opinion of counsel, to avoid:

o   the premature termination of the Series for tax purposes,

o   the disqualification of the Series for low income housing tax credits  under
    Internal Revenue Code Section 42(j)(5)(B),

o   the classification of the Series as a publicly-traded partnership or  as  an
    association taxable as a corporation for Federal income tax purposes, or

o   the recapture of tax credits.

In addition,  no transfers  may be made to tax-exempt  or foreign  entities,  or
through a securities market or a secondary market or the substantial  equivalent
thereof.

    Article 7 of the Series' partnership agreement gives WNC & Associates,  Inc.
broad powers to enforce or modify these provisions. WNC & Associates,  Inc. will
review from time to time the  restrictions  on transfer of Units. It will modify
such  restrictions  to make them less  restrictive  if the  Series  receives  an

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<PAGE>


opinion of counsel stating that such  modification  may be made without material
adverse tax consequences.

    WNC &  Associates,  Inc.  will not  recognize  a  transfer  if,  immediately
thereafter,  any transferor or transferee  would hold a fraction of a Unit. This
restriction  shall not apply to a  transfer  by gift,  inheritance,  bequest  or
family dissolution, or a transfer to an affiliate of the transferor.

    A Series will recognize  transfers as of the first day of the fiscal quarter
following  the  fiscal  quarter  in  which  the  Series   receives   appropriate
documentation  relating to the  transfer,  together  with the payment  described
above. Cash available for distribution, if any, will be allocated to the persons
recognized  as Unit  holders on the last day of each fiscal  quarter.  Except as
provided in the next sentence,  taxable income, tax loss and tax credits will be
allocated  between  a  transferor  and a  transferee  based  upon the  number of
quarterly  periods that each was  recognized  as the holder of a Unit.  Proceeds
from a sale or refinancing, if any, will be distributed, and all related taxable
income and tax loss will be allocated,  to the persons recognized as the holders
of  Units  on the  date on which  the  sale or  refinancing  occurred.  For this
purpose, transfers will be recognized as of the date specified by the transferor
and the  transferee in the instrument of assignment or, if no date is specified,
the first day of the fiscal  quarter  following the fiscal  quarter in which the
Series receives the instrument of assignment.

    Adverse  Federal  income tax  consequences  may result from any transfer  of
Units.  Investors  are  advised to consult  their tax  advisers  before any such
transfer. See "Federal Income Tax Considerations."

    A transferee may be admitted to a Series and thereby become  entitled to all
the rights of a limited partner, by:

o   obtaining the consent of WNC & Associates, Inc., and

o   signing the Series'  partnership  agreement and otherwise complying with the
    document-  execution   requirements  of  Section  13.3  of  the  partnership
    agreement.

WNC &  Associates,  Inc. may only withhold its consent to  substitution  for the
purpose  of  preserving  the  Series'  tax  status  or to  avoid  adverse  legal
consequences  to the  Series.  The rights of an  assignee  who does not become a
limited partner will be limited to the right to receive allocations of tax items
and cash  distributions,  and will not include other rights,  such as the voting
rights   described  in  "Summary  of  Certain   Provisions  of  the  Partnership
Agreement."

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                                     REPORTS

    Within 120 days after the end of year, each Series is required to distribute
to its investors:

o   financial  statements  of the  Series for such  year,  which will  include a
    balance sheet and statements of operations,  partners' equity and cash flows
    prepared  on  an  accrual  basis  in  accordance  with  generally   accepted
    accounting  principles and accompanied by an auditor's report  containing an
    opinion of an independent accountant,

o   a report of any distributions made during the year, and

o   a report of the Series' significant activities during such year.

    In  addition,  each  Series  will  distribute  to  its  investors  unaudited
quarterly  financial  statements  for each of the first  three  quarters of each
year,  together  with a report of the Series'  activities  during such  quarter.
Quarterly financial statements will consist of a balance sheet and statements of
operations, partners' equity and cash flows.

    In recent  years all or nearly all of the tax credit  WNC-partnerships  have
been unable to timely satisfy their financial statement reporting  requirements.
All of the WNC-partnerships are now current in their obligations.  The inability
of the  WNC-partnerships to timely provide reports has been due to delays by the
local general partners in reporting to the WNC-  partnerships.  In an attempt to
rectify this  situation all of the  WNC-partnerships  which are required to file
reports  under the  Securities  Exchange Act of 1934 have  changed  their fiscal
year-ends to March 31. WNC & Associates,  Inc.  hopes that the  three-month  lag
between  the  fiscal  year-ends  of  the  local  limited  partnerships  and  the
WNC-partnerships  will provide the local general  partners and WNC & Associates,
Inc. sufficient time to timely provide reports.

    Within 75 days after the end of each year,  each Series will  distribute  to
its investors such tax  information as is necessary for the preparation of their
Federal and state income tax returns.

    Until the  proceeds of its  offering  are fully  invested or returned to its
investors, each Series will also furnish to its investors, at least quarterly, a
report concerning the investments of the Series.

    Within 60 days  after the end of each of the first  three  quarters  of each
year,  each  Series  will  distribute  to its  investors  a  detailed  statement
describing any fees and other compensation paid by the Series or a local limited
partnership during such quarter to WNC & Associates,  Inc. or its affiliates. In
addition,  each Series will send to its investors  within 120 days after the end
of each year a detailed  statement of any  transactions  between the Series or a
local limited  partnership  and WNC & Associates,  Inc. or its affiliates and of


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<PAGE>


the fees,  commissions,  compensation and other benefits paid or accrued to them
for the year.

    WNC & Associates,  Inc. expects that reporting requirements similar to those
set forth  above will be  included in the  partnership  agreement  of each local
limited  partnership so that each Series will be able to prepare the reports set
forth above. WNC & Associates, Inc. will, to the extent it deems it appropriate,
transmit to the investors  copies of all reports received by the Series from the
local limited partnerships.

                 TERMS OF THE OFFERING AND PLAN OF DISTRIBUTION

    Each  Series  is  offering  25,000  Units for sale to the  public.  Series 7
commenced  its offering on the date of this  prospectus.  Series 8 will commence
its offering on a date to be identified in a supplement to this prospectus.  WNC
& Associates,  Inc. will determine in its discretion  when the Series 7 offering
will  terminate and the Series 8 offering will begin.  No Units in a Series will
be sold  unless the Series  receives  and  accepts at least  $1,400,000  in cash
subscriptions  before  termination  of its offering.  See "Escrow  Arrangements"
below in this section.  In no event will any offering be conducted more than two
years  from the date of this  prospectus.  All Units  will be sold at a price of
$1,000  per  Unit,  except as  discussed  below  under  "Volume  Discounts"  and
"Purchases  at No  Commission"  below in this  section.  The  purchase  price is
payable in cash upon  subscription,  except as  discussed  below in this section
under "How to Subscribe."

Issuance of Units in Series

    As indicated above,  the Units are being offered in two Series.  Each Series
is  organized as a separate  California  limited  partnership.  Each Series will
account for its Units separately, and will issue information with respect to its
Units separately. With respect to operating cash expenses:

o   those expenses allocable to an interest in a local limited  partnership will
    be borne by the Series which owns such interest, and

o   those expenses not so allocable  will be apportioned  among and borne by the
    two Series based upon the advice of the Series' accountants.

Underwriting Arrangements

    Units are being offered on an all-or-nothing minimum,  best-efforts maximum,
basis which means that no one is  guaranteeing  that any number of Units will be
sold. The Units are being offered through WNC Capital Corporation, as the dealer
manager,  and through other broker-dealer  members firms of the NASD selected by


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the dealer manager. WNC Capital Corporation will provide wholesaling services by
managing  the  selling  group,  coordinating  the selling  effort and  otherwise
providing support to the selling group. Capital Growth Resources will assist WNC
Capital  Corporation in this  endeavor.  WNC Capital  Corporation  also may sell
Units itself.  WNC Capital  Corporation  is a  wholly-owned  subsidiary of WNC &
Associates,  Inc.  formed  to  participate  in  offerings  sponsored  by  WNC  &
Associates, Inc. See "Conflicts of Interest" and "Management."

    As discussed under "Management  Compensation," WNC Capital  Corporation will
receive as compensation:

o   retail  selling  commissions  in  an  amount  of  up  to  7%  of the capital
    contributions, and

o   dealer manager fees in an amount of up to 2% of the capital contributions.

WNC & Associates, Inc. also  will  receive  a  nonaccountable  organizational  &
offering  expense  reimbursement  in  an  amount  equal  to 4%  of  the  capital
contributions.   From  that  4%  nonaccountable  expense  reimbursement,  WNC  &
Associates, Inc. may pay to WNC Capital Corporation:

o   up   to  1%  of   the   capital  contributions  as  additional  underwriting
    compensation, and

o   up to 0.5% of the capital  contributions  for  accountable,  bona  fide  due
    diligence activities.

WNC Capital Corporation may reallow any portion of its underwriting compensation
to the NASD-member firms participating in the offering:

o   proportionately in accordance with the number  of  Units  sold  by  them  in
    payment for retailing and wholesaling activities,

o   in reimbursement of selling and due diligence activities, and

o   subject to the  requirements  set forth  hereinafter,  in payment of cash or
    noncash sales incentive programs.

Subject to the prior approval of the NASD and compliance with the NASD's Conduct
Rules,  a Series may establish  cash or noncash sales  incentive  programs.  The
aggregate value of any noncash  incentive  awards paid to individual  registered
representatives  during any year cannot  exceed $100.  Sales  incentives  with a
value in excess of $100,  if any, must consist of cash and must be paid directly
to the  NASD-member  firm.  In that  case the  NASD-member  firm  will have sole

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discretion as to how such  incentives  will be distributed  to their  individual
registered representatives.

    In no event will the aggregate of all underwriting  compensation paid to WNC
Capital  Corporation and the  NASD-member  firms  participating  in the offering
exceed  10% of the  capital  contributions,  plus a maximum  of 0.5% of  capital
contributions  for expenses  incurred for  accountable,  bona fide due diligence
purposes.

    Underwriting  compensation  of any form  payable  with  respect to  proceeds
represented  by  investor  promissory  notes  will  be  payable  only  when  the
promissory notes are paid in cash.

    Each Series has agreed to indemnify  WNC Capital  Corporation  and the other
broker-dealer firms participating in the offering against liabilities  resulting
from untrue statements of material facts or the omission to state material facts
in this prospectus, the Registration Statement, or supplemental sales literature
authorized for use by the Series.  These liabilities  include  liabilities under
the  Securities  Act of 1933.  In the  opinion of the SEC,  indemnification  for
liabilities  arising out of the  Securities Act of 1933 is against public policy
and therefore unenforceable.

Volume Discounts

    As  indicated  above in  this section and under  "Management  Compensation,"
each Series will usually pay up to 7% of capital contributions as retail selling
commissions.  Each  Series  also will pay up to 2% of capital  contributions  as
dealer manager fees and up to 7% of capital  contributions  as  acquisition  and
investment management fees. However, in connection with subscriptions for 100 or
more of the  Units  in one or more  Series  or  other  WNC-partnerships,  retail
selling  commissions  will  be  determined  in  accordance  with  the  following
schedule:

Amount of Units Subscribed     Maximum Retail Selling
to by Any "Purchaser"          Commissions Per Unit           Price Per Unit

Up to 99                                7.0% or $70               $1,000
100 to 199                              5.5% or $55               $   985
200 to 299                              4.5% or $45               $   975
300 to 399                              3.5% or $35               $   965
400 to 499                              2.5% or $25               $   955
500 and over (1)                        1.5% or $15               $   945
----------------

(1) A Series may further  reduce the retail selling  commission  with respect to
subscriptions to 500 Units and over, but any such reduction must be the same for
investors making investments of substantially the same size.


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    Reductions in retail selling  commissions apply in a graduated  manner.  For
example, in connection with a purchase of 299 Units:

o   retail selling commissions of $70 per Unit will  be  payable  in  connection
    with the first 99 Units,

o   retail selling commissions of $55 per Unit will  be  payable  in  connection
    with the next 100 Units, and

o   retail  selling  commissions  of $45 per Unit will be payable in  connection
    with the remaining 100 Units.

    With respect to acquisition and investment  management fees payable to WNC &
Associates, Inc. and dealer manager fees payable to WNC Capital Corporation, WNC
& Associates,  Inc. and WNC Capital Corporation have reserved the right to agree
upon lower fees in connection  with  subscriptions  to a  significant  number of
Units in one or more Series or other WNC- partnerships.  All such discounts will
be the same for investors making investments of substantially the same size.

    Subscriptions  to  one or  more  Series  or  other  WNC-partnerships  may be
combined for the purpose of determining the amounts  reimbursable in the case of
subscriptions made by any purchaser,  as that term is defined below. Any request
to combine  more than one  subscription  must be made in writing on a form which
can be obtained from WNC & Associates,  Inc. If all of the information  required
in the form,  including an indication that subscriptions are to be combined,  is
not provided, the Series will not be responsible for failing to properly combine
subscriptions.   Any  request  to  combine  subscriptions  will  be  subject  to
verification  by the Series  that all such  subscriptions  were made by a single
purchaser as defined below.

    If a purchaser subscribes for additional Units after his initial purchase of
Units,  no  reimbursement  will be made with respect to any  commissions or fees
paid or payable in connection with the prior subscription(s).

    For the foregoing purposes, the term purchaser includes:

o   an individual, his or her spouse and their children under the age of 21, who
    purchase the Units for his or her or their own account,

o   a corporation, partnership, association, joint-stock company, trust, fund or
    any organized group of persons,  whether  incorporated or not, provided that
    any such entity must have been in existence  for at least six months  before
    purchasing the Units,


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o   investors  whose  funds  are  managed  by a single  professional  investment
    adviser registered under the Investment Advisers Act of 1940, and

o   investors for whom a designated bank,  insurance  company,  trust company or
    other designated entity exercises discretionary investment responsibility.

    Any  reduction in  commissions  or fees will be prorated  among the separate
subscribers considered part of a purchaser.

Purchases by Affiliates

    Before  this  offering  John B.  Lester,  Jr., a  shareholder,  officer  and
director of WNC & Associates, Inc., purchased one Unit in Series 7 at a price of
$1,000.  Similarly,  Mr. Lester or another  affiliate of WNC & Associates,  Inc.
will purchase one Unit at a price of $1,000 in Series 8 before  commencement  of
that  Series'  offering.  Neither  WNC &  Associates,  Inc.  nor its  affiliates
presently intend to purchase additional Units. They are permitted to purchase an

unlimited  number of Units  for  any  reason.  Any  Units  acquired   by  WNC  &
Associates,  Inc. and its affiliates will not be applied to the requirement that
a minimum of $1,400,000 in  subscription  funds be received for a Series.  WNC &
Associates,  Inc. and its affiliates  will hold all Units which they acquire for
investment and not for distribution.  Any purchase of Units by WNC & Associates,
Inc. and its affiliates:

o   will be for the same price and subject to the same terms as all other Units
    issued by the Series,

o   will be fully disclosed to all investors, and

o   will  provide  the  purchaser  with the same rights as other  purchasers  of
    Units, except that neither WNC & Associates,  Inc. nor any of its affiliates
    generally will have any right to vote such Units.

Purchases at No Commission

    The NASD-member firms  participating in the offering and their employees may
purchase Units on the same terms and conditions as other purchasers, except that
they will not pay the 7% retail selling  commission.  Purchases at no commission
may also be made by:

o   clients of an investment adviser who have been advised by such adviser on an
    ongoing basis regarding investments other than investments in the Units,


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<PAGE>


o   who are not being  charged by such  adviser or its  affiliates,  through the
    payment of commissions or otherwise, for the advice rendered by such adviser
    in connection with the purchase of Units,

provided, such adviser

o   is registered under the Investment Advisers Act of 1940, as amended,

o   is registered as a broker-dealer under the Securities Exchange Act of 1934,
    and

o   has executed a Soliciting Dealer Agreement with WNC Capital Corporation.

    In  connection  with any  purchases at no  commission,  the proceeds to  the
Series, net of retail selling  commissions and any reductions  thereof,  will be
the same.  Neither WNC & Associates,  Inc. nor its affiliates may purchase Units
at no commission.

    Investors  who qualify as  designated  investors  are urged to consider  the
provisions  of the Tax Reform Act of 1984  relating  to the tax status of fringe
benefits, including employee discounts.

How To Subscribe

    In order to purchase  Units,  the  subscriber  must complete and execute the
Investor  Form  accompanying  this  prospectus  and  deliver  it to his  account
executive.  A specimen of the Investor  Form is attached as part of Exhibit C to
the  prospectus.  Execution  copies of the  Investor  Form may be obtained  from
NASD-member firms participating in the offering.
Certain NASD-member firms may use alternative investor forms.

    The  minimum  investment  is  five  Units,  or  $5,000.  Employees  of WNC &
Associates,  Inc.  and its  affiliates  and  investors  in limited  partnerships
previously  sponsored  by WNC &  Associates,  Inc. may purchase a minimum of two
Units, or $2,000. After an investor has purchased the required minimum number of
Units in any Series, he may make investments in increments of $1,000 in the same
or any later series.  Subscriptions  for fewer than 20 Units must be accompanied
by a  check  for  $1,000  per  Unit  payable  to  "Southern  California  Bank  -
WNC/HTCFVI."  Investors who subscribe for 20 Units or more in any one Series may
elect to utilize an installment payment method described below.


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<PAGE>


    Completed  Investor  Forms and checks should be sent to Southern  California
Bank, the escrow agent, at the following address:

         Southern California Bank
         4100 Newport Place, Suite 900
         Newport Beach, CA  92660
         Attention: WNC Escrow Manager

    Each  investor  whose  subscription  is  accepted  will  receive a letter of
welcome from WNC & Associates, Inc. stating the amount of the investment and the
number of Units  purchased.  No sale will be deemed complete until at least five
business days after the investor has received a prospectus.

    Deferred Installments.  Under the installment payment method,  subscriptions
need be  accompanied  by a check  for only $500 per  Unit,  with the other  $500
represented  by a  promissory  note.  The  promissory  note will be payable with
interest in a single installment on:

o   January 31, 2001, if the investor subscribes between  the  date  hereof  and
    June 30, 2000,

o   June 30, 2001, if the investor subscribes between July 1, 2000  and December
    31, 2000, or

o   the later of the date of  subscription  or January 31, 2002, if the investor
    subscribes after December 31, 2000.

    An investor promissory note will be:

o   prepayable at any time in full  but  not  in  partial  prepayments,  without
    penalty or premium,

o   secured by the investor's interest in the Series, and

o   a full recourse obligation of the investor.

Each  promissory  note will bear  interest at a fixed rate equal to the one-year
Treasury Bill rate, to be determined quarterly.  If an investor doesn't make the
required  payment on a promissory note, among other things the Series would have
the right to:

o   recover by legal proceedings the unpaid amount,

o   foreclose on the Units under the Series' security interest in the Units,

o   cause a resale of the Units, or


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<PAGE>


o   offset distributions allocable to the Units.

See "Summary of Certain Provisions of the Partnership  Agreement." An investor's
obligation to pay his promissory note is  unconditional  and involves risks. See
"Risk  Factors  -  Risks  related  to the  Series  and the  Series'  partnership
agreement."

    Despite the  preceding,  WNC &  Associates,  Inc. may permit an investor who
subscribes  for 500 or more Units in any one Series to  schedule  payment of the
deferred  portion beyond the foregoing dates and/or to pay the deferred  portion
in more than one deferred  installment.  However,  the total  purchase price due
from such investor must be paid within two years following the earlier of:

o   the completion of the Series' offering, or

o   one year following the effective date of the Series' offering.

    WNC & Associates, Inc. may agree to a lower interest rate than  aforesaid on
a promissory note for investors that:

o   purchase 500 or more Units in any one Series, and

o   are corporations with a credit rating by Standards & Poor's of A or better.

In no event may the interest rate be lower than 3% per annum.

    WNC &  Associates,  Inc.  has  substantial  experience  with  respect to the
collection and  application of deferred  investor  payments in its prior limited
partnerships.  See "Management" and "Prior  Performance  Summary." Based on this
experience,  WNC & Associates,  Inc.  believes that the Series' deferred payment
arrangements can offer significant  benefits to investors.  The deferred payment
arrangement more effectively  utilizes  offering proceeds by minimizing the time
during which unneeded investor funds are held by the Series. Rather than holding
investor funds idle, or investing  them in  low-yielding  short-term  government
securities,  it is more  efficient to match  payments  from  investors  with the
Series'  actual  needs for capital.  This allows  investors to retain the use of
their funds until needed by the Series.  However, there are administrative costs
involved in processing and collecting  investor promissory notes. Based on these
costs,  WNC  &  Associates,   Inc.  has  concluded  that   installment   payment
arrangements  should only be available to  purchasers of 20 Units or more in the
case of the Series.

    Business  Development  Plan. Each Series has adopted a business  development
plan for the use of initial and deferred investor payments. This plan takes into
account the historical patterns of deferred  installment  payments made to local


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<PAGE>


limited  partnerships  by prior WNC-  partnerships.  Neither  Series  will defer
committing to local limited partnership investments until receipt of payments on
the  investor  promissory  notes.  Rather,  each  Series  will  seek to make its
investment  commitments  at the earliest  possible date.  However,  as discussed
above under  "Investment  Objectives and Policies - Investment  Policies,"  each
Series will make its capital  contributions  to local  limited  partnerships  in
stages over a period of one to two years.  A Series will make each  contribution
when conditions regarding  construction or leasing of the apartment complex have
been fulfilled.

    There  cannot  be  any  assurance  that  payments  required  under  investor
promissory  notes will be made when due.  If not,  and if the  unpaid  amount is
material,  WNC & Associates,  Inc. may attempt to renegotiate the obligations of
the Series or to obtain  financing  from  institutional  or other  lenders.  The
inability of a Series to perform its obligations to a local limited  partnership
could result in the dilution or  termination  of an interest in a local  limited
partnership. In turn, this could result in the:

o   recapture of previously-claimed tax credits  and  the  loss  of  future  tax
    credits, and

o   legal actions by the local general  partners to require  performance of such
    obligations and to recover their damages and costs.

    The portion of selling commissions,  dealer manager fees, the nonaccountable
organizational  & offering  expense  reimbursement,  acquisition  and investment
management fees and the nonaccountable acquisition expense reimbursement payable
from the  payments to be received on the investor  promissory  notes may only be
paid as the payments are actually received on the promissory notes.

    Policies as to Pledges of Promissory  Notes.  Generally,  the Series may not
sell investor promissory notes before maturity. A Series may sell the promissory
notes made by  corporations  with  credit  ratings by  Standard & Poor's of A or
better.  Each Series may pledge and grant  security  interests in any promissory
notes as security for any obligation.  A Series may grant security  interests in
promissory  notes to secure its obligations to pay the deferred  portions of its
capital contribution to the local limited partnerships.

Escrow Arrangements

    Each  Series  will  place all  subscribers'  funds and  promissory  notes it
receives in an escrow account established by the Series with Southern California
Bank,  Newport  Beach,  California,  at the  Series'  expense.  Under the Escrow
Agreement the Bank, as escrow agent,  will deposit  escrowed funds in accordance


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<PAGE>


with  instructions  from WNC & Associates,  Inc. in short-term  U.S.  government
securities, securities issued or guaranteed by the U.S. government, certificates
of deposit or time or demand deposits in commercial banks.

    Upon  receipt  by a  Series  of a  minimum  of  $1,400,000  in cash  capital
contributions,  the Series will admit the subscribers  for such Units.  Southern
California  Bank will release to the Series all cash and promissory  notes which
it then holds.  Promptly after the release to a Series of the subscribers'  cash
and promissory notes,  Southern  California Bank will pay to the subscribers any
interest earned on the cash held in escrow.  Cash and promissory  notes received
from later  subscribers to the Series will continue to be placed in escrow.  The
Series will admit  additional  subscribers  on a monthly or more frequent  basis
until the termination of the Series' offering.

    Cash and promissory notes of investors whose subscriptions are rejected will
be  returned  to them  promptly  after  rejection,  together  with any  interest
actually earned on the cash portion of the subscription while held in escrow.

    A  subscriber  may not  terminate  his  subscription.  If a Series  does not
receive a minimum of  $1,400,000 in cash capital  contributions  within one year
from the  commencement of its offering,  the Series will cancel all its existing
subscriptions.  All funds and  promissory  notes held in escrow will be released
from escrow and returned promptly to the subscribers  together with all interest
earned on the cash portion of the subscription proceeds while in escrow.

   Pending the receipt of the initial $1,400,000 of cash capital contributions,
a Series  may  borrow  funds  from any  source  to pay all or a  portion  of the
commissions,  fees and  reimbursements  to which  NASD-member firms would become
entitled   after  the  receipt  of  the  initial   $1,400,000  of  cash  capital
contributions.  The recipient must agree to return all amounts received by it in
the event the Series does not receive the  initial  $1,400,000  of cash  capital
contributions.  The Series would repay the borrowed funds only after the receipt
of the initial $1,400,000 of cash capital contributions.

                                 SALES MATERIAL

    Each  Series may use sales  materials  in  addition  to this  prospectus  in
connection  with its  offering  of Units.  Such  material  may  consist of sales
brochures  which the  Series  will  distribute  together  with this  prospectus,
tombstone   advertisements,   invitations  to  seminars,   prospecting  letters,
videotapes and slide presentations.

    The Series have not  authorized  the use of sales  material  other than that
described  above.  The  offerings  of  Units  are  made  only by  means  of this
prospectus.  Although the information contained in the Series' sales material is
believed  not to  conflict  with  any  of  the  information  contained  in  this
prospectus,  such  material  does not purport to be  complete  and should not be

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considered as part of this prospectus,  as being incorporated in this prospectus
by reference or as forming the basis of the offering of the Units.

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                             OF FINANCIAL CONDITION

    Each Series has only nominal  funds as it has not yet  commenced  operations
and the capital  anticipated to be raised  through its public  offering of Units
has not yet become available.

    Each Series  plans to raise equity  capital  from  investors by means of its
public  offering,  and then to  apply  such  funds,  including  the  installment
payments on the investor promissory notes as received, to the purchase price and
acquisition fees and costs of local limited partnerships,  reserves and expenses
of the offering.

    It is not expected that any of the local limited  partnerships will generate
cash from  operations  sufficient to provide  distributions  to investors in any
significant  amount.  Cash from operations,  if any, would first be used to meet
operating  expenses  of  the  Series.   Operating  expenses  include  the  asset
management fee. See "Management Compensation."

    Investments in local limited  partnerships are not readily marketable.  Such
investments may be affected by adverse  general  economic  conditions  which, in
turn,  could  substantially  increase  the  risk  of  operating  losses  for the
apartment  complexes,  the  local  limited  partnerships  and  the Series. These
problems  may  result  from a  number  of  factors,  many  of  which  cannot  be
controlled.  See "Risk Factors - Risks related to  investments  in local limited
partnerships  and apartment  complexes."  Nevertheless,  WNC & Associates,  Inc.
anticipates that capital raised from the sale of the Units will be sufficient to
fund the Series' future investment commitments and proposed operations.

    Each Series will establish  working  capital  reserves of at least 3% of its
capital  contributions.  WNC &  Associates,  Inc.  believes  this amount will be
sufficient to pay the operating costs and administrative expenses of the Series,
which include:

o   the asset management fee to WNC & Associates, Inc.,

o   expenses attendant to the preparation of tax returns,

o   expenses attendant to the preparation and dissemination of  reports  to  the
    investors, and

o   other investor servicing obligations of the Series.

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<PAGE>


However,  liquidity would be adversely affected by unanticipated or greater than
anticipated   operating  costs.  Defaults  or  delays  in  payment  of  investor
promissory notes could also affect liquidity. Such payments are expected to fund
a portion of the working  capital  reserves.  To the extent that working capital
reserves  are  insufficient  to  satisfy  the  cash  requirements  of a  Series,
additional  funds  would be sought  through  bank  loans or other  institutional
financing.  A Series may also use any cash distributions received from the local
limited partnerships to pay operating or administrative expenses or to replenish
or increase working capital reserves.

    Neither Series has the ability to assess its investors to provide additional
capital if needed by the Series or its local limited partnerships.  Accordingly,
if  circumstances  arise  that cause a Series'  local  limited  partnerships  to
require capital in addition to that  contributed by the Series and any equity of
the local general partners, the only possible sources of such capital will be:

o   the limited reserves of the Series,

o   third-party debt financing, which may not  be  available  as  the  apartment
    complexes already will be substantially leveraged,

o   advances of the local general partners,

o   advances of WNC & Associates, Inc.,

o   other equity sources,  which could adversely  affect the Series' interest in
    tax credits and cash distributions and result in adverse tax consequences to
    the investors, or

o   the sale of the  apartment  complexes,  which  could  have the same  adverse
    effects as discussed in the preceding bullet.

There can be no assurance  that funds from any of such sources  would be readily
available in sufficient  amounts to fund the capital  requirements  of the local
limited  partnerships  in question.  If such funds are not available,  the local
limited  partnerships would risk foreclosure on their apartment  complexes.  See
"Risk Factors - Risks related to investments in local limited  partnerships  and
apartment complexes" and "Investment Objectives and Policies - Use of Leverage."

    The capital needs and resources of each Series are expected to undergo major
changes  during  its  first  several  years of  operations  as a  result  of the
completion  of its  offering  of  Units  and  its  acquisition  of  investments.
Thereafter,  a Series' capital needs and resources are expected to be relatively
stable.  See,  however,  "Risk Factors - Risks related to  investments  in local
limited partnerships and apartment complexes."


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Year 2000 Issues - the Series and WNC & Associates, Inc.

    Status of Readiness

    Information  Technology  Systems.  Information  technology  systems  include
computer  hardware and software used to produce financial reports and tax return
information.  This information is then used to generate reports to investors and
regulatory  agencies,  including the Internal Revenue Service and the Securities
and  Exchange  Commission.  The  Series  will  rely on the IT  systems  of WNC &
Associates,  Inc.  The IT  systems  of WNC &  Associates,  Inc.  are  Year  2000
compliant.

    Non-IT  Systems.  The  Series  also  relies on the  non-IT  systems of WNC &
Associates,  Inc.  Non-IT  systems  include  machinery  and  equipment  such  as
telephones,  voice  mail  and  electronic  postage  equipment.  Except  for  one
telephone  system,  the non-IT  systems of WNC & Associates,  Inc. are Year 2000
compliant. The remedy for that telephone system will be one replacement computer
and one software  application.  Acquisition and installation of those items will
be completed in October 1999.

     Service Providers.  WNC & Associates,  Inc. and the Series also rely on the
IT systems  and the  non-IT  systems of  service  providers.  Service  providers
include:

    o     utility companies,

    o     financial institutions,

    o     telecommunications carriers,

    o     municipalities and other local jurisdictions, and

    o     other outside vendors.

WNC & Associates,  Inc. has received oral assurances  from its material  service
providers that their  respective IT and non-IT systems are Year 2000  compliant.
For these purposes, the material service providers are its:

    o     electrical utility provider,

    o     financial institutions, and

    o     telecommunications carriers.


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<PAGE>


There can be no assurance that the information given by the service providers is
correct.  There  also can be no  assurance  that the IT and  non-IT  systems  of
less-important service providers and outside vendors are Year 2000 compliant.

    Costs to Address Year 2000 Issues

    WNC & Associates, Inc.'s cost to address Year 2000 issues has been less than
$20,000.  The cost to remedy the telephone system  identified above will be less
than $5,000. The cost to deal with any Year 2000 issues of service providers and
other outside vendors cannot be estimated at this time.

    Risk of Year 2000 Issues

    The most  reasonable  and likely  worst-case  Year 2000  scenario  for WNC &
Associates,  Inc.  would be  business  disruption  due to the failure of service
providers.  This  disruption  would include a delay in performing  reporting and
fiduciary  responsibilities on behalf of a Series.  These delays would likely be
temporary  as the worst case  analysis  remedy  would be to replace  the service
provider.

Year 2000 Issues - the Local Limited Partnerships

    Status of Readiness

    The local limited partnerships in which the Series will invest have not been
identified as of the date of this prospectus.  For those investments  identified
prior to 2000 WNC & Associates,  Inc. will obtain Year 2000  certifications from
the local general partners.  Through the certificates each local general partner
will represent  that the IT and non-IT systems  critical to the operation of the
apartment  complex and  reporting to the Series are Year 2000  compliant.  WNC &
Associates,  Inc.  does not  anticipate  causing  a Series  to invest in a local
limited partnership with Year 2000 non-compliant  systems. The certificates will
also include a representation that the IT and non-IT systems of:

    o     property management companies,

    o     independent accountants,

    o     electrical utility providers,

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<PAGE>


    o     financial institutions, and

    o     telecommunications carriers

to be used by the local limited partnership will be Year 2000 compliant.

    Costs to Address Year 2000 Issues

    There will be no incremental cost to the Series or WNC & Associates, Inc. as
a result  of  assessing  Year  2000  compliance  issues  for the  local  limited
partnerships.  The cost to the local limited partnerships to deal with Year 2000
issues cannot be known at this time.

    Risk of Year 2000 Issues

    The most  reasonable and likely  worst-case Year 2000 scenario for the local
limited  partnerships would be business disruption due to the failure of service
providers.  These  disruptions  would  likely be  temporary  as the  worst  case
analysis remedy would be to replace the service provider.

                                  LEGAL MATTERS

    Derenthal & Dannhauser, San Francisco,  California, counsel for each Series,
will pass upon the  legality of the Units  offered  hereby and  certain  Federal
income tax matters.

                                     EXPERTS

    The balance  sheet of WNC Housing Tax Credit Fund VI,  L.P.,  Series 7 as of
June 30, 1999  which is  included  in this  prospectus  and in the  Registration
Statement has been audited by BDO Seidman,  LLP,  independent  certified  public
accountants, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement and is included in reliance upon such report given
upon the authority of said firm as an expert in accounting and auditing.

    The  consolidated  balance sheet of WNC & Associates,  Inc. as of August 31,
1998 which is included in this prospectus and in the Registration  Statement has
been audited by Corbin & Wertz, independent certified public accountants, as set
forth in their report thereon appearing elsewhere herein and in the Registration
Statement  and is included in reliance upon such report given upon the authority
of said firm as an expert in accounting and auditing.

    The matters of law  discussed in the section  entitled  "Federal  Income Tax
Considerations"  and under the captions "Risks arising from the Internal Revenue
Code rules  governing  tax credits" and "Tax risks other than those  relating to

                                       213

<PAGE>


tax credits" in the section  entitled "Risk Factors" and in the section entitled
"The Low Income Housing Tax Credit" as they relate to Federal income tax matters
have been reviewed by Derenthal & Dannhauser and are included herein in reliance
upon the authority of such firm as experts.

                               FURTHER INFORMATION

    This  prospectus  does not  contain  all the  information  set  forth in the
Registration  Statement and the exhibits  relating thereto which the Series have
filed with the  Securities and Exchange  Commission  under the Securities Act of
1933,  and to  which  reference  is  hereby  made.  Copies  of the  Registration
Statement and exhibits  relating  thereto are on file at the principal office of
the  Securities  and  Exchange  Commission  at  450  Fifth  Street,   Northwest,
Washington,  D.C. 20549, and may be obtained, upon payment of the fee prescribed
by the  Commission,  or may be examined  without  charge,  at the offices of the
Commission.  The  Commission  also  maintains  a website  on the  Internet  that
contains all filings respecting the Series. The website is http://www.sec.gov.


                                       214

<PAGE>


                           INDEX TO FINANCIAL STATEMENTS

                                                                            Page

WNC Housing Tax Credit Fund VI, L.P., Series 7

  Report of Independent Certified Public Accountants........................FS-1
  Balance Sheet, June 30, 1999..............................................FS-2
  Notes to Balance Sheet....................................................FS-3

WNC & Associates, Inc.
  Independent Auditors' Report..............................................FS-7
  Consolidated Balance Sheets, February 28, 1999 (Unaudited)
    and August 31, 1998.....................................................FS-8
  Notes to Consolidated Balance Sheets......................................FS-9



                                      FS-i

<PAGE>



                             (Accountant's Report)


                          To be provided by amendment



















                                      FS-1




<PAGE>

                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                       (A California Limited Partnership)
                        (A Development-Stage Enterprise)

                                  BALANCE SHEET

                                  June 30, 1999


                                     ASSETS

Cash                                                                  $    1,100
                                                                      ----------

                                                                      $    1,100
                                                                      ==========

                        LIABILITIES AND PARTNERS' EQUITY

Commitments and contingencies (Note 2)

Partners' equity (Note 1):
   General partner                                                    $      100
   Original limited partner                                                1,000
                                                                      ----------

         Total partners' equity                                            1,100
                                                                      ----------
                                                                      $    1,100
                                                                     ===========



                     See accompanying notes to balance sheet
                                      FS-2

<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                       (A California Limited Partnership)
                        (A Development-Stage Enterprise)

                             NOTES TO BALANCE SHEET

                                  June 30, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WNC  Housing  Tax  Credit  Fund  VI,  L.P.,  Series  7,  (a  California  Limited
Partnership) (the  "Partnership")  was formed on June 16, 1997 under the laws of
the state of California and has not commenced  operations.  The  Partnership was
formed to invest  primarily in other limited  partnerships  (the "Local  Limited
Partnerships")  which  own  and  operate  multi-family  housing  complexes  (the
"Housing  Complexes") that are eligible for low income housing tax credits.  The
local  general  partners  (the "Local  General  Partners") of each Local Limited
Partnership will retain  responsibility for maintaining,  operating and managing
the Housing Complex.

The  general  partner  is  WNC  & Associates,   Inc.  (the  "General  Partner").
Wilfred N. Cooper,  Sr., through the Cooper Revocable Trust, owns just less than
66.8% of the outstanding stock of WNC & Associates,  Inc. John B. Lester, Jr. is
the initial  limited  partner of the  Partnership  and owns,  through the Lester
Family Trust, just less than 28.6% of the outstanding stock of WNC & Associates,
Inc. (see Note 2).

The  balance  sheet  includes  only  activity  relating  to the  business of the
Partnership,  and does 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.

Allocations under the Terms of the Partnership Agreement

The General Partner has a 0.1% interest in operating profits and losses, taxable
income  and  losses,  tax  credits,  and  cash  available for distribution  from
the  Partnership.  The limited partners will be allocated the remaining 99.9% 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's   First  Amended  and  Restated   Agreement  of  Limited
Partnership) and the General Partner has received a subordinated disposition fee
(as described in Note 2), any additional  sale or  refinancing  proceeds will be
distributed  90% to the limited  partners  (in  proportion  to their  respective
investments) and 10% to the General Partner.

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


                                      FS-3
<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                       (A California Limited Partnership)
                        (A Development-Stage Enterprise)

                       NOTES TO BALANCE SHEET - CONTINUED

                                  June 30, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 makes 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 in 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  intends to account for its investments in limited  partnerships
using the equity method of accounting,  whereby the Partnership  will adjust 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  expected to be  consistent  with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments will
be  capitalized  as part of the investment and amortized over 15 years (see Note
2).

Losses from Local Limited Partnerships  allocated to the Partnership will not be
recognized to the extent that the  investment  balance  would be adjusted  below
zero.


                                      FS-4

<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                       (A California Limited Partnership)
                        (A Development-Stage Enterprise)

                       NOTES TO BALANCE SHEET - CONTINUED

                                 June 30, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Offering Expenses

Offering  expenses are expected to consist of  underwriting  commissions,  legal
fees,  printing,  filing and  recordation  fees,  and other  costs  incurred  in
connection with the selling of limited partnership interests in the Partnership.
The General  Partner is obligated to pay all  offering  and  organization  costs
inclusive of selling  commissions  and dealer  manager fees, in excess of 13% of
the total offering proceeds.  Offering expenses will be reflected as a reduction
of limited partners' capital.

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.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

The Partnership is offering up to 25,000 limited partnership units at $1,000 per
unit (the  "Units").  The  balance  sheet does not include  certain  Partnership
legal, accounting, and other organization and offering costs paid and to be paid
by the General Partner and/or affiliates of the General Partner.  If the minimum
offering  amount of $1,400,000 is raised,  the  Partnership  will be required to
reimburse the General  Partner  and/or its  affiliates  for such fees out of the
proceeds of the offering,  up to certain  maximum levels set forth below. In the
event  the  Partnership  is unable to raise the  minimum  offering  amount,  the
General Partner will absorb all organization and offering costs.

The  reader  of  this  financial  statement should  refer to the WNC Housing Tax
Credit  Fund VI,  L.P.,  Series 7 and Series 8  prospectus  for a more  thorough
description of the Partnership, and the terms and provisions thereunder.

The  Units  are  being  offered  by WNC  Capital  Corporation,  a  wholly  owned
subsidiary of the General Partner.

If the minimum offering amount of $1,400,000 is raised,  the Partnership will be
obligated  to  the  General  Partner  or  affiliates  for  certain  acquisition,
management and other fees as set forth below:

         Acquisition and investment management fees up to 7%, as defined, of the
         gross proceeds from the sale of the Units as compensation for  services
         rendered  in  connection   with  the   acquisition   of  Local  Limited
         Partnerships.


                                      FS-5

<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 7
                       (A California Limited Partnership)
                        (A Development-Stage Enterprise)

                       NOTES TO BALANCE SHEET - CONTINUED

                                  June 30, 1999


NOTE 2 - COMMITMENTS AND CONTINGENCIES, continued

         A nonaccountable  acquisition expense reimbursement equal  to 2% of the
         gross proceeds from the sale of the Units.

         Payment  of   a  nonaccountable  organization   and   offering  expense
         reimbursement,  and  reimbursement  for  dealer   manager  and  selling
         expenses advanced by the General Partner or affiliates on behalf of the
         Partnership.  These reimbursements  plus all other  organizational  and
         offering  expenses, inclusive of sales  commissions  and dealer manager
         fees,  are  not  to  exceed  13% of the gross proceeds from the sale of
         Units.

         An annual  management  fee equal to 0.2% of the invested  assets of the
         Local Limited Partnerships, as defined.

         A  subordinated  disposition  fee in an amount equal to 1% of the sales
         price of real estate sold by the Local Limited Partnerships. Payment of
         this  fee  is   subordinated   to  the   limited   partners   receiving
         distributions equal to their capital  contributions and their return on
         investment (as defined in the Partnership's  First Amended and Restated
         Agreement of Limited  Partnership)  and is payable only if services are
         rendered in the sales effort.

As of June 30, 1999, the General  Partner had  incurred  costs  of approximately
$128,000  related  to  the  start-up  and organization of the Partnership.  Upon
the commencement of the sale of the Units,  such costs will be reimbursed by the
Partnership to the General Partner.  In the event that the sales of the Units do
not meet the minimum offering amount of $1,400,000, these costs will be borne in
full by the General Partner.

NOTE 3 - INCOME TAXES

No provision  for income taxes will be recorded in the  financial  statements as
any  liability  for  income  taxes  is the  obligation  of the  partners  of the
Partnership.



                                      FS-6
<PAGE>




                             (Accountant's Report)


                          To be provided by amendment



















                                      FS-7

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998

<TABLE>


                                                            February 28, 1999        August 31, 1998
ASSETS                                                            (unaudited)
                                                            -----------------        ---------------
        <S>                                                            <C>                    <C>
Cash                                                           $      244,976         $      398,233
Fees receivable                                                     2,463,213              2,350,122
Loans to property developers                                          531,486                544,108
Offering costs advanced                                                49,279                 54,698
Due from partnerships                                               2,820,116              2,220,896
Advances to partnerships                                              584,278                383,420
Deferred income taxes                                                       -                 15,751
Property and equipment, net                                           331,973                359,720
Other assets                                                          321,793                326,072
                                                             ----------------        ---------------

                                                               $    7,347,114         $    6,653,020
                                                             ================        ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Notes payable                                                  $    2,728,000         $    1,400,000
Accounts payable and accrued expenses                                  96,956                227,471
Income taxes payable                                                   26,250                252,733
Interest payable                                                            -                 12,351
Due to partnerships                                                         -                115,007
Deferred revenue                                                      142,608                596,058
Accumulated losses of partnerships in
     excess of investments                                            788,169                738,169
Deferred income taxes                                                 104,340                      -
Capitalized lease obligations                                          39,363                 50,642
                                                            -----------------        ---------------
    Total liabilities                                              3,925,686               3,392,431
                                                            -----------------        ---------------

Commitments and contingencies

Stockholders' equity
Preferred stock, no par value, 1,000,000 shares
    authorized, none issued                                                 -                      -
Common stock, no par value, 1,000,000 shares
    authorized, 104,750 issued and outstanding                        177,677               177,677
Due from officers and stockholders                                   (137,000)             (132,000)
Retained earnings                                                   3,380,751             3,214,912
                                                            -----------------
    Total stockholders' equity                                      3,421,428             3,260,589
                                                            -----------------       ---------------

                                                               $    7,347,114        $    6,653,020
                                                            =================       ================
</TABLE>



                     See accompanying notes to consolidated
                                 balance sheets
                                      FS-8



<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WNC & Associates,  Inc., a California  corporation,  (the "Company"),  acts as a
corporate  general  partner and syndicator of both public and private  placement
real estate partnerships (the  "Partnerships")  which invest (either directly or
indirectly  through  other  partnership   interests)  in  multi-family   housing
complexes throughout the United States. The majority of the multi-family housing
complexes qualify for low income housing tax credits and are subsidized  through
various governmental housing assistance programs.  The Company's interest in the
profits  and losses of each  Partnership,  as general  partner,  varies  between
one-tenth and five percent.

Principles of Consolidation

The  consolidated  balance  sheets  include the  accounts of the Company and its
wholly owned subsidiaries,  WNC Capital Corporation and WNC Management, Inc. All
significant  inter-company  accounts and  transactions  have been  eliminated in
consolidation.

WNC Capital Corporation, a California corporation ("WNC Capital"), is registered
with the Securities and Exchange  Commission as a  broker/dealer  in securities.
WNC Capital does not carry customer accounts or hold securities for the accounts
of its customers. WNC Capital provides wholesaling services to affiliates of the
Company. WNC Management,  Inc., a California corporation ("WNC Management"),  is
in the business of providing property management services to government assisted
multi-family  housing  complexes.  WNC Management  provides property  management
services to certain affiliates of the Company.

Use of Estimates

The preparation of the consolidated  balance sheets in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect the reported amounts of assets and liabilities,  as well
as  disclosure  of  contingent  assets  and  liabilities  at  the  date  of  the
consolidated  balance sheets.  Areas that include significant  estimates made by
management  include,  but  are  not  limited  to,  the  collectibility  of  fees
receivable,  loans to property developers,  offering costs advanced, amounts due
from  partnerships,  advances to partnerships and the  determination of deferred
revenue and deferred income taxes.  Actual results could materially  differ from
those estimates.

Fair Value of Financial Instruments

The Company's  financial  instruments,  which are reflected in the  consolidated
balance sheets at their historical cost basis, consist of cash, fees receivable,
loans to property developers,  offering costs advanced, due from and advances to
Partnerships,  notes payable,  accounts payable and accrued expenses, and due to
Partnerships.  The estimated fair market values of such instruments could differ
from the historical cost basis. Management believes that the carrying amounts of

                                      FS-9

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
                  (continued)

the  Company's  financial  instruments  generally  approximate their fair market
values at  February  28,  1999  (unaudited).  In the case of  certain  financial
instruments  that are  non-interest  bearing,  it was not practical to determine
fair values due to the lack of a market for such financial instruments.

Concentration of Credit Risk
----------------------------

The Company, at times, maintains cash balances at certain financial institutions
in excess of federally insured amounts.

Risks and Uncertainties
-----------------------

WNC Capital

Net  Capital  Requirements.  WNC  Capital,  as  a   broker-dealer,  is  required
under  provisions  of Rule 15c-1 of the  Securities  and Exchange Act of 1934 to
maintain a ratio of aggregate  indebtedness to net capital,  as defined,  not to
exceed 15 to 1. The basic concept of the rule is liquidity,  its objective being
to require a broker/dealer  to have, at all times,  liquid assets  sufficient to
cover its  current  indebtedness.  WNC  Capital is also  required  to maintain a
minimum net capital of $5,000 or 6-2/3% of aggregate  indebtedness,  as defined,
whichever  is greater.  At  February  28,  1999,  WNC Capital had net capital of
$22,738  (unaudited)  ($21,269  at August  31,  1998)  and a ratio of  aggregate
indebtedness to net capital,  as defined, of 2.68 to 1 (unaudited) (8.56 to 1 at
August 31, 1998).

Registration.  WNC  Capital  must  register  with  state departments that govern
compliance with  securities laws in which WNC Capital does business,  as well as
comply  with  each  state's  rules  and  regulations.  Because  of  the  various
compliance laws, there is a risk that one or more regulatory  authorities  could
determine that WNC Capital has not complied with  securities  laws necessary for
it to conduct  business in a given  state.  Regulatory  actions,  if ever taken,
could have a material adverse effect on WNC Capital's financial condition.

Impact of Year 2000

The  Company  has  assessed  its  exposure to  date-sensitive  computer  systems
that may not be operative  subsequent to 1999.  As a result of this  assessment,
the  Company has  executed a plan to minimize  the  exposure to  financial  loss
and/or  disruption of normal  business  operations that may occur as a result of
Year 2000 non-compliant computer systems.

Business  Computer  Systems.  These  systems  include both computer hardware and
software  applications  relating to operations such as financial reporting.  The
Company  developed a compliance plan for each of its business  computer systems,
with particular attention given to critical systems. The Company contracted with
an outside  vendor to evaluate,  test and repair such  systems.  The  assessment
consisted of  determining  the  compliance  with Year 2000 of critical  computer


                                      FS-10

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
                  (continued)

software and hardware.  Incidences of non-compliance  were found with respect to
computer software applications and were corrected. The vendor found no instances
of non-compliance with respect to computer hardware.

Either  local  developers/general  partners  or  property  management  companies
maintain the computer systems  supporting the operations of the Partnerships and
multi-family  housing  complexes.  The  Company is in the  process of  obtaining
completed   questionnaires   from  such  affiliated  entities  to  assess  their
respective Year 2000  readiness.  The Company intends to identify those entities
having systems critical to the operations of the multi-family  housing complexes
that are not Year 2000 compliant.  For such entities  having  business  computer
systems  which  will  not be Year  2000  compliant  and  where  the lack of such
compliance is determined  to have a potential  material  effect on the Company's
financial condition,  the Company intends to develop contingency plans which may
include changing property management companies.

Outside  Vendors.  The  Company  has  obtained  assurances from its suppliers of
electrical power and banking and telecommunication  services that their critical
systems are all Year 2000 compliant. There exists, however, inherent uncertainty
that all systems of outside vendors or other third parties on which the Company,
or local general partners and property management  companies,  rely will be Year
2000 compliant.  Therefore,  the Company remains susceptible to the consequences
of third party critical computer systems being non-compliant.

Personal Computers.  The  Company  has  determined  that  its personal computers
and related software critical to its operations are Year 2000 compliant.

Fees Receivable
---------------

Fees  receivable   consist  primarily  of  syndication  fees  due  from  various
Partnerships in which the Company acts as general partner.  Syndication fees are
received  as the  limited  partners  make  their  capital  contributions  to the
Partnerships.  Fees receivable also include property  management fees earned and
uncollected,  and a receivable relating to the sale of the Company's interest in
certain low income housing tax credits (see Note 2).

Loans to Property Developers
----------------------------

Loans  to  property   developers  are  comprised   of   amounts  loaned  to,  or
deposits  made on behalf of, the  general  partners of limited  partnerships  in
which the Partnerships have or are expected to have an equity interest. All such
loans receivable are secured by the respective general partner's interest in the
limited partnerships.  In the event a property is not acquired, deposits may not
be refunded to the Company.  At the time  management  determines that a property
will not be acquired and associated deposit will not be recovered, such deposits
are written off (see Note 3).



                                      FS-11

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
                  (continued)

Offering Costs Advanced
-----------------------

Offering  costs  advanced  represent  amounts  that the Company  advances to the
Partnerships  for  certain  costs and  expenses  to produce  public and  private
offering  materials  and to qualify  the  partnership  interests  for sale under
various  state and federal  securities  laws.  Such  advances  are repaid to the
Company from the  Partnerships'  initial capital  proceeds and may be subject to
limitations,  as  defined,  in  the  individual  partnership agreements. Amounts
advanced by the Company  in  excess of such  limitations and, therefore, written
off, were  $227,800 for  the year  ended August 31, 1998.  There were no similar
write-offs for the six months ended February 28, 1999.

Due from Partnerships
---------------------

Due  from  Partnerships  consists   primarily  of  non-interest  bearing amounts
advanced to  Partnerships.  Such  amounts are  invested by the  Partnerships  in
multi-family housing complexes as capital contributions  pursuant to partnership
agreements and are due upon the Partnerships'  collection of proceeds from sales
of Partnership units (see Note 4).

Property and Equipment
----------------------

Property  and  equipment  and  improvements  that  extend  the economic  life of
assets are recorded at cost and are depreciated using the  straight-line  method
over the estimated  useful life of the related  asset,  generally  from three to
five years. Leasehold improvements and capitalized leases are amortized over the
shorter of the life of the lease or estimated useful life of the related asset.

Investments in Partnerships
---------------------------

The  Company  records  its  investment  in  the  Partnerships  using  the equity
method, which recognizes the Company's  proportionate share of income or loss as
an increase or decrease in the  investment  in the  Partnership.  As the Company
acts as the General Partner,  for those  Partnerships where recourse losses have
occurred  in  excess  of the  Company's  investment,  amounts  are  recorded  as
accumulated losses of Partnerships in excess of investments.

Revenue Recognition
-------------------

Syndication    fees,   which   represent   fees   for   selecting,   evaluating,
structuring,  negotiating  and closing  Partnership  investments in multi-family
housing complexes,  are recognized as income ratably as the Partnerships  invest
in multi-family  housing complexes under the provisions of Statement of Position
92-1 "Accounting for Real Estate Syndication Income." Syndication fees which are
collectible, pursuant to the terms of the partnership agreements, which have not
been  recognized as fee income are deferred.  As of February 28, 1999 and August
31, 1998,  the amounts of deferred  revenue were $0  (unaudited)  and  $596,058,
respectively.  Syndication  fees from  certain  private  partnerships  that were


                                      FS-12

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
                  (continued)

scheduled to be collected  more than one year from the  Company's  year end were
discounted to reflect their present value.

Commission revenue earned and related expenses associated with the operations of
WNC Capital are recorded when the related services are performed.

Asset   management   fees,   which   represent  an  annual  fee  for   providing
administrative  and management  services for Partnerships and their investments,
are  recognized  as earned  and to the  extent  that such fees are  deemed to be
collectible,  generally on a cash basis.  Management  fees,  which represent WNC
Management's property management services, are recorded when earned.

Income Taxes
------------

The  Company  accounts  for  income  taxes  under the provisions of Statement of
Financial  Accounting  Standards  No.  109 (SFAS  109),  "Accounting  For Income
Taxes."  Under the asset and liability  method of SFAS 109,  deferred tax assets
and liabilities are recognized for the future tax  consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and  liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
liabilities  are measured  using enacted tax rates  expected to apply to taxable
income in the years in which  those  temporary  differences  are  expected to be
recovered  or settled.  Under SFAS 109,  the effect on  deferred  tax assets and
liabilities  of a change in tax rates is recognized as income in the period that
includes the enactment date (see Note 8).


NOTE 2 - FEES RECEIVABLE

Fees  receivable  from  two  Partnerships  represented  48%  (unaudited) and 47%
of  total  fees  receivable  as of  February  28,  1999  and  August  31,  1998,
respectively. As of August 31, 1998, fees receivable included $1,097,555 of fees
due from a  Partnership  from the sale of tax credits  related to the  Company's
general partnership  interests in certain limited  partnerships.  Such fees were
collected in the subsequent period.


                                      FS-13

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 3 - LOANS TO PROPERTY DEVELOPERS

Loans to property developers consist of the following:
<TABLE>


                                         February 28, 1999       August 31, 1998
                                            (unaudited)
                                         -----------------       ---------------
              <S>                                   <C>                    <C>
Notes receivable due and collected
April 1999, bearing interest at
the Company's borrowing rate (8.0%
at February 28, 1999), secured by
the borrowers' interest in the
properties to be constructed for
which amounts are borrowed                    $    199,978            $   95,100



Notes receivable due and collected
September 1998, bearing interest
at the Company's borrowing rate
secured by the borrowers' interest
in the properties to be constructed
for which amounts are borrowed                           -                95,000



Notes  receivable  past  due and in
the process of being extended,
generally bearing interest at the
Company's  borrowing  rate secured
by the borrowers' interest in the
properties to be constructed for
which amounts are borrowed, net of
provisions for uncollectible amounts
approximating $ 699,000                            331,508               354,008
                                            ---------------       --------------
                                             $     531,486          $    544,108
                                            ===============       ==============

</TABLE>

NOTE 4 - DUE FROM PARTNERSHIPS

Due  from   Partnerships   includes  amounts  advanced  to  Partnerships,  which
invest  in  multi-family   housing  complexes  in  advance  of  limited  partner
contributions. Amounts due from two Partnerships represented 95% (unaudited) and
67% of the total due from  Partnerships  as of February  28, 1999 and August 31,
1998, respectively. The Company had collected reimbursements totaling $2,257,085
(unaudited) through March 31, 1999.

Through  August  31,  1998  (and  February  28, 1999 -  unaudited),  the Company
loaned an aggregate $1,678,151 to a Partnership which  invested the funds into a
property  in  Mississippi  (the  "Property").  The loan  proceeds  were  used to
complete the repair of structural defects identified by the Company during 1997.
The Property was completed in 1998 and sold to an affiliated Partnership. During
1998,  the Company  received  $700,000 as a partial  repayment  on the loan from
proceeds of the sale.  Management estimate an additional $279,000 will be repaid
during 1999, in connection with a re-financing  of the Property.  The balance of
the loan was determined to be impaired and was written down in prior periods.

In  connection  with  the  partial   repayment,  the  Company  was  required  to
establish an escrow account for outstanding  mechanics liens totaling  $265,682,
which is included in due from  Partnerships in the consolidated  balance sheets.


                                      FS-14

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 4 - DUE FROM PARTNERSHIPS (continued)

Management has determined the estimated  possible legal expenses  related to the
settlement of outstanding mechanics liens to be $140,000,  which have been fully
provided for in prior periods (see Note 9).

Due  from  partnerships  also  includes  commissions   due  to  WNC   Capital of
$32,301 as of both  February  28,  1999  (unaudited)  and August 31,  1998,  and
various expense reimbursements due to WNC Management of $19,200 as of August 31,
1998.


NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>

                                           February 28, 1999     August 31, 1998
                                             (unaudited)
                                           -----------------     ---------------

             <S>                                      <C>                  <C>

Furniture, fixtures and computer
     software                                 $      535,070       $     516,617
Leasehold improvements                                38,803              38,803
Equipment under capital leases                       219,017             219,017
     (Note 9)                              -----------------     ---------------
                                                     792,890             774,437

Less: accumulated depreciation
     and amortization                              (460,917)           (414,717)
                                           -----------------     ---------------

                                              $      331,973       $     359,720
                                           =================     ===============


NOTE 6 - OTHER ASSETS

Other assets consist of the following:


                                           February 28, 1999     August 31, 1998
                                           -----------------     ---------------
                                               (unaudited)

Real estate joint venture costs                $     106,991        $    106,991
Deposit on purchase of general
     partner interests                               175,000             200,000
Deposits, advances and other                          39,802              19,081

                                               $     321,793        $    326,072
                                           =================     ===============

</TABLE>

The  Company  assesses  the  recoverability  of  other  assets  by   determining
whether the balance can be recovered from projected  future cash flows that have
not been discounted.  An  impairment  usually arises upon the Company's decision
not to cause one of its  sponsored  tax  credit programs to invest in a proposed
real estate project.  At that point, a revised assesment of the debtor's ability
to  repay  the  advance,  either  through  performance under guarantees or cash
recoverable from the fair market value of the  real  estate, is made. The amount


                                     FS-15

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 6 - OTHER ASSETS (continued)

of  impairment,  if  any,  is  measured  based  on  fair value  and  charged  to
operations  in the period  determined  by  management. Management has determined
that  the  recoverability  of  real  estate  joint venture costs and deposits on
purchase of general  partner  interests  as of February 28, 1999 (unaudited) and
August 31, 1998 to be impaired  by $85,236.  Such amount was provided during the
year ended August 31, 1998.

NOTE 7 - NOTES PAYABLE

The  Company   has  two  lines-of-credit  with  a  bank.  Line  One  allows  for
borrowings  of up to  $1,500,000  at the bank's  index rate plus 0.25%  (8.0% at
February  28, 1999 -  unaudited)  and is  unsecured.  There were  borrowings  of
$828,000  (unaudited) and $1,400,000  outstanding  under Line One as of February
28, 1999 and August 31, 1998, respectively. Line Two allows for borrowings of up
to  $2,500,000  at the bank's index rate plus 0.25% (8.0% at February 28, 1999 -
unaudited). Line Two is collateralized by assignments of the Company's interests
in  Partnership  properties  to be  acquired  for which  amounts  are  borrowed.
Outstanding  balances  under Line Two were  $1,900,000 ( unaudited) and $0 as of
February 28, 1999 and August 31, 1998, respectively.

Outstanding  borrowings  under  the  two  lines of credit were repaid in full by
March 12, 1999 (unaudited), from collection of amounts due from partnerships and
fees receivable.  The lines of credit are personally  guaranteed by the majority
stockholder  of the  Company and mature on April 15,  1999.  The lines of credit
require the Company to satisfy  certain  financial  covenants and ratios.  As of
February  28,  1999,  the Company was in  compliance  (unaudited)  with all such
covenants and ratios.



                                      FS-16

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998

NOTE 8 - INCOME TAXES

The tax  effect  of  significant  temporary  differences  that  give rise to the
Company's deferred tax liability as of August 31, 1998 are as follows:


Deferred tax assets:
   Deferred revenue                              $     132,436
   Write-down of investments                            41,215
   Reserve for estimating legal costs                   59,976
   Alternative minimum tax credits                     223,956
   Low-income housing tax credits                       86,773
   State taxes                                           4,043
                                                     ---------
                                                       548,399


Deferred tax liabilities:
   Installment sale accounting
     from the sale of tax credits                     (470,193)

   Partnership's taxable income                        (61,645)
   Other                                                  (810)
                                                    -----------
                                                      (532,648)

Deferred income taxes                           $       15,751
                                              =================


As  of  August  31,  1998,  the  Company  has  alternative  minimum  tax credits
available to offset  future tax  liabilities  for federal and state  purposes of
approximately  $171,000 and $53,000,  respectively.  As of August 31, 1998,  the
Company  has  low-income  housing  tax credits  available  to offset  future tax
liabilities for federal and state purposes of approximately  $81,000 and $6,000,
respectively, expiring through August 2013.


                                     FS-17

<PAGE>


                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 9 - COMMITMENTS AND CONTINGENCIES

Leases

The  Company  leases  office  space,  automobiles  and furniture under operating
leases  expiring  through  February  2002, and certain  equipment  under capital
leases  expiring  through  January  2002.  Monthly  capital  lease  payments are
approximately $3,700. The leases  are  non-cancelable and require future minimum
lease payments as follows:

<TABLE>


     Years ending                                Capital               Operating
     August 31,                                  leases                leases

         <S>                                       <C>                     <C>
        1999                                  $   30,504             $   163,095
        2000                                      14,059                  71,961
        2001                                      12,564                  34,972
        2002                                       5,235                  14,707

Total minimum lease payments                      62,362             $   284,735
                                                                    ============
Less: amounts representing interest
   at rates ranging from 9.3% to 12.5%          (11,720)
                                                --------
Present value of future minimum
   capital lease obligations                 $    50,642
                                            ============

</TABLE>

Guarantees
----------

The  Company  is  a  guarantor  of certain bank loans made to the  Partnerships.
There  were no  amounts  outstanding  on such  loans  as of  February  28,  1999
(unaudited) and August 31, 1998.  These loans are repaid by the  Partnerships as
the  limited  partners  make  their  capital  contributions  to  the  respective
Partnerships.

Litigation
----------

The  Company  serves  as  a  limited  and general  partner to a certain  limited
partnership.  The developed  property incurred  significant cost overruns due to
defects in  construction.  As a result of such defects,  the Company removed and
replaced the local general  partner.  In this  capacity,  the Company  completed
construction  of the  property  (see Note 4) and loaned the limited  partnership
$1,678,151.  The limited  partnership  has filed suit against the architects and
contractors.  There have been various claims an counterclaims  filed against the
limited partnership and certain liens placed on the property.

The  ultimate  outcome  of  the  aforementioned actions is unknown at this time.
The Company  has  reserved an  aggregate  $839,151 of its due from  Partnerships
which includes the estimated outcome of various claims filed.  Management of the
Company does not believe that the additional effect on the consolidated  balance
sheets upon the  ultimate  disposition  of the  aforementioned  actions  will be
material.


                                     FS-18
<PAGE>

                     WNC & ASSOCIATES, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED BALANCE SHEETS
                February 28, 1999 (unaudited) and August 31, 1998


NOTE 9 - COMMITMENTS AND CONTINGENCIES (continued)

Equity Participation Agreement
---------------------------------

The  Company  has  an  equity  participation agreement with a key officer of the
Company and his spouse.  This agreement provided for an investment of $80,000 in
1992 by the Company to acquire a 50% interest  in certain  property,  which  was
later converted into real property for rental purposes,  owned and controlled by
the key officer and his spouse. The investment is accounted for under the equity
method. Income and losses  arising  from the operations of the rental  property,
including the allocation  of income and losses upon a sale or refinancing, shall
be  allocated  50%  to  the  Company  and 50% to the key officer and his spouse.
Accumulated  losses  of  approximately  ($15,000)  have  been  recognized by the
Company, and ($15,000) by the key officer and his spouse.

Due from Officers and Stockholders
----------------------------------

The  Company's  majority  stockholder,  who  is  also an officer, has borrowed a
total of $95,000 from the Company under a 1993 note bearing interest at 7.5% per
annum. An officer and minority  stockholder of the Company has borrowed  $25,000
from the  Company  under a 1994 note  bearing  interest  at 7.5% per annum.  The
maturity  date of the  notes  has been  extended  annually  along  with  accrued
interest  to March 31,  2000  (unaudited).  The  notes,  together  with  accrued
interest,   are  reflected  as  a  reduction  of  stockholders'  equity  in  the
consolidated balance sheets.


NOTE 10 - INTERIM IMFORMATION (Unaudited)

Interim information presented as of February 28, 1999 is unaudited. In the
opinion of the Company's management, however, all adjustments necessary for a
fair statement of interim financial position have been included in accordance
with generally accepted accounting principles. All adjustments are of a normal
and recurring nature. The interim information presented is not necessarily
indicative of results to be expected for the entire year.




                                      FS-19


<PAGE>
 ****
EXHIBIT A
                            PRIOR PERFORMANCE TABLES


          The tables set forth below present financial  information with respect
to programs  which were sponsored  by the Sponsor.  Each of  these  programs  is
considered to have  investment  objectives  similar to those of the Fund in that
they each own  interests  in local  limited  partnerships  which own  properties
generating  low income  housing  credits  or, in the case of the prior  programs
included in Table IV and Table V,  benefiting from some other form of Government
Assistance.  However,  the principal  investment objective of the prior programs
included  in Table IV and Table V was to provide  income  tax  losses  which its
investors  could use to offset taxable income from other sources.  None of these
tables are covered by the reports of independent public accountants set forth in
this document.

         For additional information as to the investment objectives and policies
of such prior programs see "Prior Performance  Summary." Additional  information
concerning  prior  performance  is  included  in  Part  II of  the  Registration
Statement  of the  Fund and in the  Form  10-K  annual  reports  for the  public
programs  which file such  reports.  Copies of these 10-K Forms are available to
any investor upon request to the Sponsor. Any such request should be directed to
the  attention of Michael L.  Dickenson,  WNC &  Associates,  Inc.  3158 Redhill
Avenue, Suite 120, Costa Mesa, California 92626.

         The  purpose  of the  tables  is to  provide  information  on the prior
performance of these partnerships so as to permit a prospective purchaser of the
Units to evaluate  the  experience  of the Sponsor in  sponsoring  such  limited
partnerships. The tables consist of:

         Table I           Experience in Raising and Investing Funds
         Table II          Compensation to Sponsor
         Table III         Operating Results of Prior Programs
         Table IV          Results of Completed Programs
         Table V           Sales or Disposals of Properties


Definitions

The  following  terms used in the prior  performance  tables have the  following
meanings:



                                       A-1
<PAGE>



"Acquisition  Cost"  includes  all costs  related  to the  acquisition  of local
limited partnership interests,  including equity contributions,  acquisition and
selection  fees  payable to the  general  partners  and other fees and  expenses
incident to the acquisition of local limited partnership interests.

"Capital Contributions" represents the contributions by investors in the prior
partnerships.

"GAAP" means generally accepted accounting principles as promulgated in the
United States.

"Months to Invest 90% of Amount  Available for  Investment"  means the length of
time,  in  months,  from  the  offering  date  to the  date  of the  closing  of
acquisitions of local limited partnerships which, in the aggregate,  represented
the investment commitment of 90% of the amount available for investment.

"Percent leverage" means mortgage financing divided by total acquisition costs.

         IT  SHOULD  NOT  BE  ASSUMED  THAT  INVESTORS  IN  THIS  OFFERING  WILL
EXPERIENCE  RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE
PARTNERSHIPS  DESCRIBED IN THE  FOLLOWING  TABLES.  INVESTORS  WILL NOT HAVE ANY
INTEREST  IN ANY OF THE  PARTNERSHIPS  DESCRIBED  IN THE TABLES OR IN ANY OF THE
PROPERTIES OWNED BY THE LOCAL LIMITED  PARTNERSHIPS IN WHICH THOSE  PARTNERSHIPS
HAVE INVESTED AS A RESULT OF THE ACQUISITION OF UNITS.




                                      A-2
<PAGE>



                                     TABLE I

TABLE I provides  information  regarding  the raising and  investing of funds by
partnerships  sponsored by the Sponsor which raised funds during the  three-year
period ended December 31, 1998.  The table presents the aggregate  dollar amount
of the  offering,  the  percentage  of  dollars  raised  which  were used to pay
offering  costs,  establish  reserves  and  acquire  investments,   as  well  as
information  regarding  the percent of leverage  and the timing for both raising
and investing funds. The information concerns investor capital  contributions as
the sole  source  of funds for  investment  and  excludes  the  nominal  capital
contributions by the general partners.

























                                      A-3
<PAGE>

<TABLE>





                                     TABLE I

                    EXPERIENCE IN RAISING AND INVESTING FUNDS

                      (January 1, 1996 - December 31, 1998)

                                 PUBLIC OFERINGS

                                        HTCF V-3          %        HTCF V-4 (a)          %      CHTC IV-5 (a)       %


<S>                                  <C>                           <C>                          <C>
Dollar amount offered                $25,000,000                   $25,000,000                  $25,000,000
                                      ==========                    ==========                   ==========

Dollar amount raised                 $17,554,600      100.0        $21,920,450       100.0      $ 6,254,800     100.0

Less offering expenses:
  Selling commissions & discounts
  paid to non-affiliates (b)           1,064,500        6.1          1,590,100         7.3          297,600       4.8
  Organizational expenses (c)          1,074,100        6.1          1,349,700         6.2          428,500       6.8

Reserves                                 539,100        3.1          1,916,450         8.7          727,600      11.6
                                      ----------        ---          ---------         ---          -------      ----

Percent invested as of
  close of offering                  $14,876,900       84.7        $17,064,200        77.8       $4,801,100      76.8
                                      ==========       ====         ==========        ====        =========      ====

Acquisition costs:
   Prepaid items and fees
   related to purchase of
   local limited partnership
   interest                           $   97,200        0.5         $  167,500         0.7        $   8,700       0.1
   Cash down payments (d)             13,813,700       78.7         15,325,100        69.9        4,431,100      70.9
   Acquisition fees                      966,000        5.5          1,571,600         7.2          361,300       5.8
   Other                                       -        -.-                  -         -.-                -       -.-
                                    ---------------     ---  -----------------         ---  ---------------     ------

Total acquisition cost               $14,876,900       84.7        $17,064,200        77.8       $4,801,100      76.8
                                     ===========       ====         ==========        ====        =========      ====


Percentage leverage (mortgage
  financing divided by total
  acquisition cost)                          69%                           54%                          47%

Date offering commenced                     7/95                          7/96                        11/95

Length of offering (months)                   11                            13                            7

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                      21                            12                           22
-------------------------------
<FN>

(a) Not all properties have been  identified as of December 31, 1998.  Therefore
    uninvested amounts are included in reserves.
(b) Selling commissions were first paid to an affiliated broker-dealer which
    reallowed all selling commissions to non-affiliates.
(c) Consists of estimated legal, accounting, printing and other organization
    and offering expenses paid by the partnership directly or indirectly through
    the sponsor.
(d) Represents the capital contributions of the partnership paid or the required
    payments to be paid to the local limited partnerships.
</FN>
</TABLE>


                                       A-4
                                    UNAUDITED

<PAGE>

<TABLE>





                                     TABLE I

                    EXPERIENCE IN RAISING AND INVESTING FUNDS

                      (January 1, 1996 - December 31, 1998)

                                PUBLIC OFFERINGS

                                                      HTCF VI-5 (a)             %      HTCF VI-6(a)                %

<S>                                                 <C>                                 <C>
Dollar amount offered                               $25,000,000                         $25,000,000
                                                     ==========                          ==========

Dollar amount raised                                $24,945,400             100.0       $ 6,944,000            100.0

Less offering expenses:
  Selling commissions & discounts
   paid to non-affiliates (b)                         1,710,300               6.9           464,600              6.7
  Organizational expenses (c)                         1,500,000               6.0           404,000              5.8

Reserves                                              1,617,700               6.5                 -              -.-
                                                      ---------               ---       ------------             ---

Percent invested as of
  close of offering                                 $20,117,400              80.6       $ 6,075,400             83.1
                                                     ==========              ====         =========             ====

Acquisition costs:
  Prepaid items and fees
   related to purchase of
   local limited partnership interest                $  169,000               0.7         $  28,800              0.4
  Cash down payments (d)                             18,277,600              73.3         5,889,900             84.8
  Acquisition fees                                    1,670,800               6.7           464,500              6.7
  Other                                                       -               -.-                 -              -.-
                                               -----------------              ---  ----------------              ---

Total acquisition cost                              $20,117,400              80.6       $ 6,383,200             91.9
                                                                             ====         =========             ====

Percentage leverage (mortgage
  financing divided by total
  acquisition cost)

Date offering commenced                                    6/97                                7/98

Length of offering (months)                                  13                                 (e)

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                                     14                                 (e)
-------------------------------
<FN>

(a) Not all properties have been  identified as of December 31, 1998.  Therefore
    uninvested amounts are included in reserves.
(b) Selling commissions were first paid to an affiliated broker-dealer which
    reallowed all selling commissions to non-affiliates.
(c) Consists of estimated legal, accounting, printing and other organization and
    offering  expenses paid by the partnership directly or indirectly through
    the sponsor.
(d) Represents the capital contributions of the partnership paid or the required
    payments to be paid to the local limited partnerships.
(e) The offering was continuing as of December 31, 1998.  Amounts have been
    invested in excess of amounts raised.
</FN>
</TABLE>


                                      A-5
                                   UNAUDITED


<PAGE>

<TABLE>



                                     TABLE I

                    EXPERIENCE IN RAISING AND INVESTING FUNDS

                      (January 1, 1996 - December 31, 1998)

                         P R I V A T E  O F F E R I N G S

                                            Three Partnerships                      One Partnership
                                                  Organized in                         Organized in
                                                      1997(a)                  %            1998(a)                %
                                            __________________             _____    _______________            _____

<S>                                                <C>                                  <C>
Dollar amount offered                              $67,000,000                          $20,000,000
                                                    ==========                           ==========

Dollar amount raised                               $69,563,300             100.0        $19,566,500            100.0

Less offering expenses:
  Selling commissions & discounts
  paid to non-affiliates (b)                         1,534,500               2.2                  -              0.0
  Organizational expenses (c)                        1,092,800               1.6            440,200              2.3
  Reserves                                           8,261,600              11.9          2,480,300             12.7
                                                     ---------              ----          ---------             ----

Percent invested as of
  close of offering                                $58,674,400              84.3        $16,646,000             85.0
                                                    ==========              ====         ==========             ====

Acquisition costs:
  Prepaid items and fees
    related to purchase of
    local limited partnership interest              $  823,000               1.2         $  339,700              1.7
  Cash down payments (d)                            54,260,400              78.0         15,281,600             78.1
  Acquisition fees                                   2,217,700               3.2            782,700              4.0
  Other                                              1,373,300               2.0            242,000              1.2
                                                     ---------               ---            -------              ---

Total acquisition cost                             $58,674,400              84.3        $16,646,000             85.0
                                                    ==========              ====         ==========             ====

Percent leverage (mortgage
  financing divided by total
  acquisition cost)                                        55%                                  49%

Date offering commenced                                Various                               5/1/98

Length of offering (months)                            Various                                    2

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                               Various                                  N/A
------------------------------
<FN>

(a) Not all properties have been  identified as of December 31, 1998.  Therefore
    uninvested amounts are included in reserves.
(b) Selling commissions were first paid to an affiliated broker-dealer which
    reallowed all selling commissions to non-affiliates.
(c) Consists of estimated legal, accounting, printing and other organization and
    offering  expenses paid by the partnership directly or indirectly through
    the sponsor.
(d) Represents the capital contributions of the partnership paid or the required
    payments to be paid to the local limited partnerships.
</FN>
</TABLE>

                                       A-6
                                    UNAUDITED
<PAGE>





                                    TABLE II

TABLE II presents information concerning the cumulative compensation paid to the
Sponsor for the period from January 1, 1996 to December 31, 1998 with respect to
programs  presented  in TABLE I and on an  aggregate  basis with  respect to all
other programs which have been sponsored by the Sponsor.
























                                      A-7
<PAGE>

<TABLE>


                                    TABLE II

                             COMPENSATION TO SPONSOR

                      (January 1, 1996 - December 31, 1998)

                                PUBLIC OFFERINGS
                                ________________

                                          HTCF V-3       HTCF V-4      CHTC IV-5
                                          ________       ________      _________

<S>                                           <C>            <C>           <C>
Date offering commenced                       7/95           7/96          11/95

Dollar amount raised                   $17,559,000    $21,920,450     $6,253,000

Amount paid to sponsor from
  proceeds of offering: (a)
     Underwriting fees                           -              -              -
     Acquisition fees                      966,000      1,571,600        361,300
     Syndication fee                             -              -              -
     Other                                       -        440,000        130,140

Dollar amount of cash generated
  from operations before
  deducting payments to sponsor             67,206        399,836        178,308

Amount paid to sponsor from operations:
   Property management fees                      -              -              -
   Asset  management fees                  110,000         30,000         10,000
   Reimbursements                                -              -              -
   Leasing commissions                           -              -              -

Dollar amount of property sales
 and refinancing before deducting
 payments to sponsor:
     Cash                                        -              -              -
     Notes                                       -              -              -

Amount paid to sponsor from property
  sales and refinancing:
     Real estate commissions                     -              -              -
     Subordinated disposition fee                -              -              -
     Other                                       -              -              -
------------------------------------
<FN>
(a)      Represents amounts paid to sponsor which were not reallowed to
         non-affiliates.
</FN>
</TABLE>



                                      A-8
                                   UNAUDITED
<PAGE>

<TABLE>



                                    TABLE II

                             COMPENSATION TO SPONSOR

                      (January 1, 1996 - December 31, 1998)

                                PUBLIC OFFERINGS

                                           HTCF VI-5    HTCF VI-6(a)      Ten Other Public
                                                                                  Programs
                                           _________    ____________       _______________
<S>                                             <C>             <C>         <C>
Date offering commenced                         6/97            7/98        1995 and prior

Dollar amount raised                     $24,945,400      $6,944,000          $110,287,500

Amount paid to sponsor from
  proceeds of offering: (b)
     Underwriting fees                             -               -                     -
     Acquisition fees                      1,670,800         464,500                     -
     Syndication fee                               -               -                     -
     Other                                   750,000         199,095                87,169

Dollar amount of cash generated
  From operations before
  Deducting payments to sponsor              256,294           1,554               765,004

Amount paid to sponsor from
operations:
   Property management fees                        -               -                     -
   Partnership management fees (c)                 -               -             1,136,716
   Reimbursements                                  -               -                     -
   Leasing commissions                             -               -                     -

Dollar amount of property sales and
  refinancing before deducting
  payments to sponsor:
     Cash                                          -               -                51,407
     Notes                                         -               -                     -


Amount paid to sponsor from
 property sales and refinancing:
     Real estate commissions                       -               -                     -
     Incentive fee                                 -               -                     -
     Other                                         -               -                     -
------------------------------------
<FN>

(a) The offering was continuing as of December 31, 1998.
(b) Represents   amounts  paid  to  sponsor   which  were  not   reallowed  to
    non-affiliates.
(c) Partnership  management  fees were paid from  partnership  reserves  in the
    instances where amounts paid to sponsor from operations exceed dollar amount
    of cash generated from operations.

</FN>
</TABLE>



                                       A-9
                                    UNAUDITED

<PAGE>


<TABLE>




                                    TABLE II

                             COMPENSATION TO SPONSOR

                      (January 1, 1996 - December 31, 1998)

                                PRIVATE OFFERINGS

                                                   Three Partnerships         One Partnership       One Hundred-Three
                                                         Organized in            Organized in           Other Private
                                                                 1997                    1998            Partnerships
                                                   ------------------         ---------------         ---------------

<S>                                                                                      <C>             <C>
Date offering commenced                                       Various                    5/98            1995 & prior

Dollar amount raised                                      $66,859,433             $19,566,500                     N/A

Amount paid to sponsor from
  proceeds of offering: (a)
     Underwriting fees                                              -                       -                       -
     Acquisition fees                                       2,217,700                 782,661                       -
     Syndication fee                                                -                       -                       -
    Other                                                     540,544                 440,247                       -

Dollar amount of cash generated
  from (used in) operations before
  deducting payments to sponsor                               133,869                   6,947                     N/A

Amount paid to sponsor from operations:
   Property management fees                                         -                       -                       -
   Partnership management fees (b)                            196,300                       -                 286,056
   Reimbursements                                                   -                       -                  58,000
   Leasing commissions                                              -                       -                       -

Dollar amount of property sales and
  refinancing  before  deducting  payments
  to sponsor:
     Cash                                                           -                       -                       -
     Notes                                                          -                       -                       -


Amount paid to sponsor from property sales
  and refinancing:
     Real estate commissions                                        -                       -                       -
     Incentive fee                                                  -                       -                       -
     Other                                                          -                       -                       -
------------------------------------
<FN>

(a)      Represents amounts paid to sponsor which were not reallowed to
         non-affiliates.
(b)      Partnership  management fees were paid from partnership reserves in the
         instances where amounts paid to sponsor from  operations  exceed dollar
         amount of cash generated from operations.
</FN>
</TABLE>


                                      A-10
                                    UNAUDITED

<PAGE>


                                    TABLE III

TABLE III presents the operating  results for all partnerships  sponsored by the
Sponsor  which closed during the five years ended  December 31, 1998.  The prior
partnerships are structured as investment  partnerships  acquiring  interests in
operating partnerships. The investment partnerships account for such investments
using  the  equity  method  of  accounting   which   recognizes   each  of  such
partnership's  pro rata share of the  operating  partnership's  total  income or
loss. Revenues generated by the investment partnerships consist substantially of
interest on short-term  investments.  This interest income  generally  decreases
after the initial two years of  operations  as funds  available  for  investment
decrease.  This  decrease  in funds  arises  from the  investment  partnership's
payments of capital contributions due.

All of the prior public partnerships, one of the prior private partnerships that
closed  in  1994  and  all  of the other prior private  partnerships report on a
GAAP basis and,  accordingly,  "Cash generated from (used in) operations" is per
each program's  Statement of Cash Flows.  The remaining  prior private  programs
maintain  their  books and records on the tax basis of  accounting  and not on a
GAAP basis,  and "Cash generated  from(used in) operations" for such programs is
per their  respective  books and records.  The  significant  difference  is that
depreciation  expense on a tax basis as  compared  to a GAAP basis is greater in
the early years of operations.

Other  information  included in TABLE III includes data on cash  generated  from
operations  and tax and  cash  distribution  information  per  $1,000  invested,
including Tax Credit allocations.











                                      A-11
                                   UNAUDITED
<PAGE>
<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    CHTC III

                                                1994             1995            1996             1997           1998
                                                ----             ----           -----            -----           ----


<S>                                        <C>             <C>             <C>              <C>            <C>
Gross revenue                              $ 156,271       $  145,959      $   74,947       $   57,279     $   26,577
Less:
   Operating expenses                         86,306          193,916         214,737          204,259        215,744
   Interest                                        -                -               -                -              -
   Depreciation and amortization              41,757           57,466          57,933           58,596         60,464
   Equity in losses of local limited
    partnerships                             352,511        1,155,114       1,132,216        1,028,617        918,787
                                             -------        ---------       ---------        ---------        -------

Net income (loss) - GAAP basis            $(324,303)     $(1,260,537)    $(1,329,939)     $(1,234,193)   $(1,168,418)
                                           ========       ===========     ===========      ===========    ===========

Taxable income (loss) from operations     $(388,247)     $(1,279,818)    $(1,523,381)     $(1,307,843)   $(1,365,735)
                                           =========      ===========     ===========      ===========    ===========
   Taxable income (loss) from sale        $       -      $         -     $         -      $         -    $         -
                                           =========      ===========     ===========      ===========    ===========


Cash generated from(used in) operations   $(225,005)     $    437,400    $   (143,337)    $     (6,960)  $      4,243
Cash generated from sales                         -                 -               -                -              -
Cash generated from refinancing                   -                 -               -                -              -
Less:  Cash distributions to investors            -                 -               -                -        900,000
                                         -----------      -----------     -----------       ----------     ----------

Cash generated (deficiency) after cash
  distributions and special items         $(225,005)       $  437,400    $ (143,337)       $   (6,960)    $ (895,067)
                                           ========           =======      ==========          =======      =========


                                    TAX AND DISTRIBUTION DATA PER $1,000 INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                      (a)  $(28)            $(70)           $(84)            $(72)          $(75)
     From recapture                                -                -               -                -              -
  Capital gain (loss)                              -                -               -                -

Federal tax credits                       (a)    32                95             112              113            113
California tax credits                    (a)    48                85              85               66             17


Cash distributions to investors
  Source (on GAAP basis)
    Investment income                              -                -               -                -              -
    Return of capital
        Price adjusters                            -                -               -                -             35
        Balance of uninvested assets               -                -               -                -             15
  Source (on cash basis)
    Sales                                          -                -               -                -              -
     Refinancing                                   -                -               -                -              -
    Operations                                     -                -               -                -              -


                                      A-12
                                   UNAUDITED

<PAGE>

    Other
        Price adjusters                            -                -               -                -             35
        Balance of uninvested assets               -                -               -                -             15
Amount (in percentage terms)
   Remaining   invested   in   program
   local limited  partnerships  at end
   of     year     (original     total
   acquisition  costs  of  investments
   retained  divided by total original
   acquisition     costs     of    all
   properties)                                  100%             100%            100%             100%           100%
--------------------------------
<FN>

(a)   Tax losses and tax credits allocated to an investor in the first two years
      are  dependent  upon  an  investor's  entry  date.  Amount  shown  is that
      allocated to initial investors.
</FN>
</TABLE>







                                      A-13
                                   UNAUDITED
<PAGE>

<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    HTCF IV-1

                                             1994(a)            1995            1996             1997            1998
                                             -------        --------     -----------     ------------      ----------

<S>                                        <C>             <C>            <C>              <C>             <C>
Gross revenue                              $  85,261       $  68,682      $   51,654       $   25,676      $   27,708
Less:
   Operating expenses                         47,149          55,573          51,467           57,228         123,062
   Interest                                        -               -               -                -               -
   Depreciation and amortization              20,797          30,926          31,032           31,416          31,369
Equity in losses in local partnerships       413,316         727,986       1,023,557          764,430         728,078
                                             -------         -------       ---------          -------         -------

Net income (loss) - GAAP basis            $(396,001)      $(745,803)    $(1,054,402)      $ (827,398)     $ (854,801)
                                           ========        ========      ===========        =========       =========

Taxable income (loss) from operations     $(417,185)      $(874,044)     $ (982,635)     $(1,094,717)    $(1,110,938)
                                           =========       =========       =========      ===========     ===========

Cash generated (used) from operations      $  27,511       $  55,437      $   22,420      $  (51,546)     $  (55,354)
Cash generated from sales                          -               -               -                -               -
Cash generated from refinancing                    -               -               -                -               -

Less: Cash distributions to investors              -               -               -                -               -
                                          ----------      ----------      ----------       ----------      ----------   -

Cash generated (deficiency) after cash
 distributions and special items           $  46,649       $  55,437      $   22,420     $   (51,546)     $  (55,354)
                                              ======          ======          ======        =========        ========


                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                      (b)  $(59)           $(87)           $(97)           $(108)          $(110)
     From recapture                                -               -               -                -               -
  Capital gain(loss)                               -               -               -                -               -


Federal tax credits                       (b)     32             101             136              143             142
California tax credits                             -               -               -                -               -


Cash distributions to investors                    -               -               -                -               -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year
(original total acquisition costs
 of properties retained divided
 by total original acquisition
 costs of all properties)                       100%            100%            100%             100%            100%
--------------------------------
<FN>
(a)      Partial year of operations.
(b)      Tax losses and tax credits  allocated  to an investor in the first year
         are  dependent  upon an  investor's  entry date.  Amount  shown is that
         allocated to initial investor.
</FN>
</TABLE>

                                      A-14
                                   UNAUDITED


<PAGE>

<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    HTCT IV-2


                                          1994(a)          1995          1996           1997          1998
                                          -------          ----         -----           ----          ----

<S>                                     <C>           <C>           <C>            <C>           <C>
Gross revenue                           $   3,475     $ 179,927     $ 161,610      $  74,571     $  47,017
Less:
   Operating expenses                      16,096        57,965        60,777         65,717        65,402
   Interest                                11,173        39,148         5,350              -             -
   Depreciation and amortization            1,638        26,208        40,109         40,823        32,099
Equity in losses in local partnerships    239,118       628,521       628,631        737,115       658,728
                                          -------       -------       -------        -------       -------

Net income (loss) - GAAP basis         $(264,550)    $(571,915)     $(573,257)    $(769,084)    $(709,212)
                                        ========      =========      =========     =========     =========

Taxable income (loss)from operations   $(228,979)    $(702,048)     $(641,050)    $(928,847)    $(895,194)
                                        =========     =========      =========     =========     =========

Cash generated (used)from operations   $ (25,518)     $  54,970      $  60,895     $  52,765     $  26,255
Cash generated from sales                       -             -              -             -             -
Cash generated from refinancing                 -             -              -             -             -

Less: Cash distributions to investors           -             -              -             -             -
                                       ----------    ----------     ----------    ----------     ---------

Cash generated  (deficiency)  after
 cash distributions and special items  $ (25,518)     $  54,970      $  60,895     $  52,765     $  26,255
                                         =======         ======         ======        ======        ======


                              TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                   (b)  $(82)    (b)  $(58)          $(41)         $(59)         $(57)
     From recapture                             -             -              -             -             -
   Capital gain (loss)                          -             -              -             -             -

Federal tax credits                    (b)     21    (b)     70            105           113           124
California tax credits                          -             -              -             -             -


Cash distributions to investors                 -             -              -             -             -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year
(original total acquisition costs of
 properties retained divided by
 total original acquisition costs
 of all properties)                          100%          100%           100%          100%          100%
 --------------------------------
<FN>

(a)      Partial year of operations.
(b)      Tax losses and tax  credits  allocated  to an investor in the first two
         years are dependent upon an investor's entry date. Amount shown is that
         allocated to initial investor.

</FN>
</TABLE>


                                      A-15
                                   UNAUDITED
<PAGE>
<TABLE>




                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    CHTC IV-4

                                              1994(a)           1995         1996         1997         1998
                                              -------       --------     --------     --------     --------

<S>                                          <C>            <C>         <C>          <C>          <C>
Gross revenue                                $  1,613       $160,888    $ 147,254    $  65,307    $  46,032
Less:
   Operating expenses                              12         41,325       51,488       45,130       49,409
   Interest                                    13,387         79,853            -            -            -
   Depreciation and amortization                    -         16,056       24,865       25,419       25,561
Equity in (income) losses in local
   partnerships                               (2,212)        100,224      528,288      806,639      750,114
                                              -------        -------      -------      -------      -------

Net income (loss) - GAAP basis              $ (9,574)      $(76,570)   $(457,387)   $(811,881)   $(779,052)
                                              =======       ========    =========    =========    =========

Taxable income (loss) from operations       $(11,786)      $(60,108)   $(566,147)   $(778,340)   $(837,679)
                                             ========       ========    =========    =========    =========

Cash generated (used) from operations        $  1,602       $ 26,322    $  95,766    $ 110,356    $  84,603
Cash generated from sales                           -              -            -            -            -
Cash generated from refinancing                     -              -            -            -            -

Less: Cash distributions to investors               -              -            -            -            -
                                             --------      ---------    ---------   ----------  ----------

Cash  generated   (deficiency)  after
 cash distributions and special items        $  1,602       $ 26,322    $  95,766    $ 110,356    $  84,603
                                                =====         ======       ======      =======       ======


                               TAX AND DISTRIBUTION DATA PER $1,000 INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                        (b)  $(12)      (b)  $(9)         $(49)       $(69)       $(72)
     From recapture                                  -              -             -           -           -
  Capital gain (loss)                                -              -             -           -           -

Federal tax credits                                  -      (b)    18            64          86          99
California tax credits                               -      (b)    53            70          91          67

Cash distributions to investors                      -              -             -           -           -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year (original
 total acquisition  costs of
 properties retained divided by
 total original acquisition costs
 of all properties)                               100%           100%          100%        100%        100%
 --------------------------------
<FN>

(a)      Partial year of operations.
(b)      Tax losses and tax  credits  allocated  to an investor in the first two
         years are dependent upon an investor's entry date. Amount shown is that
         allocated to initial investors.
</FN>
</TABLE>


                                      A-16
                                   UNAUDITED
<PAGE>

<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    HTCF V-3

                                                  1995(b)            1996             1997         1998
                                                  -------       ---------        ---------       ---------

<S>                                              <C>           <C>              <C>             <C>
Gross revenue                                    $  3,487      $  209,940       $  121,703      $   55,326
Less:
   Operating expenses (a)                          12,379          69,130           66,884          71,627
   Interest                                             -               -                                -
   Depreciation and amortization                      454          23,436           34,605          35,765
Equity in losses in local partnerships                343         185,071          789,697       1,201,184
                                                     ----         -------          -------       ---------
Net income (loss) - GAAP basis                   $  9,689      $ (67,697)      $ (769,483)    $(1,253,250)
                                                   ======        ========        =========     ===========

Taxable income (loss) from  operations            $ 2,522     $ (128,969)     $(1,060,301)    $(1,409,234)
                                                    =====        ========      ===========     ===========


Cash generated (used) from operations             $ 3,402     $ (205,999)       $  102,215      $   60,990
Cash generated from sales                               -               -                -               -
Cash generated from refinancing                         -               -                -               -
Less:  Cash distributions to investors                  -               -                -               -
                                                 --------       ---------        ---------       ---------
Cash  generated  (deficiency)  after
 cash distributions and special items             $ 3,402     $ (205,999)       $  102,215      $   60,990
                                                    =====       =========          =======         =======


                              TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                             (c)   $2      (c)  $(26)            $(58)           $(78)
     From recapture                                     -               -                -               -
  Capital gain (loss)                                   -               -                -               -

Federal tax credits                              (c)    3      (c)     62               84             130
California tax credits                                  -               -                -               -

Cash distributions to investors
  Source (on GAAP basis)
      Investment income                                 -               -                -               -
      Return of capital                                 -               -                -               -
  Source (on cash basis)
      Sales                                             -               -                -               -
      Refinancing                                       -               -                -               -
      Operations                                        -               -                -               -
      Other                                      (d)    5               -                -               -

Amount (in percentage terms) remaining
 invested in program properties at end of
 year (original total acquisition costs of
 properties retained divided by total
 original acquisition costs of all
 properties)                                         100%            100%             100%            100%
 --------------------------------
<FN>

(a)      Operating expenses include reimbursements to the general partner as
         follows: 1998 - $20,471; 1997 - $12,154; and 1996 - $4,948.
(b)      Partial year of operations.
(c)      Tax income (losses) and tax credits allocated to an investor in the
         first two years are dependent upon an investor's entry date.
         Amount shown is that allocated to initial investors.
(d)      This amount was distributed in 1995 by the general partner and not by
         the partnership.
</FN>
</TABLE>

                                      A-17
                                   UNAUDITED

<PAGE>

<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    HTCF V-4

                                                              1996(b)                     1997                1998
                                                              -------                ---------             ----------

<S>                                                          <C>                     <C>                   <C>
Gross revenue                                                $ 15,529                $ 225,609             $  231,113
Less:
   Operating expenses (a)                                      30,183                   86,206                 79,139
   Interest                                                         -                        -                      -
   Depreciation and amortization                                2,851                   42,034                 56,694
Equity in losses (income) in local
partnerships                                                   29,329                  334,756              1,004,237
                                                               ------                  -------              ---------

Net income (loss) - GAAP basis                              $(46,834)             $  (109,688)           $  (908,957)
                                                             ========              ===========              =========

Taxable income (loss) from operations                       $(23,166)               $(237,387)          $ (1,154,795)
                                                             ========                =========            ===========

Cash generated (used) from operations                        $  4,010                $  94,732             $  271,094
Cash generated from sales                                           -                        -                      -
Cash generated from refinancing                                     -                        -                      -

Less: Cash distributions to investors                               -                        -                      -
                                                             --------                 --------              ---------           -

Cash generated  (deficiency)  after
 cash distributions and special items                       $   4,010                $  94,732             $  271,094
                                                               ======                   ======                =======


                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                                       (c)     $5                (c)  $(4)                  $(52)
     From recapture                                                 -                        -                      -
  Capital gain (loss)                                               -                        -                      -

Federal tax credits                                        (c)     14                       19                     80
California tax credits                                              -                        -                      -

Cash distributions to investors                                     -                        -                      -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year
 (original total acquisition costs
 of properties retained divided by
 total original acquisition costs
 of all properties)                                              100%                     100%                   100%
 --------------------------------
<FN>
(a)      Operating expenses include reimbursements to the general partner as
         follows: 1998 - $26,929; 1997 - $14,111; and 1996 - $6,812.
(b)      Partial year of operations.
(c)      Tax income  (losses)  and tax credits  allocated to an investor in the
         first two years are dependent upon an investor's entry date.
         Amount shown is that allocated to initial investors.
</FN>
</TABLE>

                                      A-18
                                   UNAUDITED

<PAGE>

<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                    CHTC IV-5


                                                             1996(b)                      1997                1998(c)
                                                             -------                  --------               --------

<S>                                                         <C>                      <C>                    <C>
Gross revenue                                               $ 54,573                 $  78,454              $  65,634
Less:
   Operating expenses (a)                                      1,393                    25,517                 31,241
   Interest                                                        -                         -                      -
   Depreciation and amortization                               7,753                    11,352                 12,319
Equity in losses (income) in local
partnerships                                                    (15)                   146,305                119,048
                                                              ------                  --------                -------

Net income (loss) - GAAP basis                              $ 45,442                $(104,720)             $ (96,974)
                                                              ======                 =========               ========

Taxable income (loss) from operations                       $ 45,427                $ (84,003)             $(198,375)
                                                              ======                  ========              =========

Cash generated (used) from operations                       $159,328                $ (39,216)              $  48,196
Cash generated from sales                                          -                         -                      -
Cash generated from refinancing                                    -                         -                      -

Less: Cash distributions to investors                              -                         -                      -
                                                           ---------                 ----------             ---------

Cash  generated   (deficiency)  after
cash distributions and special items                        $159,328                $ (39,216)               $ 48,196
                                                             =======                  ========                 ======


                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                                        (c)  $10                     $(13)                  $(30)
     From recapture                                                -                         -                      -
  Capital gain (loss)                                              -                         -                      -

Federal tax credits                                                -                        31                     76
California tax credits                                             -                        67                     67

Cash distributions to investors                                    -                         -                      -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year (original
 total acquisition costs of
 properties retained divided by total
 original acquisition costs of all
 properties)                                                    100%                      100%                   100%
--------------------------------
<FN>
(a)      Operating expenses include reimbursements to the general partner as
         follows: 1998 - $16,045; and 1997 - $4,584.
(b)      Partial year of operations.
(c)      Tax income  (losses)  and tax credits  allocated to an investor in the
         first year are dependent upon an investor's entry date.
         Amount shown is that allocated to initial investors.
</FN>
</TABLE>

                                      A-19
                                   UNAUDITED

<PAGE>
<TABLE>



                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                                               HTCF VI-5                           HTCF VI-6

                                                        1997(b)                1998                        1998(b)
                                                        -------                -------                     ----------


<S>                                                    <C>                     <C>                           <C>
Gross revenue                                          $ 10,012                286,006                       $  6,003
Less:
   Operating expenses (a)                                 7,843                 75,782                          4,449
   Interest                                                   -                     16                              -
   Depreciation and amortization                          2,256                 47,350                          3,055
Equity in losses (income) in local
partnerships                                            (2,395)                 76,506                       (60,610)
                                                        -------                 ------                       --------

Net income (loss) - GAAP basis                          $ 2,308               $ 86,352                      $(59,109)
                                                          =====                 ======                       ========

Taxable income (loss) from operations                   $ 9,308              $(78,171)                      $ (1,501)
                                                          =====               ========                        =======

Cash generated (used) from operations                  $(2,873)              $ 259,167                       $ 48,196
Cash generated from sales                                     -                      -                              -
Cash generated from refinancing                               -                      -                              -

Less:  Cash distributions to investors                        -                      -                              -
                                                    -----------            -----------                      ---------

Cash generated (deficiency) after cash
  distributions and special items                      $(2,873)               $259,167                       $ 48,196
                                                        =======                =======                         ======

                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                                    (c)  $1              (c)  $(4)                      (c)  $(1)
     From recapture                                           -                      -                              -
  Capital gain (loss)                                         -                      -                              -

Federal tax credits                                           -              (c)    20                              -
California tax credits                                        -                      -                              -

Cash distributions to investors                               -                      -                              -

Amount (in percentage terms) remaining
 invested in program properties at end of
 year (original total acquisition costs
 of properties  retained divided by total
 original acquisition costs of all
 properties)                                               100%                   100%                           100%
--------------------------------
<FN>
(a)      Operating expenses for HTCF VI-5 include reimbursements to the general
         partner as follows: 1998 - $11,204; and for HTCF VI-6 as follows: 1998
         - $3,300.
(b)      Partial year of operations.
(c)      Tax income  (losses)  and tax credits  allocated to an investor in the
         first two years are dependent upon an investor's entry date.
         Amount shown is that allocated to initial investors.
</FN>
</TABLE>


                                      A-20
                                   UNAUDITED

<PAGE>
<TABLE>


                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                   TWO PRIVATE
                          OFFERINGS CLOSED DURING 1994

                                                      1994(a)         1995          1996           1997       1998
                                                      -------    ---------      ---------      --------       -------

<S>                                                 <C>          <C>           <C>           <C>           <C>
Gross revenue                                       $   7,619    $  60,739     $   67,700    $   23,771    $   29,577
Less:
   Operating expenses                                 111,523       89,405         53,699        55,471        51,172
   Interest                                                 -            -              -             -             -
   Depreciation and amortization                        1,305       26,141         37,940        37,490        32,908
Equity in losses in local partnerships                129,171      562,915      1,071,626     1,002,071       949,514
                                                      -------      -------      ---------     ---------       -------

Net  income  (loss) - Tax  basis  for WNC Tax
Credits XXX;  GAAP basis for ITC I                 $(234,380)   $(617,722)   $(1,095,565)  $(1,071,261)  $(1,004,017)
                                                    =========    =========    ===========   ===========   ===========

Taxable income (loss) from operations              $(234,066)   $(797,292)   $(1,310,142)  $(1,299,282)  $(1,235,714)
                                                    =========    ========     ===========   ===========   ===========

Cash generated (used) from operations              $(103,904)   $ (31,420)     $   36,501   $  (47,895)   $  (33,689)
Cash generated from sales                                   -            -              -             -             -
Cash generated from refinancing                             -            -              -             -             -

Less:  Cash distributions to investors                      -            -              -             -             -

Cash generated (deficiency) after cash              ---------    ---------        -------     ---------      --------
  distributions and special items                  $(103,904)   $ (31,420)     $   36,501   $  (47,895)   $  (33,689)
                                                    =========     ========         ======      ========      ========

                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                                      $(23)        $(61)          $(99)        $(96)        $(93)
     From recapture                                           -            -              -            -            -
  Capital gain (loss)                                         -            -              -            -            -

Federal tax credits (b)                                       3           69            130          149          149
Federal historic rehabilitation credits (b)                  31           24              -            -            -
California tax credits (b)                                    -            -              -            -            -

Cash distributions to investors                               -            -              -            -            -

Amount (in percentage terms) remaining
 invested in program properties at end of
 year (original total acquisition costs
 of properties  retained divided by total
 original acquisition costs of all properties)              100%         100%           100%         100%         100%
--------------------------------
<FN>
(a)      Partial year of operations.
(b)      Weighted average.
</FN>
</TABLE>

                                      A-21
                                   UNAUDITED

<PAGE>

<TABLE>

                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                   ONE PRIVATE
                           OFFERING CLOSED DURING 1995


                                                        1995(a)              1996              1997            1998
                                                        -------           -------         ---------          ---------

<S>                                                    <C>               <C>             <C>                  <C>
Gross revenue                                          $ 58,335          $ 138,052       $   24,580           $ 2,714
Profit (loss) on sale of
  limited partnership interest                                -                  -                -         (324,184)
Less:
   Operating expenses                                   126,526            102,922          129,739            60,745
   Interest                                                   -                  -                -                 -
   Depreciation and amortization                          6,099             32,616           49,364            49,364
Equity in losses in local partnerships                  161,903            453,545           39,326           747,171
                                                        -------            -------           ------           -------


Net income (loss) -GAAP basis                        $(236,193)        $ (451,031)      $ (893,849)      $(1,178,750)
                                                      =========          =========        =========       ===========

Taxable (income) loss from operations                $(146,497)        $ (716,986)     $(1,232,653)      $(1,066,338)
                                                      --------          ----------      -----------       -----------
Taxable (income) loss from sale of
  local limited partnership interest                 $       0         $        0      $         0       $  (324,184)
                                                      --------          ---------       -----------       ===========

Cash generated (used) from operations                $ (74,596)         $  61,873      $   (91,302)      $   (21,202)
Cash generated from sales                                    -                  -                -           267,885
Cash generated from refinancing                              -                  -                -                 -

Less: Cash distributions to investors                        -                  -                -                 -


Cash generated (deficiency) after                    ----------         ---------        ----------        ---------
 cash distsributions and special items               $ (74,596)         $  61,873      $   (91,302)      $   246,683
                                                       ========            ======          ========          =======


                                    TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                                 (b)  $(10)              $(48)             $(81)            $(71)
     From recapture                                           -                  -                -                 -
  Capital gain (loss)                                         -                  -                -              (22)

Federal tax credits                                  (b)      7                 59              129               147
California tax credits                                        -                  -                -                 1

Cash distributions to investors                               -                  -                -                 -

Amount (in percentage terms)
 remaining invested in program
 properties    at   end   of   year
(original total acquisition costs of
 properties retained divided by
 total original acquisition costs
 of all properties)                                        100%               100%             100%              100%
 --------------------------------
<FN>
(a)      Partial year of operations.
(b)      Tax loss and tax credits allocated to an investor in the first year are
         dependent upon an investor's entry date. Amount shown is that allocated
         to initial investors.
</FN>
</TABLE>


                                      A-22
                                   UNAUDITED

<PAGE>

<TABLE>

                                    TABLE III

                       OPERATING RESULTS OF PRIOR PROGRAMS

                                                           THREE PRIVATE                           ONE PRIVATE
                                                     OFFERINGS CLOSED DURING 1997         OFFERING CLOSED DURING 1998



                                                     1997(a)                 1998                            1998(a)
                                                     -------                -------                        ----------

<S>                                               <C>                     <C>                               <C>
Gross revenue                                     $  143,233              $  189,537                        $   7,097
Less:
   Operating expenses                                 49,648                 260,360                           22,150
   Interest                                          355,783               2,152,313                                0
   Depreciation and amortization                     467,061                 106,258                            7,104
Equity in losses in local partnerships               722,387               2,611,409                          162,694
                                                     -------               ---------                          -------

Net income (loss) - GAAP basis                   $(1,451,646)            $(4,940,803)                       $(184,851)
                                                  ===========             ===========                        =========

Taxable (income) loss from operations            $(1,733,726)            $(5,277,673)                       $(157,883)
                                                  ===========             ===========                        =========


Cash generated (used) from operations             $  119,668             $   (80,799)                       $   6,947
Cash generated from sales                                  -                       -                                -
Cash generated from refinancing                            -                       -                                -

Less: Cash distributions to investors                      -                       -                                -


Cash generated  (deficiency)  after                  -------               ---------                          -------
 cash distributions and special items             $  119,668             $  (80,799)                         $  6,947
                                                     =======                ========                            =====


                  TAX AND DISTRIBUTION DATA PER $1,000 INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                               (b) $(26)               (b) $(78)                             $(8)
     From recapture                                        -                       -                                -
  Capital gain (loss)                                      -                       -                                -

Federal tax credits                                (b)    17               (b)    67                                3
Federal historic rehabilitation credits                                                                            19
California tax credits                             (b)     3               (b)    17                                -


Cash distributions to investors                            -                       -                                -

Amount (in percentage terms)
 remaining invested in program
 properties    at   end   of   year
 (original total acquisition costs of
 properties retained divided by
 total original acquisition costs
 of all properties)                                     100%                    100%                             100%
 --------------------------------
<FN>

(a)      Partial year of operations.
(b)      Weighted average.
</FN>
</TABLE>



                                      A-23
                                   UNAUDITED
<PAGE>


                                    TABLE IV

TABLE IV presents  the results of programs  sponsored  by the Sponsor  that have
completed operations during the five years ended December 31, 1998. One program,
Virgin  Islands,  completed  operations  and is presented in TABLE V.


















                                      A-24
                                   UNAUDITED
<PAGE>
<TABLE>


                                    TABLE IV

                          RESULTS OF COMPLETED PROGRAMS

                      (January 1, 1994 - December 31, 1998)

                                                                                                       VIRGIN ISLANDS

                                                                                                       CLEARVIEW APTS (a)

<S>                                                                                                          <C>
Dollar Amount Raised                                                                                         $705,000
Number of Properties Purchased                                                                                      1
Date of Closing of Offering                                                                                      4/83

Date of First Sale of Property                                                                               12/26/97
Date of Final Sale of Property                                                                               12/26/97

Receivable on Net Purchase Money Financing                                                                 140,000(b)

                  TAX AND DISTRIBUTION DATA PER $1,000 INVESTED

   Federal Income Tax Results:
   Ordinary income (loss)
        from operations                                                                                      $(3,551)
        from recapture                                                                                              -
   Capital Gain                                                                                                 2,963
    Deferred Gain
       Capital                                                                                                    296
       Ordinary                                                                                                     -

Cash Distributions to Investors
    Source (on GAAP basis)
        Investment income                                                                                           -
        Return of capital                                                                                    $127 (c)
    Source (on cash basis)                                                                                          -
       Sales                                                                                                 $127 (c)
       Refinancing                                                                                                  -
       Operations                                                                                                   -
       Other                                                                                                        -
--------------------------------
<FN>
(a)      This was not a tax credit program.
(b)      The program took back a note from the buyer in the principal  amount of
         $140,000,  bearing no interest and payable in July 1999. The receivable
         is presented at face amount and not at discounted current value.
(c)      The first  installment  of $127 per  $1,000  invested  was made in July
         1998. The second and final installment of approximately $196 per $1,000
         invested will be made in late 1999 when the buyer's promissory  note is
         expected to be retired.
</FN>
</TABLE>

                                      A-25
                                   UNAUDITED

<PAGE>


                                     TABLE V

TABLE V presents the sales or disposals of property by partnerships sponsored by
the Sponsor  during the three years ended  December 31,  1998.


















                                      A-26
                                   UNAUDITED
<PAGE>
<TABLE>


                                     TABLE V

                        SALES OR DISPOSALS OF PROPERTIES

                      (January 1, 1996 - December 31, 1998)

                                                               ITCF II           SHELTER RESOURCE FUND

                                                        LAMBERT COMMUNITY      FOLSOM GARDEN I       FOLSOM GARDEN II

<S>                                                               <C>  <C>            <C>   <C>              <C>   <C>
Date property acquired                                            4/11/97             11/30/83               11/30/83
Date of sale                                                      6/15/98           1/30/97(a)             1/30/97(a)


Selling Price, Net of Closing Costs and
   GAAP Adjustments:

  Cash received (disbursed) net of closing costs              $ 1,400,142         $  (216,345)            $   117,454
  Mortgage  balance and accrued interest at time of sale        2,293,021            1,918,394              1,586,941
  Purchase money mortgage taken back by program                 1,167,578                    -                      -
  Adjustments resulting from application of GAAP                        -                                           -
                                                              -----------         ------------            -----------
   Total                                                     $4,860,741(b)        $1,702,049(b)          $1,704,395(b)
                                                              ============         ============           ============

Cost of Properties Including Closing and Soft Costs

  Original mortgage financing                                  $2,293,021         $  1,200,000           $  1,200,000
  Total acquisition cost, capital
  improvement, closing and soft costs(c)                        2,891,970              369,716                362,120
                                                                ---------              -------            -----------
  Total                                                        $5,184,991         $  1,569,716           $  1,562,120
                                                                =========            =========              =========

Excess (Deficiency) of Property
 Operating Cash Receipts Over Cash
 Expenditures(d)                                               $ (54,000)        $   (27,339)             $   140,954
                                                                 ========            =========                =======
--------------------------------
<FN>
(a)      Sales were not to related parties.
(b)      All taxable  income was reported as Section  1231  income. Only Lambert
         was reported as an installment sale.
(c)      Amounts shown do not include pro rata share of original offering
         costs.
(d)      Costs incurred in the administration of the partnership and not
         related to the operation of the property are not included.
</FN>
</TABLE>

                                      A-27
                                   UNAUDITED


<PAGE>
<TABLE>


                                     TABLE V

                        SALES OR DISPOSALS OF PROPERTIES

                      (January 1, 1996 - December 31, 1998)

                                                        RIVERSIDE          VIRGIN ISLANDS         BELLE ISLE, LTD

                                                          ALBANY           CLEARVIEW APTS        T. T. APARTMENTS

<S>                                                            <C>  <C>               <C> <C>                 <C>  <C>
Date property acquired                                         8/15/85                9/1/83                  8/15/86
Date of sale                                                  10/31/97(a)            12/26/97(a)              12/9/97


Selling  Price,  Net  of  Closing  Costs  and  GAAP
Adjustments:

  Cash received (disbursed) net of closing costs                  $  42,693             $ 105,058            $ 35,200
  Mortgage  balance and accrued interest at time of               1,106,559             2,481,724             855,205
sale
  Purchase money mortgage taken back by program                           0               140,000
  Adjustments resulting from application of GAAP                          -                     -                   -
                                                                 ----------            ----------           ---------
    Total                                                      $1,149,252(b)         $2,726,782(b)         $890,405(b)
                                                               ============          ============          ==========

Cost of Properties Including Closing and Soft Costs

  Original mortgage financing                                    $1,045,489            $2,267,400            $855,000
  Total acquisition cost, capital
  improvement, closing and soft costs(c)                            220,000               442,000             136,800
                                                                    -------               -------             -------
  Total                                                          $1,265,489            $2,709,400            $991,800
                                                                  =========             =========             =======

Excess (Deficiency) of Property
 Operating Cash Receipts Over Cash
 Expenditures(d)                                                 $(150,000)            $(268,000)              $    -
                                                                  =========             =========                   =
--------------------------------
<FN>
(a)      Sales were not to related parties.
(b)      All taxable income was reported as Section 1231 income.
         Only T.T. Apartments was reported as an installment sale.
(c)      Amounts shown do not include pro rata share of original offering costs.
(d)      Costs incurred in the  administration  of the partnership and not
         related to the operation of the property are not included.
</FN>
</TABLE>


                                      A-28
                                   UNAUDITED
<PAGE>



                                                                       EXHIBIT B



                         WNC HOUSING TAX CREDIT FUND VI

                           FIRST AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                Table of Contents
                                                                            Page
ARTICLE 1         DEFINITIONS............................................... B-5

ARTICLE 2         FORMATION; NAME; PLACE OF BUSINESS;
                  PURPOSE AND TERM..........................................B-19

         Section 2.1       Formation of Partnership.........................B-19
         Section 2.2       Name.............................................B-19
         Section 2.3       Place of Business................................B-19
         Section 2.4       Purpose..........................................B-19
         Section 2.5       Agent for Service of Process.....................B-20
         Section 2.6       Term.............................................B-20

ARTICLE 3         PARTNERS AND CAPITAL......................................B-20

         Section 3.1       General Partner..................................B-20
         Section 3.2       Initial Limited Partner..........................B-21
         Section 3.3       Additional Limited Partners;
                                    Terms of Offering.......................B-21
         Section 3.4       Payment or Return of
                                    Additional Limited Partners' Capital....B-22
         Section 3.5       Liability of Limited Partners....................B-25
         Section 3.6       Miscellaneous....................................B-25

ARTICLE 4         DISTRIBUTIONS OF CASH; ALLOCATIONS OF
                  PROFITS AND LOSSES........................................B-26

         Section 4.1       Distributions of Cash Available for Distribution.B-26

                                       B-1


<PAGE>



         Section 4.2       Distributions of Sale or Refinancing Proceeds....B-26
         Section 4.3       Profits and Losses...............................B-27
         Section 4.4       Certain Provisions Related to Partnership
                                    Allocations and Distributions...........B-28
         Section 4.5       Allocation of Tax Credits........................B-32
         Section 4.6       Determinations of Allocations and Distributions
                                    Within Classes of Partners..............B-33

ARTICLE 5         RIGHTS, POWERS AND DUTIES OF
                  GENERAL PARTNER...........................................B-34

         Section 5.1       Management of the Partnership....................B-34
         Section 5.2       General Authority of General Partner.............B-35
         Section 5.3       Authority of General Partner and its
                                    Affiliates to Deal with Partnership.....B-40
         Section 5.4       Restrictions on Authority of General Partner.....B-44
         Section 5.5       Duties and Obligations of General Partner........B-47
         Section 5.6       Compensation of Sponsor..........................B-49
         Section 5.7       Other Business of Partners.......................B-51
         Section 5.8       Limitation on Liability of
                                    Sponsor; Indemnification................B-52

ARTICLE 6         ADMISSION OF SUCCESSOR AND ADDITIONAL
                  GENERAL PARTNERS; WITHDRAWAL OF
                  GENERAL PARTNER...........................................B-53

         Section 6.1       Admission of Successor or Additional
                                    General Partners........................B-53
         Section 6.2       Restrictions on Transfer of
                                    General Partner's Interest..............B-54
         Section 6.3       Consent of Limited Partners to
                                    Admission of Successor or
                                    Additional General Partners.............B-55
         Section 6.4       Event of Withdrawal of a General Partner.........B-55
         Section 6.5       Interest and Liability of a Withdrawn
                                    General Partner........................ B-55
         Section 6.6       Valuation and Sale of Interest of
                                    Former General Partner..................B-56


                                       B-2


<PAGE>



ARTICLE 7         TRANSFERABILITY OF UNITS..................................B-57
         Section 7.1       Right to Transfer Units..........................B-57
         Section 7.2       Restrictions on Transfers........................B-57
         Section 7.3       Assignees and Assignment Procedure...............B-61
         Section 7.4       Substitute Limited Partners......................B-64

ARTICLE 8         DISSOLUTION AND WINDING-UP OF
                  THE PARTNERSHIP...........................................B-64

         Section 8.1       Events Causing Dissolution.......................B-64
         Section 8.2       Liquidation......................................B-65

ARTICLE 9         BOOKS AND RECORDS, ACCOUNTING, REPORTS,
                  TAX ELECTIONS, ETC........................................B-66

         Section 9.1       Books and Records................................B-66
         Section 9.2       Accounting and Fiscal Year.......................B-67
         Section 9.3       Bank Accounts and Temporary Investments..........B-67
         Section 9.4       Reports..........................................B-67
         Section 9.5       Depreciation and Other Tax Elections.............B-69
         Section 9.6       Designation of Tax Matters Partner...............B-69

ARTICLE 10        MEETINGS AND VOTING RIGHTS
                           OF LIMITED PARTNERS..............................B-70

         Section 10.1      Meetings and Actions Without Meetings............B-70
         Section 10.2      Voting Rights of Limited Partners................B-70
         Section 10.3      Limitations on Roll-Ups; Dissenters' Rights......B-71

ARTICLE 11        SPECIAL POWER OF ATTORNEY.................................B-73

ARTICLE 12        AMENDMENTS................................................B-74

         Section 12.1      Adoption of Amendments...........................B-74
         Section 12.2      Filing of Required Documents.....................B-75
         Section 12.3      Required Change of Partnership Name..............B-75




                                       B-3


<PAGE>



ARTICLE 13        MISCELLANEOUS PROVISIONS..................................B-76

         Section 13.1      Security Interest and Right of Set-Off...........B-76
         Section 13.2      Notices..........................................B-76
         Section 13.3      Execution........................................B-76
         Section 13.4      Binding Effect...................................B-77
         Section 13.5      Applicable Law...................................B-77
         Section 13.6      Counterparts.....................................B-77
         Section 13.7      Separability of Provisions.......................B-77
         Section 13.8      Captions.........................................B-77
         Section 13.9      Mandatory Arbitration............................B-77
         Section 13.10     Partnerships Treated as Separate.................B-78










                                       B-4


<PAGE>



     FIRST  AMENDED AND RESTATED  AGREEMENT OF LIMITED  PARTNERSHIP  dated as of
April 1, 1999 among WNC & Associates,  Inc., as General Partner, John B. Lester,
Jr. as Initial Limited Partner and those Persons who shall hereafter be admitted
to the Partnership as Additional Limited Partners, who hereby agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

     The  following  terms used in this  Agreement  shall,  unless  the  context
otherwise requires,  have the meanings specified in this Article 1. The singular
shall include the plural and the masculine gender shall include the feminine and
neuter genders, and vice versa, as the context requires.

     "Accountants" means BDO Seidman, LLP, Costa Mesa, California, or such other
firm of independent public accountants as from time to time shall be engaged for
the Partnership by the General Partner.

     "Acquisition  and Investment  Management Fees" means the fees to be paid to
the Sponsor pursuant to Section 5.6.4 hereof.

     "Acquisition Expenses" means expenses, including, but not limited to, legal
fees and expenses,  travel and  communications  expenses,  costs of  appraisals,
non-refundable  option  payments on property not acquired,  accounting  fees and
expenses,  title insurance and  miscellaneous  expenses related to selection and
acquisition by the  Partnership of Local Limited  Partnership  Interests and the
selection  and   acquisition  of  Apartment   Complexes  by  the  Local  Limited
Partnerships,  whether or not acquired, including the Nonaccountable Acquisition
Expense Reimbursement.

     "Acquisition  Fees" means the total of all fees and commissions paid by any
party in  connection  with the selection or purchase by the  Partnership  of any
Local Limited  Partnership  Interest,  including  fees and  commissions  paid in
connection with the  investigation of Local Limited  Partnerships an interest in
which is not  acquired by the  Partnership,  and the  purchase,  development  or
construction  of an Apartment  Complex by a Local Limited  Partnership,  whether
designated  as  an  Acquisition  and  Investment  Management  Fee,  real  estate
commission,  acquisition  fee,  finders' fee,  selection fee,  Development  Fee,
Construction Fee,  nonrecurring  management fee,  consulting fee or any fee of a
similar nature however  designated,  with the exception of Development  Fees and
Construction  Fees paid to Persons not affiliated with the Sponsor in connection

                                       B-5


<PAGE>


with  the  actual  development  and  construction  of an Apartment  Complex.  As
used  herein,  a  "Development  Fee"  shall  be a fee  for the  packaging  of an
Apartment Complex, including negotiating and approving plans, and undertaking to
assist in obtaining zoning and necessary variances,  necessary financing and Tax
Credits for the Apartment  Complex,  either  initially or at a later date, and a
"Construction  Fee" shall be a fee or other  remuneration  for acting as general
contractor and/or construction manager to construct improvements,  supervise and
coordinate projects or provide Major Repairs and Rehabilitation for an Apartment
Complex.

     "Act" means the California  Revised  Limited  Partnership  Act (Corp.  Code
Section  15611,  et seq.),  as now in effect and as the same may be amended from
time to time hereafter.

     "Additional   Limited   Partners"  means  those  Persons  admitted  to  the
Partnership pursuant to Section 3.3 hereof.

     "Adjusted Capital Account Deficit" means, with respect to each Partner, the
deficit  balance in his  Capital  Account as of the end of the  relevant  fiscal
period of the Partnership, after giving effect to the following adjustments:

              (a) Increasing  such Capital Account by any amounts such Person is
     obligated    to   restore    under   the    standards    set   by   Section
     1.704-1(b)(2)(ii)(c)  of the Regulations (or is deemed obligated to restore
     under Section 1.704-2(g)(1) and (i)(5) of the Regulations); and

              (b)  Decreasing  such  Capital  Account by the items  described in
     Section    1.704-    1(b)(2)(ii)(d)(4),     1.704-1(b)(2)(ii)(d)(5)     and
     1.704-1(b)(2)(ii)(d)(6) of the Regulations.

     "Adjusted Capital  Contribution" means, for each fiscal period, the Limited
Partners' Capital Contribution reduced by all distributions of noninvested funds
pursuant  to Section  3.4.2  hereof  and  distributions  of Sale or  Refinancing
Proceeds made to the Limited Partners through the end of such period.

     "Affiliate"  or "Affiliated  Person"  means,  when used with reference to a
specified  Person:  (i) any Person who,  directly or indirectly,  controls or is
controlled  by or is under common  control with the specified  Person;  (ii) any
Person who is an officer or  director  of, or partner in, or serves in a similar
capacity with respect to, the specified  Person or of which the specified Person
is an  officer,  director  or partner,  or with  respect to which the  specified
Person  serves  in a  similar  capacity;  (iii)  any  Person  who,  directly  or
indirectly, is the beneficial owner of, or controls, 10% or more of any class of
equity securities of, or otherwise has a 10% or more beneficial interest in, the

                                       B-6


<PAGE>


specified  Person;  or (iv)  any  Person  of  which  the  specified  Person  is,
directly or indirectly, the owner of, or in control of, 10% or more of any class
of  equity  securities,  or in  which  the  specified  Person  has a 10% or more
beneficial interest.

     "Agreement"  means this First  Amended and  Restated  Agreement  of Limited
Partnership,  as  originally  executed  and as amended or restated  from time to
time. Words such as "herein,"  "hereinafter,"  "hereof,"  "hereto," "hereby" and
"hereunder," when used with reference to this Agreement, refer to this Agreement
as a whole, unless the context otherwise requires.

     "Apartment  Complex" or "Property" means a multi-family  residential rental
complex  owned  or  under  development  and rehabilitation  by a  Local  Limited
Partnership.

     "Asset Based Fee" means  compensation to the Sponsor computed in accordance
with Section IV.J. of the NASAA Guidelines.  No Asset Based Fee shall be payable
to the Sponsor.

     "Asset  Management Fee" means the annual fee payable to the General Partner
or an Affiliate of the General Partner pursuant to Section 5.6.7.

     "Capital Account" means,  with respect to any Partner,  the Capital Account
maintained for such Partner in accordance with the following provisions:  (i) to
each Partner's  Capital  Account there shall be credited such Partner's  Capital
Contribution,  such Partner's  distributive share of Profits, and such Partner's
share  of any  items in the  nature  of  income  and gain  which  are  specially
allocated  pursuant to Section 4.4 hereof,  and (ii) to each  Partner's  Capital
Account  there shall be debited the amount of cash and the net fair market value
of  property  distributed  to such  Partner  pursuant to any  provision  of this
Agreement, such Partner's distributive share of Losses, and such Partner's share
of any items in the nature of expenses or losses which are  specially  allocated
pursuant to Section 4.4 hereof.  In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital  Account of the  transferror  to the extent it relates to
the  transferred  interest.  Capital  Accounts shall be maintained in accordance
with Treasury Regulation Section 1.704-1(b)(2)(iv).

     "Capital  Contribution"  means the total amount of cash  contributed to the
Partnership  (excluding any cash  contributed by the General Partner pursuant to
the last sentence of Section 3.3.3 hereof)  determined  without inclusion of any
interest or late charges paid on the Promissory Notes and without  reduction for
any discounts for Discount  Investors (prior to the deduction of any Syndication
Expenses) by all the  Partners or any class of Partners or any one  Partner,  as
the case may be (or the predecessor holders of the Interests of such Partners or

                                       B-7


<PAGE>


Partner),  reduced,  in the case of the Limited  Partners,  by the amount of any
funds returned to them pursuant to Section 3.4.2.

     "Cash Available for Distribution"  means, with respect to any period,  Cash
Flow less any amounts set aside from Cash Flow for the  restoration  or creation
of Reserves.

     "Cash Flow" means, with respect to any period,  (i) all cash funds provided
to the Partnership from Local Limited Partnership  operations  (exclusive of any
proceeds  derived  from the  sale,  disposition,  financing  or  refinancing  of
Apartment  Complexes,  or other Sale or Refinancing  transactions) plus (ii) all
cash funds from Partnership  operations  (including any interest from Promissory
Notes), without deduction for depreciation,  but after deducting cash funds used
to pay all other expenses, Debt Service and capital expenditures.

     "Code"  means  the  Internal  Revenue  Code of  1986,  as  amended,  or any
corresponding provision or provisions of succeeding law.

     "Competitive"  when applied to a fee,  commission (other than a real estate
or  brokerage  commission)  or other  payment  for goods  supplied  or  services
rendered, means a payment equal to the amount customarily charged by Persons not
Affiliated  with the payee for such goods or services in the geographic  area in
which such goods are supplied or services rendered.

     "Competitive  Real  Estate  Commission"  means a real  estate or  brokerage
commission  paid for the  purchase  or sale of  Property  which  is  reasonable,
customary  and  competitive  in light of the  size,  type  and  location  of the
Property.

     "Consent"  means either (i) the approval  given by vote at a meeting called
and held in  accordance  with the  provisions  of Section  10.1, or (ii) a prior
written approval required or permitted to be given pursuant to this Agreement.

     "Dealer Manager" means WNC Capital Corporation.

     "Dealer  Manager Fee" means the fee payable to the Dealer Manager  pursuant
to Section 5.6.2.

     "Debt  Service" means all payments  required to be made in connection  with
any  loan  to  the  Partnership  or any  loan  secured  by a lien  on any of the
Apartment Complexes.


                                       B-8

<PAGE>



     "Deemed  Liquidation  Distribution"  means,  with  respect  to the  Limited
Partners,  as a  class,  and the  General  Partner  the  amount  that  would  be
distributed to them as of the end of each fiscal year of the  Partnership if the
Partnership  were dissolved and liquidated and (i) the assets of the Partnership
were sold for cash  equal to their  Federal  adjusted  tax basis (or their  Book
Value,  where Section 4.4.2  applies);  (ii) the  liabilities of the Partnership
were paid; and (iii) the remaining cash of the Partnership  were  distributed to
such class of Partners in accordance with Section 4.2.1 (and not Section 4.2.2).

     "Discount  Investor"  means any Additional  Limited Partner who has paid or
agreed to pay less than  $1,000  per Unit  subscribed  for by him on  account of
reduced or no selling  commissions,  reduced  Dealer Manager Fees and/or reduced
Acquisition  and  Investment  Management  Fees  attributable  to his  Units,  as
specified  in  the  Prospectus   under  "Terms  of  the  Offering  and  Plan  of
Distribution."

     "Economic  Risk of Loss"  means the  extent to which a Partner  or  Related
Person bears the economic risk of loss for a Partnership liability as determined
under Treasury Regulation Section 1.752-2.

     "Escrow Agent" means Southern  California Bank, Newport Beach,  California,
or any other  escrow  agent  chosen by the  General  Partner  to hold funds from
investors pending their admission to the Partnership.

     "Event of Withdrawal"  means the occurrence of any of the following  events
as to a General  Partner:  (i) its withdrawal from the  Partnership  pursuant to
Section 15662 of the Act; (ii) its removal in  accordance  with this  Agreement;
(iii) it (a) makes an  assignment  for the  benefit  of  creditors,  (b) files a
voluntary  petition in bankruptcy,  (c) is adjudged a bankrupt or insolvent,  or
has  entered  against it an order for  relief in any  bankruptcy  or  insolvency
proceeding,   (d)  files  a   petition   or  answer   seeking   for  itself  any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute,  law or regulation,  (e) files an answer or
other  pleading  admitting or failing to contest the material  allegations  of a
petition  filed  against  it in any  proceeding  of this  nature,  or (f) seeks,
consents  to  or  acquiesces  in  the  appointment  of a  trustee,  receiver  or
liquidator of itself or of all or any substantial  part of its properties;  (iv)
the lapse of 120 days  after  the  commencement  of any  proceeding  against  it
seeking reorganization,  arrangement,  composition,  readjustment,  liquidation,
dissolution  or similar relief under any statute,  law or regulation,  if during
such period the proceeding has not been dismissed, or the lapse of 90 days after
the appointment,  without its consent or acquiescence, of a trustee, receiver or
liquidator of itself or of all or any  substantial  part of its  properties,  if

                                       B-9


<PAGE>


during  such  period  the  appointment  is  not vacated or stayed,  or if within
90 days after the expiration of any such stay,  the  appointment is not vacated;
(v) in the case of a General Partner who is a natural person,  (a) his death, or
(b) the entry by a court of competent jurisdiction  adjudicating him incompetent
to manage his person or his property;  (vi) in the case of a General Partner who
is acting  as a general  partner  by virtue of being a trustee  of a trust,  the
termination  of the trust (but not merely the  substitution  of a new  trustee);
(vii) in the case of a General  Partner  which is a  separate  partnership,  the
dissolution and commencement of winding up of the separate  partnership;  (viii)
in the  case of a  General  Partner  which is a  corporation,  the  filing  of a
certificate  of  dissolution,  or its  equivalent,  for the  corporation  or the
revocation of its charter;  or (ix) in the case of a General Partner which is an
estate, the distribution by the fiduciary of the estate's entire interest in the
Partnership.  Notwithstanding the foregoing, an Event of Withdrawal shall not be
deemed to have occurred as to a General Partner under the preceding  clause (iv)
until 120 days  shall  have  elapsed  after  Notification  has been given to the
Limited  Partners  of the event  which,  with or  without  lapse of time,  would
constitute an event contemplated by such clause.

     "Front-End Fees" means fees and expenses paid by any party for any services
rendered during the  organizational  and acquisition  phases of the Partnership,
including  Organizational and Offering Expenses,  Acquisition Fees,  Acquisition
Expenses,  interest on deferred  fees and expenses and any other  similar  fees,
however  designated.  Front-End  Fees  which  are to be  paid  pursuant  to this
Agreement from  installment  payments on the Promissory  Notes shall be paid pro
rata as the installment payments are received by the Partnership.

     "General  Partner"  means WNC & Associates,  Inc., or any Person or Persons
who, at the time of reference  thereto,  has been admitted as a successor to any
such General Partner or as an additional General Partner,  in each such Person's
capacity as a general partner.  Restrictions  placed on the rights and powers of
the  "General  Partner"  throughout  this  Agreement  also serve to restrict the
rights and powers of the Affiliates of the General Partner.

     "Government   Assistance"  means  any  form  of  Federal,  state  or  local
government  assistance  provided  to  Properties  or their  tenants  or  owners,
including mortgage  insurance,  rental assistance  payments,  permanent mortgage
financing,  low interest  mortgage loans,  interest  reduction  payments and Tax
Credits.

     "Gross  Proceeds"  means the gross  proceeds  of the  Offering,  determined
without  inclusion of any interest or late charges paid on the Promissory  Notes
and without reduction for any discounts for Discount Investors.


                                      B-10


<PAGE>



     "Historic Tax Credit" means the tax credit allowable pursuant to Section 47
of the Code for  rehabilitation  expenditures  incurred  with respect to certain
qualified buildings.

     "HUD" means the United States  Department of Housing and Urban  Development
or any successor thereto.

     "Independent  Expert"  means a Person  with no  material  current  or prior
business  or  personal  relationship  with  the  Sponsor  who  is  engaged  to a
substantial  extent in the business of rendering opinions regarding the value of
assets of the type held by the Partnership, and who is qualified to perform such
work.

     "Initial Limited Partner" means John B. Lester, Jr.

     "Interest"  means  the  entire  ownership  interest  of a  Partner  in  the
Partnership at any particular  time,  including the right of such Partner to any
and all  benefits  to  which a  Partner  may be  entitled  as  provided  in this
Agreement,  together with the obligations of such Partner to comply with all the
terms and provisions of this  Agreement.  Reference to a majority,  or specified
percentage,  in interest of the Limited  Partners means,  Limited Partners whose
combined Capital Contribution represents over 50%, or such specified percentage,
respectively, of the Capital Contribution of all Limited Partners.

     "Invested  Assets" means 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  Apartment
Complexes owned by such Local Limited Partnerships.

     "Investment   Date"  means  the  date  of  the  final  admission  into  the
Partnership of Additional Limited Partners who purchased Units.

     "Investment  in Local Limited  Partnership  Interests"  means the amount of
Capital   Contributions  used  by  the  Partnership  to  acquire  Local  Limited
Partnership Interests (except that, if a portion of the Partnership's investment
in a Local Limited  Partnership is used to fund working capital  reserves of the
Local Limited  Partnership,  there shall be excluded from this  calculation  any
amount which is used to fund working  capital  reserves which is in excess of 5%
of Gross  Proceeds)  plus Reserves of the  Partnership,  except that Reserves in
excess of 5% of Gross  Proceeds shall not be included,  but excluding  Front-End
Fees.  Notwithstanding the preceding,  the total amount of Capital Contributions

                                      B-11


<PAGE>


used to fund Partnership  Reserves or working  capital  reserves  of  the  Local
Limited  Partnerships  which shall be included in  Investment  in Local  Limited
Partnership Interests shall not exceed 5% of Gross Proceeds.

     "Investor  Closing"  means a  closing  at which  purchasers  of  Units  are
admitted as Additional Limited Partners pursuant to Section 3.3 hereof.

     "Limited  Partner"  means any Person who is a Limited  Partner,  whether an
Initial Limited Partner,  an Additional  Limited Partner or a Substitute Limited
Partner at the time of reference thereto, in such Person's capacity as a Limited
Partner of the Partnership.

     "Local General Partners" (whether or not capitalized) means the Persons who
are from time to time  general  partners  (or  managers  in the cases of limited
liability companies) of Local Limited Partnerships,  except that where reference
is made to Local General  Partners in respect of any guaranties or  undertakings
provided to the Partnership in connection with its investment in a Local Limited
Partnership,  such term shall mean such Local  General  Partners  at the date of
such  investment  or such  other  Persons  (including  Affiliates  of such Local
General Partners) as actually provide such guaranties and undertakings.

     "Local  Limited  Partnership"  means a  limited  partnership  or a  limited
liability  company  which owns or is developing  or  rehabilitating  one or more
rental housing projects to be qualified under Section 42(g) and/or Section 47 of
the Code.

     "Local Limited Partnership Interest" means the limited partnership interest
of the Partnership in a Local Limited Partnership.

     "Low Income Housing Credit" means the tax credit allowable under Section 42
of the Code for a qualified low income housing project.

     "Major  Repairs and  Rehabilitation"  means the repair,  rehabilitation  or
reconstruction   of  a  Property  where  the  aggregate  costs  of  the  repair,
rehabilitation  or  reconstruction  exceed 10% of the fair  market  value of the
Property at the time of such services.

     "Mortgage" (whether capitalized or not) means any mortgage,  deed of trust,
or  similar  security  instrument  and,  where  the sense of this  Agreement  so
requires, the indebtedness secured thereby.


                                      B-12


<PAGE>



     "NASAA  Guidelines"  means the  Statement of Policy  Regarding  Real Estate
Programs adopted by the North American  Securities  Administrators  Association,
Inc., as in effect on the date of this Agreement.

     "Net Proceeds"  means the Gross Proceeds less  Organizational  and Offering
Expenses.

     "Nonaccountable  Acquisition Expense Reimbursement" means the payment to be
made to the General Partner or its Affiliate  pursuant to Section 5.6.5 hereof.

     "Nonaccountable O&O Expense  Reimbursement" means the payment to be made to
the General Partner or its Affiliate pursuant to Section 5.6.3 hereof.

     "Nonrecourse  Deductions"  has the meaning given it in Treasury  Regulation
Section 1.704-2(b)(1).

     "Nonrecourse Liability" means a Partnership liability with respect to which
no Partner or Related Person bears the Economic Risk of Loss.

     "Note  Capital  Contribution"  means that  portion  of a Limited  Partner's
Capital Contribution, if any, paid in accordance with his Promissory Note.

     "Notification" means a writing, containing the information required by this
Agreement to be communicated to any Person,  personally delivered to such Person
or sent by  registered,  certified or regular  mail,  postage  prepaid,  to such
Person at the last known address of such Person.  The date of personal  delivery
or the date of mailing thereof,  as the case may be, shall be deemed the date of
giving the Notification.

     "Offering" means, with respect to the Partnership, the offering and sale of
its Units pursuant to the Prospectus.

     "Offering  Commencement  Date"  means,  with respect to the  Offering,  the
effective date of the registration statement or post-effective amendment thereto
filed  with  the  Securities  and  Exchange   Commission  which  authorizes  the
commencement of such Offering.

     "Operating  Cash Expenses"  means,  with respect to any fiscal period,  the
amount of cash  disbursed  by the  Partnership  in that  period in the  ordinary
course of business for the payment of its operating  expenses,  such as expenses
for management,  on-site property personnel,  utilities, repair and maintenance,

                                      B-13


<PAGE>


insurance,  investor   communications,   legal,   accounting,   statistical  and
bookkeeping  services,  use of computing  or  accounting  equipment,  travel and
telephone expenses,  salaries and direct expenses of Partnership employees while
engaged in Partnership  business,  and any other operational and  administrative
expenses  necessary  for  the  prudent  operation  of the  Partnership.  Without
limiting the generality of the foregoing,  Operating Cash Expenses shall include
the actual cost of goods,  materials and administrative  services used for or by
the Partnership,  whether  incurred by the General Partner,  an Affiliate of the
General  Partner  or  a  non-Affiliated   Person  in  performing  the  foregoing
functions. As used in the preceding sentence, actual cost of goods and materials
means the actual cost of goods and materials used for or by the  Partnership and
obtained from entities not Affiliated with the General Partner,  and actual cost
of  administrative  services  means the pro rata cost of  personnel  (as if such
persons were employees of the Partnership) associated therewith, but in no event
to exceed the Competitive amount.

     "Organizational  and  Offering  Expenses"  means all  expenses  incurred in
connection  with  the  formation  of  the  Partnership,   the  registration  and
qualification  of the Units  under  Federal  and state  securities  laws and the
Offering,   including   selling   commissions,   the  Dealer  Manager  Fee,  the
Nonaccountable O&O Expense Reimbursement and all advertising expenses.

     "Partner" means any General Partner or Limited Partner.

     "Partner  Nonrecourse Debt" has the meaning given it in Treasury Regulation
Section 1.704-2(b)(4).

     "Partner  Nonrecourse  Debt Minimum  Gain" means the amount  determined  in
accordance with the principles of Treasury Regulation Section 1.704-2(i)(3).

     "Partnership"  means  the  partnership  formed  under  the  terms  of  this
Agreement.

     "Partnership  Minimum Gain" means the amount  determined in accordance with
the principles of Treasury Regulation Section 1.704-2(d).

     "Partnership  Register" means the schedule  listing the names and addresses
of all Limited Partners  together with the amounts of their  respective  Capital
Contributions  which shall be  maintained  by the General  Partner in accordance
with Section 3.3.

     "Person" means any  individual,  partnership,  corporation,  trust or other
legal entity.


                                      B-14


<PAGE>



     "Prime  Rate" means the prime or  reference  rate of interest  from time to
time announced by Southern  California Bank as being charged by it on short-term
unsecured loans to its most creditworthy customers.

     "Profits"  and  "Losses"  means,  for each  fiscal  year or other  relevant
period,  an amount equal to the  Partnership's  taxable  income or loss for such
year or period  determined  in accordance  with Section  703(a) of the Code (for
this purpose all items of income,  gain, loss or deduction required to be stated
separately  pursuant  to  Section  703(a)(1)  of the Code shall be  included  in
taxable income or loss), with the following  adjustments:  (i) any income of the
Partnership  that is exempt from Federal income tax and not otherwise taken into
account in  computing  Profits or Losses  pursuant to this  definition  shall be
added to such taxable income or loss;  (ii) any  expenditures of the Partnership
described  in Section  705(a)(2)(B)  of the Code or treated as such  pursuant to
Treasury Regulation Section  1.704-1(b)(2)(iv)(i),  and not otherwise taken into
account in computing  Profits or Losses  pursuant to this  definition,  shall be
subtracted  from such taxable income or loss;  (iii) any adjustment  pursuant to
Section 743(b) of the Code shall be allocated solely to the Partner to whom such
adjustment  relates and shall not be taken into account in computing  Profits or
Losses;  (iv) any gain or loss which would have been realized by the Partnership
on the sale of assets distributed in kind to Partners, determined with reference
to the fair market value and the adjusted tax basis of such property for Federal
income tax purposes immediately prior to such distribution, shall be added to or
subtracted  from such  taxable  income or loss;  (v)  notwithstanding  any other
provision of this definition, any items that are specially allocated pursuant to
Section 4.4 shall not be taken into account in computing Profits or Losses;  and
(vi) if required, the adjustments specified in Section 4.4.2 shall be taken into
account.

     "Promissory  Note" means the full recourse  promissory  note evidencing the
deferred  installments,  if any, of the Capital Contribution required to be made
for a Unit.

     "Property  Management  Fee"  means a fee paid for  day-to-day  professional
property management services in connection with the Properties.

     "Prospectus" means the prospectus  contained in the registration  statement
filed with the Securities and Exchange  Commission with respect to the Units, in
the final form in which said  prospectus  is filed with said  Commission  and as
thereafter  supplemented  pursuant to Rule 424 under the Securities Act of 1933,
as amended.

     "Purchase  Price"  means the  price  paid  upon the  purchase  or sale of a
particular Local Limited Partnership  Interest or Apartment Complex, as the case

                                      B-15


<PAGE>


may  be,  including  the  amount  of   Acquisition  Fees   and  all  liens   and
mortgages on the Apartment Complex, but excluding points and prepaid interest.

     "RD" means the United States Department of Agriculture,  Rural Development,
or any successor thereto.

     "Registration Date" has the meaning given it in Section 7.3.2.

     "Related  Person" means a Person having a relationship  with a Partner that
is described in Treasury Regulation Section 1.752-4(b).

     "Reserves"  means amounts set aside by the  Partnership for working capital
or  other  obligations  of the  Partnership  and  contingencies  related  to the
ownership of Local Limited Partnership Interests.

     "Return on Investment"  means an annual,  cumulative,  but not  compounded,
"return"  to  the  Limited  Partners  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 annual rates: (i) 11%
through  December  31,  2010,  and (ii) 6% for the balance of the  Partnership's
term.

     "Roll-Up" means a transaction involving the acquisition, merger, conversion
or  consolidation,  either  directly or indirectly,  of the  Partnership and the
issuance of securities of a Roll-Up Entity. Such term does not include:

     (i)  any transaction if the securities of the Partnership  have been for at
least  twelve  months  traded on a national  securities  exchange or through the
National  Association of Securities  Dealers,  Inc. Automated Quotation National
Market System; or

     (ii)  a  transaction  involving  the  conversion  to  corporate,  trust  or
association  form  of  only  the  Partnership,  if,  as  a  consequence  of  the
transaction,  there  will  be no  significant  adverse  change  in  any  of  the
following: (a) the Limited Partners' voting rights; (b) the term of existence of
the  Partnership;  (c) the  terms of  compensation  of the  Sponsor;  or (d) the
Partnership's investment objectives.

     "Roll-Up  Entity"  means the  partnership,  real estate  investment  trust,
corporation,  trust or other entity that would be created or would survive after
the successful completion of a proposed Roll-Up transaction.

                                      B-16


<PAGE>


     "Sale or Refinancing"  means a sale by the Partnership of any Local Limited
Partnership Interest, or any other real or personal property of the Partnership,
or the  Partnership's  receipt of the  proceeds of a sale or  refinancing  of an
Apartment  Complex or any other real or  personal  property  of a Local  Limited
Partnership.

     "Sale or Refinancing  Proceeds"  means all cash receipts of the Partnership
arising from a Sale or Refinancing less the following:

     (i) the amount  paid or to be paid in  connection  with or as an expense of
such Sale or Refinancing,  and, with regard to damage recoveries or insurance or
condemnation proceeds,  the amount paid or to be paid for repairs,  replacements
or renewals  resulting  from damage to or partial  condemnation  of the affected
property;

     (ii) the amount applied to the payment of the debts and  obligations of the
Partnership; and

     (iii) any Reserves funded with such proceeds.

     "SLP  Affiliate"  means an Affiliate of the General Partner in its capacity
as a limited partner (or member in the case of limited  liability  companies) of
Local Limited Partnerships.

     "Sponsor"  means  any  Person   directly  or  indirectly   instrumental  in
organizing, wholly or in part, the Partnership, or any Person who will manage or
participate in the management of the Partnership,  and any Affiliate of any such
Person,  but does not include a Person whose only relation with the  Partnership
is as that of an  independent  property  manager whose only  compensation  is as
such.  "Sponsor"  does not include  wholly  independent  third  parties  such as
attorneys,   accountants  and  underwriters   whose  only  compensation  is  for
professional  services  rendered in connection  with the Offering.  A Person may
also be a "Sponsor" of the Partnership  by: (i) taking the initiative,  directly
or  indirectly,  in founding or  organizing  the business or  enterprise  of the
Partnership,  either  alone or in  conjunction  with one or more  Persons;  (ii)
receiving a material  participation  in the  Partnership in connection  with the
founding or organizing of the business of the  Partnership,  in consideration of
services or property,  or both services or property;  (iii) having a substantial
number of  relationships  and contacts  with the  Partnership;  (iv)  possessing
significant rights to control  Partnership  properties (other than Local General
Partners whose only  association with the Partnership is as such); (v) receiving
fees for providing services to the Partnership which are paid on a basis that is
not  customary  in the  industry;  and (vi)  providing  goods or services to the
Partnership  on a basis  which  was not  negotiated  at  arm's  length  with the
Partnership.


                                      B-17


<PAGE>



     "State Tax  Credits"  means any credit  permitted  by a state's  tax and/or
revenue  laws  against  income tax  liability  owed to that state as a result of
activities or expenditures relating to low income housing.

     "Subordinated Disposition Fee" means the fee payable to the General Partner
in  connection  with   dispositions   of  Properties   owned  by  Local  Limited
Partnerships pursuant to Section 5.6.8.

     "Substitute  Limited  Partner" means any Person admitted to the Partnership
as a Limited Partner pursuant to the provisions of Section 7.3 and 7.4 hereof.

     "Syndication  Expenses"  means all  expenditures  classified as syndication
expenses  pursuant  to  Treasury  Regulation  Section  1.709-2(b).   Syndication
Expenses shall be taken into account under this Agreement at the time they would
be taken into account under the Partnership's  method of accounting if they were
deductible expenses.

     "Tax Credits" means any credit permitted under the Code against the Federal
income tax liability of any Partner as a result of activities or expenditures of
the Partnership or any Local Limited Partnership, including, without limitation,
Low Income Housing Credits and Historic Tax Credits.

     "Temporary   Investments"   means  United  States  Government   securities,
securities  issued or fully  guaranteed  by United States  Government  agencies,
certificates of deposit and time or demand deposits in, or repurchase agreements
constituting  obligations  of,  commercial  banks with  deposits  insured by the
Federal  Deposit  Insurance  Corporation  and other  short-term,  highly  liquid
investments.

     "Treasury  Regulation  or  Regulations"  means the Income  Tax  Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).

     "Unit" means the Interest of a Limited  Partner  attributable  to a Capital
Contribution of $1,000 (determined  without regard to any discounts for Discount
Investors).

     "Voluntary  Withdrawal" by a General Partner means any withdrawal initiated
by the General Partner and includes,  but is not limited to, the commencement of
an action in  bankruptcy  by or against such General  Partner,  and excludes any
withdrawal  accomplished  as  the  result  of  a  settlement,   whether  or  not
incorporated  in a  decree  of a  court  or  administrative  agency,  between  a
withdrawing General Partner and one or more of any  remaining  General Partners,

                                      B-18


<PAGE>



a  majority-in-interest  of  the  Limited  Partners  or  any  regulatory  agency
whether  a  Federal  or  state  agency  or  a  self-regulatory   agency,  having
jurisdiction over the affairs of the Partnership.

                                    ARTICLE 2

              FORMATION; NAME; PLACE OF BUSINESS; PURPOSE AND TERM

     2.1.     Formation of Partnership

     The parties hereto hereby form the  Partnership on the terms and conditions
set forth herein and pursuant to the provisions of the Act.

     2.2.     Name

     The name of the Partnership shall be "WNC Housing Tax Credit Fund VI, L.P.,
Series 7," or "WNC Housing Tax Credit Fund VI, L.P.,  Series 8," as the case may
be. The  General  Partner,  in its sole  discretion,  may change the name of the
Partnership at any time and from time to time provided that Notification thereof
is given to the Limited Partners within 30 days of the effective date thereof.

     2.3.     Place of Business

     The  Partnership  shall  continuously  maintain  an  office in the State of
California which shall constitute its principal office and place of business and
at which the records  required by Section 15615 of the Act and by Section 9.1 of
this Agreement  shall be maintained.  Such office shall  initially be located at
3158 Redhill Avenue, Suite 120, Costa Mesa, California 92626, but may be changed
from time to time by the General Partner provided that  Notification  thereof is
given to the Limited Partners within 30 days of the effective date thereof.

     The Partnership may maintain  additional  offices and places of business in
other locations selected by the General Partner.

     2.4.     Purpose

     The purpose and  character of the business of the  Partnership  shall be to
acquire,   hold,  sell,  dispose  of  and  otherwise  invest  in  Local  Limited

                                      B-19


<PAGE>


Partnership  Interests  and to  engage  in  any  other  activities  related   or
incidental thereto.  The investment  objectives of the Partnership,  in order of
importance, shall be to:

     (i) provide  current  tax  benefits,  primarily  in the form of Tax Credits
which Limited Partners may use to offset Federal income tax liabilities;

     (ii)  preserve and protect the Partnership's capital; and

     (iii) provide cash distributions from Sale or Refinancing transactions.

     2.5.     Agent for Service of Process

     The Partnership shall continuously maintain an agent for service of process
on the  Partnership  at the  Partnership's  principal  office  in the  State  of
California. Such agent shall initially be David N. Shafer, Esq.

     2.6.     Term

     The term of the Partnership shall commence on the date of the filing of its
Certificate of Limited  Partnership with the office of the Secretary of State of
the State of  California  and shall  continue  in full  force and  effect  until
December 31, 2060, or until the  termination  and winding up of the  Partnership
prior to that time pursuant to the provisions of Article 8.

                                    ARTICLE 3

                              PARTNERS AND CAPITAL

     3.1.     General Partner

     The business  address of the General Partner is 3158 Redhill Avenue,  Suite
120,  Costa  Mesa,  California  92626.  The  General  Partner has made a Capital
Contribution  to the  Partnership  of $100.  The General  Partner  shall have no
personal liability for the repayment of the Capital  Contribution of any Limited
Partner  nor any  other  obligation  to make  Capital  Contributions,  loans  or
advances to the Partnership.


                                      B-20


<PAGE>



     3.2.     Initial Limited Partner

     The business address of the Initial Limited Partner is 3158 Redhill Avenue,
Suite 120, Costa Mesa,  California 92626. The Initial Limited Partner has made a
Capital  Contribution to the Partnership of $1,000. The Initial Limited Partner,
as such,  shall not be required to make any additional  Capital  Contribution to
the Partnership.

     3.3.     Additional Limited Partners; Terms of Offering

     3.3.1.  The Partnership  intends to make a public Offering of not more than
25,000  additional  Units and shall admit as Limited  Partners the Persons whose
subscriptions for such Units are accepted by the General Partner (who may refuse
to accept  any  subscription  for any  reason).  The  names  and the  residence,
business or mailing  addresses  of the  Additional  Limited  Partners  and their
Capital Contributions shall be set forth in the Partnership Register.

     3.3.2. The Capital Contribution required of each Additional Limited Partner
shall be not less than  $5,000  and may be such  greater  integral  multiple  of
$1,000 (in each case  determined  without  regard to any  discounts for Discount
Investors)  as such  Additional  Limited  Partner and the General  Partner shall
agree upon. Notwithstanding the preceding,  employees of the General Partner and
its Affiliates and/or investors in real estate syndications previously sponsored
by the General Partner may make a minimum Capital Contribution of $2,000. Except
with  respect  to  subscribers  who  qualify  for,  and  elect to  utilize,  the
installment  payment  procedure  provided  for in  Section  3.4.1  below for the
payment of up to one-half  their  Capital  Contributions,  all of such  required
Capital  Contribution  shall be paid in cash at the time of subscription for the
Units.

     All subscribers  whose  subscriptions are acceptable to the General Partner
shall be admitted to the Partnership as Additional Limited Partners on or before
the  last  day of the  calendar  month  during  which  such  subscriptions  were
accepted.

     3.3.3.  All cash and Promissory  Notes received from  subscribers for Units
shall be received by the Partnership in trust and deposited in an escrow account
with the Escrow Agent.  Subscriptions for Units shall be accepted or rejected by
the General Partner within 30 days after their receipt by the Partnership.  Upon
receipt and deposit  into  escrow of Capital  Contributions  in the amount of at
least $1,400,000, the Escrow Agent shall release to the Partnership such Capital
Contributions   and  the   Promissory   Notes   evidencing   any  Note   Capital
Contributions,  and the  subscribers  for such Units  shall be  admitted  to the
Partnership as Additional Limited Partners within 15 days after the date of such

                                      B-21


<PAGE>


release. Thereafter,  subscribers whose  subscriptions  are  acceptable  to  the
General  Partner  shall be admitted to the  Partnership  as  Additional  Limited
Partners  on or before  the last day of the  calendar  month  during  which such
subscriptions  were  accepted.  All  cash  and  Promissory  Notes  deposited  by
subscribers  whose  subscriptions  are rejected by the General  Partner shall be
returned to such  subscribers  within 10 business days after such rejection.  If
the Escrow  Agent does not  receive  Capital  Contributions  in the amount of at
least $1,400,000 within one year from the Offering  Commencement  Date, it shall
within 30 days  thereafter  return all cash and  Promissory  Notes  deposited by
subscribers for Units. Any interest earned on subscription funds in the hands of
the Escrow  Agent  received by the Escrow  Agent from any  subscriber  for Units
shall be paid to such subscriber promptly after the release of such subscription
proceeds by the Escrow Agent to the  Partnership or to such  subscriber,  as the
case may be.  The  General  Partner,  in its sole  discretion,  may,  but is not
obligated to,  increase the total  interest  earned by the  subscribers on funds
held by the Escrow Agent.  If so, the amount of the increase in interest will be
identified in the Prospectus.  Any funds necessary to pay such additional amount
shall be contributed to the Partnership by the General Partner.

     3.3.4.  The Offering  shall be terminated not later than two years from the
Offering Commencement Date, and may be terminated earlier at the election of the
General Partner.

     3.3.5.  To accomplish the purpose of this Section 3.3, the General  Partner
is hereby authorized to do all things necessary to admit such Additional Limited
Partners,  including,  but not  limited  to,  registering  the  Units  under the
Securities  Act of 1933,  as amended,  qualifying  the Units for sale with state
securities regulatory agencies or perfecting exemptions from qualification,  and
entering into  underwriting  or agency  arrangements  for the Offering upon such
terms and conditions as the General Partner may deem advisable.

     3.4.     Payment or Return of Additional Limited Partners' Capital

     3.4.1.  (a) Each Limited  Partner who  subscribes  for 20 or more Units may
elect to contribute only $500 in cash for each Unit which such Partner acquires,
provided  that he also shall make a Note Capital  Contribution  in the amount of
$500 for each such Unit.  The Note  Capital  Contribution  of each such  Limited
Partner shall be evidenced by a Promissory Note delivered upon  subscription for
the Units. Except as set forth below in this section, each Promissory Note shall
be payable in one installment of principal on (i) January 31, 2001, if the maker
subscribes  for his Units  between the date hereof and June 30, 2000,  (ii) June
30,  2001,  if the  maker  subscribes  for his  Units  between  July 1, 2000 and
December 31, 2000, or (iii) the later of the date of subscription or January 31,
2002,  if the maker  subscribes  for his Units after  December  31,  2000.  Each

                                      B-22


<PAGE>


Promissory  Note shall bear interest on the  unpaid  balance  at  a  rate  equal
to  the  one-year  Treasury  Bill  rate,  such rate to be determined  quarterly.
Interest   will  be  payable  in  arrears  on  the   principal   payment   date.
Notwithstanding  the preceding,  (i) in connection with  subscriptions to 500 or
more  Units by a single  purchaser  the  General  Partner  shall have the power,
exercisable in its sole discretion, to agree to a different schedule for payment
of the Promissory Note,  including a schedule which provides for payment in more
than one deferred  installment,  provided that the total purchase price due from
such  investor  is paid  within  two  years  following  the  earlier  of (a) the
completion of the Offering,  or (b) one year following the effective date of the
Offering;  and (ii) in connection with  subscriptions  to 500 or more Units by a
single corporate purchaser which has a credit rating issued by Standard & Poor's
of A or better,  the General  Partner shall have the power,  exercisable  in its
sole discretion, to agree to a lower interest rate on such investor's Promissory
Note,  provided  that in no event  may the  interest  rate by lower  than 3% per
annum.

              (b) Each  Limited  Partner  who elects to pay for his Units in the
manner  described in Section  3.4.1.(a)  (an  "Installment  Contributor  Limited
Partner")  hereby grants to the  Partnership a security  interest in the Limited
Partner's  Units to secure all of the Limited  Partner's  obligations  under the
Promissory  Note,  any  modifications,  renewals or extensions of the Promissory
Note and all of the  Limited  Partner's  other  obligations  under this  Section
3.4.1.

              (c) If an Installment  Contributor  Limited Partner defaults under
his Promissory Note or under any modifications,  renewals or extensions thereof,
at the option of the  Partnership,  the entire unpaid  principal  balance of his
Promissory Note shall be immediately due and payable,  the Promissory Note shall
continue  to bear  interest  at the rate set forth in Section  3.4.1(a),  a late
charge shall be imposed in an amount equal to 5% of any  delinquent  payment and
the Partnership  shall be entitled to retain and, in any event,  set off against
the amount  owed to the  Partnership  by the  defaulting  Limited  Partner,  all
distributions  attributable to the Units of the defaulting  Limited Partner.  In
addition,  the  Partnership  may pursue any remedy  available  (including  those
available under the provisions of the Uniform  Commercial  Code) or in equity to
collect,  enforce and satisfy the obligations of the defaulting Limited Partner,
including  the  filing of a suit to obtain a  judgment  against  the  defaulting
Limited Partner.

     The  defaulting  Limited  Partner  shall pay to the  Partnership  all costs
incurred by the Partnership in enforcing the Promissory Note,  including but not
limited  to  costs  of  obtaining  money  damages  and  attorneys'   fees.  Each
Installment  Contributor  Limited Partner  acknowledges that the Partnership may
pledge his Promissory Note as collateral  security for Partnership  debt. In the
event  of  a  default  under  the  Promissory Note, the Partnership or any other

                                      B-23


<PAGE>



holder of the  Promissory  Note,  as   applicable,   may   foreclose   upon  the
defaulting Limited Partner's interest in the Partnership and sell the Units in a
commercially  reasonable manner to  non-defaulting  Limited Partners or to other
qualified  investors on terms  approved by the  Partnership or any holder of the
Promissory  Note. It is acknowledged  by each  Installment  Contributor  Limited
Partner that the purchase of the Units is a suitable investment only for Persons
meeting  certain  suitability  standards  and that it will be difficult  for the
Partnership  to find a  suitable  purchaser  of the Units  and to make  adequate
disclosure of all of the then existing  risks of the  investment to  prospective
purchasers.  The General  Partner and its  Affiliates may (but are not obligated
to) purchase  any such Units,  but only if such Units have first been offered to
the  non-defaulting  Limited  Partners.  If Units are offered to  non-defaulting
Limited  Partners,  they  will be  sold on a  first-come,  first-sold  basis  in
increments of whole Units only.

     Each Installment  Contributor Limited Partner agrees that in the event of a
default under his Promissory Note and a foreclosure and sale of his Units by the
Partnership or any holder of his Promissory  Note, as applicable,  the purchaser
of the Units in such a sale may be substituted as a Limited  Partner in place of
the defaulting  Limited  Partner without any further consent being required from
the defaulting Limited Partner, and specifically  authorizes the General Partner
to execute on his behalf any amendment to this Agreement or other  documentation
necessary to effect the substitution.  Units acquired by the Partnership through
a foreclosure sale or otherwise may be reissued by the Partnership.

     Each  Promissory  Note shall (i) be made with full  recourse  to the maker;
(ii) not be a negotiable  instrument;  (iii) be  assignable  only subject to the
defenses  of  the  maker;  (iv)  be  subject  to  venue  for  collection  in the
jurisdiction in which the Installment  Contributor Limited Partner resides;  (v)
except as set forth below in this section,  not be sold by the Partnership prior
to maturity;  (vi) provide that a default in a payment due shall not occur until
30 days  after its due date;  provided,  that until 30 days  after  default  and
notice thereof and intent to foreclose has been given to the defaulting  Limited
Partner,  such  Limited  Partner  shall have the right to cure such default with
interest  due  thereon  without  suffering  any  reduction  in  Interest  in the
Partnership  and the  Partnership  may not commence  proceedings  to enforce its
security interest in the defaulting  Limited Partner's Units;  (vii) not contain
any provision authorizing a confession of judgment;  and (viii) be prepayable at
any time in whole (but not in part) without  penalty.  Subject to the foregoing,
the Partnership may pledge and grant security  interests in Promissory  Notes as
security for any  Partnership  obligation.  Notwithstanding  the preceding,  the
General  Partner shall have the power,  exercisable in its sole  discretion,  to
sell the Promissory Note of any corporate investor,  provided that such investor
has a credit rating issued by Standard & Poor's of A or better.

                                      B-24


<PAGE>



     3.4.2. In the event that any portion of the amount available for Investment
in Local Limited  Partnership  Interests is not so invested  within the later of
(i) 24 months  after the  Offering  Commencement  Date,  or (ii) 12 months after
termination of the Offering, such uninvested portion (except for Reserves) shall
be  distributed  to the Limited  Partners who invested in the  Partnership  as a
return of capital.  In addition,  in order to refund to the Limited Partners the
amount of Front-End  Fees  attributable  to such returned  capital,  the General
Partner shall contribute to the Partnership and the Partnership shall distribute
pro rata to the  Limited  Partners  the amount by which the  quotient of (i) the
amount of uninvested  capital  distributed  pursuant to the foregoing  sentence,
divided by (ii) the percentage of the Capital  Contributions  which remain after
payment of all Front-End  Fees,  exceeds the uninvested  capital so distributed.
Any funds (i) with  respect  to the  investment  of which  the  Partnership  has
executed a written agreement in principle,  commitment letter,  letter of intent
or understanding,  option agreement or other similar  understanding or contract,
or (ii) which the Partnership has set aside or temporarily invested for Reserves
or to fund capital  contributions  to any Local Limited  Partnerships  as of the
later of (iii) the date 24 months after the Offering  Commencement  Date or (iv)
the date 12 months after  termination of the Offering will be deemed invested on
that date and will not  subsequently be returned to the Limited Partners even if
investment of such funds is not  consummated or the contingent  payments are not
made.

     3.5.     Liability of Limited Partners

     3.5.1.  A  Limited  Partner  shall  be  liable  only  to make  his  Capital
Contribution,  including his Note Capital Contribution,  and shall not be liable
for  the  debts,  liabilities,   contracts  or  any  other  obligations  of  the
Partnership.

     3.5.2. A Limited  Partner may be obligated to return a distribution of cash
or other  property  received  by him from the  Partnership  to the extent  that,
immediately  after giving effect to the  distribution,  all  liabilities  of the
Partnership,  other than  liabilities  to Limited  Partners  on account of their
Interests  in the  Partnership  and  liabilities  as to  which  recourse  of the
creditors is limited to specified  property of the Partnership,  exceed the fair
value of the Partnership's assets,  provided that the fair value of any Property
that is subject to a liability  as to which  recourse of creditors is so limited
shall be included in the  Partnership's  assets only to the extent that the fair
value of the Property exceeds the liability.

     3.6.     Miscellaneous

     3.6.1. No Partner shall be paid interest on any Capital Contribution.


                                      B-25


<PAGE>



     3.6.2. No Partner shall have the right to withdraw prior to the dissolution
and  winding  up of the  Partnership  or to receive  any  return of his  Capital
Contribution except as specifically provided in Article 4 and Sections 3.4.2 and
8.2. No Capital  Contribution may be returned in the form of property other than
cash, except as specifically provided in Section 8.2.

     3.6.3.  After its issuance by the Partnership,  no Unit shall be subject to
Assessment.  For these purposes,  the term "Assessment" means additional amounts
of  capital  which may be  mandatorily  required  of or paid at the  option of a
Limited Partner beyond his subscription  commitment.  The term "Assessment" does
not mean a Limited Partner's Note Capital Contribution.

                                    ARTICLE 4

                      DISTRIBUTIONS OF CASH; ALLOCATIONS OF PROFITS AND LOSSES

     4.1.     Distributions of Cash Available for Distribution

     Any Cash Available for  Distribution at the end of any fiscal year shall be
distributed,  within 120 days after the end of such  fiscal  year,  99.9% to the
Limited Partners and 0.1% to the General Partner.

     4.2.     Distributions of Sale or Refinancing Proceeds

     4.2.1.  Subject  to  other  provisions  of this  Section  4.2,  all Sale or
Refinancing   Proceeds,  to  the  extent  not  used  to  acquire  Local  Limited
Partnership Interests as permitted by Section 5.4.1(x),  shall be distributed in
the following amounts and order of priority:

     (i) First,  to the  Limited  Partners  until they have  received  (a) their
Adjusted  Capital  Contributions,  plus (b) their Return on Investment minus (i)
any cash  distributed  by the  Partnership to the Limited  Partners  pursuant to
Section 4.1 or this  Section  4.2.1(i)(b)  on or before the close of the year in
which the  distribution  of Sale or  Refinancing  Proceeds  occurs,  and (ii) an
amount equal to the Tax Credits  allocated to the Limited  Partners on or before
the close of such year (reduced by any recapture thereof arising other than as a
result of the disposition of a Unit by a Limited Partner);

     (ii) Second,  to the General  Partner in an amount equal to (a) its Capital
Contribution  minus (b) any amounts  previously  distributed  to it from Sale or
Refinancing Proceeds; and

                                      B-26


<PAGE>



     (iii)  Third  (after  payment  of  any  accrued  but  unpaid   Subordinated
Disposition Fee), the balance 90% to the Limited Partners and 10% to the General
Partner.

     4.2.2.  Upon termination and winding up of the  Partnership,  after payment
of, or adequate provision for, the debts and obligations of the Partnership, and
the  funding of any  Reserves  deemed  reasonable  by the General  Partner,  the
remaining  assets of the  Partnership  shall be distributed to all Partners with
positive  Capital  Accounts in the ratio of their  respective  positive  Capital
Accounts to the sum of all such positive Capital  Accounts.  For purposes of the
preceding  sentence,  the Capital  Account of each Partner  shall be  determined
after  all  adjustments  in  accordance  with  this  Article  4  resulting  from
Partnership operations and from all Sales or Refinancings.

     4.2.3.  Notwithstanding  any  other  provision  of  this  Agreement  to the
contrary,  the interest of the General  Partner and of its Affiliates in cash to
be distributed by the Partnership or by any Local Limited  Partnership from Cash
Available for Distribution,  from Sale or Refinancing  Proceeds, or from similar
sources in the case of a Local Limited Partnership, will not exceed, in the case
of Cash Available for Distribution, 10% of total Cash Available for Distribution
and, in the case of Sale or Refinancing  Proceeds,  after the payment to Limited
Partners of an amount  equal to 100% of their  Capital  Contributions  and their
Return  on  Investment,   15%  of  remaining   Sale  or  Refinancing   Proceeds.
Furthermore,  the interest of the General  Partner and its  Affiliates  as Local
General Partners and/or as the SLP Affiliate in operating cash flow of all Local
Limited Partnerships,  plus the Asset Management Fee payable pursuant to Section
5.6.7,  will not in any year exceed an amount  equal to 0.5% of that  portion of
Invested  Assets  in  Local  Limited  Partnerships  which  are  attributable  to
apartment units receiving Government Assistance.

     4.3.     Profits and Losses

     After taking into account all special  allocations and otherwise  adjusting
the Partners'  Capital Accounts in accordance with the applicable  provisions of
Section 4.4,  any  remaining  Profits and Losses  shall be  allocated  among the
Partners in accordance with this Section 4.3.

     4.3.1.  If there is an aggregate Loss remaining,  such remaining  aggregate
Loss shall be  allocated  99.9% to the Limited  Partners and 0.1% to the General
Partner.  Notwithstanding  the preceding,  the Losses allocated  pursuant to the
preceding  sentence shall not exceed the maximum amount of Losses that can be so
allocated  without  causing  any  Partner to have an  Adjusted  Capital  Account
Deficit  at the end of any  fiscal  year.  In the event  some but not all of the
Partners would have Adjusted Capital Account Deficits  as  a  consequence  of an

                                      B-27


<PAGE>



allocation  of Losses,  the  limitation  set forth  herein shall be applied on a
Partner by Partner  basis so as to allocate  the maximum  permissible  Losses to
each Partner.

     4.3.2. If there is an aggregate Profit remaining,  such remaining aggregate
Profit shall be allocated:

     (i)  First,  in the  event  that the  Limited  Partners  have an  aggregate
positive  Capital Account balance and the General Partner has a negative Capital
Account  balance or vice versa,  to the class of Partners with and to the extent
of such negative balances;

     (ii)  Second,  to the  extent of the  aggregate  negative  Capital  Account
balances of the  Partners,  to the Limited  Partners and the General  Partner in
such manner and amount as is  necessary to cause the  negative  Capital  Account
balances of such  Partners,  as so adjusted,  to be in the ratio of 99.9% to the
Limited Partners and 0.1% to the General Partner; and

     (iii) Third, to the Limited Partners and the General Partner in such manner
and amount as is necessary to cause the positive Capital Account balances of the
Partners to be equal to such Partners' Deemed Liquidation Distributions.

     4.3.3.  Whenever in this  Section  4.3 a  reference  is made to the Limited
Partners,  such  reference  shall be deemed  to be a  reference  to the  Limited
Partners as a class.

     4.3.4.  Profits and Losses and the amount of any expenditure giving rise to
a Tax Credit shall be determined  and allocated with respect to each fiscal year
of the Partnership as of, and within 75 days after, the end of such year.

     4.4.     Certain Provisions Related to Partnership Allocations and
              Distributions

     4.4.1.(i) If the  Partnership is advised at any time by its  Accountants or
counsel  that the  allocations  of Profits  and Losses  and/or Tax  Credits  are
unlikely to be respected for Federal income tax purposes, the General Partner is
authorized and empowered, without any Consent of Limited Partners, to amend this
Agreement to cure such defect.

     (ii) Notwithstanding anything to the contrary, until the expiration of five
years after the last  Apartment  Complex  qualifying for the Historic Tax Credit
has been placed in  service,  nothing in Section  4.3 or this  Section  4.4.1 is
intended  to, or shall,  cause  Profits to be allocated in any manner other than
99.9% to the Limited Partners and 0.1% to the General Partner.

                                      B-28


<PAGE>



     4.4.2. The Partners acknowledge that under certain circumstances  specified
in the Treasury  Regulations,  the allocations of taxable income or loss and any
item thereof may not be respected for Federal  income tax  purposes,  unless the
assets of the  Partnership  are revalued to reflect  their fair market value and
the  Capital  Accounts  of the  Partners  are  properly  adjusted to reflect the
difference  between  this fair  market  value  (referred  to herein as the "Book
Value")  and the  Partnership's  tax basis in such  assets (or, in the case of a
prior  revaluation,  the Partnership's  prior Book Value).  The circumstances in
which  such  revaluation  may  be  required  include,  without  limitation,  the
contribution  of property  (other than cash) to the Partnership by a Partner and
certain  distributions  of  property  by  the  Partnership  to a  Partner.  This
Agreement  does not permit or provide for the  contribution  of property  (other
than cash) to the  Partnership  and does not  provide  for the  distribution  of
property  (other  than  cash) to the  Partners,  except for  distributions  to a
liquidating  trust for the Partners under Section 8.2.2.  However,  in the event
that the Treasury Regulations are determined to require such a revaluation,  the
Capital  Accounts of the  Partners  shall be properly  adjusted to reflect  such
revaluation  and the effect of such  contribution or distribution on liabilities
that the  recipient  assumes or to which the revalued  property is subject.  Any
allocation of Profits and Losses and any  adjustment  to the  Partners'  Capital
Accounts  required  by the  Treasury  Regulations  as a result of such  required
revaluation,  or any subsequent allocations of Profits and Losses, shall be made
in accordance with Treasury Regulations under Code Sections 704(b) and 704(c).

     4.4.3.(i)  In the event  any  Limited  Partners  unexpectedly  receive  any
adjustments,  allocations,  or  distributions  described in Treasury  Regulation
Section  1.704-1(b)(2)(ii)(d)(4)-  (ii)(d)(6),  items of Partnership  income and
gain (consisting of a pro rata portion of each item of the Partnership's income,
including gross income, and gain for such year) shall be specially  allocated to
such Partners in an amount and manner  sufficient  to  eliminate,  to the extent
required by the  Regulations,  the Adjusted  Capital  Account Deficit created by
such adjustments, allocations, or distributions as quickly as possible.

     (ii) In the  event the  adjusted  tax basis of any  investment  tax  credit
property  that has been  placed  in  service  by the  Partnership  is  increased
pursuant to Section 50(c)(2) of the Code, such increase shall be allocated among
the  Partners  (as an  item  in the  nature  of  income  or  gain)  in the  same
proportions as the investment tax credit that is recaptured with respect to such
Property is shared among the Partners.

     (iii) The Capital  Account of each  Limited  Partner  shall be reduced by a
charge equal to the amount of the selling  commission paid by the Partnership to
the  soliciting  dealers  that is properly  allocable  to the Units held by such
Limited  Partner.  Notwithstanding  any  provision  of  this  Agreement  to  the
contrary, the Partnership shall be deemed to have distributed  to  each  Limited

                                      B-29


<PAGE>



Partner,  and the Capital  Account of each Limited  Partner  shall  be  reduced
by a charge  equal to,  the excess of a 7%  selling  commission  over the amount
charged  such  Limited  Partner's  Capital  Account as a selling  commission  in
accordance with the preceding sentence (the "Discount"). Any deemed distribution
pursuant to this Section  4.4.3(iii) shall not be deemed a return of a Partner's
Capital  Contribution,  but rather shall be deemed to be a compromise within the
meaning of Section 15636(c) of the Act, and no Partner shall be obligated to pay
any such amount to or for the benefit of the  Partnership or any creditor of the
Partnership.   With  respect  to  each  Discount   Investor:   (a)  the  Capital
Contribution  of such  Investor  shall be deemed to be equal to $1,000  for each
Unit purchased; (b) the amount of the selling commission paid by the Partnership
that is properly allocable to the Units held by such Investor shall be deemed to
be the reduced  selling  commission;  and (c) such Investor shall not receive an
actual distribution but shall be deemed to have received a distribution pursuant
to this Section 4.4.3(iii) equal to the Discount. All other Syndication Expenses
for any fiscal year or other period shall be specially  allocated to the Limited
Partners in  proportion  to their Units,  provided  that if  additional  Limited
Partners  are  admitted  to the  Partnership  pursuant  to Section 3.3 hereof on
different dates, all of such other  Syndication  Expenses shall be divided among
the  Partners who own Units from time to time so that,  to the extent  possible,
the cumulative amount of such other Syndication  Expenses allocated with respect
to each Unit at any time is the same  amount.  In the event the General  Partner
shall  determine  that such result is not likely to be achieved  through  future
allocations of such other Syndication Expenses, the General Partner may allocate
a portion of Profits  and Losses so as to achieve the same effect on the Capital
Accounts of the Limited Partners.

     (iv) Any  reduction  in the  adjusted  tax basis  (or cost) of  Partnership
property  pursuant to Section  50(c)(1) of the Code shall be allocated among the
Partners  (as an  item  in  the  nature  of  expenses  or  losses)  in the  same
proportions  as the basis (or cost) of such  property is  allocated  pursuant to
Treasury Regulation Section 1.46-3(f)(2)(i).

     (v) (a)  Except  as  otherwise  provided  in  Treasury  Regulation  Section
1.704-2(f),  if there is a net  decrease in  Partnership  Minimum  Gain during a
fiscal  year of the  Partnership,  each  Partner  shall  be  allocated  items of
Partnership income and gain for such year (and, if necessary,  subsequent years)
in  proportion  to, and to the extent of, an amount equal to the portion of such
Partner's  share of the net  decrease in  Partnership  Minimum  Gain during such
year.

              (b) Except as otherwise  provided in Treasury  Regulation  Section
1.704-2(h),  if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
during  a fiscal  year of the  Partnership  determined  in  accordance  with the

                                      B-30


<PAGE>


principles  of  Section  1.704-2(i)  of  the Regulations, each Partner who had a
share of Partner  Nonrecourse  Debt Minimum  Gain at the  beginning of such year
shall be allocated  items of Partnership  income and gain for such year (and, if
necessary,  subsequent  years) in proportion to, and to the extent of, an amount
equal to the  portion of such  Partner's  share of the net  decrease  in Partner
Nonrecourse  Debt Minimum Gain during such year that is allocable (in accordance
with the principles set forth in Treasury  Regulation Section 1.704-2(i)) to the
disposition of Partnership  property subject to the related Partner  Nonrecourse
Debt.

     (vi) The  allocations  set forth in Sections 4.4.2 and 4.4.3 hereof,  other
than this  Section  4.4.3(vi)  (the  "Regulatory  Allocations")  are intended to
comply with certain  requirements of Treasury  Regulations.  It is the intent of
the Partners that, to the extent possible,  all Regulatory  Allocations shall be
offset either with other Regulatory  Allocations or with special  allocations of
other items of  Partnership  income,  gain,  loss or deduction  pursuant to this
Section  4.4.3(vi).  Therefore,  notwithstanding  any  other  provision  of this
Article 4 (other than the  Regulatory  Allocations),  the General  Partner shall
make such offsetting special  allocations of Partnership  income,  gain, loss or
deductions in whatever  amount it  determines  appropriate  so that,  after such
offsetting  allocations are made, each Partner's  Capital Account balance is, to
the extent  possible,  equal to the Capital  Account  balance such Partner would
have had if the Regulatory  Allocations  were not part of this Agreement and all
Partnership  items were  allocated  pursuant to the provisions of this Article 4
other than the Regulatory  Allocations.  In exercising its discretion under this
Section 4.4.3(vi), the General Partner shall take into account future Regulatory
Allocations under Section  4.4.3(v)(a) and (b) that,  although not yet made, are
likely to offset other  Regulatory  Allocations  previously  made under Sections
4.4.3(vii) and (viii).

     (vii) Any  deduction  attributable  to  Partner  Nonrecourse  Debt shall be
allocated  to the Partners  that bear the Economic  Risk of Loss for the Partner
Nonrecourse Debt.

     (viii)  Nonrecourse  Deductions  shall be  allocated  99.9% to the  Limited
Partners and 0.1% to the General Partner.

     4.4.4.  For the purpose of making any  allocation  of Profit and Loss,  the
Capital  Account of each  Partner  shall first be deemed to have been reduced by
the  amount  of any  distribution  that,  at the end of the  fiscal  year of the
Partnership  with respect to which such allocation is to be made, was reasonably
anticipated to be made to such Partner pursuant to Section 4.1 or Section 4.2.1,
except to the extent that, in compliance with Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(6),   the  General  Partner   reasonably   anticipates  that  the
Partnership will subsequently have offsetting income or gains.

                                      B-31


<PAGE>



     4.4.5.  To the  extent  that  any  amount  of gain  from  the sale or other
disposition  of a  Property  is treated as gain  subject  to the  provisions  of
Section 1245 or 1250 of the Code (other than as a result of the  application  of
Section  291 of the Code),  such gain shall be  allocated  between  the  Limited
Partners, as a class, and the General Partner in the manner and amount necessary
to offset the amount of depreciation  previously allocated to them that is being
recaptured as a result of such sale or other  disposition  (including any amount
so  treated  as a result  of the  application  of  Section  50(c) of the  Code);
provided,  however, that nothing in this Section 4.4.5 shall alter the aggregate
amount of Profits and Losses  allocable to any Partner  pursuant to this Article
4, and the character of other items  included in such Profits and Losses for the
relevant  period  shall  be  appropriately  adjusted  to  give  effect  to  this
provision.

     4.4.6.  All amounts  withheld  pursuant to the Code or any provision of any
state or local tax law with respect to any  distribution  to, or allocable share
of,  the  Partners  shall be  treated as  amounts  distributed  to the  Partners
pursuant to this Article 4 for all purposes  under this  Agreement.  The General
Partner may allocate any such amounts  among the Limited  Partners in any manner
that is in accordance with applicable law.

     4.4.7.  Where relevant in determining  the allocation of Profits and Losses
among the Partners,  including  the  character of any amount so allocated,  such
Profits  and  Losses  arising  other  than from a Sale or  Refinancing  shall be
allocated  among the Partners  before the  allocation of such Profits and Losses
from a Sale or Refinancing,  and where more than one Sale or Refinancing  occurs
during the fiscal  year,  Profits  and Losses  from such  transactions  shall be
allocated among the Partners in chronological order.

     4.4.8.  To the extent  permitted by Section  1.704-2(h)(3)  of the Treasury
Regulations,   the  General   Partner  shall   endeavor  to  treat   Partnership
distributions  as having been made from the proceeds of a Nonrecourse  Liability
or a Partner  Nonrecourse Debt only to the extent that such distributions  would
cause or increase an Adjusted Capital Account Deficit for any Limited Partner.

     4.4.9 Any interest income  recognized by the Partnership in connection with
payments to the Partnership  pursuant to a Promissory Note shall be allocated to
the Limited  Partner which delivered such Promissory Note to the Partnership (or
his successor in interest).

     4.5.     Allocation of Tax Credits

     4.5.1.  Except as provided in Section  4.5.2,  in accordance  with Treasury
Regulation  Section  1.704-1(b)(4)(ii),  all  expenditures  giving  rise  to the

                                      B-32


<PAGE>


allowance of any Tax Credits  shall be  allocated  among  the  Partners  in  the
manner in which the  deductions  arising from such  expenditures  are  allocated
among the Partners for the relevant  taxable year, it being the intention of the
Partners that such expenditures,  including,  without  limitation,  expenditures
giving rise to the allowance of Low Income Housing  Credits,  be allocated 99.9%
to the Limited Partners, as a class, and 0.1% to the General Partner.

     4.5.2.  For purposes of the investment  tax credit,  including the Historic
Tax Credit,  each Partner shall be allocated a share of the Partnership's  basis
in the property  qualifying for the investment tax credit.  Each Partner's share
of such basis  shall be  determined  in  accordance  with the ratio in which the
Partners are  allocated  Profits of the  Partnership  (other than Profits from a
Sale or  Refinancing)  for the year  during  which  the  property  is  placed in
service.  If the  Partnership  realizes no Profits  during such year,  then such
share of such basis shall be determined  in  accordance  with the ratio in which
the next dollar of such  Profits  would have been  allocated if such Profits had
been realized.

     4.5.3.  Any  recapture of any Tax Credits  shall be  allocated  between the
Limited  Partners,  as a class,  and the  General  Partner in the same manner in
which they shared the Tax Credits.

     4.5.4.  Notwithstanding  Section 4.5.3, in the case of any recapture of any
Tax Credits  resulting  from the sale,  exchange,  transfer or assignment of any
Units,  the Limited  Partners  holding  such Units prior to the sale,  exchange,
transfer or  assignment  shall  indemnify the  Partnership  and the Partners not
transferring  their  Units  for  the  consequences  of  such  recapture  in  the
proportion in which such transferred Units shared the Tax Credits.

     4.6.     Determinations of Allocations and Distributions
              Within Classes of Partners

     4.6.1. All Cash Available for Distribution and Sale or Refinancing Proceeds
distributable  to the Limited  Partners  as a class,  and all Profits and Losses
(including  each item of  income,  gain,  loss,  deduction  or  credit  included
therein, except as provided in Section 4.4) allocable to the Limited Partners as
a class, shall be distributed or allocated,  as the case may be, to each Limited
Partner entitled to a distribution or allocation,  in the ratio which the number
of Units held by each Limited Partner bears to the total number of Units held by
all Limited Partners entitled to the distribution or allocation.

     4.6.2.  Except a provided in Sections 3.3.3,  4.6.3,  4.6.4, and 4.6.5, all
Profits and Losses not arising  from a Sale or  Refinancing  and all Tax Credits
allocable to the Limited Partners as a class,  shall be allocated,  and all Cash

                                      B-33


<PAGE>


Available for Distribution distributable to the  Limited  Partners  as  a  class
shall be  distributed,  to the Persons  recognized (in  accordance  with Section
7.3.3 in the case of a  transfer  of  Units)  as the  holders  of Units for this
purpose as of the last day of the  fiscal  period  for which the  allocation  or
distribution is to be made.

     4.6.3.  Subject to Section 4.6.5, all Profits and Losses not arising from a
Sale or Refinancing  and all Tax Credits for a fiscal year allocable to any Unit
which is transferred  during the year shall be divided and allocated between the
transferee and the transferror  based upon the number of quarterly  periods that
each was recognized (in accordance with Section 7.3.3) as the holder of the Unit
for this  purpose,  without  regard to  whether  Partnership  operations  during
particular  quarterly  periods of such fiscal year produced profits or losses or
cash distributions.

     4.6.4. All Profits and Losses arising from a Sale or Refinancing  allocable
to the  Limited  Partners  as a  class  shall  be  allocated,  and  all  Sale or
Refinancing  Proceeds  distributable to the Limited Partners as a class shall be
distributed,  to the Persons recognized (in accordance with Section 7.3.3 in the
case of a transfer of Units) as the holders of Units for this  purpose as of the
date of the Sale or Refinancing.

     4.6.5. In the event that there is more than one Investor Closing,  all Cash
Available  for  Distribution  and Profits and Losses not arising  from a Sale or
Refinancing,  distributable  or  allocable,  as the case may be, to the  Limited
Partners as a class for the period commencing with the first day of the month of
the  Investor  Closing  and ending on the last day of the month of the  Investor
Closing will be distributed or allocated, as the case may be, on a monthly basis
in accordance with Section 4.6.1 solely to the Limited Partners  admitted to the
Partnership as of or prior to the Investor Closing date which occurs during such
month.

                                    ARTICLE 5

                  RIGHTS, POWERS AND DUTIES OF GENERAL PARTNER

     5.1.     Management of the Partnership

     5.1.1.  Subject to the Consent of the Limited  Partners  (or of a specified
percentage thereof) where required by this Agreement,  the General Partner shall
have the exclusive right and authority to manage and control the business of the
Partnership  and is hereby  authorized  to take any action and to do anything it
deems  necessary to achieve the purposes of the  Partnership in accordance  with
the provisions of this Agreement and applicable law.


                                      B-34


<PAGE>



     5.1.2.  The General  Partner  shall,  except as otherwise  provided in this
Agreement,  have  all  rights  and  powers  and  shall  be  subject  to all  the
restrictions  and  liabilities  of a partner in a  partnership  without  limited
partners.

     5.1.3. No Limited  Partner  (except one who may also be a General  Partner,
and then only in its capacity as a General Partner) shall participate in or have
any control over the Partnership  business or have any authority or right to act
for or bind the Partnership.

     5.2.     General Authority of General Partner

     5.2.1. Subject to Sections 5.2.2, 5.3 and 5.4, the General Partner for, and
in the name and on behalf  of, the  Partnership  is hereby  authorized,  without
limitation:

     (i) to acquire,  hold,  encumber,  sell, dispose of and otherwise deal with
Local  Limited  Partnership  Interests,  at such price and upon such terms as it
deems to be in the best interests of the Partnership,  including exercise of the
Partnership's  voting and other  rights  and powers as a limited  partner in the
Local Limited Partnerships;

     (ii) to acquire by purchase,  lease, exchange or otherwise,  any other real
or personal property;

     (iii) to borrow money and issue  evidences of  indebtedness,  and to secure
the same by pledge or other lien on any Local Limited  Partnership  Interests or
other assets of the Partnership;

     (iv)  to  employ  agents,  employees,  managers,  accountants,   attorneys,
consultants and other Persons necessary or appropriate to carry out the business
and operations of the Partnership,  and to pay fees, expenses,  salaries,  wages
and other compensation to such Persons;

     (v)  to  pay,  extend,  renew,  modify,   adjust,  submit  to  arbitration,
prosecute,  defend or  compromise,  upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation,  suit, liability, cause
of  action  or  claim,  including  taxes,  either  in  favor of or  against  the
Partnership;

     (vi) to  cause  the  Partnership  to make or  revoke  any of the  elections
referred to in the Code;


                                      B-35


<PAGE>



     (vii) to offer and sell Units in the  Partnership to the public directly or
through any licensed Person and to employ personnel, agents and dealers for such
purpose;

     (viii) to  establish  and maintain  Reserves for such  purposes and in such
amounts  as it deems  appropriate  from time to time,  it being  understood  and
agreed that,  after the  termination of the Offering,  the General Partner shall
establish  initial  Reserves  out  of  Capital  Contributions,   in  the  manner
contemplated by the  Prospectus,  in an amount equal to not less than 3% of such
Capital Contributions;

     (ix)  to  invest  the  Net  Proceeds  in  Temporary  Investments  prior  to
investment in Local Limited Partnership Interests;

     (x) to engage in any kind of activity  necessary to, or in connection with,
or incidental to the accomplishment of the purposes of the Partnership;

     (xi) to withhold income taxes as required by, and to otherwise  comply with
and take actions necessary as a result of, provisions of the Code (or comparable
provisions of law in any state or other  jurisdiction  in which the  Partnership
does business) requiring withholding;

     (xii) in the absolute  discretion of the General Partner, at any time after
conclusion  of the  Offering,  to  repurchase  any Units upon the request of the
holder thereof on terms mutually agreeable to the Partnership and such holder if
the repurchase does not impair the capital or the operations of the Partnership.
Neither the  Partnership  nor the General  Partner shall,  at any time, have any
obligation whatsoever to repurchase any Units; and

     (xiii) for purposes of the  requirements of the Community  Reinvestment Act
or related  requirements,  to allocate  properties among Limited Partners in the
absolute discretion of the General Partner.

     5.2.2.  Notwithstanding any provision in this Agreement to the contrary, it
is understood and agreed that in selecting Local Limited  Partnership  Interests
for  investment  by the  Partnership  the General  Partner shall be bound by the
following  investment  policies  which may not be  changed,  altered or amended,
except as provided in Section 10.2:

     (i) the Partnership shall make an investment in a Local Limited Partnership
Interest  only if the  Local  Limited  Partnership  owns a  completed  Apartment
Complex  or  is  in  the  process  of  developing  a new  Apartment  Complex  or

                                      B-36


<PAGE>


rehabilitating an Apartment Complex which shall  be  eligible,  in  the  opinion
of counsel,  (a) for the Low Income Housing Credit,  and/or (b) the Historic Tax
Credit;

     (ii) the  Partnership  shall  not  acquire  any Local  Limited  Partnership
Interest  unless the  Partnership  has  received,  with respect to the Apartment
Complex of such Local Limited Partnership, either (a) an appraisal prepared by a
competent,  independent   appraiser  or  (b)  RD  Forms  1924-13  (estimate  and
certificate of actual cost) and 1930-7 (statement of budget, income and expense)
or HUD project cost and budget  analysis on Form 2264,  or a comparable  form of
any successor of RD or HUD or of a state or other governmental agency, including
any  applicable  Tax Credit  allocation  agency,  setting forth  estimates  with
respect to construction  and mortgage  financing costs and initial rental income
and  operating  expenses,  which  in  either  case  shall be  maintained  in the
Partnership's  records  for at least  five  years,  and shall be  available  for
inspection and duplication by any Partner;

     (iii)  no  part  of  the  Partnership's   investment  in  a  Local  Limited
Partnership  Interest  (other than with respect to a Local  Limited  Partnership
which  owns a  completed  Apartment  Complex  at the  time of the  Partnership's
initial  investment  therein) shall be made prior to receipt of a commitment for
the construction  loan, and no more than 75% of the Partnership's  investment in
such a Local Limited  Partnership  Interest  shall be made prior to receipt of a
commitment for the permanent loan;

     (iv) the agreements  with respect to the  Partnership's  investment in each
Local Limited  Partnership  Interest (other than with respect to a Local Limited
Partnership  which  owns  a  completed  Apartment  Complex  at the  date  of the
Partnership's  initial  investment  therein) must contain provisions whereby the
completion of construction of the Apartment  Complex at the price  contracted is
secured by an adequate completion bond or other satisfactory  arrangements.  For
the purposes of this Section 5.2.2(iv), other satisfactory arrangements include,
but are not limited to, the following:

              (a) a written guarantee of completion by the Local General Partner
supported  by  financial  statements   demonstrating  sufficient  net  worth  or
adequately collateralized by other real or personal properties or other Persons'
guarantees; or

              (b)  a  retention  of  a   reasonable   portion  of  the  purchase
consideration as a potential offset to such purchase  consideration in the event
the Local General Partner does not perform in accordance with such agreement;


                                      B-37


<PAGE>



     (v) the  Partnership  shall not  invest in any  Local  Limited  Partnership
Interest unless an experienced real estate developer has agreed in writing for a
minimum term  acceptable to the General  Partner to supervise  management of the
Property or to serve as its managing Local General Partner or Property manager;

     (vi) the  Partnership  shall  invest  only in a Local  Limited  Partnership
Interest if the Local Limited  Partnership  restricts the payment of real estate
commissions by any Person to any Person upon resale of an Apartment Complex to a
maximum of the lesser of (a) the Competitive Real Estate Commission or (b) 6% of
the sales price of the Apartment Complex (including the amount of the commission
paid);

     (vii)  the  Partnership  shall  invest  only in Local  Limited  Partnership
Interests as follows:

              (a) if the Local General Partner of the Local Limited  Partnership
is a Sponsor,  the partnership  agreement of the Local Limited  Partnership must
include provisions (1) complying with Section IX.F. of the NASAA Guidelines, (2)
acknowledging  privity  between  the  Local  General  Partner  and  the  Limited
Partners,  (3)  providing  that the  compensation  payable to the Sponsor in the
aggregate from both the Partnership and the Local Limited  Partnership shall not
exceed the amounts  permitted  under  Section IV. of the NASAA  Guidelines,  (4)
providing that the Local Limited  Partnership  have as its limited partners only
publicly  registered  partnerships,  except that  special  limited  partners not
affiliated  with the Sponsor  shall be permitted if the  interests  taken by the
special limited  partners result in no diminution in the control  exercisable by
the other limited partners of the Local Limited  Partnership,  and (5) providing
that the Partnership's  investment in the Local Limited Partnership shall not be
structured through more than a two-tier arrangement;

              (b) if the Local General Partner of the Local Limited  Partnership
is not a Sponsor,  the  partnership  agreement of the Local Limited  Partnership
must include  provisions  granting to the limited  partners  therein  rights and
obligations  with  respect to such Local  Limited  Partnership  similar to those
granted to the Limited  Partners  with  respect to the  Partnership  in Sections
3.3.3 (respecting admissions),  3.6.3, 5.2.1(xii),  5.4.1(ix),  5.4.1(x), 5.4.2,
5.5.4,  5.5.6,  6.1, 7.1,  7.3.2,  7.4, 9.1, 9.4,  10.1,  10.2,  12.1.2 and 13.9
hereof;

     (viii) the Partnership shall invest in Local Limited Partnership  Interests
jointly with other limited  partnerships  (including limited  partnerships which
are  controlled  by or  otherwise  affiliated  with the  General  Partner)  (the
Partnership and any other limited partnership being referred to hereinafter as a
"Program") only if each of the following conditions is satisfied:


                                      B-38


<PAGE>



              (a)  the  Programs   have   substantially   identical   investment
objectives;

              (b)  there are no duplicate property management or other fees;

              (c)  the   compensation   to  the  sponsor  of  each   Program  is
substantially identical in each Program;

              (d) each Program  will have a right of first  refusal if the other
Programs wish to sell their Local Limited Partnership Interests;

              (e) the  investment of each Program is on  substantially  the same
terms and conditions;

              (f) if any other Program is controlled by or otherwise  affiliated
with the General Partner,  such other Program must be publicly  registered under
the Securities Act of 1933; and

              (g)  if  any  other  Program  is not  controlled  by or  otherwise
affiliated with the General Partner,  the Partnership alone or together with any
publicly  registered  Program  controlled  by or otherwise  affiliated  with the
General  Partner must acquire a Controlling  Interest in the joint venture.  For
this purpose the phrase  "Controlling  Interest"  means  possessing the power to
direct  or cause the  direction  of the  activities  and  policies  of the joint
venture,  whether through ownership of securities,  by contract, by the exercise
of a power of veto over its  activities  and policies other than in the ordinary
course of business, or otherwise;

     (ix) the  Partnership  shall commit a percentage  of the Limited  Partners'
Capital Contributions to Investment in Local Limited Partnership Interests which
is at least equal to the greater of (a) 80% of the Capital Contributions reduced
by 0.1625% for each 1% of the aggregate indebtedness secured or to be secured by
all  liens  and  mortgages   encumbering   Properties  owned  by  Local  Limited
Partnerships  or (b) 70% of the  Capital  Contributions.  For  purposes  of this
calculation,  the percentage of "aggregate indebtedness secured or to be secured
by all  liens  and  mortgages  encumbering  Properties  owned by  Local  Limited
Partnerships" is the percentage  resulting when the Partnership's  share of such
aggregate indebtedness is divided by the Partnership's share of the aggregate of
the  Purchase  Prices  of all  Properties  held by Local  Limited  Partnerships,
excluding  Front-End Fees. If the total amount of Front-End Fees must be reduced
in order to enable the  Partnership to satisfy the foregoing  restrictions,  the
General  Partner  shall,  and shall cause its  Affiliates  or other  Persons to,
reimburse the  Partnership  for the amount of Front-End Fees received by them as
necessary to enable the Partnership to meet this investment requirement; and

                                      B-39


<PAGE>



     (x) the  Partnership  may invest in a Local  Limited  Partnership  Interest
where the Local Limited Partnership owns an existing Apartment Complex which has
experienced   cash  flow  or  operational   difficulties,   including   mortgage
delinquencies,  provided that the  following  are satisfied  with respect to any
such  investment:  (a) a satisfactory  workout  arrangement is in place, (b) the
General  Partner has determined  that the risk associated with the investment is
not significantly greater than the risk associated with an investment in a Local
Limited Partnership  Interest where the Apartment Complex is  newly-constructed,
and (c) not more than 10% of Investment in Local Limited  Partnership  Interests
is invested in such Local Limited  Partnership  Interests.  For purposes of this
Section  5.2.2(x),  an Apartment  Complex which has been subject to  substantial
rehabilitation shall not be considered to be an existing property.

     5.2.3. With respect to each of its obligations, powers and responsibilities
under this Agreement,  the General Partner is authorized to execute and deliver,
for and on  behalf  of the  Partnership,  such  notes  and  other  evidences  of
indebtedness,   contracts,   agreements,   assignments,   deeds,   leases,  loan
agreements,  mortgages and other security instruments and agreements as it deems
proper, all on such terms and conditions as it deems proper.

     5.2.4.  Any Person dealing with the  Partnership or the General Partner may
rely upon a certificate signed by the General Partner as to:

     (i) the identity of the General Partner or any Limited Partner;

     (ii) the Persons who are  authorized to execute and deliver any  instrument
or document of or on behalf of the Partnership;

     (iii) the existence or  non-existence of any fact or facts which constitute
a condition  precedent to acts by the General Partner or in any other manner are
germane to the affairs of the Partnership; or

     (iv) any act or failure to act by the Partnership or as to any other matter
whatsoever involving the Partnership or any Partner.

     5.3.    Authority of General Partner and its Affiliates to Deal with
             Partnership

     5.3.1.  Without  limitation  upon the other  powers set forth  herein,  the
General  Partner is expressly  authorized for, in the name of, and on behalf of,
the Partnership to:


                                      B-40


<PAGE>



     (i) subject to the limitations set forth herein, pay to the General Partner
or any of its  Affiliates  designated by them the  compensation  provided for in
Section 5.6 hereof;

     (ii)  borrow  funds  from the  General  Partner  or any of its  Affiliates;
provided,  however,  that such borrowings may only be made on a short-term basis
(not to exceed one year) and provided  further that the  Partnership may not pay
in  connection  therewith  (a)  interest or other  financing  charges or fees in
excess of the amounts which would be charged by unrelated  lending  institutions
on  comparable  loans for the same purpose in the same locality (and in no event
may interest on such borrowings exceed 2% per annum above the Prime Rate) or (b)
any prepayment charge or penalty;

     (iii)  in  connection  with the  organization  of the  Partnership  and the
Offering, the Partnership shall pay the Nonaccountable O&O Expense Reimbursement
and shall pay, or reimburse the General  Partner or its  Affiliates for advances
made  to  cover,  the  retail  selling  commission  equal  to 7% of the  Capital
Contribution  and the Dealer Manager Fee;  provided that the General  Partner or
its Affiliates  shall pay all  Organizational  and Offering  Expenses,  with the
exception   of  retail   selling   commissions   equal  to  7%  of  the  Capital
Contributions,  the Dealer  Manager  Fee,  and the  Nonaccountable  O&O  Expense
Reimbursement;

     (iv) in connection  with the  acquisition by the Partnership of investments
in  Local  Limited  Partnership   Interests,   the  Partnership  shall  pay  the
Nonaccountable   Acquisition  Expense  Reimbursement  to  the  General  Partner;
provided that the General Partner shall pay all Acquisition  Expenses,  with the
exception of the Nonaccountable Acquisition Expense Reimbursement;

     (v) deal with, or otherwise engage in business with, or provide services to
and receive compensation therefor from, any Person who has provided any services
to, lent money to, sold  property to, or purchased  property  from,  the General
Partner or any of its Affiliates;

     (vi) require in any or all  Partnership  contracts that the General Partner
shall not have any personal  liability  thereon but that the Person  contracting
with the  Partnership  shall look solely to the  Partnership  and its assets for
satisfaction;   however,  if  any  additional   cost   is   imposed   upon   the
Partnership as a result of such a  requirement,  such  additional  cost shall be
paid by the General Partner from its own funds, without recourse to the funds of
the Partnership;

     (vii) subject to the provisions of Section 5.2.2(vii) hereof,  exercise the
right to cause an  Affiliate  of the General  Partner to become a Local  General
Partner,   including  the  sole  Local  General  Partner,  of  a  Local  Limited


                                      B-41


<PAGE>


Partnership  (a) upon request by a lender that such action be taken,  (b) in the
event of the bankruptcy, death, dissolution, withdrawal, removal or adjudication
of  incompetence of a Local General  Partner,  or (c) in the event of a material
default by a Local General  Partner or any of its Affiliates on any  obligations
of such Local General  Partner or Affiliate to the Local Limited  Partnership or
to the Partnership or upon a material  default by the Local Limited  Partnership
under its mortgage loan or upon the occurrence of certain other events;

     (viii)  exercise  the right to cause the SLP  Affiliate to become a special
limited  partner of each Local  Limited  Partnership  upon the terms and for the
interest in the Local Limited Partnership described in the Prospectus; and

     (ix) in connection  with a Local Limited  Partnership  which is expected to
generate  Tax  Credits  and State  Tax  Credits,  invest  in the  Local  Limited
Partnership  in such manner  that the  Partnership  shall pay for,  and shall be
allocated,   the  Tax  Credits,  and  another  investor  in  the  Local  Limited
Partnership,  including  an  investor  which may be the  General  Partner  or an
Affiliate thereof, shall pay for and shall be allocated the State Tax Credits.

     5.3.2.  Other than as  specifically  authorized  in this  Section  5.3, the
General Partner is prohibited  from entering into any  agreements,  contracts or
arrangements  on behalf  of the  Partnership  with the  General  Partner  or any
Affiliate  of the General  Partner.  Such  prohibition  shall  include,  without
limitation, the following:

     (i) the  Partnership  shall  not  purchase  any Local  Limited  Partnership
Interest from the Sponsor unless such purchase is pursuant to the right of first
refusal required by Section  5.2.2(viii)  hereof or unless such Person purchased
the Local Limited  Partnership  Interest in its name in order to facilitate  the
acquisition  of such Local  Limited  Partnership  Interest  by the  Partnership;
provided, however, that in the event of such an acquisition from the Sponsor (a)
the purchase price paid by the  Partnership may not (except to the extent of any
reimbursement  by the  Partnership  of carrying  costs)  exceed the cost of such
Local Limited  Partnership  Interest to the seller; (b) no compensation or other
benefit  from the  transaction  may accrue to the  Sponsor  except as  otherwise
permitted  by this  Agreement;  (c) the  seller  has not held the Local  Limited
Partnership  Interest  for  a  period  in  excess  of  twelve  months  prior  to
commencement  of the Offering;  (d) there is no difference in interest  terms of
the loans secured by the Local Limited Partnership Interest at the time acquired
by the Sponsor  and the time  acquired  by the  Partnership;  (e) all income and
expense  which accrues to the Sponsor as a result of the ownership of such Local
Limited  Partnership  Interest shall be treated as belonging to the Partnership;
(f) the cost of the Local Limited Partnership  Interest may not exceed the funds
reasonably  anticipated  to be available  to the  Partnership  to purchase  such
asset; and (g) the seller is not a Program in which  the General Partner  has an

                                      B-42


<PAGE>




interest.  For this purpose,  the term "Program" shall mean a limited or general
partnership,  joint venture,  unincorporated association or similar organization
other  than a  corporation  formed  and  operated  for the  primary  purpose  of
investment  in and the  operation  of or gain from an interest in real  property
including such entities formed to make or invest in mortgage loans;

     (ii) neither the General Partner nor any of its Affiliates shall enter into
an agreement or contract with a Local Limited Partnership for the development of
any Apartment  Complex or the  construction of improvements  with respect to any
Apartment Complex;

     (iii) neither the General  Partner nor any of its Affiliates  shall receive
directly or indirectly a commission or fee in connection  with the  reinvestment
of the  proceeds  of the sale,  exchange  or  refinancing  of any Local  Limited
Partnership Interest or any Apartment Complex;

     (iv) neither the General  Partner nor any of its  Affiliates  shall provide
insurance  brokerage  services in connection with obtaining any insurance policy
covering any Apartment Complex;

     (v) neither the General Partner nor any of its Affiliates shall be given an
exclusive  right  to sell or  exclusive  employment  to sell any  Local  Limited
Partnership  Interest for the Partnership or any Apartment Complex for any Local
Limited Partnership;

     (vi) except as provided in Sections 5.3.1(vii),  (viii) or (ix) hereof, the
Partnership shall not sell any Local Limited Partnership Interest to the General
Partner or any of its Affiliates;

     (vii) the  Partnership  shall not lend any funds to the General  Partner or
any of its Affiliates; and

     (viii) no rebates or give-ups may be received by the General Partner or any
of its  Affiliates,  nor  may  the  General  Partner  or  any of its  Affiliates
participate in any reciprocal  business  arrangement which would have the effect
of circumventing any of the provisions of this Agreement.

    5.3.3.  All of the  Partnership's  expenses shall be billed directly to and
paid by the Partnership to the extent practicable. Reimbursements to the General
Partner or any of its  Affiliates by the  Partnership  shall be allowed only for
the Partnership's Organizational and Offering Expenses, Acquisition Expenses and
Operating Cash Expenses and only subject to the limitations on the reimbursement
of such expenses set forth herein.


                                      B-43


<PAGE>




     5.3.4.  Reimbursement  to the General  Partner or any of its  Affiliates of
Operating Cash Expenses pursuant to Section 5.3.3 hereof shall be subject to the
following:

     (i) No such  reimbursement  shall be  permitted  for services for which the
General Partner or any of its Affiliates is entitled to compensation by way of a
separate fee; and

     (ii) No such  reimbursement  shall be made  for (a)  rent or  depreciation,
utilities,  capital  equipment  or  other  such  administrative  items,  and (b)
salaries,  fringe  benefits,  travel  expenses  and other  administrative  items
incurred or allocated to any "controlling  person" of the General Partner or any
Affiliate of the General  Partner.  For the purposes of this Section  5.3.4(ii),
"controlling  person"  includes,  but is not  limited  to, any  Person,  however
titled,  who performs  functions for the General Partner or any Affiliate of the
General  Partner  similar  to those of: (1)  chairman  or member of the board of
directors; (2) executive management, such as president, vice president or senior
vice president, corporate secretary or treasurer; (3) senior management, such as
the vice  president of an operating  division who reports  directly to executive
management;  or (4) those  holding 5% or more  equity  interest  in the  General
Partner or any Affiliate of the General  Partner or a person having the power to
direct or cause the  direction  of the General  Partner or any  Affiliate of the
General Partner, whether through the ownership of voting securities, by contract
or otherwise.

     5.3.5.  Nothing  contained  herein is intended to prohibit the  Partnership
from investing in a Local Limited  Partnership  which is an Affiliate of another
Local Limited  Partnership in which the Partnership or another entity  sponsored
by the Sponsor has invested.

     5.4.     Restrictions on Authority of General Partner

     5.4.1.   The General Partner shall not:

     (i) do any act in contravention of this Agreement;

     (ii) do any act which  would make it  impossible  to carry on the  ordinary
business of the Partnership;
     (iii) possess Partnership  property,  or assign the Partnership's rights in
specific Partnership property, for other than a Partnership purpose;

     (iv)  admit a Person  as a General  Partner,  except  as  provided  in this
Agreement;


                                      B-44


<PAGE>



     (v)  admit a Person  as a  Limited  Partner,  except  as  provided  in this
Agreement;

     (vi)  directly  or  indirectly  pay  or  award  any  commissions  or  other
compensation  to any Person engaged by a potential  investor in the  Partnership
for investment advice as an inducement to such adviser to advise the purchase of
Units, but this clause shall not prohibit the payment of the selling commissions
and other underwriting  compensation contemplated herein or in the Prospectus to
a registered broker-dealer or other properly-licensed Person for selling Units;

     (vii) cause the  Partnership to lend any funds to any Person (other than in
connection  with  Temporary  Investments),  except that the General  Partner may
cause the  Partnership  to make loans to or to post  letters of credit for Local
Limited Partnerships in which the Partnership is expected to own a Local Limited
Partnership Interest, provided that in the case of any such loan (a) the loan is
made  prior  to  the  date  that  the  Partnership  makes  its  initial  capital
contribution to the Local Limited Partnership,  (b) the total amount of all such
loans  does  not  exceed  50%  of the  Limited  Partners'  Capital  Contribution
committed to the  investment  in such Local  Limited  Partnership,  and (c) such
borrowings  may only be made on a short-term  basis (not to exceed one year) and
must, unless earlier repaid,  be repaid from the  Partnership's  initial capital
contribution  to the Local Limited  Partnership at the time such initial capital
contribution is made;

     (viii) cause the Partnership to acquire  unimproved or nonincome  producing
property  (but this clause shall not restrict the rights of the  Partnership  to
invest  in  Local  Limited   Partnerships   owning  Apartment   Complexes  under
construction or rehabilitation or Apartment  Complexes as to which  construction
or  rehabilitation  has not  commenced  but with respect to which closing of the
construction  loan has occurred or the Apartment  Complex site has been acquired
and a construction loan commitment has been obtained);

     (ix) cause the  Partnership to utilize Cash Available for  Distribution  to
acquire Local Limited Partnership Interests;

     (x) cause the Partnership to reinvest Sale or Refinancing Proceeds unless a
sufficient portion thereof is distributed to the Limited Partners to enable each
Limited Partner, assuming that he is in a  combined  Federal,  state  and  local
marginal  income tax bracket of 30%, to pay the Federal,  state and local income
tax  liability  arising  from  the  Sale or  Refinancing  which  generated  such
proceeds,  and in any event Sale or Refinancing Proceeds shall not be reinvested
following  the second  anniversary  of the first day of the calendar  quarter in
which the Investment Date occurs,  except to the extent of any Reserves retained
therefrom;

                                      B-45


<PAGE>



     (xi)  cause  the  Partnership  to  acquire  any Local  Limited  Partnership
Interest in exchange for Units;

     (xii)  change the  Partnership's  purposes  from those set forth in Section
2.4;

     (xiii)  facilitate  or  recognize  the  trading of Units on an  established
securities market or on a secondary market, if, in the opinion of counsel,  such
action would result in the  Partnership  being  classified as a publicly  traded
partnership  under Section 7704 of the Code and such  classification  would have
material adverse tax consequences for the Limited Partners;

     (xiv) cause the Partnership to invest in Local Limited  Partnerships  under
circumstances  where  duplicate  fees for the same service may be payable by the
Partnership and/or the particular Local Limited Partnership;

     (xv)  except  as  set  forth  below  in  this  subsection,   following  the
termination  of the offering of Units,  cause the total  amount of  indebtedness
incurred  by  the  Partnership  to at  any  time  exceed  the  sum of 85% of the
aggregate  purchase  price  of all  Apartment  Complexes  which  have  not  been
refinanced,  and  85%  of the  aggregate  fair  market  value  of all  Apartment
Complexes which have been refinanced, as determined by the lender as of the date
of refinancing.  Notwithstanding the preceding, with respect to all indebtedness
insured  or  guaranteed  by the full  faith  and  credit  of the  United  States
government, a state or local government,  or an agency or instrumentality of any
of them, and with respect to all indebtedness  provided by any such Person,  the
total amount of indebtedness incurred by the Partnership shall at no time exceed
the sum of 100% of the aggregate purchase price of all Apartment Complexes which
have not been  refinanced,  and 100% of the  aggregate  fair market value of all
Apartment  Complexes which have been refinanced,  as determined by the lender as
of the date of  refinancing.  For  purposes of this  subsection  only,  the term
"indebtedness"  shall  include  the  principal  of any  loan  together  with any
interest that may be deferred  pursuant to the terms of the loan agreement which
exceeds 5% per annum of the principal  balance of such  indebtedness  (excluding
contingent  participations  in income  and/or  appreciation  in the value of the
Apartment  Complexes),  and  shall  exclude  any  indebtedness  incurred  by the
Partnership for necessary working capital reserves;

    (xvi)  cause  the  Partnership  to pay  aggregate  Acquisition  Fees to all
Persons in an amount which exceeds the lesser of (a) the Competitive rate or (b)
18% of the Gross Proceeds.  The foregoing  limitation  shall be complied with at
any given time and on an ongoing basis;

                                      B-46


<PAGE>


     (xvii)  cause the  Partnership  to invest  in junior  trust  deeds or other
similar obligations,  except for junior trust deeds which arise from the sale of
Properties; or

     (xviii) cause the  Partnership  to invest in general  partner  interests of
limited  partnerships or, except as provided in Section  5.2.2(viii),  cause the
Partnership to invest in general partnerships or joint ventures.

     5.4.2.  Without  the  Consent  of a  majority-in-interest  of  the  Limited
Partners, the General Partner may not:

     (i)  sell  at  one  time  all  or  substantially  all  the  assets  of  the
Partnership,  except in connection  with the  liquidation  and winding up of the
Partnership's business upon its dissolution;

     (ii) cause the merger or other reorganization of the Partnership; or

     (iii) elect to dissolve the Partnership.

     5.4.3. Except as otherwise provided in Section 3.4.1(a) hereof with respect
to the Promissory Notes of certain  corporations,  the General Partner shall not
sell, assign or otherwise transfer the Promissory Notes at a discount;  provided
that this  restriction  shall not prohibit the General  Partner from pledging or
otherwise  granting a security  interest in the Promissory Notes as security for
any Partnership obligation.

     5.5.     Duties and Obligations of General Partner

     5.5.1.  The General  Partner shall take such actions as may be necessary or
appropriate  to  form,  qualify  and  continue  the  Partnership  as  a  limited
partnership  under the laws of the State of  California  and in order to form or
qualify the  Partnership  under the laws of any other  jurisdiction in which the
Partnership  is doing business or in which such  formation or  qualification  is
necessary to protect the limited  liability of the Limited  Partners or in order
to continue in effect such formation or  qualification.  In this  connection the
General Partner shall cause a Certificate of Limited  Partnership to be filed on
behalf of the  Partnership in the office of the  California  Secretary of State,
and  shall  cause  an  amendment to the Certificate to be  filed in such office,
and in each other public office in which the Certificate  was previously  filed,
within 30 days after the happening of any of the following events:

     (i) A change in the name of the Partnership;

                                      B-47


<PAGE>



     (ii) A change in the address of the Partnership office;

     (iii) A change  in the  name or  address  of the  Partnership's  agent  for
service of process;

     (iv) The withdrawal of a General Partner;

     (v) The admission of a General Partner; or

     (vi) The discovery by a General Partner of any false or erroneous  material
statement contained in the Certificate.

     5.5.2.  The General Partner shall prepare or cause to be prepared and shall
file on or before the due date (or any extension thereof) any Federal,  state or
local tax returns required to be filed by the Partnership.

     5.5.3.  The General  Partner  shall use its best efforts to assure that the
Partnership shall not be deemed an investment company as such term is defined in
the Investment Company Act of 1940 and shall use its best efforts to obtain from
the Securities and Exchange  Commission an order exempting the Partnership  from
the  provisions of the Investment  Company Act of 1940.  The General  Partner is
expressly  authorized  to  prepare,  execute  and file with the  Securities  and
Exchange  Commission  an  application  pursuant to Sections 6(c) and 6(e) of the
Investment  Company  Act of  1940  for an  exemption  from  all or  some  of the
provisions of such Act, together with such other documents, and to do such other
acts and things, as may be necessary or convenient in seeking such an exemption.
In the event that delay is  encountered  in  obtaining  such order,  the General
Partner is  authorized to rely upon an opinion of counsel to the effect that the
Partnership is exempt from the provisions of the Investment  Company Act of 1940
until such time as such order is obtained, if ever.

     5.5.4.  The General  Partner shall have  fiduciary  responsibility  for the
safekeeping and use of all funds and assets of the  Partnership,  whether or not
in its immediate possession or control. The General Partner shall not employ, or
permit  another  to employ,  such  funds or assets in any manner  except for the
exclusive benefit of the Partnership.

   5.5.5. The funds of the Partnership  shall not be commingled with the funds
of any other Person.

     5.5.6.  The General Partner shall not contract away the fiduciary duty owed
at common law to the Limited Partners.


                                      B-48


<PAGE>



     5.5.7. The General Partner is authorized,  in its discretion,  to cause the
Partnership  to acquire  policies of limited  partnership  liability  insurance,
insuring the Partners and their  Affiliates  against  liabilities  in connection
with the  business of the  Partnership  and  insuring  the  Partnership  against
liabilities  with  respect  to any  indemnification  it is legally  required  or
permitted to provide Partners and their Affiliates; subject to the provisions of
Section 5.8.3 hereof.

     5.6.     Compensation of Sponsor

     5.6.1.   The  Sponsor  shall  not  receive  any  salary,   fees,   profits,
distributions   or  allocations  from  the  Partnership  or  any  Local  Limited
Partnership in which the Partnership invests except as expressly allowed by this
Agreement.

     5.6.2. The Dealer Manager shall be entitled to receive from the Partnership
retail selling  commissions and the Dealer Manager Fee in respect of the sale of
Units, all as set forth in the Prospectus.

     5.6.3.  The  General  Partner  or  an  Affiliate  shall  receive  from  the
Partnership a Nonaccountable O&O Expense  Reimbursement in an amount equal to 4%
of the Capital Contributions.

     5.6.4.   For  services  actually  rendered  or to be  rendered, directly or
indirectly,  by the Sponsor in connection  with the acquisition of Local Limited
Partnership  Interests and the initial management of Local Limited Partnerships,
the Partnership shall pay to the Sponsor  Acquisition and Investment  Management
Fees in an amount equal to 7% of the Capital  Contributions.  The services to be
performed for such fee shall include (i) identifying  Local Limited  Partnership
Interests  for review,  evaluation  and,  ultimately,  selection or rejection as
potential  acquisitions for the  Partnership;  (ii) drafting and negotiating the
partnership  agreements of the Local Limited Partnerships;  (iii) organizing and
structuring the Local Limited Partnerships; (iv) acting as a liaison between the
Partnership and the Local Limited  Partnerships during the period of acquisition
of the Local Limited  Partnership  Interests and the period of construction  and
rent-up  of  the  Apartment  Complexes;  (v)  establishing   record-keeping  and
reporting  systems in connection with monitoring  activities and performances of
the Local  Limited  Partnerships  during the  start-up  period  (i.e.,  a period
generally ending two to four years after the Partnership's investment in a Local
Limited Partnership); (vi) implementing banking, escrow or other cash management
arrangements  for the  payment of  capital  contributions  to the Local  Limited
Partnerships; and (vii) assisting the Local Limited Partnerships in establishing
systems for financial,  regulatory  and other  compliance  reporting,  audit and
accounting   procedures,  partnership  reserves  management  and   miscellaneous

                                      B-49
<PAGE>




start-up period services.   Such  Acquisition  and  Investment  Management  Fees
shall be payable at the time Gross  Proceeds are received.  Notwithstanding  the
amount of Acquisition and Investment Management Fees set forth herein, the total
amount  thereof  shall be reduced in  connection  with the  purchase of Units by
certain Discount  Investors,  as described in the Prospectus under "Terms of the
Offering  and Plan of  Distribution."  The  amount  of such  reduction  shall be
treated as a distribution to such a Discount  Investor but shall not be deemed a
return of the Discount  Investor's  Capital  Contribution;  rather the reduction
amount shall be deemed to be a compromise within the meaning of Section 15636(c)
of the Act, and no Discount  Investor  shall be obligated to pay any such amount
to or for the benefit of the  Partnership  or any  creditor of the  Partnership.
Except as set forth in this Section 5.6.4, no Acquisition  Fees shall be paid to
the Sponsor.

     5.6.5.  The  General  Partner  or  an  Affiliate  shall  receive  from  the
Partnership a  Nonaccountable  Acquisition  Expense  Reimbursement  in an amount
equal to 2% of the Capital Contributions.

     5.6.6.  For any  property  management  services  actually  rendered  by the
General  Partner or its  Affiliates  respecting  the  Properties  owned by Local
Limited  Partnerships,  the General  Partner or any such  Affiliate  may receive
Property  Management Fees from the Local Limited  Partnerships.  Included in any
such  Property  Management  Fee shall be  bookkeeping  services and fees paid to
non-Affiliated  Persons for property management  services.  The maximum Property
Management Fees paid to the General Partner or any of its Affiliates  (including
all  leasing and  releasing  fees and  bonuses  and other  payments  for leasing
related  services,  paid to any  Person)  shall be the lesser of 5% of the gross
revenues from the Property or a  Competitive  amount.  Such property  management
fees will include fees for rent-up,  leasing and  releasing  services;  however,
separate fees for the initial rent-up or initial leasing-up of newly-constructed
or substantially-rehabilitated  properties may be paid to the General Partner or
its Affiliates in Competitive amounts.

     5.6.7. For services  rendered by the General Partner or an Affiliate of the
General  Partner in  connection  with the  administration  of the affairs of the
Partnership,  the General  Partner or any such Affiliate  shall receive from the
Partnership  an annual Asset  Management  Fee in an amount not to exceed 0.2% of
that  portion  of  Invested  Assets  in Local  Limited  Partnerships  which  are
attributable  to apartment  units  receiving  Government  Assistance.  The Asset
Management Fee shall be payable with respect to the previous calendar quarter on
the first day of each calendar quarter during the year,  provided that the Asset
Management  Fee shall only  accrue and be payable as  follows:  the total  Asset
Management Fee shall be allocated among the Apartment Complexes in proportion to
the amount of the  Partnership's  capital  contribution  to each  Local  Limited
Partnership, and the portion of the Asset Management Fee so attributable  to any

                                      B-50


<PAGE>



Apartment Complex shall only accrue and be  payable  commencing  with  the  date
on which such Apartment Complex commences  operations.  Accrued but unpaid Asset
Management  Fees for any year shall be deferred  without  interest  and shall be
payable in subsequent  years from any funds available to the  Partnership  after
payment  of all other  costs and  expenses  of the  Partnership,  including  any
Reserves then  determined by the General Partner to no longer be necessary to be
retained by the Partnership, or from the proceeds of a Sale or Refinancing.

     5.6.8. For services  rendered by the General Partner or an Affiliate of the
General  Partner in  connection  with the sale of any Property  owned by a Local
Limited  Partnership,  the General  Partner shall receive from the Partnership a
Subordinated Disposition Fee in an amount equal to 1% of the sales price of such
Property if the General Partner or its Affiliate  provides a substantial  amount
of  services  in the sales  effort.  This fee shall be  payable  only  after the
distributions  in Section  4.2.1(i)  and (ii) have been made,  and may accrue if
there are insufficient  Sale or Refinancing  Proceeds payable to the Partnership
upon any such sale.  This fee is subject to the  limitations  imposed by Section
5.2.2(vi).

     5.7.     Other Business of Partners

     5.7.1.  The General  Partner shall devote to the affairs of the Partnership
such  time  as may  be  necessary  for  the  proper  performance  of its  duties
hereunder,  but neither the General Partner, its officers and directors, nor any
successors  to such  parties  shall be expected to devote their full time to the
performance of such duties.

     5.7.2.  Any Partner or any of his  Affiliates may engage  independently  or
with  others  in other  business  ventures  of  every  nature  and  description,
including,  without  limitation,  the  rendering  of advice or services to other
investors  and  the  making  or  management  of  other  investments,   including
investments in real  properties  receiving  Government  Assistance.  Neither the
Partnership nor any Partner shall have any rights by virtue of this Agreement or
the  partnership  relationship  created  hereby in or to such other  ventures or
activities or to the income or proceeds derived therefrom, provided that nothing
in this Section 5.7.2 shall relieve the General Partner of its general fiduciary
obligation to the Partnership.

     5.7.3.  The Sponsor may be presented with an investment  opportunity  which
could be availed of by the  Partnership and one or more other entities which the
Sponsor or one of its  Affiliates  manages.  The  decision as to the  particular
entity which shall make the  investment  shall be based upon such factors as the
effect of the acquisition on  diversification  of each entity's  portfolio,  the


                                      B-51


<PAGE>


estimated income tax effects of the purchase on each entity, the amount of funds
of each entity  available for  investment and the length of time such funds have
been available for  investment.  If a particular  investment is determined to be
suitable  for more than one  entity,  priority  generally  shall be given to the
entity having  uninvested  funds for the longest period of time;  except that an
entity which was formed to invest primarily in apartment  complexes eligible for
state low income housing  credits as well as the Low Income Housing Credit shall
be given priority over the  Partnership and other entities which are not seeking
to provide  such state tax  credits  with  respect  to any  investment  which is
eligible for such state tax credits.

     5.8.     Limitation on Liability of Sponsor; Indemnification

     5.8.1.  No Sponsor  shall have any liability to the  Partnership  or to any
Partner for any loss suffered by the Partnership  which arises out of any action
or inaction of the Sponsor if the Sponsor,  in good faith,  determined that such
course of conduct was in the best interest of the  Partnership,  the Sponsor was
acting on behalf of, or  performing  services  for,  the  Partnership,  and such
course of conduct did not  constitute  negligence  or misconduct of the Sponsor.
Each  Sponsor  shall be  indemnified  by the  Partnership  against  any  losses,
judgments,  liabilities,  expenses and amounts paid in  settlement of any claims
sustained  by it when  acting on behalf  of, or  performing  services  for,  the
Partnership,  provided  that  the same  were not the  result  of  negligence  or
misconduct  on the  part of such  Sponsor  and were the  result  of a course  of
conduct which the Sponsor, in good faith, determined was in the best interest of
the  Partnership.  Any indemnity under this Section 5.8 shall be provided out of
and to the extent of Partnership  assets only, and no Limited Partner shall have
any personal liability on account thereof.

     5.8.2. Notwithstanding anything to the contrary contained in Section 5.8.1,
the Sponsor (which term,  for the purposes of this Section 5.8.2,  shall include
Affiliates of the Sponsor only if such  Affiliates  are  performing  services on
behalf of the Partnership) and any Person acting as a broker-dealer shall not be
indemnified  for any losses,  liabilities or expenses  arising from or out of an
alleged  violation of Federal or state securities laws unless (i) there has been
a  successful  adjudication  on the  merits  of  each  count  involving  alleged
securities law violations as to the particular  indemnitee,  or (ii) such claims
have  been  dismissed  with  prejudice  on the  merits  by a court of  competent
jurisdiction  as to the  particular  indemnitee,  or (iii) a court of  competent
jurisdiction approves a settlement of the claims against a particular indemnitee
and finds that  indemnification  of the  settlement  and related costs should be
made,  provided that in the case of this clause (iii) the court has been advised
of the  positions of the  Securities  and Exchange  Commission,  the  California
Commissioner of Corporations,  the Missouri Securities Division, the Texas State
Securities Board and any other state securities regulatory  authority  in  which

                                      B-52


<PAGE>


Units of the Partnership  were  offered  and  sold  as  to  indemnification  for
violations of securities  laws;  provided that the court need only be advised of
and consider the positions of the  securities  regulatory  authorities  of those
states (i) which are  specifically  set forth in this Section  5.8.2 and (ii) in
which plaintiffs claim they were sold Units.

     5.8.3. The Partnership shall not pay for any insurance  covering  liability
of any party as to which such party is hereby prohibited from being indemnified;
provided,  however, that nothing contained herein shall preclude the Partnership
from  purchasing  and  paying for such types of  insurance,  including  extended
coverage liability and casualty and workers' compensation, as would be customary
for any Person owning comparable  assets and engaged in a similar  business,  or
from naming any Sponsor as additional insured parties thereunder,  provided that
such addition does not add to the premiums payable by the Partnership.

     5.8.4. The Partnership may advance funds to each Sponsor for legal expenses
and other  costs  incurred by it in  connection  with any legal  action  brought
against it,  provided  that each of the  following is  satisfied:  (i) the legal
action relates to acts or omissions with respect to the performance of duties or
services on behalf of the  Partnership;  (ii) the legal action is initiated by a
third party who is not a Limited Partner,  or the legal action is initiated by a
Limited Partner and a court of competent jurisdiction  specifically approves the
advancement of funds;  and (iii) the Sponsor  receiving the funds  undertakes to
repay  the  funds  to  the  Partnership  in the  event  it is  not  entitled  to
indemnification at the conclusion of such legal action.

                                    ARTICLE 6

                      ADMISSION OF SUCCESSOR AND ADDITIONAL
                 GENERAL PARTNERS; WITHDRAWAL OF GENERAL PARTNER

     6.1.     Admission of Successor or Additional General Partners

     6.1.1.  With the Consent of all other  General  Partners,  if any,  and the
Consent of at least a majority-in-interest  of the Limited Partners, any General
Partner may at any time  designate one or more Persons to be its successor or to
be an additional General Partner,  with such Interest in the Partnership as such
General  Partner and the  successor or  additional  General  Partner agree upon,
provided that the Interests of the other Partners shall not be affected thereby.

     6.1.2.  If at any time any material  reduction shall occur in the net worth
of the General  Partner,  the General  Partner  shall consult with legal counsel
and,  if such  counsel is of the opinion  that such  reduction  might  adversely

                                      B-53

wncnat6-01z/05.lpa6

<PAGE>



affect the treatment of the Partnership as such for Federal income tax purposes,
the General  Partner  shall use its best efforts  either (i) to admit as General
Partners  one or more  Persons  having a net worth  sufficient  to  offset  such
reduction,  the additional  General Partner or General Partners to have whatever
participation  in the General  Partner's  Interests the General  Partner and the
additional  General  Partners agree upon,  provided that the additional  General
Partners  have no  authority to manage or control the  Partnership,  there is no
change in the  identity of the Persons who have  authority  to manage or control
the Partnership,  and the admission of the additional  General Partners does not
materially affect the Interests of the Limited Partners; or (ii) if necessary in
the opinion of legal counsel, to obtain additional  capitalization sufficient to
satisfy any then existing  requirements  of the Internal  Revenue  Service for a
ruling that an entity, whether or not a corporation, has sufficient net worth so
that  a  limited   partnership  of  which  it  is  a  general  partner  has  the
characteristic of unlimited liability.

     6.1.3.  Except in  connection  with a transfer to a successor or additional
General Partner pursuant to Section 6.1.1. or 6.1.2.,  the General Partner shall
have no right to retire or withdraw voluntarily from the Partnership or to sell,
transfer,  or assign all or any  portion  of its  Interest,  except  that it may
substitute  in its stead as General  Partner  any entity  which has,  by merger,
consolidation or otherwise,  acquired  substantially  all of its assets or stock
and continued its business.

     6.1.4. Any Voluntary Withdrawal by the General Partner from the Partnership
or any sale, transfer or assignment by the General Partner of its Interest shall
be effective  only upon the  admission in  accordance  with this Section 6.1 and
Section 13.3 of a successor or additional General Partner, as the case may be.

     6.1.5.  No assignee or transferee of all or any part of the Interest of the
General  Partner  shall  have any right to become a  General  Partner  except as
provided in this Article 6.

     6.2.     Restrictions on Transfer of General Partner's Interest

     Notwithstanding  anything to the contrary in this Article 6, the assignment
or transfer of the General  Partner's  Interest shall at all times be subject to
the same restrictions applicable to an assignment or transfer of Units set forth
in Sections 7.2.1 and 7.2.2.


                                      B-54


<PAGE>


     6.3.    Consent of Limited Partners to Admission of Successor or Additional
             General Partners

     Each of the Limited Partners, by the execution of this Agreement,  Consents
for all  purposes of the Act to the  admission  of any Person as a successor  or
additional    General   Partner   for   which   the   express   Consent   of   a
majority-in-interest  of the  Limited  Partners  has been  obtained  at the time
pursuant to Section 6.1. Upon receipt of such a Consent to such admission from a
majority-in-interest of the Limited Partners, then, subject to the provisions of
Section 6.2, the admission shall, without any further Consent or approval of the
Limited Partners, be an act of all the Limited Partners.

     6.4.     Event of Withdrawal of a General Partner

     If,  at the time of an Event  of  Withdrawal  of a  General  Partner,  such
General Partner was not the sole General Partner,  the remaining General Partner
or General  Partners shall  immediately:  (i) give  Notification  to the Limited
Partners of such  event;  and (ii) make any  amendments  to this  Agreement  and
execute and file for recordation any amended  Certificates or other  instruments
necessary to reflect the  termination of the Interest of the General  Partner as
to which such event has occurred and such General  Partner's having ceased to be
a General Partner.

     6.5.     Interest and Liability of a Withdrawn General Partner

     6.5.1.  Upon an Event of Withdrawal as to a General  Partner,  such General
Partner shall immediately cease to be a General Partner,  and its Interest shall
be subject to purchase in accordance with Section 6.6; provided,  however,  that
such a  termination  shall not affect any rights of such General  Partner  which
arose prior to such event (including rights to amounts then accrued and owing to
such General  Partner),  or the value,  if any, at the time of such event of the
Interest of such General Partner.

     6.5.2. Any General Partner who voluntarily or involuntarily  for any reason
(including  bankruptcy,  death,  dissolution or  adjudication  of  incompetence)
withdraws from the Partnership or sells, transfers or assigns its Interest shall
remain liable for all obligations  and  liabilities  incurred by the Partnership
prior to the time the withdrawal, sale, transfer or assignment becomes effective
to the same extent it would have been liable had the withdrawal,  sale, transfer
or assignment not occurred,  but it shall be free of any obligation or liability
incurred on account of the activities of the Partnership after that time.

                                      B-55


<PAGE>



     6.6.     Valuation and Sale of Interest of Former General Partner

     6.6.1.  If the business of the  Partnership is continued after the Event of
Withdrawal of a General Partner, or if, following such event, the Partnership is
reconstituted,  in each case as  contemplated  by Section 8.1,  the  Partnership
shall  purchase  such General  Partner's  Interest for a price equal to the then
present fair market value thereof. Such fair market value shall be determined by
agreement of the former General Partner and the Partnership,  or, if they cannot
agree,  by  arbitration  in  accordance  with the current  rules of the American
Arbitration  Association.  The  expense of  arbitration  will be shared  equally
between such former General Partner and the Partnership.

     6.6.2.  Promptly after  determination  of the fair market value of a former
General  Partner's  Interest  pursuant to Section 6.6.1,  the Partnership  shall
deliver to such former General  Partner a promissory note of the Partnership for
such fair market  value  payable in no less than five equal  consecutive  annual
installments  commencing on the first anniversary of the date of such note. Such
promissory note shall bear simple interest at the rate per annum which is at all
times equal to the Prime Rate,  but not to exceed the maximum rate  permitted by
law,  payable  on the last  day of each  calendar  quarter  while  such  note is
outstanding;  provided,  however,  that if such note is  delivered  following an
Event of Withdrawal of a General Partner which is a Voluntary  Withdrawal on its
part then (i) such note shall  neither be secured nor bear interest and (ii) the
principal payable to the withdrawing  General Partner shall be limited in amount
and date of payment to  distributions  which such  withdrawing  General  Partner
would have received under this  Agreement had it not withdrawn.  Within 120 days
after the determination of the fair market value of the former General Partner's
Interest,  the  Partnership  may,  with the  Consent  of all  remaining  General
Partners and the Consent of a majority-in-interest of the Limited Partners, sell
such  Interest to one or more  Persons,  who may be  Affiliates of the remaining
General Partner or General  Partners,  and admit such Persons to the Partnership
as substitute General Partners; provided, however, that the purchase price to be
paid to the Partnership for the Interest of the former General Partner shall not
be less than its fair market value as  determined  by the procedure set forth in
Section 6.6.1.  above. Such substitute  General Partner or Partners may pay said
purchase  price in  installments  in the manner set forth above in this  Section
6.6.2.


                                      B-56


<PAGE>



                                    ARTICLE 7

                            TRANSFERABILITY OF UNITS

     7.1.     Right to Transfer Units

     Subject to the requirements of this Article 7, a Limited Partner may assign
his Units by a  written  instrument  of  assignment,  the  terms of which  shall
conform to the provisions of this Agreement.

     7.2.     Restrictions on Transfers

     7.2.1. No sale,  exchange,  transfer or assignment of any Units may be made
if, in the opinion of counsel to the Partnership,  such sale, exchange, transfer
or assignment would:

     (i) when added to the total of all other Units sold or  exchanged  within a
period of 12 consecutive  months prior thereto,  result in the Partnership being
considered  to have  terminated  within the  meaning of Section 708 of the Code;
provided,  that any deferred sales or exchanges shall be made (in  chronological
order to the extent  practicable)  as of the first day of a fiscal quarter after
the end of any such 12-month  period,  subject to the provisions of this Article
7;

     (ii) cause the  Partnership  to become a  publicly-traded  partnership  for
Federal income tax purposes;

     (iii) cause the  Partnership to cease to qualify under Section  42(j)(5)(B)
or Section 47 of the Code;

     (iv)  result in the  Partnership  or any other  Partner  being  required to
recapture  any Tax  Credits  unless  the holder of such  Units  indemnifies  the
Partnership and its Partners for such recapture; or

     (v) result in the Partnership being treated as an association  taxable as a
corporation for Federal income tax purposes.

     7.2.2. No sale, exchange,  transfer or assignment of any Unit shall be made
to any Person  exempt from Federal  income tax under Section 501 of the Code, to
any  Person  defined  in  Section  168(h)(2)  of the  Code,  to  any  Individual
Retirement  Account as defined in Section 408(a) of the Code, to any Keogh Plan,
to any nonresident alien, or to any foreign Person.

                                      B-57


<PAGE>



     7.2.3.  Any transfer of a Unit to a Person who makes a market in securities
shall be void ab initio unless such Person shall certify to the General  Partner
that it has acquired  such Unit solely for  investment  purposes and not for the
purpose of resale.

     7.2.4. No purported sale, exchange, transfer or assignment by a transferror
of a Unit shall be permitted unless the transferror  shall have represented that
such transfer:

     (i) was effected through a broker-dealer or matching agent whose procedures
with respect to the transfer of Units have been approved by the General  Partner
as not being  incident  to  trading  on an  established  securities  market or a
secondary market and not through any other broker-dealer or matching agent; or

     (ii) otherwise was not effected through an established securities market or
through a broker-dealer or matching agent which makes a market in Units or which
provides a readily available,  regular and ongoing opportunity to the holders of
Units to sell or exchange  their Units  through a public  means of  obtaining or
providing information of offers to buy, sell or exchange Units.

     7.2.5. In connection with state  securities laws  restrictions on transfer,
Section  260.141.11 of the Rules of the California  Commissioner of Corporations
states:

      "(a) The issuer of any security upon which a  restriction  on transfer has
     been imposed pursuant to Sections  260.141.10 or 260.534 shall cause a copy
     of this  section  to be  delivered  to each  issuee or  transferee  of such
     security at the time the  certificate  evidencing the security is delivered
     to the issuee or transferee.

     (b) It is unlawful for the holder of any such security to consummate a sale
     or transfer of such security,  or any interest  therein,  without the prior
     written  consent  of the  Commissioner  (until  this  condition  is removed
     pursuant to Section 260.141.12 of these rules), except:

             (1)     to the issuer;

             (2)     pursuant to the order or process of any court;

             (3)     to any person described in Subdivision (i) of Section 25102
                     of the Code or Section 260.105.14 of these rules;


                                      B-58


<PAGE>



              (4)     to the transferor's ancestors,  descendants, or spouse, or
                      any custodian or trustee for the account of the transferor
                      or the transferor's ancestors,  descendants, or spouse; or
                      to a transferee  by a trustee or custodian for the account
                      of  the   transferee   or  the   transferee's   ancestors,
                      descendants, or spouse;

              (5)     to holders of securities of the same  class  of  the  same
                      issuer;

              (6)     by way of gift or donation inter vivos or on death;

              (7)     by or  through  a  broker-dealer  licensed  under the Code
                      (either  acting as such or as a finder) to a resident of a
                      foreign  state,  territory,  or  country  who  is  neither
                      domiciled   in  this  state  to  the   knowledge   of  the
                      broker-dealer,  nor actually  present in this state if the
                      sale  of  such  securities  is  not  in  violation  of any
                      securities law of the foreign state, territory, or country
                      concerned;

              (8)     to a broker-dealer  licensed under the Code in a principal
                      transaction,   or  as  an  underwriter  or  member  of  an
                      underwriting syndicate or selling group;

              (9)     if the interest sold or  transferred  is a pledge or other
                      lien given by the  purchaser  to the seller upon a sale of
                      the security for which the Commissioner's  written consent
                      is obtained or is not required;

              (10)    by way of a sale  qualified  under Section  25111,  25112,
                      25113,  or  25121 of the  Code,  of the  securities  to be
                      transferred, provided that no order under Section 25140 or
                      subdivision  (a) of Section 25143 of the Code is in effect
                      with respect to such qualification;

              (11)    by a  corporation  to a  wholly-owned  subsidiary  of such
                      corporation,   or  by  a  wholly-owned   subsidiary  of  a
                      corporation to such corporation;

              (12)    by way  of an  exchange  qualified  under  Section  25111,
                      25112, or 25113 of the Code,  provided that no order under
                      Section 25140 or  subdivision  (a) of Section 25143 of the
                      Code is in effect with respect to such qualification;


                                      B-59


<PAGE>



              (13)    between  residents  of  foreign  states,  territories,  or
                      countries who are neither  domiciled nor actually  present
                      in this state;

              (14)    to the State Controller pursuant to the Unclaimed Property
                      Law or to the administrator of the unclaimed  property law
                      of another state; or

              (15)    by the State Controller pursuant to the Unclaimed Property
                      Law or by the administrator of the unclaimed  property law
                      of another state if, in either such case,  such person (i)
                      discloses  to  potential   purchasers  at  the  sale  that
                      transfer of the securities is restricted  under this rule,
                      (ii) delivers to each  purchaser a copy of this rule,  and
                      (iii)  advises  the  Commissioner  of  the  name  of  each
                      purchaser;

              (16)    by a trustee to a  successor  trustee  when such  transfer
                      does not involve a change in the  beneficial  ownership of
                      the securities; or

              (17)    by way of an offer and sale of  outstanding  securities in
                      an issuer transaction that is subject to the qualification
                      requirement  of Section  25110 of the Code but exempt from
                      that  qualification  requirement  by  subdivision  (f)  of
                      Section  25102;  provided that any such transfer is on the
                      condition  that any  certificate  evidencing  the security
                      issued  to  such  transferee   shall  contain  the  legend
                      required by this section.

              (c) The certificates  representing such securities subject to such
              a restriction on transfer,  whether upon initial  issuance or upon
              any  transfer  thereof,   shall  bear  on  their  face  a  legend,
              prominently  stamped or printed  thereon in capital letters of not
              less than 10-point size, reading as follows:

              'IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OR THIS SECURITY,
              OR ANY INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR,
              WITHOUT  THE  PRIOR  WRITTEN   CONSENT  OF  THE   COMMISSIONER  OF
              CORPORATIONS  OF THE STATE OF  CALIFORNIA,  EXCEPT AS PERMITTED IN
              THE COMMISSIONER'S RULES.'"



                                      B-60


<PAGE>



Such restriction  shall be noted in the appropriate  records of the Partnership,
and no  transfer  of any  interest  in the  Partnership  shall be made except in
compliance with the terms of such legend condition.

     7.2.6. No sale, exchange,  transfer or assignment of any Unit shall be made
to any Person who does not satisfy the investor suitability standards imposed by
the Partnership in connection with the public Offering of the Units or such more
restrictive  standards,  if  any,  as may be  required  under  applicable  state
securities laws.

     7.2.7.  No purported  sale,  exchange,  assignment or transfer by a Limited
Partner of any Unit after which any  transferror  or  transferee  would hold any
fraction of a Unit,  will be permitted or  recognized  (except for  transfers by
gift, inheritance,  bequest or family dissolution, or transfers to Affiliates of
the transferror).

     7.2.8.  The General  Partner  (i) shall be entitled to make any  reasonable
inquiry of the Limited  Partners and prospective  Limited Partners in connection
with the  provisions of this Section 7.2, and (ii) may, in its sole  discretion,
on behalf of the  Partnership,  impose any restrictions on transfers of Units or
any other additional  procedures or requirements  which it deems  appropriate in
order to prevent  the  Partnership  from being  treated  for tax  purposes as an
association or as a publicly-traded partnership, or to give effect to the intent
of this Section 7.2, and shall be permitted, in order to give effect to any such
restriction,  procedures or  requirements,  to amend this Agreement  without the
Consent of the Limited Partners.  The General Partner shall give Notification to
all  Limited  Partners  in  the  event  that  sales,  exchanges,   transfers  or
assignments have generally been suspended.

     7.2.9.  The General  Partner will review from time to time the  limitations
and restrictions on the sale, exchange, transfer or assignment of Units and will
eliminate  or  modify  such  limitations  or  restrictions  to  make  them  less
restrictive  if the  Partnership  shall have received an opinion of counsel that
such  elimination  or  modification  may be made  without  material  adverse tax
consequences to the Partners.

     7.3.     Assignees and Assignment Procedure

     7.3.1.  If a  Limited  Partner  who is an  individual  dies or a  court  of
competent  jurisdiction  adjudges him to be  incompetent to manage his person or
his  property,  such  Limited  Partner's  executor,   administrator,   guardian,
conservator  or other legal  representative  may  exercise  all of such  Limited
Partner's  rights for the purposes of settling his estate or  administering  his
property,  including  any power  under  this  Agreement  to join with a proposed

                                      B-61


<PAGE>


assignee   in   satisfying   conditions  precedent  to  the  assignment  of  his
Interest to such  assignee and to such  assignee  becoming a Substitute  Limited
Partner.  If a  Limited  Partner  which is not an  individual  is  dissolved  or
terminated,  the powers of that  Limited  Partner may be  exercised by its legal
representative  or successor.  Notwithstanding  the foregoing,  the  Partnership
shall not be under any duty to recognize  the  authority  of any such  executor,
administrator,   guardian,   conservator  or  other  legal   representative   or
successor's  rights  unless and until the  Partnership  shall have received such
evidence  of the  authority  of such party as counsel  for the  Partnership  may
request. The death, dissolution, adjudication of incompetence or bankruptcy of a
Limited Partner shall not dissolve the Partnership.

     7.3.2.  In order to give  effect to the  restrictions  on transfer of Units
contained in this Article 7, a purported or proposed  assignment of a Unit shall
not take effect for any purpose until it has been  registered on the Partnership
Register (the date of such registration  being called the "Registration  Date").
The General Partner shall not be under any duty to cause any assignment to be so
registered until (i) the assigning Limited Partner and/or the proposed assignee,
as  applicable,  shall have  delivered to the  Partnership  a duly  executed and
acknowledged  counterpart of the  instrument of  assignment,  signed by both the
assignor and the assignee,  evidencing written acceptance by the assignee of all
the terms and provisions of this Agreement and representing  that the assignment
was made in  accordance  with all  applicable  laws and  regulations  (including
investment suitability requirements); (ii) the Partnership shall have received a
fee in an amount  established by it from time to time sufficient to reimburse it
for all its actual costs in connection with such assignment,  including, but not
by way of limitation,  any advice of counsel  contemplated  by this Agreement in
connection  with such  assignment,  and, if the Partnership has made an election
under Section 754 of the Code, any  incremental  accounting  fees resulting from
compliance  with  Section  754 in  connection  with such  assignment;  provided,
however,  that the amount of such fee shall in no event  exceed the lower of the
Partnership's  actual costs in connection  with the transfer or $100;  (iii) the
Partnership shall have received such evidence of the authority of the parties to
such assignment as counsel for the Partnership may request; (iv) if a Promissory
Note of the transferror  has not been paid in full, the  Partnership  shall have
received  a  written  statement  signed  by the  assignee  or  transferee  which
acknowledges  the material terms of the Promissory  Note,  including the payment
due date, the status of payments,  the  Partnership's  security  interest in the
Units, the terms of default, the consequences  thereof, and the terms for curing
the default;  and (v) the Partnership  shall have received such further evidence
of compliance of such assignment with the terms and conditions of this Agreement
and the Prospectus as the Partnership may reasonably request, including, but not
by way of limitation,  instruments  complying with Section 13.3 and any required
consent to such  assignment of the  Commissioner of Corporations of the State of

                                      B-62


<PAGE>


California.   The   General  Partner  shall  cause  such  an   assignment,  upon
compliance  with the foregoing  conditions and the conditions of Section 7.2, to
be  registered  on the  Partnership  Register not later than the last day of the
calendar month following satisfaction of such conditions.

     7.3.3. Except as otherwise provided in this Section 7.3.3, if an assignment
of a Unit is  registered  on the  Partnership  Register  as  provided in Section
7.3.2,  the assignee of such Unit shall:  (i) for the purposes of Sections 4.6.2
and  4.6.3,  be  recognized  as a holder  of the Unit as of the first day of the
fiscal  quarter  following  the fiscal  quarter in which the  Registration  Date
occurs; and (ii) for the purposes of Section 4.6.4, be recognized as a holder of
the Unit as of the date specified by the parties in the instrument of assignment
provided for in Section 7.3.2, or if no date is specified therein, the first day
of the fiscal  quarter  following the fiscal  quarter in which the  Registration
Date occurs.

     7.3.4. The rights of an assignee of a Unit who does not become a Substitute
Limited  Partner  shall be  limited  to the right to  receive  his share of Cash
Available for Distribution, Sale or Refinancing Proceeds, Profits and Losses and
Tax Credits,  as  determined  under Article 4. Any assignee of all or any of the
Units of a Limited Partner who does not become a Substitute  Limited Partner and
desires to make a further  assignment  of any of such Units  shall be subject to
all the  provisions  of this Article 7 to the same extent and in the same manner
as any Limited Partner desiring to make an assignment of his Units.

     7.3.5.  Upon receipt of documents  purporting to create or release a pledge
or other security interest in a Limited Partner's Interest,  the General Partner
shall  promptly  cause such  transaction  to be  registered  on the  Partnership
Register.  Any purported or proposed  pledge of, or other security  interest in,
any  Limited  Partner's  Interest  shall not take  effect for any  purpose or be
deemed  perfected  unless  and  until  the  same  has  been  registered  on  the
Partnership  Register and shall be subject to any  existing  pledge and security
interest  granted to the  Partnership  pursuant to Section 13.1. The Partnership
may charge a fee in an amount  established by it from time to time sufficient to
reimburse it for all its actual costs in connection with such pledge,  including
but not by way of  limitation,  any advice of counsel  in  connection  with such
pledge, and no pledge shall be effective until such fee is paid.

     7.3.6.  The  General  Partner  shall  provide to each  Limited  Partner and
registered  pledgee,  if  any,  from  time to time  the  transaction  statements
required to be provided to such respective parties by the California  Commercial
Code.


                                      B-63


<PAGE>



     7.4.     Substitute Limited Partners

     Subject to the Consent of the General  Partner,  which  Consent may only be
withheld for the purpose of preserving the  Partnership's tax status or to avoid
adverse legal  consequences to the  Partnership,  the assignee of any Units duly
transferred  to him  pursuant  to  this  Section  7  shall  be  admitted  to the
Partnership as a Substitute  Limited Partner upon satisfaction of the conditions
contained in Section 13.3.  The  Partnership  Register shall be amended not less
often than quarterly to recognize the admission of Substitute Limited Partners.

                                    ARTICLE 8

                  DISSOLUTION AND WINDING-UP OF THE PARTNERSHIP

     8.1.     Events Causing Dissolution

     8.1.1.  The  Partnership  shall  dissolve and its affairs shall be wound up
upon the  happening of any of the following  events:  (i) an Event of Withdrawal
shall occur as to a General Partner;  (ii) the sale or other  disposition of all
the Local Limited  Partnership  Interests  and other assets of the  Partnership;
(iii) the election by the General Partner pursuant to Section 5.4.2, or the vote
by the  Limited  Partners  pursuant  to  Section  10.2.1(ii),  to  dissolve  the
Partnership;  or (iv) the expiration of the term of the Partnership specified in
Section 2.6.

     8.1.2.   Notwithstanding  the  foregoing,  the  Partnership  shall  not  be
terminated,  liquidated or wound up upon the occurrence of an event specified in
clause 8.1.1(i) above if (i) a remaining General Partner,  if any, elects within
120 days after such an event to continue  the  business of the  Partnership,  or
(ii) if there is no remaining  General Partner,  a  majority-in-interest  of the
Limited  Partners  agree in writing to continue the business of the  Partnership
and, within six months after the last remaining General Partner has ceased to be
a General Partner, to admit one or more General Partners.

     8.1.3.  Dissolution  of the  Partnership  shall be  effective on the day on
which the event occurs giving rise to the dissolution, but the Partnership shall
not terminate until the Partnership's  Certificate of Limited  Partnership shall
have been canceled and the assets of the Partnership shall have been distributed
as provided in Section 8.2.  Notwithstanding the dissolution of the Partnership,
until the  termination  of the  Partnership  the  business  and  affairs  of the
Partnership shall continue to be governed by this Agreement.


                                      B-64


<PAGE>



     8.2.     Liquidation

     8.2.1.  Upon  dissolution  of the  Partnership,  unless the business of the
Partnership  is continued  pursuant to Section 8.1,  the General  Partner  shall
liquidate the assets of the  Partnership  and apply and  distribute the proceeds
thereof as contemplated by this Section 8.2. After payment of liabilities  owing
to  creditors  of the  Partnership,  the  General  Partner  shall set aside as a
Reserve  such  amount  as it  deems  reasonably  necessary  for  any  contingent
liabilities or obligations of the Partnership.  Said Reserve may be paid over by
the  General  Partner to a bank,  to be held in  Temporary  Investments  for the
purpose of paying any such  contingent  liabilities or  obligations  and, at the
expiration of such period as the General Partner may deem advisable,  the amount
in such Reserve shall be distributed to the Partners in accordance  with Section
4.2.2.

     8.2.2.  Notwithstanding  the  foregoing,  in the event the General  Partner
determines that an immediate sale of part or all of the Partnership assets would
cause undue loss to the  Partners,  the General  Partner,  in order to avoid any
such loss may, after having given  Notification to all the Limited Partners,  to
the extent not then prohibited by applicable  law,  either defer  liquidation of
and  withhold  from  distribution  for a  reasonable  time  any  assets  of  the
Partnership  except  those  necessary  to satisfy  the  Partnership's  debts and
obligations,  or convey the remaining assets of the Partnership to a liquidating
trust for the benefit of the Partners. In such event, the trustee will be a bank
authorized to accept such trusts, having deposits insured by the Federal Deposit
Insurance Corporation and having a combined capital and surplus of not less than
$50,000,000;  such trustee will  liquidate  such assets in an orderly manner and
distribute the proceeds of such liquidation,  net of costs associated therewith,
to the  Partners in  accordance  with  Section 4.2. The fair market value of any
assets conveyed to such  liquidating  trust shall be determined,  promptly after
such  conveyance,  by an  independent  appraiser to be selected by random number
from a list of three qualified  appraisers  obtained by the General Partner from
the American Institute of Real Estate Appraisers.

     8.2.3.  The General  Partner shall cause the business of the Partnership to
be wound up and cause  the  cancellation  of the  Partnership's  Certificate  of
Limited  Partnership  following  the  liquidation  and  distribution  of all the
Partnership's assets.



                                      B-65


<PAGE>



                                    ARTICLE 9

                         BOOKS AND RECORDS, ACCOUNTING,
                          REPORTS, TAX ELECTIONS, ETC.

     9.1.     Books and Records

     (a) The General  Partner shall cause the  Partnership  to keep and maintain
full and complete books and records which shall include each of the following:

              (i) a current list  (updated at least  quarterly) of the full name
     and last known business or residence address and business telephone of each
     Partner  set  forth  in  alphabetical   order  together  with  the  Capital
     Contribution  and the share in  Profits  and  Losses of each  Partner  (the
     "Participant List");

              (ii) a copy of the  Certificate  of  Limited  Partnership  and all
     certificates  of amendment  thereto,  together with executed  copies of any
     powers of attorney pursuant to which any certificate has been executed;

              (iii) copies of the Partnership's  Federal, state and local income
     tax  information  returns  and  reports,  if any,  for the six most  recent
     taxable years;

              (iv) copies of the original of this  Agreement and all  amendments
thereto;

              (v)  financial  statements  of the  Partnership  for the six  most
recent fiscal years; and

              (vi) the Partnership's  books and records for at least the current
     and past three fiscal years.

     (b) Upon the request of a Limited Partner, the General Partner shall within
10 days of the receipt of the request mail to the Limited  Partner copies of the
Participant List (which shall be on white paper in a readily readable form of no
less than 10-point type), and the information set forth in Section 9.1(a)(ii) or
(iv) above and of the  provisions of the Act described in Section 10.1.2 of this
Agreement.  A reasonable charge for copy work may be charged by the Partnership.
Each  Limited  Partner  shall have the right  upon  request  and  during  normal
business  hours to  inspect  and copy any of the  foregoing  records  at his own
expense,  and, upon request,  to obtain from the General  Partner  copies of the
Partnership's  Federal,  state  and local  income  tax or  information  returns,
promptly after such returns become available.

                                      B-66


<PAGE>



     (c) If the Sponsor  neglects or refuses to exhibit,  produce or mail a copy
of the Participant List as requested, the Sponsor shall be liable to any Limited
Partner requesting the list for costs,  including  attorneys' fees,  incurred by
the Limited Partner for compelling the production of the  Participant  List, and
for actual damages  suffered by the Limited Partner by reason of such refusal or
neglect.  It shall be a defense  that the  actual  purpose  and  reason  for the
requests for  inspection or for a copy of the  information is to secure the list
of Limited Partners or other information for the purpose of selling such list or
information  or copies  thereof,  or of using the same for a commercial  purpose
other  than in the  interest  of the  requesting  Person  as a  Limited  Partner
relative to the affairs of the Partnership.  The Sponsor may require the Limited
Partner  requesting  the  Participant  List to  represent  that  the list is not
requested for a commercial  purpose unrelated to the Limited Partner's  interest
in  the  Partnership.  The  remedies  provided  hereunder  to  Limited  Partners
requesting  copies of the Participant  List are in addition to, and shall not in
any way limit,  other remedies  available to Limited Partners under Federal law,
or the laws of any state.

     9.2.     Accounting and Fiscal Year

     The  books  of the  Partnership  shall  be  kept on the  accounting  method
selected by the General Partner. The fiscal year of the Partnership shall end on
March 31 in each year, or on such other date as the General Partner determines.

     9.3.     Bank Accounts and Temporary Investments

     The bank  accounts  of the  Partnership  shall  be  maintained  in  banking
institutions  determined by the General Partner,  and withdrawals  shall be made
only in the regular course of Partnership  business on signatures  determined by
the General Partner. All deposits and other funds not needed in the operation of
the business or not yet invested may be invested in Temporary Investments.

     9.4.     Reports

     9.4.1.  Within 60 days after the end of each of the first three quarters of
each fiscal year of the  Partnership,  the  General  Partner  shall send to each
Person who was a Limited  Partner at any time  during  such  quarter one or more
reports which, taken together, provide the following information (which need not
be audited): (i) a balance sheet as at the end of such quarter; (ii) a statement
of  operations  for such  quarter;  (iii) a  statement  of cash  flows  for such
quarter;  (iv) a  statement  setting  forth  the  amount  of all fees and  other
compensation and distributions  and reimbursed  expenses paid by the Partnership

                                      B-67

<PAGE>


for the  quarter to  the  General  Partner  or  any  Affiliate  of  the  General
Partner;  (v) a report of the significant  activities of the Partnership  during
the quarter; and (vi) until the Limited Partners' Capital  Contributions (except
for  any  amounts  utilized  to  pay   Organizational   and  Offering  Expenses,
Acquisition  Fees,  Acquisition  Expenses or  Operating  Cash  Expenses,  or any
amounts set aside for Reserves) are fully  invested,  a special  report of Local
Limited Partnership Interests acquired during the quarter,  describing the terms
of such  investments.  If the Partnership  acquires a Local Limited  Partnership
Interest  during the last quarter of any fiscal year,  a report  containing  the
information  described in the  preceding  clause (vi) shall be sent on or before
the date of  transmission of the report for such year required by Section 9.4.3.
Until all Promissory  Notes have been paid in full, each quarterly  report shall
reflect any defaults in the payment of the  Promissory  Notes,  actions taken by
the  Partnership  in response to any defaults,  and a discussion and analysis of
the impact thereof on capital requirements of the Partnership.

     9.4.2.  Within 75 days after the end of each  calendar  year,  the  General
Partner  shall  provide  to each  Person  who was a Limited  Partner at any time
during the fiscal year  ending  during that  calendar  year all tax  information
necessary  for the  preparation  of his Federal and state income tax returns and
other tax returns with regard to  jurisdictions  in which the  Partnership  or a
Local Limited Partnership is formed or qualified or owns Properties.

     9.4.3.  Within  120  days  after  the  end  of  each  fiscal  year  of  the
Partnership,  the  General  Partner  shall send to each Person who was a Limited
Partner at any time during such fiscal year:  (i) a balance  sheet as of the end
of such fiscal year and  statements  of  operations,  partners'  equity and cash
flows for such  fiscal year  prepared  in  accordance  with  generally  accepted
accounting  principles  and  accompanied  by an auditor's  report  containing an
opinion of the  Accountants;  (ii) a report (which need not be audited)  setting
forth any  distributions  made to Persons who were Limited  Partners at any time
during the fiscal year, separately identifying  distributions from (a) Cash Flow
from Local Limited Partnership or Partnership operations during the fiscal year,
(b) Cash Flow from Local Limited Partnership or Partnership  operations during a
prior  fiscal  year  which had been held as  Reserves,  (c) Sale or  Refinancing
Proceeds,  and (d) amounts previously set aside as Reserves from Gross Proceeds;
(iii) a report of the significant activities of the Partnership during the year;
(iv)  a  special  report  setting  forth  the  amount  of  all  fees  and  other
compensation and distributions  and reimbursed  expenses paid by the Partnership
and the Local Limited Partnerships for the fiscal year to the General Partner or
any Affiliate of the General Partner and the services performed in consideration
therefor, which report shall be verified by the Accountants,  with the method of
verification  to  include,  at a  minimum,  a  review  of the  time  records  of
individual employees, the costs of whose services were reimbursed,  and a review
of the  specific  nature of the work  performed  by each such  employee,  all in
accordance  with  generally   accepted   auditing   standards  and, accordingly,

                                      B-68


<PAGE>



including  such  tests  of  the  accounting  records  and  such  other  auditing
procedures as the Accountants  consider  appropriate in the  circumstances.  The
additional  costs of such special  report  shall be itemized by the  Accountants
among all programs  sponsored  by the General  Partner and its  Affiliates  on a
program-by-program  basis and may be  reimbursed  to the General  Partner or its
Affiliates  to the extent  that such  reimbursement,  when added to the cost for
administrative  services rendered, does not exceed the Competitive rate for such
services.  Until all Promissory Notes have been paid in full, such annual report
shall reflect any defaults in the payment of the Promissory Notes, actions taken
by the Partnership in response to any defaults, and a discussion and analysis of
the impact thereof on capital requirements of the Partnership.

     9.5.     Depreciation and Other Tax Elections

     The Partnership may elect to use with respect to depreciable  assets of the
Partnership  any  depreciation  method  which  is  permitted  by  the  Code  and
appropriate in the opinion of the General Partner.  All other Federal income tax
elections  required or permitted to be made for or by the  Partnership  shall be
made by the General Partner after consulting with the  Accountants.  The General
Partner may, but shall not be under any duty to, cause the  Partnership  to make
an election under Section 754 of the Code (or any successor provision thereto).

     9.6.     Designation of Tax Matters Partner

     The General  Partner is hereby  designated as the "Tax Matters  Partner" of
the  Partnership  under  Section  6231(a)(7)  of the  Code  and,  in  connection
therewith  and in addition to all powers given  thereunto,  shall have all other
powers needed to fully perform as the Tax Matters  Partner,  including,  without
limitation, the power to retain all attorneys and accountants of its choice, the
right to settle any audits  without the consent of the Limited  Partners and the
right to challenge any final  partnership  administrative  adjustment in a court
action. The designation made in this Section is hereby expressly consented to by
each  Limited  Partner as an express  condition  to becoming a Limited  Partner.
Expenses of any administrative proceedings undertaken by the Tax Matters Partner
will be paid for out of Partnership  assets.  Each Limited Partner who elects to
participate in the proceedings will be responsible for any expenses  incurred by
him in connection with his  participation,  and the cost of any resulting audits
or  adjustments  of a Limited  Partner's  tax return will be borne solely by the
affected  Limited  Partner.  The  General  Partner is hereby  designated  as the
"notice  partner"  under  Section  6231(a)(8)  of the Code to receive any notice
provided by the Internal  Revenue Service to the Limited  Partners as a group in
accordance with Section 6223(b)(2) of the Code.

                                      B-69


<PAGE>


                                   ARTICLE 10

                 MEETINGS AND VOTING RIGHTS OF LIMITED PARTNERS

     10.1.    Meetings and Actions Without Meetings

     10.1.1.  Meetings of the Limited  Partners for any purpose may be called by
the General Partner at any time, and shall be called by the General Partner upon
receipt of a request in writing, containing a proposal for the holding of such a
meeting,  signed by 10% or more in interest of the Limited  Partners and stating
the purpose of the meeting.  In addition,  the General  Partner may,  and,  upon
receipt  of a  proposal  in  writing  signed  by the  holders  of 10% or more in
interest  of the  Limited  Partners  shall,  submit any matter  (upon  which the
Limited  Partners  are  entitled to act) to the Limited  Partners  for a vote by
written Consent without a meeting.

     10.1.2.  All meetings and actions of the Limited Partners shall be governed
in all respects,  including  matters  relating to notice,  quorum,  adjournment,
proxies,  record  dates and  actions  without a meeting,  by the  provisions  of
Section  15637 of the Act, as said  Section  15637 shall be amended from time to
time.  Notwithstanding  the foregoing,  upon receipt of a written  request for a
Partnership  meeting  from one or more Limited  Partners  either in person or by
certified mail stating the purpose(s) of the meeting,  the General Partner shall
provide  all Limited  Partners,  within 10 days after  receipt of said  request,
written  notice  (either in person or by certified  mail) of the meeting and the
purpose of such meeting to be held on a date not less than 15 days nor more than
60 days after  receipt of said  request,  at a time and place  convenient to the
Limited Partners.

     10.2.    Voting Rights of Limited Partners

     10.2.1. The holders of a majority of the outstanding Units may, without the
concurrence of the General Partner:

     (i) amend this Agreement, subject to the provisions of Section 12.1 hereof;

     (ii) dissolve the Partnership;

     (iii) remove the General Partner and elect a replacement General Partner;


                                      B-70


<PAGE>



     (iv)  approve or  disapprove  the sale of all or  substantially  all of the
assets of the Partnership in a single  transaction other than in connection with
the liquidation of the Partnership; or

     (v) if the Partnership  invests in a Local Limited Partnership of which the
Local General Partner is a Sponsor, direct the General Partner (acting on behalf
of the  Partnership) to take any action permitted to be taken by the Partnership
pursuant to the partnership agreement of the Local Limited Partnership.

     10.2.2.  Notwithstanding  any  provision  of the Act to the  contrary,  the
Limited  Partners  shall only have the right to vote on the matters set forth in
Paragraph 10.2.1. of this Agreement.

     10.2.3. In any vote of the Limited Partners,  each Limited Partner shall be
entitled  to cast  one vote for  each  Unit  which he owns as of the  designated
record date.  Notwithstanding  any other provision of this Agreement,  any Units
held by the Sponsor will not be entitled to vote,  and will not be considered to
be  "outstanding"  Units for purposes of any vote,  upon matters which involve a
conflict between the interests of such Sponsor and the  Partnership,  including,
but not limited to, any vote on the proposed  removal of the General  Partner or
regarding any transaction between the Partnership and the Sponsor.

10.3.         Limitations on Roll-Ups; Dissenters' Rights

     10.3.1.  In  connection  with  a  proposed  Roll-Up,  an  appraisal  of all
Partnership  assets shall be obtained from a competent,  Independent  Expert. If
the appraisal will be included in a prospectus used to offer the securities of a
Roll-Up  Entity,  the appraisal  shall be filed with the Securities and Exchange
Commission  and the states as an exhibit to the  registration  statement for the
offering.  Accordingly,  an  issuer  using the  appraisal  shall be  subject  to
liability  for  violation  of  Section  11 of the  Securities  Act of  1933  and
comparable  provisions under state laws for any material  misrepresentations  or
material omissions in the appraisal.  Partnership assets shall be appraised on a
consistent  basis. The appraisal shall be based on an evaluation of all relevant
information,  and shall indicate the value of the  Partnership's  assets as of a
date  immediately  prior  to the  announcement  of  the  proposed  Roll-Up.  The
appraisal  shall  assume an orderly  liquidation  of  Partnership  assets over a
12-month  period.  The terms of the engagement of the  Independent  Expert shall
clearly state that the engagement is for the benefit of the  Partnership and its
Limited  Partners.  A  summary  of the  independent  appraisal,  indicating  all
material assumptions underlying the appraisal,  shall be included in a report to
the Limited Partners in connection with a proposed Roll-Up.


                                      B-71



<PAGE>



     10.3.2.  In connection with a proposed  Roll-Up,  the Person sponsoring the
Roll-Up shall offer to Limited Partners who vote "no" on the proposal the choice
of:

     (i)  accepting the securities of the Roll-Up Entity offered in the proposed
Roll-Up; or

     (ii)  one of the  following:  (a)  remaining  as  Limited  Partners  in the
Partnership,  and  preserving  their  interests  therein  on the same  terms and
conditions as existed  previously;  or (b) receiving  cash in an amount equal to
the Limited Partners' pro-rata share of the appraised value of the net assets of
the Partnership.

     10.3.3. The Partnership shall not participate in any proposed Roll-Up which
would result in Limited  Partners  having  democracy  rights which are less than
those provided for under this Agreement. If the Roll-Up Entity is a corporation,
the voting  rights of Limited  Partners  shall  correspond  to the voting rights
provided for in this Agreement to the greatest extent possible.

     10.3.4. The Partnership shall not participate in any proposed Roll-Up which
includes  provisions  which would operate to materially  impede or frustrate the
accumulation  of shares by any purchaser of the securities of the Roll-Up Entity
(except  to the  minimum  extent  necessary  to  preserve  the tax status of the
Roll-Up Entity).  The Partnership  shall not participate in any proposed Roll-Up
which would limit the ability of a Limited Partner to exercise the voting rights
of the securities of the Roll-Up Entity on the basis of the number of Units held
by that Limited Partner.

     10.3.5.  The Partnership  shall not participate in any proposed  Roll-Up in
which Limited  Partners'  rights of access to the records of the Roll-Up  Entity
will be less than those provided for under this Agreement.

     10.3.6.  The Partnership  shall not participate in any proposed  Roll-Up in
which any of the costs of the  transaction  would be borne by the Partnership if
the Roll-Up is not approved by the Limited Partners.

     10.3.7. In addition to those set forth above,  Limited Partners who dissent
with respect to a proposed  Roll-Up will have the rights provided under Sections
15679.1 through 15679.14 of the Act.


                                      B-72


<PAGE>



                                   ARTICLE 11

                            SPECIAL POWER OF ATTORNEY

     Each  Limited  Partner,  including  each  Additional  Limited  Partner  and
Substitute  Limited  Partner,  by the execution of this  Agreement,  irrevocably
constitutes and appoints the General Partner, with full power of substitution in
the premises, his true and lawful attorney-in-fact with full power and authority
in his name, place and stead to execute,  acknowledge,  deliver,  swear to, file
and  record  at the  appropriate  public  offices  any  documents  necessary  or
appropriate to carry out the provisions of this  Agreement,  including,  but not
limited to:

     (i) all certificates and other instruments (including  counterparts of this
Agreement),   and  any  amendment  thereof,  which  the  General  Partner  deems
appropriate in order to form,  qualify or continue the  Partnership as a limited
partnership  (or a partnership  in which the Limited  Partners will have limited
liability comparable to that provided by the Act) in the State of California and
in the  jurisdictions  in which the Partnership may conduct business or in which
formation,  qualification  or  continuation  is, in the  opinion of the  General
Partner,  necessary or desirable to protect the limited liability of the Limited
Partners;

     (ii) all amendments to this Agreement adopted in accordance with its terms,
and all  instruments  which the General  Partner deems  appropriate to reflect a
change or  modification  of the Partnership in accordance with the terms of this
Agreement;

     (iii) all financing statements,  continuation statements or other documents
and amendments thereto which the General Partner deems appropriate to perfect or
continue the  perfection  of the  Partnership's  security  interest in his Units
provided  for in Section  13.1,  and, if the Limited  Partner is an  Installment
Contributor  Limited  Partner,  Section  3.4.1(b),  of this  Agreement,  and all
instruments  relating to the admission of any  Additional or Substitute  Limited
Partner,  including  any  amendment to this  Agreement  which  substitutes  as a
Limited Partner the purchaser at a foreclosure sale of Units previously given as
security by a defaulting Limited Partner for his Promissory Note; and

     (iv) all conveyances and other  instruments which the General Partner deems
appropriate  to implement  the  provisions  of this  Agreement or to reflect the
dissolution  and winding up of the  Partnership in accordance  with the terms of
this Agreement.

     The  appointment by each of the Limited  Partners of the General Partner as
his attorney-in-fact  shall be deemed to be a power coupled with an interest, in

                                      B-73


<PAGE>


recognition of the fact that each of the  Partners  under  this  Agreement  will
be relying upon the power of the General  Partner to act as contemplated by this
Agreement in any filing and other action by it on behalf of the Partnership, and
shall  survive and shall not be affected by the  subsequent  bankruptcy,  death,
adjudication of incompetence or insanity, disability,  incapacity or dissolution
of any Person  hereby  giving the power nor by the transfer or assignment of all
or any part of the  Units of any such  Person;  provided,  however,  that in the
event of the transfer by a Limited  Partner of all of his Units,  the  foregoing
power of attorney of a  transferror  Limited  Partner shall survive the transfer
only until the transferee is admitted to the Partnership as a Substitute Limited
Partner and all required documents and instruments are duly executed,  filed and
recorded to effect the substitution.

                                   ARTICLE 12

                                   AMENDMENTS

     12.1.    Adoption of Amendments

     12.1.1. In addition to the amendments authorized herein,  amendments may be
made to this  Agreement  from  time  to  time by a  majority-in-interest  of the
Limited Partners,  without the Consent of the General Partner;  provided that no
such  amendment  shall (i) in any manner allow the Limited  Partners to take any
action  which  would  constitute  their  participation  in  the  control  of the
Partnership's  business  within  the  meaning of  Section  15632 of the Act,  or
otherwise  cause  the loss of their  limited  liability,  nor (ii)  without  the
Consent of the General Partner,  alter the rights, power, duties or compensation
of  the  General  Partner  or  any  of its  Affiliates  or  its  (or  any of its
Affiliates')  interest in Profits and Losses,  Tax Credits,  Cash  Available for
Distribution  or Sale or Refinancing  Proceeds or alter any of the provisions of
Sections 3.6.2 or 6.6 or this Section 12.1.1.

     12.1.2.  In  addition  to  the  amendments   otherwise  authorized  herein,
amendments  may be made  to  this  Agreement  from  time to time by the  General
Partner,  without the Consent of any of the Limited Partners:  (i) to add to the
representations,  duties or obligations of the General  Partner or surrender any
right or power  granted to the General  Partner  herein,  for the benefit of the
Limited  Partners;  (ii) to cure any  ambiguity,  to correct or  supplement  any
provision herein which may be inconsistent  with any other provision  herein, or
to make any other provisions with respect to matters or questions  arising under
this  Agreement  which  will not be  inconsistent  with the  provisions  of this
Agreement;  and (iii) to delete or add any provision of this Agreement  required
to be deleted or added by the staff of the Securities and Exchange Commission or
other Federal agency or by a state "Blue Sky" commissioner  or  similar official

                                      B-74


<PAGE>



and deemed by the  Commission,  agency,  commissioner or official to be for  the
benefit or protection of the Limited Partners.

     No amendment shall be adopted pursuant to this Section 12.1.2 (except under
the preceding  clause  (iii)) unless its adoption:  (i) is for the benefit of or
not adverse to the interests of the Limited  Partners;  (ii) is consistent  with
Section 5.1 hereof; (iii) does not affect the distribution of Cash Available for
Distribution  or Sale or  Refinancing  Proceeds or the allocation of Profits and
Losses or of Tax Credits among the Partners or between the Limited Partners as a
class and the General Partner;  and (iv) does not, in the opinion of counsel for
the Partnership,  affect the limited liability of the Limited Partners under the
Act or the status of the  Partnership  as a partnership  for Federal  income tax
purposes.

     In addition to the amendments otherwise authorized herein,  notwithstanding
the preceding  paragraph,  amendments may be made to this Agreement  without the
Consent of any Limited  Partner with respect to the  provisions  of Article 4 of
this Agreement in accordance with Section 4.4.1 and/or Section 4.4.2.

     12.2.    Filing of Required Documents

     In making any amendments, there shall be prepared and filed for recordation
by the General  Partner all documents and  certificates  required to be prepared
and filed under the Act and under the laws of any other  jurisdictions under the
laws of which the Partnership is then formed or qualified.

     12.3.    Required Change of Partnership Name

     If at any time there is no General  Partner  which is an Affiliate of WNC &
Associates,  Inc. (or any successor  thereto),  the Partnership  shall forthwith
change  its name in such a manner as not to  include  the  initials  "WNC."  All
parties to this  Agreement  recognize  that damages at law may be an  inadequate
remedy for breach of the  foregoing  covenant,  and consent that the same may be
enforced by specific  performance,  injunction or equitable remedy as well as in
an action at law.


                                      B-75


<PAGE>



                                   ARTICLE 13

                            MISCELLANEOUS PROVISIONS

     13.1.    Security Interest and Right of Set-Off

     As security for any  withholding  tax or other  liability or  obligation to
which the  Partnership  may be  subject  as a result of any act or status of any
Limited Partner, or to which the Partnership becomes subject with respect to the
Interest of any Limited  Partner,  the Partnership  shall have (and each Limited
Partner  hereby  grants to the  Partnership)  a  security  interest  in all Cash
Available for Distribution and Sale or Refinancing Proceeds distributable to the
Limited  Partner  to the extent of the  amount of the  withholding  tax or other
liability or obligation.

     13.2.    Notices

     Except as otherwise  specifically provided herein, all notices,  demands or
other  communications  hereunder shall be in writing and shall be deemed to have
been given, if given in any manner specified in the definition of "Notification"
herein, when dispatched,  and shall be sent to the respective addresses referred
to in such definition.

     13.3.    Execution

     Each  Limited  Partner,   including  any  Additional  Limited  Partner  and
Substitute  Limited Partner,  additional  General Partner and successor  General
Partner,  shall  become a Partner  in the  Partnership  by  signing  counterpart
signature  pages to this Agreement or a power of attorney to the General Partner
therefor,  and any other  instrument  or  instruments  deemed  necessary  by the
General Partner. By so signing,  each Limited Partner,  including any Additional
Limited Partner and Substitute  Limited Partner,  additional  General Partner or
successor General Partner,  as the case may be, shall be deemed to have adopted,
and to have  agreed to be bound by,  all the  provisions  of this  Agreement.  A
Person may be admitted as an Additional  Limited  Partner and shall become bound
by this  Agreement  (i) if such Person (or a  representative  authorized by such
Person  orally,  in writing or by other  action  such as payment  for his Units)
executes this Agreement or any other writing,  including without limitation, the
Investor Form included with the Prospectus, evidencing the intent of such Person
to become an Additional Limited Partner or (ii) without such execution,  if such
Person (or a representative  authorized by such Person orally,  in writing or by
other action such as payment for his Units)  complies  with the  conditions  for

                                      B-76


<PAGE>


becoming  an  Additional  Limited  Partner  as  set forth  in this Agreement and
requests  (orally,  in writing or by other action such as payment for his Units)
that the Partnership Register reflect such admission.

     13.4.    Binding Effect

     The covenants and  agreements  contained  herein shall be binding upon, and
inure  to  the  benefit  of,  the  heirs,  executors,  administrators,  personal
representatives, successors and assigns of the respective parties hereto.

     13.5.    Applicable Law

     This Agreement  shall be construed and enforced in accordance with the laws
of the State of  California;  provided,  however,  that the  provisions  of this
Section 13.5 shall not govern  causes of action based on alleged  violations  of
Federal or state (other than the State of California) securities laws.

     13.6.    Counterparts

     This  Agreement  may be  executed  in  several  counterparts,  all of which
together  shall  constitute  one  agreement   binding  on  all  parties  hereto,
notwithstanding that all the parties have not signed the same counterpart.

     13.7.    Separability of Provisions

     Each provision of this Agreement shall be considered separable,  and if for
any reason any provision or provisions  hereof are  determined to be invalid and
contrary to any  existing or future law,  no such  invalidity  shall  impair the
operation or affect those portions of this Agreement which are valid.

     13.8.    Captions

     Section  titles and the table of contents are for  convenience of reference
only and shall not control or limit the meaning of this  Agreement  as set forth
in the text hereof.

     13.9.    Mandatory Arbitration

     Except as provided in Article 6 hereof,  mandatory arbitration shall not be
required  in  connection  with any  dispute  between a Limited  Partner  and the
Sponsor or the Partnership.

                                      B-77


<PAGE>


Nothing  contained in this Section  13.9 shall apply to  pre-existing  contracts
between Limited Partners and their broker-dealers.

     13.10.   Partnerships Treated as Separate

     This Partnership Agreement shall apply to each Partnership separately,  and
each Partnership shall file its own Certificate of Limited Partnership.

     IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of the
date first above written.

                                  General Partner:

                                  WNC & Associates, Inc.,
                                  General Partner

                                  By:    /s/ John B. Lester, Jr.
                                         John B. Lester, Jr.,
                                         President

                                  Initial Limited Partner:

                                  /s/ John B. Lester, Jr.
                                  John B. Lester, Jr.









                                      B-78
<PAGE>



                                                                       EXHIBIT C
                                  INVESTOR FORM

WNC Housing Tax Credit Fund VI, L.P., Series __

Amount of Investment
______________ x $1,000  _________________
# Units                  Total Dollar Amount

Minimum Investments:  $5,000 ($2,000 for previous WNC investors);
Additional increments:  $1,000

____ New Account
____ Addition to Existing Fund VI Current Series Account
____ Initial Here if  the investor is  paying for his Units with a check for the
total subscription amount.

____ Initial Here if the investor elects to use the installment payment. In such
case he shall make a check for one-half of the total subscription  amount (i.e.,
the  number  of Units subscribed above x $500) and pay the  remaining  half with
interest  pursuant  to the  terms of the  Promissory  Note on the  reverse  side
hereof,  which must be executed by the investor.  An investor is eligible to use
this installment  payment method only if he is subscribing for at least 20 Units
($20,000).


Make Check Payable To:              Southern California Bank
                                    WNC/HTCF VI

Submit To:                          Southern California Bank
                                    4100 Newport Place, Suite 900
                                    Newport Beach, CA  92660
                                    Attention:  WNC Escrow Manager

INVESTOR INFORMATION

Investor ____ Dr.  ____  Mr. ____  Mrs.  ____ Ms.   Social Security Number

--------------------------------------------------------------------------------
Investor ____ Dr.  ____ Mr.  ____  Mrs.  ____  Ms.  Social Security Number

--------------------------------------------------------------------------------
Entity Name                                  Taxpayer Identification Number

-----------------------------------          -----------------------------------
Occupation                                   Income

-----------------------------------          -----------------------------------


Mailing Address                              Residence Address
                                             (if different from mailing address)

-----------------------------------          -----------------------------------
City                                         City

-----------------------------------          -----------------------------------
State                      Zip               State                     Zip

-----------------------------------          -----------------------------------


Daytime Phone                                Phone

--------------------------------------------------------------------------------
Occupation                         Income              E-mail address

CONTINUED ON OTHER SIDE




<PAGE>


                            INVESTOR FORM (CONTINUED)

LEGAL FORM OF OWNERSHIP

____  Individual  ____  Community  Property  ____ Joint  Tenants  with Rights of
Survivorship  ____  Tenants  in Common
____  Partnership  (Copy of  partnership agreement  must be sent with this form)
____  Corporate  (Certified  corporate resolution  must be sent with this form)
____  Revocable Trust (Trustee(s) is required to sign below.  Copy of trust
instrument  must be sent with this form)
____ Custodian for: _______________________________________________
         Under Uniform Gift to Minors Act of the State of ________________. The
         Units are being purchased in the State of
         ________________
         (Complete if different from the state of residence.)
____ Other (Specify.)

____ Check here if the investor is not a citizen of the United States.
____ Check here if the  investor  is subject to backup  withholding  pursuant to
Section  3406(a)(1)(C)  of the  Internal  Revenue  Code.
____ Check here if the investor is a minor in the investor's state of residence.

Investor Signature

Execution of the Investor Form below constitutes the  undersigned's subscription
for  the  number  of  Units  indicated above and his acceptance and agreement to
perform the terms and conditions of the First Amended and Restated  Agreement of
Limited  Partnership  included as Exhibit B to the Prospectus of WNC Housing Tax
Credit Fund VI, dated September 3, 1999.

Signature of First Investor                   Date

-----------------------------------           ---------------------------
Signature of Second Investor                  Date

-----------------------------------           ---------------------------

In order to induce  the General Partner  to  accept  this subscription, investor
represents by initialing in the space provided that investor has received a copy
of the final Prospectus. ____________
                              (Initial Here)
____ By checking  this box the investor directs the General Partner to treat all
information concerning the investor as confidential,  and not to disseminate any
such information to any party, without the investor's consent,  except as may by
required under an applicable statute or regulation or by the order of a court or
government agency.

Broker/Dealer  Information

The  undersigned  represents  that  he  has  complied  with the  requirements of
the Conduct Rules of the NASD with respect to the subscriber  whose name appears
on the above Investor Form and hereby  certifies that he has reasonable  grounds
to believe on the basis of information obtained from the investor concerning his
objectives, financial situation and needs and any other information known to the
undersigned that the investment in the Units is suitable for the investor,  and,
in  addition,  has  informed  the  investor  as to the  lack  of  liquidity  and
marketability  of the Units.  The  undersigned  warrants  that a Prospectus  was
delivered to the  subscriber not less than five days prior to submission of this
subscription     to     the     Series.

---------------------------             -----------------------------------
Account Executive                       Broker/Dealer Firm

--------------------------------------------------------------------------------
Branch Office Address     ____ Please check if new address

--------------------------------------------------------------------------------
City                       State          Zip               Phone

--------------------------------------------------------------------------------



--------------------------------------------------------------------------------
Account Executive's Signature               Date                E-mail


--------------------------------------------------------------------------------
and/or Branch Manager's Signature           Date                E-mail


                                       C-1


<PAGE>



                                 PROMISSORY NOTE

$500 PER UNIT

FOR VALUE RECEIVED, the undersigned ("Maker"),  promises,  jointly and severally
if more than one, to pay to the order of WNC  Housing Tax Credit Fund VI,  L.P.,
Series __, a California limited partnership  ("Payee"),  at the office of Payee,
3158 Redhill Avenue, Suite 120, Costa Mesa,  California  92626-3416,  or at such
other  location as Payee may from time to time  designate,  the principal sum of
FIVE HUNDRED DOLLARS ($500),  multiplied by the number of Units set forth in his
Investor Form,  together with interest on the unpaid principal  balance from the
date of the Maker's  admission  as a limited  partner of the Payee until paid at
the rate of ____%  per  annum.  Said  principal  sum  shall  be  payable  in one
installment  as follows:  (i) on January 31,  2001,  if Maker  subscribes  on or
before June 30, 2000, (ii) on June 30, 2001, if Maker subscribes between July 1,
2000 and December 31, 2000,  or (iii) the later of the date of  subscription  or
January 31, 2002, if Maker subscribes after December 31, 2000.  Interest accrued
to the principal  installment payment date shall also be due and payable on such
date.

This  Promissory   Note  is  delivered   pursuant  to  the  terms  of the  First
Amended and Restated  Agreement of Limited  Partnership  of Payee,  and shall be
governed by the following provisions:

1. This Promissory  Note shall be paid in lawful money of the United States.  2.
The occurrence of any of the following shall constitute an "Event of Default":

         (a) Default in the payment of any amount  payable  hereunder  when due,
         which  default in  payment  is not cured  within 30 days after such due
         date ("Payment  Default");  or default in the  performance of any other
         obligation of Maker under this Promissory Note;

         (b) A  materially  false  or  misleading  omission  or  representation,
         statement,  certificate,  warranty or other  assertion  in the Investor
         Form or any other document executed by the Maker in connection with the
         purchase of Units of limited partnership interest in Payee;

         (c) The filing by, or against,  the Maker of any  proceeding  under the
         Federal Bankruptcy Code;

         (d) An assignment for the benefit of creditors made by the Maker; or

         (e) The appointment of,  or application  for, a  receiver or trustee by
         any party for all or any part of the assets of the Maker.

3. Upon the occurrence of an Event of Default,  then at the option of Payee, the
entire  unpaid  balance of  principal on this  Promissory  Note,  together  with
accrued  interest and any other amounts due hereunder,  shall be immediately due
and payable.

4. In the event that any amount payable under this  Promissory  Note is not paid
when due, a late charge in the amount of 5% of the late amount  shall be due and
payable in addition to the interest provided herein.

5. If this  Promissory  Note is not paid  when  due or if an  Event  of  Default
occurs,  Maker  promises  to pay all  costs of  collection,  including,  but not
limited  to,  reasonable  attorneys'  fees  incurred by Payee on account of such
collection whether or not suit is filed hereon.

6. In the  event  this  Promissory  Note is not paid  when due or if an Event of
Default  occurs,  Payee  may set off  all  amounts  owed  to  Payee  under  this
Promissory Note against all distributions to which Maker is entitled relating to
Maker's Units of limited partnership interest in Payee.

7. In the event of a Payment Default,  Maker shall be given a notice by Payee of
the Payment Default and the Payee's intent to foreclose on its security interest
given by Maker to secure the payment of this Promissory Note. For a period of 30
days after such notice (the "Cure Period"), Maker shall be entitled to cure such
Payment  Default by paying the delinquent  principal  payment,  with interest as
provided in this Promissory  Note, to the Payee.  Prior to the expiration of the
Cure  Period,  the Payee shall not be entitled  to  commence  to  foreclose  its
security interest in the Maker's Units of limited partnership  interest in Payee
and Maker's  interest in Payee shall not be subject to any reduction as a result
of such Payment Default. However, Payee may withhold any distributions otherwise
payable or issuable to Maker  pending the cure of the Payment  Default  prior to
the  expiration of the Cure Period.  Any reduction in Maker's  interest in Payee
effective  upon the  expiration  of the Cure  Period  will relate back and shall
apply to and affect any  withheld  distributions.  Upon  expiration  of the Cure
Period Payee may commence to foreclose and  foreclose  its security  interest in
the Maker's Units of limited partnership interest in Payee.

<PAGE>


8. This Promissory Note is made with full recourse to Maker, is by its terms not
a negotiable  instrument,  is assignable  only subject to the defenses Maker may
have, is subject to venue for collection in the state in which Maker resides and
may not be sold by Payee prior to its maturity.  Subject to the foregoing, Payee
may pledge and grant security  interests in this Promissory Note as security for
any obligation of Payee.

9. This Promissory Note shall be governed by, and construed in accordance  with,
the laws of the State of California.

10.  Reference in this  Promissory Note to "Payee" shall mean the original Payee
hereunder so long as the Payee shall be the holder of this  Promissory  Note and
thereafter shall mean any subsequent holder of the Promissory Note.

11. Time is of the essence of each obligation of Maker hereunder.

12. No delay or  omission  on the part of the  Payee in  exercising  any  rights
hereunder or under the  Agreement of Limited  Partnership  of Payee or any other
instrument  given to secure this  Promissory  Note shall  operate as a waiver of
such rights or any other right hereunder or under said instruments.

13. This  Promissory  Note may be prepaid in full at any time without premium or
penalty; provided, however, that no partial prepayments shall be permitted.

14. Maker waives presentment,  demand for payment, notice of dishonor, notice of
protest,  protest  and all other  notices  or  demands  in  connection  with the
delivery,  acceptance,  performance,  default,  endorsement  or guaranty of this
instrument, except as provided in paragraph 7 above.

                This note is executed as of _______, 199__.

                                      ---------------------------
                                      Maker

                                      ---------------------------
                                      Maker

















                                       C-2
<PAGE>







    No dealer,  salesman  or any other  person has been  authorized  to give any
information or to make any  representations  other than those  contained in this
Prospectus, and, if given or made, such information and representations must not
be  relied  upon.  This  Prospectus  does not  constitute  an offer to sell or a
solicitation  of an offer to buy any of the  securities  offered  hereby  in any
state to any  person to whom it is  unlawful  to make such  offer.  Neither  the
delivery  of this  Prospectus  nor any sale  made  hereunder  shall,  under  any
circumstances,  create  any  implication  that  there  has been no change in the
affairs of the Fund since the  respective  dates at which  information  is given
herein,  or the date hereof.  However,  if any material change occurs while this
Prospectus is required by law to be delivered,  this  Prospectus will be amended
or supplemented accordingly.

     For a period of 90 days after the effective  date of this  Prospectus,  all
dealers  that  effect   transactions  in  these   securities,   whether  or  not
participating in the distribution, may be required to deliver a Prospectus. This
is in addition to the dealers' obligation to deliver a Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.


                             WNC & ASSOCIATES, INC.
                         3158 Redhill Avenue, Suite 120
                            Costa Mesa, CA 92626-3416
                                  714/662-5565









<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8

                        Supplement Dated November ___, 2000
                       To Prospectus Dated September 3, 1999

         This Supplement is part of, and should be read in conjunction with, the
Prospectus of WNC Housing Tax Credit Fund VI, L.P.,  Series 8 ("Series 8") dated
September 3,  1999.

Principal Investment Objectives

         Series 8 intends to invest in Local Limited Partnerships with a view to
realizing  Tax  Credits  of from  $1,000  to $1,050  per  Unit.  There can be no
assurance that this objective will be achieved.  See "Investment  Objectives and
Policies" and "Risk Factors" in the Prospectus.

















       THIS SUPPLEMENT IS NOT TO BE USED IN ARIZONA, MAINE, MASSACHUSETTS,
         MINNESOTA, MISSOURI, NEBRASKA, PENNSYLVANIA, TENNESSEE OR TEXAS

<PAGE>

                      WNC HOUSING TAX CREDIT FUND VI, L.P.,
                                    SERIES 8
                      Supplement Dated November ____, 2000
                      To Prospectus Dated September 3, 1999

         This supplement is part of, and should be read in conjunction with, the
prospectus of WNC Housing Tax Credit Fund VI, L.P.,  Series 8 dated September 3,
1999, and the single-page  supplement to prospectus dated November __, 2000. The
single-page supplement dated November __, 2000 is not for use in all states. All
other supplements are superseded.

TABLE OF CONTENTS
                                                                            Page
Termination of Series 7 Offering...............................................1
Status of Series 8 Offering....................................................1
Management.....................................................................1
Federal Income Tax Considerations..............................................2
Prior Performance Summary......................................................2
Experts.......................................................................11
Financial Statements........................................................FS-i
Prior Performance Tables.....................................................A-1


TERMINATION OF SERIES 7 OFFERING

     Series 7 has completed its offering of Units.

STATUS OF SERIES 8 OFFERING

     Series 8 commenced  its  offering of a minimum of 1,400 Units and a maximum
of 25,000 Units on November ____, 2000.  Series 8 Units are being offered on the
terms set forth in the prospectus.

MANAGEMENT

         The officers of WNC & Associates, Inc. are as follows:

Wilfred N. Cooper, Sr.            Chief Executive Officer, Chairman of the Board
John B. Lester, Jr.               Vice Chairman of the Board
Wilfred N. Cooper, Jr.            President, Chief Operating Officer, Secretary
David N. Shafer                   Executive Vice President
Michael L. Dickenson              Vice President - Chief Financial Officer
Sylvester P. Garban               Vice President - Institutional Investments
N. Paul Buckland                  Vice President - Acquisitions
Thomas J. Riha                    Vice President - Asset Management
David C. Turek                    Vice President - Originations

     Biographical  information  for each of these  persons is in the  prospectus
under "Management - WNC & Associates, Inc."

     Raymond S. Olsen was appointed President of WNC Management,  Inc. effective
December 1999. Mr. Olsen is 59. His experience in  acquisition,  development and
management of commercial and multi-family residential real estate began in 1980.
Previously,  he was President of Arizona Management Group, from 1998 to 1999. He

                                       1
<PAGE>

was a Vice President of United Dominion  Realty Trust, a real estate  investment
trust, from 1996 to 1998, and Director of Property  Management for Gates, Hudson
& Associates,  from 1994 to 1996. He is a former Vice President of the Apartment
and Office Building Association of Washington, D.C., and a former Executive Vice
President of the National  Apartment  Association.  Mr. Olsen graduated from the
University of Southern California in 1971 with a Bachelor of Science degree, and
earned a Masters of Public Administration degree in 1974.

FEDERAL INCOME TAX CONSIDERATIONS

Tax Legislation

     In December 1999  President  Clinton signed into law the Ticket to Work and
Work  Incentives  Improvement  Act of 1999.  Included in that  legislation  is a
provision  which repeals the  installment  method of tax  accounting for accrual
method taxpayers.  Series 8 is required to use the accrual method of accounting.
Accordingly, the installment method of accounting should be unavailable upon the
sale  of an  apartment  complex  or the  sale  of a  local  limited  partnership
interest.  See "Federal Income Tax Considerations - Treatment of Mortgage Loans"
in the prospectus.

Tax Shelter Registration Number

     The taxpayer  identification  number and tax shelter registration number of
Series 8 are 33-0761519 and 99127000010,  respectively.  See "Federal Income Tax
Considerations - Tax Shelter Registration" in the prospectus.

PRIOR PERFORMANCE SUMMARY

Introduction

     Before  1982 WNC &  Associates,  Inc.  assisted  developers  of low  income
housing to structure  investments which could be sold in private placements.  In
connection with these 57 structured partnerships, WNC & Associates, Inc.:

o    provided  structuring and consulting services to developers  concerning the
     organization of the limited partnerships which were to  own the low  income
     housing developments,

o    arranged for  preparation  of  partnership agreements  and other  requisite
     documents  for the projects, including legal opinions as  to Federal income
     tax and organizational matters, and

o    arranged for the  placement of  securities,  typically in  accordance  with
     Regulation D under the Securities  Act of 1933, as amended.  The developers
     relied on independent broker-dealers to place such securities.

     WNC & Associates,  Inc. was not an initial  managing general partner of any
of the structured  partnerships.  In the years immediately following the sale of
the structured  partnerships'  interests,  WNC & Associates,  Inc. monitored the
structured partnerships' activities and results of operations. Since then, WNC &
Associates,  Inc. has provided administrative services to some of the structured
partnerships  such as the  preparation  of partnership  income tax  information.
Except for two structured  partnerships  as to which WNC & Associates,  Inc. has
become the substituted managing general partner,  WNC & Associates,  Inc. has no
role in the ongoing management of the structured partnerships.  Accordingly, the
57 structured  partnerships are distinguished from the 69 sponsored partnerships
as to which WNC & Associates,  Inc. was an initial  managing general partner and
continues  to  serve  as  managing  general   partner.   Unlike  the  structured
partnerships, these sponsored partnerships are similar to Series 8 in that WNC &
Associates,  Inc. is or was solely  responsible for the conduct of the offering,
the identification and acquisition of local limited partnership  interests,  and
the management of the sponsored partnerships.

                                       2
<PAGE>

All WNC-Partnerships

     From its formation  through March 31, 2000, WNC & Associates,  Inc. and its
affiliates had raised equity through the 57 structured  partnerships  and the 69
sponsored  partnerships in the aggregate amount of  approximately  $456,590,000,
from  more  than  15,250  investors,  to  acquire  interests  in a total  of 625
apartment   properties  located  in  the  jurisdictions  set  forth  below,  and
representing more than $1,056,120,000 in aggregate acquisition costs.  Estimates
of acquisition costs are equal to equity contributions and debt financing.

     Of the  625  total  properties,  nine  of the 57  properties  owned  by the
structured  partnerships  had been sold or refinanced as of March 31, 2000,  and
eight of the 568 properties owned by the sponsored partnerships had been sold as
of March 31,  2000.  See "Sales of  Properties;  Terminations  of  Partnerships"
below.  Two of the  properties  sold by sponsored  partnerships  were tax credit
properties.

     Nine  of the  57  structured  partnerships  and  one  of  the 69  sponsored
partnerships  had  completed  operations  as of March 31,  2000.  See  "Sales of
Properties; Terminations of Partnerships" below. None of these partnerships were
tax credit partnerships.

     Exhibit A to this  supplement  includes  Tables I, II and III which contain
additional  information  with  regard  to  some  of the  more  recent  sponsored
partnerships.  Tables IV and V included  in Exhibit A contain  information  with
regard to sales of properties or  terminations  of  structured  partnerships  or
sponsored  partnerships within recent years.  Reference also is made to Table VI
included in the  Registration  Statement  which  describes in greater detail the
properties  in  which  some  of the  more  recent  sponsored  partnerships  have
invested.  WNC &  Associates,  Inc. will send to any  prospective  investor upon
request and without a charge a copy of Table VI.

     None of the 57  structured  partnerships  entailed  low income  housing tax
credit offerings. Of the 69 sponsored partnerships,  15 public and 38 non-public
partnerships  entail low income  housing tax credit  offerings.  As of March 31,
2000,  the 53 tax  credit  sponsored  partnerships  had raised an  aggregate  of
approximately  $433,528,000 from more than 13,900 investors, and had invested in
a  total  of  524  apartment  complexes  at an  aggregate  acquisition  cost  of
approximately $996,971,000 in the jurisdictions set forth below. Eighteen of the
53 tax credit  sponsored  partnerships  have held one or more of their apartment
complexes for the full 10-year credit period.










                                       3
<PAGE>


                              Number of Properties


        All Structured                             All Structured
         And Sponsored    Tax Credit                and Sponsored     Tax Credit
          Partnerships  Partnerships                 Partnerships   Partnerships


Alabama           23          23      Nebraska                8             8
Arizona           12           9      Nevada                  6             6
Arkansas          20          20      New Mexico             18            16
California       137          96      New Jersey              1             1
Colorado           1           0      New York                7             7
District of                           North Carolina         38            36
  Columbia         1           1      Ohio                   10             4
Florida           14           8      Oklahoma               16            13
Georgia            7           6      Oregon                  5             5
Idaho              2           2      Pennsylvania            4             4
Illinois          21          20      South Carolina         18            12
Indiana            7           7      South Dakota            1             1
Iowa              10          10      Tennessee              28            27
Kansas             6           4      Texas                  99            89
Kentucky           4           3      U.S. Virgin Islands     1             0
Louisiana         19          16      Utah                    1             0
Maryland           3           3      Virginia                7             6
Michigan           4           3      Washington              3             2
Minnesota          4           4      West Virginia           4             0
Mississippi       12          12      Wisconsin              18            18
Missouri          23          20      Wyoming                 1             1
Montana            1           1

     Of the 53 tax  credit  sponsored  partnerships,  13 public  and 22  private
partnerships commenced their offerings during the period between January 1, 1990
and March 31, 2000. See "Public  Partnerships  Sponsored Between January 1, 1990
and March 31, 2000" and "Private Partnerships  Sponsored Between January 1, 1990
and March 31, 2000" below.  These 35 sponsored  partnerships  were  organized to
invest in other limited  partnerships owning apartment complexes benefiting from
low income housing tax credits and, in most  instances,  one or more other forms
of government assistance.  Other forms of government assistance include mortgage
loan subsidies. See "Other Government Assistance Programs" in the prospectus.

Public Partnerships Sponsored Between January 1, 1990 and March 31, 2000

     The 13 public sponsored  partnerships sponsored between January 1, 1990 and
March 31, 2000 are:

o        WNC Housing Tax Credit Fund II, L.P.
o        WNC California Housing Tax Credits II, L.P.
o        WNC Housing Tax Credit Fund III, L.P.
o        WNC California Housing Tax Credits III, L.P.
o        WNC Housing Tax Credit Fund IV, L.P., Series 1
o        WNC Housing Tax Credit Fund IV, L.P., Series 2
o        WNC California Housing Tax Credits IV, L.P., Series 4
o        WNC California Housing Tax Credits IV, L.P., Series 5
o        WNC Housing Tax Credit Fund V, L.P., Series 3

                                       4
<PAGE>

o        WNC Housing Tax Credit Fund V, L.P., Series 4
o        WNC Housing Tax Credit Fund VI, L.P., Series 5
o        WNC Housing Tax Credit Fund VI, L.P., Series 6, and
o        WNC Housing Tax Credit Fund VI, L.P., Series 7.

Except  for  Series  7,  each of  these 13  public  sponsored  partnerships  had
completed its offering as of March 31, 2000.

     WNC & Associates,  Inc. will send to any prospective  investor upon request
and without charge copies of the most recent report on Form 10-K filed by any of
the  public  partnerships  with the SEC which  have done so,  and will send upon
request, for a reasonable fee, the exhibits to such Form 10-K.

     Through March 31, 2000, these 13 public  sponsored  partnerships had raised
an aggregate of  approximately  $192,354,000  in capital  contributions  from an
aggregate  of  approximately  11,000  investors  and  invested in a total of 229
apartment properties located in the following jurisdictions:


Alabama             18                           Minnesota                1
Arizona              4                           Mississippi              7
Arkansas             8                           Missouri                11
California          38                           Nebraska                 7
Florida              2                           New Mexico               8
Georgia              2                           New York                 3
Idaho                1                           North Carolina          17
Illinois            12                           Ohio                     4
Indiana              2                           Oklahoma                 4
Iowa                 8                           Oregon                   2
Kansas               4                           South Carolina           2
Kentucky             1                           South Dakota             1
Louisiana            4                           Tennessee                6
Maryland             2                           Texas                   38
Michigan             1                           Virginia                 5
                                                 Wisconsin                6

     The aggregate  mortgage debt  encumbering the properties was  approximately
$272,051,000   and  the  aggregate   acquisition  cost  of  the  properties  was
approximately   $410,670,000.   At  the  times  of  these  13  public  sponsored
partnerships'  investments  therein 71 of the properties were existing apartment
complexes and 158 were under  development or  construction  by the local limited
partnerships which own them.

     All of these  13  public  sponsored  partnerships  have as their  principal
investment  objective  providing Federal low income housing tax credits to their
investors.  Four of them have the additional  objective of providing  California
low income housing tax credits.

     Tax credit information with regard to the 13 public sponsored  partnerships
since January 1, 1990 and the two other public sponsored  partnerships organized
to  provide  low income  housing  tax  credits is set forth in the tables  which
follow:






                                       5
<PAGE>


                                                       Federal Credit Programs
<TABLE>
Offering                                                                                                                   Federal
Commence-                                                                                                             Credit Years
ment       Name                                          Credits Received Per $10,000 Investment                      Remaining(1)
----       ----     ----------------------------------------------------------------------------------------------------------------


                          Total       1999   1998    1997   1996   1995    1994   1993   1992    1991   1990    1989
                          -----       ----   ----    ----   ----   ----    ----   ----   ----    ----   ----    ----
      <S>                  <C>        <C>    <C>     <C>    <C>    <C>     <C>    <C>    <C>     <C>    <C>     <C>           <C>

1989       HTCF          $14,170     $1,180 $1,410  $1,410 $1,410 $1,410  $1,410 $1,410 $1,410  $1,400 $1,640     $80           0
1990       HTCFII         13,360      1,450  1,450   1,450  1,450  1,450   1,460  1,380  1,210   1,300    760      --           2
1992       HTCFIII         9,740      1,600  1,570   1,570  1,570  1,520   1,190    680     40      --     --      --           5
1993       HTCFIV-1        7,000      1,460  1,420   1,430  1,360  1,010     320     --     --      --     --      --           6
1994       HTCFIV-2        5,680      1,350  1,240   1,130  1,050    700     210     --     --      --     --      --           6
1995       HTCFV-3         4,160      1,370  1,300     840    620     30      --     --     --      --     --      --           7
1996       HTCFV-4         2,170      1,040    800     190    140     --      --     --     --      --     --      --        8(2)
1997       HTCFVI-5          680        480    200      --     --     --      --     --     --      --     --      --           9
1998       HTCFVI-6          250        250     --      --     --     --      --     --     --      --     --      --          10
1999       HTCFVI-7           --         --     --      --     --     --      --     --     --      --     --      --          11
</TABLE>

                                        Federal and California Credit Programs
<TABLE>
Offering                                                                                                                   Federal
Commence-                                                                                                             Credit Years
ment       Name                                          Credits Received Per $10,000 Investment                      Remaining(1)
----       ----     ----------------------------------------------------------------------------------------------------------------

                          Total       1999   1998    1997   1996   1995    1994   1993   1992    1991   1990    1989
                          -----       ----   ----    ----   ----   ----    ----   ----   ----    ----   ----    ----
      <S>                  <C>        <C>    <C>     <C>    <C>    <C>     <C>    <C>    <C>     <C>    <C>     <C>           <C>
1989       CHTC          $16,630     $  990 $  990  $  990 $  990  $ 990  $1,180 $1,720 $2,360  $2,590 $2,270  $1,560           1
1991       CHTCII         13,550      1,170  1,170   1,440  1,530  2,060   1,940  1,780  1,810     650     --      --        0(2)
1993       CHTCIII         8,850      1,130  1,300   1,790  1,970  1,800     800     60     --      --     --      --           6
1994       CHTCIV-4        6,770      1,290  1,660   1,770  1,340    710      --     --     --      --     --      --           6
1995       CHTCIV-5        4,030      1,620  1,430     980     --     --      --     --     --      --     --      --          10

<FN>
(1)  As of December 31, 1999.
(2) These prior  programs will generate a small amount of low income housing tax
credits for up to five years beyond the stated  number of years due to increases
in qualified basis.
</FN>
</TABLE>




                                                                           6

<PAGE>


Private Partnerships Sponsored Between January 1, 1990 and March 31, 2000

     As of March 31,  2000,  the 22  private  sponsored  partnerships  sponsored
between   January  1,  1990  and  March  31,  2000   involved  an  aggregate  of
approximately  $206,393,000 in commitments for capital  contributions payable in
installments from an aggregate of approximately 830 investors.  These 22 private
sponsored  partnerships  invested in a total of 218 apartment properties located
in the following jurisdictions:


Alabama              5                           Missouri                 9
Arizona              5                           Montana                  1
Arkansas            10                           Nebraska                 1
California          24                           Nevada                   6
District of                                      New Jersey               1
  Columbia           1                           New Mexico               8
Florida              3                           New York                 4
Georgia              3                           North Carolina          18
Idaho                1                           Oklahoma                 7
Illinois             8                           Oregon                   2
Indiana              2                           Pennsylvania             4
Iowa                 2                           South Carolina           9
Kentucky             2                           Tennessee                6
Louisiana           12                           Texas                   46
Maryland             1                           Virginia                 1
Michigan             2                           Washington               2
Minnesota            3                           Wisconsin                3
Mississippi          5                           Wyoming                  1



     The aggregate  mortgage debt  encumbering the properties was  approximately
$313,086,000   and  the  aggregate   acquisition  cost  of  the  properties  was
approximately $507,365,000.

     All of these 22  private  sponsored  partnerships  have as their  principal
investment  objective  providing Federal low income housing tax credits to their
investors.  Three of them have the additional  objective of providing California
low income housing tax credits.

     Tax  credit   information  with  regard  to  these  22  private   sponsored
partnerships  sponsored since January 1, 1990 and the 16 other private sponsored
partnerships organized to provide low income housing tax credits is set forth in
the tables which follow:


                                       7
<PAGE>


                             Federal Credit Programs

<TABLE>
Offering                                                                                                                Federal
Commence-                                                                                                               Credit Years
ment     Name                                                    Credits Received Per $10,000 Investment(1)             Remaining(2)
----     ----          -------------------------------------------------------------------------------------------------------------

                        Total    1999   1998    1997   1996   1995    1994   1993   1992   1991   1990(3) 1989   1988   1987
                        -----    ----   ----    ----   ----   ----    ----   ----   ----   ----   ------- ----   ----   ----
     <S>                 <C>      <C>    <C>     <C>    <C>    <C>     <C>    <C>    <C>    <C>    <C>     <C>    <C>    <C>     <C>
1987     Pepper
          Tree(4)      $15,730  $   70 $  660  $1,350 $1,470 $1,470  $1,470 $1,470 $1,470 $1,470 $2,370  $1,530 $  900 $   30      0
1987     East Bay       14,320      --     --     380  1,360  1,350   1,360  1,360  1,360  1,360  1,670   1,700  1,400  1,020      0
1987     Sequoia Manor  14,990      --    160   1,390  1,370  1,370   1,370  1,370  1,350  1,380  2,220   1,460  1,340    210      0
1987     Bayou          13,890      --     --   1,000  1,290  1,290   1,290  1,290  1,290  1,290  2,110   1,400  1,330    310      0
1987     Laurel Hill    14,300      50    300   1,180  1,320  1,320   1,320  1,320  1,320  1,300  2,090   1,320  1,230    230   0(5)
1988     Ridgetop       15,040      60  1,280   1,390  1,390  1,390   1,390  1,390  1,390  1,390  2,250   1,500    220     --   0(5)
1989     Alta Mesa      13,900     850  1,320   1,320  1,320  1,320   1,320  1,320  1,320  1,320  1,950     540     --     --      1
1990     WNC-90         12,850   1,400  1,400   1,400  1,400  1,400   1,400  1,400  1,400  1,400    250      --     --     --      1
1991     SR XIX         12,200   1,420  1,420   1,440  1,440  1,440   1,440  1,440  1,440    720     --      --     --     --      2
1991     TCXX           12,560   1,430  1,430   1,460  1,460  1,460   1,460  1,460  1,460    940     --      --     --     --      2
1991     TCXXI          10,600   1,360  1,360   1,360  1,360  1,360   1,360  1,360  1,030     50     --      --     --     --      3
1992     TCXXII         10,960   1,410  1,410   1,410  1,410  1,410   1,410  1,410  1,090     --     --      --     --     --      3
1992     TCXXIII        10,640   1,400  1,400   1,400  1,400  1,400   1,400  1,370    870     --     --      --     --     --      3
1992     TCXXV           9,200   1,380  1,380   1,380  1,380  1,380   1,280    870    150     --     --      --     --     --      5
1993     TCXXVI          8,810   1,330  1,330   1,330  1,330  1,330   1,320    840     --     --     --      --     --     --      4
1993     TC XXVIII       7,250   1,300  1,300   1,300  1,300  1,300     640    110     --     --     --      --     --     --      5
1993     TCXXIX          7,150   1,310  1,310   1,310  1,290  1,110     790     30     --     --     --      --     --     --      6
1994     TCXXX           6,020   1,230  1,230   1,230  1,220  1,000     110     --     --     --     --      --     --     --      6
1994     ITC I           7,440   1,530  1,520   1,530  1,670    780     410     --     --     --     --      --     --     --      7
1995     ITC II          5,030   1,620  1,460   1,290    590     70      --     --     --     --     --      --     --     --      8
1996     ITC III         2,580   1,200  1,000     380     --     --      --     --     --     --     --      --     --     --     10
1997     ITC V           1,850   1,170    660      20     --     --      --     --     --     --     --      --     --     --     10
1998     ITC VI            630     410    220      --     --     --      --     --     --     --     --      --     --     --     11
1999     ITC VII           130     130     --      --     --     --      --     --     --     --     --      --     --     --     11
1999     ITC VIII           --      --     --      --     --     --      --     --     --     --     --      --     --     --     12
</TABLE>





                                                                           8
<PAGE>




                                        Federal and California Credit Programs

<TABLE>
Offering                                                                                                                Federal
Commence-                                                                                                               Credit Years
ment     Name                                                    Credits Received Per $10,000 Investment(1)             Remaining(2)
----     ----          -------------------------------------------------------------------------------------------------------------

                        Total    1999   1998    1997   1996   1995    1994   1993   1992    1991   1990(3) 1989   1988   1987
                        -----    ----   ----    ----   ----   ----    ----   ----   ----    ----   ------- ----   ----   ----
     <S>                 <C>      <C>    <C>     <C>    <C>    <C>     <C>    <C>    <C>     <C>    <C>     <C>    <C>    <C>    <C>

1987    Beech Villa   $18,610   $   -- $   --  $  860 $1,360 $1,360  $1,350 $1,350 $1,350  $1,350 $2,670  $3,210 $3,210 $540       0
1988    Elmwood Villa  18,620       30    570     990    990    990     990    990  1,330   2,610  4,010   3,460  1,660   --       0
1988    Poplar Villa   18,150       --    530     970    970    970     970    970    970   2,280  3,420   3,410  2,690   --       0
1988    Olive Tree     18,230       10    760     970    970    970     970    970    970   1,620  3,990   3,310  2,720    -       0
1988    Pine Rock      17,640      230    940     940    940    940     940    880  1,220   3,280  3,810   3,240    280   --       0
1988    Mesa Verde     17,220      190    970   1,030  1,020  1,030   1,030  1,030  1,870   1,690  3,610   2,760    990   --    0(5)
1988    Sunfield       17,070      280  1,140   1,340  1,340  1,340   1,340  1,340  1,340   1,650  3,090   2,080    790   --       0
1988    Foxglove       15,810    1,210  1,360   1,360  1,360  1,360   1,360  1,550  2,020   2,020  1,920     290     --   --       1
1989    Elliot Place   17,100      600  1,140   1,200  1,200  1,200   1,200  1,200  1,670   2,460  3,200   2,030     --   --       1
1990    Wheatridge     14,240    1,120  1,120   1,120  1,120  1,120   1,120  1,480  2,240   2,230  1,570      --     --   --       2
1992    TCXXIV         12,370    1,260  1,260   1,260  1,260  1,740   2,180  2,180  1,230      --     --      --     --   --       3
1993    TCXXVII         9,900    1,270  1,270   1,290  1,560  1,750   1,740  1,020     --      --     --      --     --   --       5
1997    CTC             2,260    2,260    870     210     --     --      --     --     --      --     --      --     --   --       9
<FN>
(1)      Represents the return received by investors  utilizing deferred payment
         purchase  plans.  In many  instances  the  respective  returns  to cash
         investors  were higher than those listed  above  inasmuch as the use of
         deferred payment purchase notes entailed the payment of interest.
(2)      As of December 31, 1999.
(3)      In 1990 certain  partnerships  were permitted to,  and  did,  elect  to
         utilize 150% of the Federal low  income  housing  tax  credit otherwise
         allowable for 1990.
(4)      Pepper Tree  originally offered Federal low income  housing tax credits
         only.  After the investors  were admitted to  Pepper  Tree,  the  local
         general partners obtained California low income housing tax credits  as
         well, which are not reflected in this chart.
(5)      These sponsored partnerships will generate a small amount of low income
         housing tax credits for up to five additional years due to increases in
         qualified basis.
</FN>
</TABLE>








                                                                           9
<PAGE>


Sales of Properties; Terminations of Partnerships

     As of March 31, 2000, nine of the structured  partnerships  had either sold
or refinanced nine apartment  complexes,  returning to their  investors  between
approximately  100% and 200% of their invested  capital in addition to providing
tax deductions  averaging in excess of 200% of their invested capital.  Of them,
one structured  partnership  sold its property and terminated  operations.  Five
structured partnerships refinanced their properties and liquidated the interests
of the original limited partners.  Limited partnership interests were offered to
new investors. WNC & Associates,  Inc. has no involvement with the reconstituted
partnerships.  Three of the  structured  partnerships  sold their  properties to
three  other  partnerships.  After the  general  partner  of those  three  other
partnerships obtained tax credits for the properties, a partnership sponsored by
WNC & Associates,  Inc.  purchased the limited  partnership  interests  therein.
These events  occurred  prior to 1994 and,  consequently,  are not  reflected in
Table IV or Table V.

     As of March 31, 2000,  eight  properties  had been sold by seven  sponsored
partnerships.  All of these transactions are included in Table V. Of these seven
sponsored partnerships,  one terminated operations.  The results of that program
is described in Table IV.

Major Adverse Events

     In  cases  where  projects  have  failed  to  perform  as  expected,  WNC &
Associates,  Inc.  has  intensified  its  monitoring  operations,   visited  the
projects,  attempted to provide  general  advice to the local general  partners,
removed and replaced the local general partners, and/or attempted to help seek a
resolution of pending problems.

     Specifically, since January 1, 1990, the following events occurred:

     In a private WNC  partnership  sponsored in 1996,  WNC &  Associates,  Inc.
removed MidSouth  Development,  Inc. as local general partner of a local limited
partnership  in 1997 after  construction  defects were  discovered and the local
general partner  declared  bankruptcy.  The WNC partnership  purchased the local
limited  partnership's  bridge loan at its face value upon maturity thereof. The
local limited partnership completed construction using other funds loaned by WNC
& Associates, Inc. and the WNC partnership.  Thereafter, with the consent of its
investors,   the  WNC  partnership  sold  its  interest  in  the  local  limited
partnership.

     In a public WNC  partnership  sponsored  in 1993,  WNC &  Associates,  Inc.
removed six local  general  partners from a local  limited  partnership  in 1997
after they violated  provisions of the local limited  partnership's  partnership
agreement.  The local general  partners failed to obtain the approval of the WNC
partnership  prior to refinancing the existing debt. The remaining local general
partner,  an agency of the county in which the  property  is  located,  has been
replaced by an experienced  non-profit entity. This local limited partnership is
now performing as anticipated.

     In 1997 the IRS issued  notices of  adjustment  regarding  five  properties
owned by four private WNC  partnerships  and developed by the same local general
partner. The IRS claimed that development fees paid to the local general partner
were not  properly  includable  in the  depreciable  and  eligible  bases of the
respective  properties.  After  filing a petition  for  readjustment  before the
United  States Tax Court,  each of the local  limited  partnerships  and the WNC
partnerships  reached a settlement with the IRS in 1998 which provided that, for
each property:  the depreciable basis thereof was unchanged;  the eligible basis
thereof  was  reduced by a portion  of the  development  fees;  a portion of the
reduction  in eligible  basis was  eligible  for  amortization  as  organization
expenses; and the actual deficiency for 1993 to 1996, in an immaterial amount on
a per unit basis for each WNC  partnership,  was assessed for 1996 and was equal
to the reduction of low income housing tax credits  resulting from the reduction
in eligible  basis,  less the deduction  resulting from the  amortization of the
reclassified  organization expenses. Low income housing tax credits for 1997 and
all years thereafter are reduced in an immaterial  amount on a per unit basis as
a result of the reduction in eligible basis.  WNC & Associates,  Inc. offered to
pay each limited  partner's  tax  deficiencies  (if any) for 1996 and 1997.  The
limited  partnership   agreements  of  these  local  limited  partnerships  were
negotiated in 1990,  prior to the time local  general  partners were required to
pay tax  deficiencies.  Similar  notices of adjustment  regarding two properties
owned by two WNC partnerships and developed by the same local general partner as
aforesaid were issued by the IRS in late 1999.  These two WNC  partnerships  are
analyzing their potential courses of action.

                                       10
<PAGE>

     Also in 1997,  Howard  Miller,  the local  general  partner of three  local
limited  partnerships  which  were  invested  in by a  private  WNC  partnership
sponsored in 1984,  transferred the properties of the local limited partnerships
to one  transferee  without  seeking the  approval of the WNC  partnership.  The
transfers were made in consideration of relief of indebtedness owed by the local
general partner. Each of the local limited partnerships has brought an action to
have the  transfer  set aside and to remove the local  general  partner.  As the
properties are located in three states,  three lawsuits have been commenced.  In
all three of those actions the court ruled to remove the local  general  partner
and to declare null and void the transfer. In one case, Mr. Miller has contested
the decision and another hearing has been scheduled.  In a second case, the only
outstanding issue is whether or not the local limited partnership is entitled to
punitive damages.  The third case was settled in consideration of the payment to
the local limited partnership of its attorney fees.

     In a private WNC partnership sponsored in 1997, a local limited partnership
encountered  significant  construction cost overruns. The local general partners
agreed  to defer  receipt  of their  development  fee and paid  one-half  of the
construction  cost  overruns.   The  WNC  partnership  paid  the  balance.   The
construction  loan was  converted  to a permanent  loan secured by a first trust
deed, and all junior  indebtedness  originally  anticipated  was obtained by the
local limited partnership.  Thereafter,  the first permanent loan was refinanced
at a more  affordable  rate,  the local general  partners  were removed,  and an
affiliate  of WNC &  Associates,  Inc.  was  admitted as their  substitute.  The
property is successfully operating and is paying all its obligations.

     In a public WNC  partnership  sponsored in 1997, an apartment  complex of a
local limited partnership operated at a deficit since construction completion in
the first calendar  quarter of 1999. The local general partner ceased funding of
the deficit and was removed by WNC & Associates, Inc. WNC & Associates, Inc. has
been admitted as the substitute  local general  partner,  and a new unaffiliated
property manager has been appointed. The occupancy rate as of September 30, 2000
was approximately  80%. The apartment complex is expected to achieve  stabilized
operations by the end of 2000.

     WNC identified  problems with a developer who is the local general  partner
of six local limited  partnerships  invested in by three public WNC partnerships
sponsored in 1994 and 1995. The local general partner has been removed from each
of  the  local  limited  partnerships.   Two  of  the  properties  have  overdue
construction  debt in place.  The  lender of the  construction  debt has filed a
notice of  default  with  regard to each  loan.  Of the other  four  properties,
operating  deficits  at three of them have  been  cured.  One of the other  four
properties was poorly managed,  has an occupancy rate below 50% and continues to
have operating  deficits.  Some of the unoccupied units included therein require
renovation.  WNC is still  analyzing  its  potential  courses of  action,  which
include  a sale  or a  transfer  of all or a  portion  of its  interests  in the
partnerships.

     To the  knowledge  of WNC &  Associates,  Inc.,  there  have  been no major
adverse  events  concerning the  structured  partnerships  since January 1, 1990
which would be of material  interest to the  investors.  However,  because WNC &
Associates,  Inc.  has  limited or no  involvement  with many of the  structured
partnerships,  it may be  unaware of the  existence  of such  events.  Investors
should not take the lack of disclosure of such major adverse events to mean that
the structured partnerships have not encountered such major adverse events.

EXPERTS

     (To be provided by amendment.)






                                       11
<PAGE>

                                      FS-i

                          INDEX TO FINANCIAL STATEMENTS

                                                                           Page

WNC Housing Tax Credit Fund VI, L.P., Series 8

Report of Independent Certified
     Public Accountants (to be provided by amendment).......................FS-1
Balance Sheet, August 31, 2000..............................................FS-2
Notes to Balance Sheet......................................................FS-3

WNC & Associates, Inc.

Independent Auditors' Report (to be provided by amendment)..................FS-6
Consolidated Balance Sheets,
     January 31, 2000 (unaudited) and August 31, 1999.......................FS-7
Notes to Consolidated Balance Sheets........................................FS-8

























                                      FS-i
<PAGE>



                             (Accountants' Report)























                                      FS-1

<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
                       (A California Limited Partnership)

                                  BALANCE SHEET

                                 August 31, 2000



                                                                   2000
                                                              --------------


ASSETS

Cash                                                        $         1,100
                                                              --------------

                                                            $         1,100
                                                              ==============

LIABILITIES AND PARTNERS' EQUITY

Commitments and Contingencies (Note 2)

Partners' equity (Note 1):
   General partner                                          $           100
   Initial limited partner                                            1,000
                                                              --------------

     Total partners' equity                                 $         1,100
                                                              ==============

















                 See accompanying notes to financial statements
                                      FS-2
<PAGE>


                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
                       (A California Limited Partnership)

                             NOTES TO BALANCE SHEET

                                 August 31, 2000


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

WNC  Housing  Tax  Credit  Fund  VI,  L.P.,  Series  8,  (a  California  Limited
Partnership) (the  "Partnership")  was formed on June 16, 1997 under the laws of
the state of California and has not commenced  operations.  The  Partnership was
formed to invest  primarily in other limited  partnerships  (the "Local  Limited
Partnerships")  which  own  and  operate  multi-family  housing  complexes  (the
"Housing  Complexes") that are eligible for low income housing tax credits.  The
local  general  partners  (the "Local  General  Partners") of each Local Limited
Partnership will retain  responsibility for maintaining,  operating and managing
the Housing Complex.

The  general  partner  is  WNC  &  Associates,  Inc.  (the  "General  Partner").
Wilfred N. Cooper,  Sr., through the Cooper Revocable Trust, owns just less than
66.8% of the outstanding stock of WNC & Associates,  Inc. John B. Lester, Jr. is
the initial  limited  partner of the  Partnership  and owns,  through the Lester
Family Trust, just less than 28.6% of the outstanding stock of WNC & Associates,
Inc. (see Note 2).

The  balance  sheet  includes  only  activity  relating  to the  business of the
Partnership,  and does 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.

Allocations under the Terms of the Partnership Agreement

The General Partner has a 0.1% interest in operating profits and losses, taxable
income and losses,  tax credits,  and cash available for  distribution  from the
Partnership. The limited partners will be allocated the remaining 99.9% 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's   First  Amended  and  Restated   Agreement  of  Limited
Partnership) and the General Partner has received a subordinated disposition fee
(as described in Note 2), any additional  sale or  refinancing  proceeds will be
distributed  90% to the limited  partners  (in  proportion  to their  respective
investments) and 10% to the General Partner.

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 makes 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.

                                      FS-3
<PAGE>

                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
                       (A California Limited Partnership)

                       NOTES TO BALANCE SHEET - CONTINUED

                                 August 31, 2000

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

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 in 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  intends to account for its investments in limited  partnerships
using the equity method of accounting,  whereby the Partnership  will adjust 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  expected to be  consistent  with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments will
be  capitalized  as part of the investment and amortized over 15 years (see Note
2).

Losses from Local Limited Partnerships  allocated to the Partnership will not be
recognized to the extent that the  investment  balance  would be adjusted  below
zero.

Offering Expenses

Offering  expenses are expected to consist of  underwriting  commissions,  legal
fees,  printing,  filing and  recordation  fees,  and other  costs  incurred  in
connection with the selling of limited partnership interests in the Partnership.
The General  Partner is obligated to pay all  offering  and  organization  costs
inclusive of selling  commissions  and dealer  manager fees, in excess of 13% of
the total offering proceeds.  Offering expenses will be reflected as a reduction
of limited partners' capital.

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.

NOTE 2 - COMMITMENTS AND CONTINGENCIES

The Partnership is offering up to 25,000 limited partnership units at $1,000 per
unit (the  "Units").  The  balance  sheet does not include  certain  Partnership
legal, accounting, and other organization and offering costs paid and to be paid
by the General Partner and/or affiliates of the General Partner.  If the minimum
offering  amount of $1,400,000 is raised,  the  Partnership  will be required to
reimburse the General  Partner  and/or its  affiliates  for such fees out of the
proceeds of the offering,  up to certain  maximum levels set forth below. In the
event  the  Partnership  is unable to raise the  minimum  offering  amount,  the
General Partner will absorb all organization and offering costs.

The reader of this  financial  statement  should  refer to the WNC  Housing  Tax
Credit  Fund VI,  L.P.,  Series 8 and Series 8  prospectus  for a more  thorough
description of the Partnership, and the terms and provisions thereunder.

The  Units  are  being  offered  by WNC  Capital  Corporation,  a  wholly  owned
subsidiary of the General Partner.

If the minimum offering amount of $1,400,000 is raised,  the Partnership will be
obligated  to  the  General  Partner  or  affiliates  for  certain  acquisition,
management and other fees as set forth below:

         Acquisition and investment management fees up to 7%, as defined, of the
         gross proceeds from the sale of the Units as compensation  for services
         rendered  in  connection   with  the   acquisition   of  Local  Limited
         Partnerships.

                                      FS-4
<PAGE>

                 WNC HOUSING TAX CREDIT FUND VI, L.P., SERIES 8
                       (A California Limited Partnership)

                       NOTES TO BALANCE SHEET - CONTINUED

                                 August 31, 2000

NOTE 2 - COMMITMENTS AND CONTINGENCIES, continued

         A non-accountable  acquisition expense reimbursement equal to 2% of the
gross proceeds from the sale of the Units.

         Payment  of  a   non-accountable   organization  and  offering  expense
         reimbursement,   and  reimbursement  for  dealer  manager  and  selling
         expenses advanced by the General Partner or affiliates on behalf of the
         Partnership.  These  reimbursements  plus all other  organizational and
         offering  expenses,  inclusive of sales  commissions and dealer manager
         fees,  are not to  exceed  13% of the gross  proceeds  from the sale of
         Units.

         An annual  management  fee equal to 0.2% of the invested  assets of the
Local Limited Partnerships, as defined.

         A  subordinated  disposition  fee in an amount equal to 1% of the sales
         price of real estate sold by the Local Limited Partnerships. Payment of
         this  fee  is   subordinated   to  the   limited   partners   receiving
         distributions equal to their capital  contributions and their return on
         investment (as defined in the Partnership's  First Amended and Restated
         Agreement of Limited  Partnership)  and is payable only if services are
         rendered in the sales effort.

As  of  September  27,  2000,   the  General   Partner  had  incurred  costs  of
approximately   $15,000  related  to  the  start-up  and   organization  of  the
Partnership.  Upon the  commencement  of sale of the  Units,  such costs will be
reimbursed by the Partnership to the General Partner. In the event that sales of
the Units do not meet the minimum  offering  amount of  $1,400,000,  these costs
will be borne in full by the General Partner.

NOTE 3 - INCOME TAXES

No provision  for income taxes will be recorded in the  financial  statements as
any  liability  for  income  taxes  is the  obligation  of the  partners  of the
Partnership.















                                      FS-5
<PAGE>







                             (Accountant's Report)


                          To be provided by amendment

























                                      FS-6
<PAGE>




                                                          WNC & Associates, Inc.


                                                     Consolidated Balance Sheets


                                                  January 31,         August 31,
                                                        2000               1999
--------------------------------------------------------------------------------
                                                   (Unaudited)
Assets

   Cash                                            $   241,391       $ 2,200,176
   Fees receivable (Note 2)                            146,405         1,299,747
   Loans to property developers (Note 3)             5,396,267         1,030,695
   Due from partnerships (Note 4)                      479,868           780,576
   Offering costs advanced                             425,512           222,163
   Property and equipment, net (Note 5)                280,647           268,219
   Other assets (Note 6)                               203,063           218,601
   Deferred income taxes (Note 8)                      788,721           204,689
--------------------------------------------------------------------------------

Total assets                                       $ 7,961,874       $ 6,224,866
--------------------------------------------------------------------------------

Liabilities and Stockholders' Equity

Liabilities
   Lines of credit (Note 7)                        $ 2,200,000       $         -
   Accounts payable and accrued expenses               233,963           425,876
   Income taxes payable                                      -           624,000
   Due to partnerships                                 933,469            46,160
   Deferred revenue                                    596,776           408,442
   Accumulated losses of partnerships
     in excess of investments                          778,532           779,102
   Capitalized lease obligations (Note 9)               23,278            27,280
--------------------------------------------------------------------------------

Total liabilities                                    4,766,018         2,310,860
--------------------------------------------------------------------------------

Commitments and contingencies (Notes 9 and 10)

Stockholders' equity
   Preferred stock, no par value, 1,000,000
     shares authorized, no shares issued                     -                 -
   Common stock, no par value, 1,000,000 shares
     authorized, 103,250 issued and outstanding        128,733           128,733
   Due from officers and stockholders                (140,590)         (140,590)
   Retained earnings                                 3,207,713         3,925,863
--------------------------------------------------------------------------------

Total stockholders' equity                           3,195,856         3,914,006
--------------------------------------------------------------------------------

Total liabilities and stockholders' equity         $ 7,961,874       $ 6,224,866
--------------------------------------------------------------------------------

                          See accompanying notes to consolidated balance sheets.


                                      FS-7
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.      Organization and Summary   Organization
        of Significant Accounting
        Policies                   WNC   &   Associates,   Inc.  (a   California
                                   corporation)  (the   "Company")  acts   as  a
                                   corporate  general partner and  syndicator of
                                   both   public   and   private   real   estate
                                   partnerships    (the   "Partnerships").   The
                                   Partnerships    invest   in   local   limited
                                   partnerships   which,   in  turn,  invest  in
                                   apartment   complexes  throughout  the United
                                   States.   The   majority   of  the  apartment
                                   complexes  qualify for low-income housing tax
                                   credits  and are  subsidized  through various
                                   other   governmental    low-income    housing
                                   programs.

                                   The  Company's  interests  in the profits and
                                   losses of the Partnerships where it serves as
                                   a general partner, either directly or through
                                   other  partnership  interest,  varies between
                                   0.01% and 5.0%.

                                   Principles of Consolidation

                                   The accompanying  consolidated balance sheets
                                   include  the  accounts of the Company and its
                                   wholly-owned   subsidiaries,    WNC   Capital
                                   Corporation  and  WNC  Management,  Inc.  All
                                   significant    intercompany    accounts   and
                                   transactions    have   been   eliminated   in
                                   consolidation.

                                   The   accompanying     unaudited    condensed
                                   consolidated balance  sheet of the Company as
                                   of January  31, 2000  has  been  prepared  in
                                   accordance  with the  Securities and Exchange
                                   Commission  Rules  with  respect  to  interim
                                   financial statements  and therefore  does not
                                   include  all  information and notes necessary
                                   for a fair presentation of financial position
                                   in   conformity   with   generally   accepted
                                   accounting  principles.   In  the  opinion of
                                   management,    the     unaudited    condensed
                                   consolidated  balance  sheet as reported  for
                                   the interim  period  reflects all adjustments
                                   which are necessary for  a fair  presentation
                                   of financial condition.

                                      FS-8
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.     Organization and Summary    Principles of Consolidation (Continued)
       of Significant Accounting
       Policies                    WNC Capital  Corporation was  incorporated in
       (Continued)                 California   on  February  23,  1994  and  is
                                   registered  with the  Securities and Exchange
                                   Commission as a broker/dealer  in securities.
                                   WNC  Capital   Corporation   does  not  carry
                                   customers'  accounts or hold  securities  for
                                   the  accounts of its  customers.  WNC Capital
                                   Corporation  provides wholesaling services to
                                   affiliates  of the Company.  WNC  Management,
                                   Inc. was  incorporated in California on April
                                   28, 1997 and is in the  business of providing
                                   property  management  services to  low-income
                                   apartment  complexes.  WNC  Management,  Inc.
                                   provides management services to affiliates of
                                   the Company.

                                   Use of Estimates

                                   The  preparation of  a  consolidated  balance
                                   sheets   in   conformity    with    generally
                                   accepted   accounting   principles   requires
                                   management    to     make    estimates    and
                                   assumptions  that affect the reported amounts
                                   of  assets  and   liabilities,   as  well  as
                                   disclosure   of    contingent    assets   and
                                   liabilities  at the date of the  consolidated
                                   balance    sheets.    Areas   which   include
                                   significant   estimates  made  by  management
                                   include,   but  are  not   limited   to,  the
                                   collectibility  of fees receivable,  loans to
                                   property developers, offering costs advanced,
                                   and  amounts due from  partnerships,  and the
                                   determination   of   deferred   revenue   and
                                   deferred  income taxes.  Actual results could
                                   materially differ from those estimates.

                                   Concentration of Credit Risk

                                   The  Company,   at  times,   maintains   cash
                                   balances at certain financial institutions in
                                   excess of federally insured amounts.


                                      FS-9
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.      Organization and Summary   Risks and Uncertainties
        of Significant Accounting
        Policies                   Net Capital Requirements
        (Continued)
                                   WNC Capital Corporation,  as a broker-dealer,
                                   is required under provisions of Rule 15c-1 of
                                   the  Securities  and  Exchange Act of 1934 to
                                   maintain a ratio of aggregate indebtedness to
                                   net capital, as defined,  not to exceed 15 to
                                   1.  The   basic   concept   of  the  rule  is
                                   liquidity,  its objective  being to require a
                                   broker  or  dealer  to  have,  at all  times,
                                   sufficient liquid assets to cover its current
                                   indebtedness. WNC Capital Corporation is also
                                   required to maintain a minimum net capital of
                                   $5,000 or 6-2/3% of  aggregate  indebtedness,
                                   as defined, whichever is greater. WNC Capital
                                   Corporation  had  net capital  of $92,855 and
                                   $175,517 at  January 31, 2000  and August 31,
                                   1999,  respectively,  which  was  $86,665 and
                                   $166,055,  respectively,  in  excess  of  the
                                   required  minimum  capital.  At  January  31,
                                   2000, the ratio of aggregate  indebtedness to
                                   net  capital  was  0.31  to  1  (0.81 to 1 at
                                   August 31, 1999).

                                   Registration

                                   WNC Capital  Corporation  must  register with
                                   state      departments      which      govern
                                   compliance   with    securities    laws    in
                                   which it does business.  Various  regulatory
                                   requirements  exist in each  state with which
                                   WNC Capital Corporation must comply.  Because
                                   of the various  compliance  laws,  there is a
                                   risk that one or more regulatory  authorities
                                   could determine that WNC Capital  Corporation
                                   has  not  complied   with   securities   laws
                                   necessary  for it to  conduct  business  in a
                                   given  state.  Regulatory  actions,  if  ever
                                   taken,  could have an  adverse  effect on WNC
                                   Capital Corporation's  consolidated financial
                                   condition.

                                      FS-10
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.      Organization and Summary   Fees Receivable
        of Significant Accounting
        Policies                   Fees receivable  consist of syndication  fees
        (Continued)                due from  various  Partnerships  in which the
                                   Company acts as general partner.  Syndication
                                   fees are  received  by the  Company  from the
                                   Partnerships  as the  limited  partners  make
                                   their    capital    contributions    to   the
                                   Partnerships (see Note 2).

                                   Fees   receivable   also  includes   property
                                   management fees earned and uncollected, and a
                                   receivable   relating  to  the  sale  of  the
                                   Company's  interest  in  certain  low  income
                                   housing tax credits (see Note 2).

                                   Loans to Property Developers

                                   Loans to property developers are comprised of
                                   amounts loaned to, or deposits made on behalf
                                   of,   the   general   partners   of   limited
                                   partnerships in which the  Partnerships  have
                                   or will  have an  equity  interest.  All such
                                   loans   receivable   are   secured   by   the
                                   respective  general partners  interest in the
                                   limited  partnerships and are repaid when the
                                   equity interests are acquired. In the event a
                                   property  is  not  acquired  and   management
                                   determines  that the loan will not be repaid,
                                   such amount is written off in that period.

                                   Offering Costs Advanced

                                   Offering  costs  advanced  represent  amounts
                                   that    the    Company    advances   to   the
                                   Partnerships  for certain  costs and expenses
                                   to    produce    the    offering    materials
                                   and to qualify the partnership  interests for
                                   sale  under  the  various  state  or  Federal
                                   securities  laws. Such advances are repaid to
                                   the Company out of the Partnerships'  initial
                                   capital   proceeds,   and  are   subject   to
                                   limitations,  as defined,  in the  individual
                                   Partnership agreements.

                                   Due From Partnerships

                                   Due from Partnerships  consists  primarily of
                                   amounts   advanced  to   Partnerships.   Such
                                   amounts are non-interest  bearing and are due
                                   upon the Partnerships' collection of proceeds
                                   from  sales  of  Partnership  units  or  from
                                   operating cash flows (see Note 4).

                                      FS-11
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.      Organization and Summary   Due From Partnerships (Continued)
        of Significant Accounting
        Policies                   Due from  Partnerships  also includes amounts
        (Continued)                that the Company advances to Partnerships for
                                   capital  costs and  expenses  relating to the
                                   acquisition of limited partnership  interests
                                   in  apartment  complexes.  Such  advances are
                                   repaid to the Company out of the Partnerships
                                   initial capital proceeds,  and are subject to
                                   limitations,  as defined,  in the  individual
                                   Partnership agreements.

                                   Property and Equipment

                                   Property and  equipment  are recorded at cost
                                   and are depreciated  using the  straight-line
                                   method over the estimated  useful life of the
                                   related  asset,  generally from three to five
                                   years. Leasehold improvements and capitalized
                                   leases are amortized  over the shorter of the
                                   life of the lease or estimated useful life of
                                   the related asset.

                                   Investments in Partnerships

                                   The  Company  records  its  investment in the
                                   Partnerships    using   the  equity   method,
                                   which recognizes the Company's  proportionate
                                   share    of    income    or   loss   as    an
                                   increase or decrease in the investment in the
                                   Partnership. For those Partnerships where the
                                   Company  acts  as  the  General  Partner  and
                                   losses   have   occurred  in  excess  of  the
                                   Company's investment, amounts are recorded as
                                   accumulated  losses of Partnerships in excess
                                   of investments.

                                   Revenue Recognition

                                   Syndication  fees,  which  represent fees for
                                   selecting,      evaluating,      structuring,
                                   negotiating    and    closing     Partnership
                                   investments  in  apartment   complexes,   are
                                   recognized   as   income   ratably   as   the
                                   Partnerships  invest in  apartment  complexes
                                   under the provisions of Statement of Position
                                   92-1 "Accounting for Real Estate  Syndication
                                   Income."    Syndication    fees   which   are
                                   collectible,  pursuant  to the  terms  of the
                                   partnership  agreements,  which have not been
                                   recognized as fee income are deferred.  As of
                                   January  31,  2000 and August 31,  1999,  the
                                   Company    had    $596,776    and   $408,442,
                                   respectively, of such deferred revenue.

                                     FS-12
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

1.      Organization and Summary   Revenue Recognition (Continued)
        of Significant Accounting
        Policies                   Sales  commission  revenue and dealer manager
        (Continued)                fees  earned,   and  the  related   expenses,
                                   associated with the operations of WNC Capital
                                   Corporation  are  recorded  when the  related
                                   services are performed.

                                   Management    fees,   which   represent   the
                                   Company's    annual    fee   for    providing
                                   administrative and asset management  services
                                   for Partnerships and their  investments,  are
                                   recognized  as earned and to the extent  that
                                   such  fees  are  deemed  to  be  collectible,
                                   generally on a cash basis.  Management  fees,
                                   which   represent  WNC   Management,   Inc.'s
                                   property  management  services,  are recorded
                                   when earned.

                                   Income Taxes

                                   The  Company  accounts for income taxes under
                                   the    provisions     of      Statement    of
                                   Financial  Accounting Standards No. 109 (SFAS
                                   109),       "Accounting      For       Income
                                   Taxes." Under the asset and  liability method
                                   of  SFAS  109,   deferred   tax   assets  and
                                   liabilities are recognized for the future tax
                                   consequences  attributable   to   differences
                                   between  the  financial   statement  carrying
                                   amounts of existing  assets  and  liabilities
                                   and their  respective tax bases. Deferred tax
                                   assets  and  liabilities  are  measured using
                                   enacted  tax   rates  expected  to  apply  to
                                   taxable income in the years  in  which  those
                                   temporary  differences  are  expected  to  be
                                   recovered or settled. Under  SFAS  109,   the
                                   effect on deferred tax assets and liabilities
                                   of  a change in tax rates  is  recognized  as
                                   income in the period that  includes the
                                   enactment  date (see Note 8).

2.      Fees Receivable            Fees receivable  from two public Partnerships
                                   amounted  to  $1,070,941  and  $22,145  as of
                                   August 31, 1999, respectively.  As of January
                                   31, 2000, these receivables had  been repaid.
                                   As of  August 31, 1999, fees  receivable also
                                   includes  $154,432   of  fees   due   from  a
                                   Partnership  from  the  sale of  tax  credits
                                   related to the  Company's general partnership
                                   interests  in  certain  limited partnerships.
                                   Such amount has been repaid.


                                      FS-13
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

3.      Loans to Property         Loans to  property  developers  consist of the
        Developers                following:

                                                       January 31,  August 31,
                                                              2000         1999
                        --------------------------------------------------------
                                                        (Unaudited)
                        Notes receivable (all
                        current) generally due
                        within  120 days of
                        issuance,  or  thirty
                        days after demand,
                        bearing interest at the
                        Company's borrowing
                        rate, secured by the
                        borrower's interest in
                        the property to be
                        constructed for which
                        amounts are borrowed.           $ 5,097,099  $       -

                        Note  receivable due the
                        earlier of April 2000 or
                        thirty days after demand,
                        bearing interest at the
                        Company's borrowing rate,
                        secured by the borrower's
                        interest in the property
                        to be constructed for
                        which amounts are borrowed.       200,000        200,000

                        Note  receivable  due and
                        collected  November 1999,
                        secured by the  borrower's
                        interest in the  property
                        to  be  constructed  for
                        which amounts are borrowed.             -         75,608

                        Note receivable  bearing
                        interest at 1%, all of
                        which has been collected
                        subsequent to August 31, 1999.          -        354,048



                                      FS-14
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

3.       Loans to Property
         Developers
         (Continued)
                                                         January 31,  August 31,
                                                              2000         1999
                        --------------------------------------------------------
                                                        (Unaudited)
                        Notes receivable past due,
                        generally  bearing interest
                        at the Company's borrowing
                        rate secured  by  the
                        borrowers' interest in the
                        properties to be constructed
                        for which amounts are
                        borrowed.                          99,168        401,039
                        --------------------------------------------------------

                                                      $ 5,396,267    $ 1,030,695
                        --------------------------------------------------------

                                   The Company had a past due loan to a property
                                   developer  at August 31,  1999,  representing
                                   32% of total  loans to  property  developers,
                                   which was collected  subsequent to August 31,
                                   1999.

4. Due From                        Due from Partnerships consists  primarily  of
   Partnerships                    amounts advanced to Partnerships which invest
                                   in  apartment complexes, as discussed in Note
                                   1. As of  January 31, 2000, the  Company  had
                                   amounts  due  from  two  Partnerships   which
                                   represented 52%  and 0%, respectively, of the
                                   total  due  from Partnerships.  As of  August
                                   31,  1999,  the  Company had amounts due from
                                   two Partnerships  which  represented  53% and
                                   14%,  respectively, of  the  total  due  from
                                   partnerships.

                                   Through  August 31,  1999,  (and  January 31,
                                   2000  -  Unaudited)  the  Company  loaned  an
                                   aggregate  $1,678,151 to a Partnership  which
                                   invested   the  funds  into  a  property   in
                                   Mississippi  (the  "Property").  The Property
                                   was completed during 1998, and was sold to an
                                   affiliated Partnership. During 1999 and 1998,
                                   the Company received  $131,560  and $700,000,
                                   respectively  as  partial  repayment  on  the
                                   loan.  In  August  1998, this note receivable
                                   was sold to a  related  party  for  $279,000,
                                   principal and interest due October 2003. Such
                                   amount  is   included   in   the   due   from
                                   Partnerships  as  of  August  31,  1999.  The
                                   remaining   balance of  $699,151 was reserved
                                   in its entirety as of January 31, 2000.


                                      FS-15
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

4. Due From                        In connection  with the partial  repayment in
   Partnerships                    1998  from  the  new  general   partner,   as
   (Continued)                     discussed  above, the Company was required to
                                   establish an escrow  account for  outstanding
                                   mechanics liens totaling $265,682. Subsequent
                                   to August 31, 1999 $51,375 in the escrow fund
                                   was   released  to  the  Company.   Such  has
                                   been included in the due from Partnerships as
                                   in   the    consolidated    balance   sheets.
                                   Management   has   determined  the  estimated
                                   possible  legal   expenses   related  to  the
                                   settlement of outstanding  mechanics liens to
                                   be $140,000,  and such was reserved for prior
                                   to 1999.  The  reserve  was  increased  by an
                                   additional $67,000, for management's estimate
                                   of mechanics liens to be  paid. Subsequent to
                                   August 31, 1999,  $18,719  of  legal expenses
                                   were incurred, resulting in a reserve balance
                                   of  $111,073 at January 31, 2000.

                                   Due   from    partnerships    also   includes
                                   commissions  due  to  WNC  Capital  Corp.  of
                                   $23,860 at January  31, 2000  and  $41,000 at
                                   August   31,   1999   and   various   expense
                                   reimbursements due to WNC  Management Co.  of
                                   $29,612  at  January 31, 2000  and $27,478 at
                                   August 31, 1999.

5.     Property and Equipment

                                                        January 31,   August 31,
                                                              2000         1999
                        --------------------------------------------------------
                                                        (Unaudited)
                        Furniture, fixtures, equipment
                           and computer software         $ 600,949     $ 559,500
                        Leasehold improvements              41,958        40,578
                        Equipment under capital leases
                           (see Note 9)                    219,017       219,017
                         -------------------------------------------------------
                                                           861,924       819,095
                        Less:  accumulated depreciation
                           and amortization              (581,277)     (550,876)
                        --------------------------------------------------------

                                                         $ 280,647     $ 268,219
                        --------------------------------------------------------

                                     FS-16
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

6.     Other Assets     Other assets consist of the following:

                                                        January 31,   August 31,
                                                              2000         1999
                        --------------------------------------------------------
                                                        (Unaudited)
                        Real estate joint venture
                          costs                          $  50,000     $  50,000
                        Management contracts
                          acquired, net                    129,163       149,996
                        Deposits, advances and other        23,900        18,605
                        --------------------------------------------------------

                                                         $ 203,063     $ 218,601
                        --------------------------------------------------------

                                   The Company  assesses the  recoverability  of
                                   other assets by determining whether the asset
                                   balances   can  be   recovered   from   their
                                   projected undiscounted future cash flows. The
                                   amount of  impairment,  if any,  is  measured
                                   based on fair value and charged to operations
                                   in the  period  in which  the  impairment  is
                                   determined by management.

7.     Lines of Credit             The Company has a line of credit with a bank.
                                   The line of credit allows  for  borrowings of
                                   up to $1,500,000  at  the  bank's  index rate
                                   plus  0.25%  (9.25% at  January  31, 2000 and
                                   8.75% at August 31, 1999) and  is  unsecured.
                                   There were  $1,500,000  and $0 of  borrowings
                                   under this arrangement as of January 31, 2000
                                   and  August   31,   1999,  respectively.  The
                                   primary  line   of   credit   is   personally
                                   guaranteed  and matures April 15, 2000.

                                   The  Company  also had a $700,000  short-term
                                   note  payable to the same bank at January 31,
                                   2000,  that was repaid in February  2000. The
                                   note  payable  bore  interest  at the  bank's
                                   index  rate  plus 1% (10.0%  at  January  31,
                                   2000),  and was personally  guaranteed by the
                                   majority stockholder of the Company.


                                      FS-17
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

8.     Income Taxes                The tax effect of temporary  differences that
                                   give  rise  to  significant  portions  of the
                                   deferred tax  assets and  liabilities are  as
                                   follows:

                                                                      August 31,
                                                                           1999
                                   ---------------------------------------------

                                   Deferred revenue                  $   140,709
                                   Accrued bonus                          89,705
                                   Reserves                              148,510
                                   State taxes                            56,100
                                   ---------------------------------------------

                                   Deferred income tax
                                      asset before reserves              435,024

                                   Less:  valuation reserve            (129,887)
                                   ---------------------------------------------

                                   Deferred income tax asset         $   305,137
                                   ---------------------------------------------

                                   Deferred tax liabilities:
                                    Installment sale accounting
                                      with respect to sale of
                                      tax credits                    $  (61,517)
                                    Depreciation and amortization       (38,931)
                                  ----------------------------------------------

                                  Deferred income tax liability      $ (100,448)
                                  ----------------------------------------------

                                  Net deferred income tax asset      $   204,689
                                  ----------------------------------------------

                                  At August 31,  1999 a valuation  allowance  in
                                  the amount of  $129,887  has been  provided on
                                  the  deferred  income  tax asset as the future
                                  deductibility    of   certain    reserves   is
                                  uncertain.


                                      FS-18
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

9.       Commitments and          Leases
         Contingencies
                                  The Company  leases office space,  automobiles
                                  and furniture under operating  leases expiring
                                  through  February 2002, and certain  equipment
                                  under capital leases expiring  through January
                                  2002. Aggregate monthly capital lease payments
                                  amount to $1,047 as of August  31,  1999.  The
                                  leases are  noncancellable  and require future
                                  minimum lease payments as follows:

                                                         Operating   Capitalized
                               Years ending August 31,     Leases       Leases
                               -------------------------------------------------

                                  2000                   $  39,340     $  12,567
                                  2001                      35,077        12,567
                                  2002                      13,874         8,378
                               -------------------------------------------------

                               Total minimum lease
                                   payments              $   88,291       33,512
                               ------------------------------------
                               Less: amounts
                                   representing
                                   interest at
                                   11.2%                                 (6,232)
                               -------------------------------------------------
                               Present value of
                                   future minimum
                                   capitalized lease
                                   obligations                         $  27,280
                               -------------------------------------------------

                                   Guarantees

                                   The  Company is a guarantor  of certain  bank
                                   lines  of  credit  made to the  Partnerships,
                                   which  totaled  $0  at January  31,  2000 and
                                   $4,091,000 at  August 31, 1999.  These  lines
                                   are repaid by the Partnerships as the limited
                                   partners make their capital  contributions to
                                   the respective Partnerships.

                                   Subsequent to January 31, 2000, a Partnership
                                   utilized $700,000 of its  line of credit  for
                                   which the Company is the guarantor.

                                      FS-19
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

9.       Commitments and           Litigation
         Contingencies
         (Continued)               The  Company  serves as a limited and general
                                   partner to a certain limited partnership. The
                                   Company  loaned  to the  limited  partnership
                                   aggregate  $1,678,151 for  development of the
                                   property.  The  developed  property  incurred
                                   significant  cost  overruns due to defects in
                                   construction.  As a result  of such  defects,
                                   the Company  removed and  replaced  the local
                                   general    partner.    In   this    capacity,
                                   construction  was  completed  by the  Company
                                   (see Note 4).  The  limited  partnership  has
                                   filed  suit   against  the   architects   and
                                   contractors.  There have been various  claims
                                   and  counterclaims  filed against the limited
                                   partnership  and certain  liens placed on the
                                   property.   The   ultimate   outcome  of  the
                                   aforementioned  actions  are  unknown at this
                                   time.  The Company has  reserved an aggregate
                                   $839,151 of its due from  Partnerships  which
                                   includes  the  estimated  outcome  of various
                                   claims filed.  Management of the Company does
                                   not believe that the additional effect on the
                                   consolidated  financial  statements  upon the
                                   ultimate  disposition  of the  aforementioned
                                   actions will be material.

                                   Equity Participation Agreement

                                   The  Company  has  an  equity   participation
                                   agreement  with a key  officer of the Company
                                   and his spouse.  This agreement  provided for
                                   an  investment  of $80,000 by the  Company to
                                   acquire a 50%  interest in certain  property,
                                   which was later  converted into real property
                                   for rental purposes, owned by the key officer
                                   and his  spouse.  Pursuant  to  terms of this
                                   agreement, all income and losses arising from
                                   the   operations  of  the  rental   property,
                                   including the allocation of income and losses
                                   upon a sale or refinance,  shall be allocated
                                   50% to the Company and 50% to the key officer
                                   and his spouse.

                                      FS-20
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

9.      Commitments and            New Equity Participation Plan
        Contingencies
        (Continued)                On September 1, 1998,  the Company  adopted a
                                   new equity  participation  plan.  The plan is
                                   designed   to   provide   incentive   to  key
                                   employees to continue their  employment  with
                                   the  Company.  The plan vests at 20% per year
                                   with vesting  terminating upon termination of
                                   employment.

                                   Due From Officers and Stockholders

                                   In April 1993,  an officer and the  Company's
                                   majority  stockholder  borrowed  $55,000 from
                                   the Company. This note bears interest at 7.5%
                                   per annum.  The maturity date of the note has
                                   been  extended  annually  along with  accrued
                                   interest  to  March  31,   2000.   The  note,
                                   together with accrued  interest,  is included
                                   in  the  accompanying   consolidated  balance
                                   sheet.  During 1998, this officer borrowed an
                                   additional  $40,000  under the same  terms as
                                   the original note.

                                   During 1994,  an officer and  stockholder  of
                                   the  Company   borrowed   $25,000   from  the
                                   Company. This note bears interest at 7.5% per
                                   annum. The maturity date of the note has been
                                   extended annually along with accrued interest
                                   to March 31, 2000.  The note,  together  with
                                   accrued interest,  is in stockholders' equity
                                   in  the  accompanying   consolidated  balance
                                   sheet.

                                   Guarantees

                                   The Company  is  a  guarantor of certain bank
                                   lines of credit  made  to  the  Partnerships,
                                   which totaled $5,900,000  as  of  January 31,
                                   2000.  There  were  no amounts outstanding on
                                   such lines of credit as  of August  31, 1999.
                                   These lines are repaid by the Partnerships as
                                   the  limited  partners   make  their  capital
                                   contributions to the respective Partnerships.



                                      FS-21
<PAGE>

                                                          WNC & Associates, Inc.

                                             Notes to Consolidated Balance Sheet
                                January 31, 2000 (Unaudited) and August 31, 1999
--------------------------------------------------------------------------------

9.      Commitments and            Benefit Plan
        Contingencies
        (Continued)                The Company  maintains a profit  sharing plan
                                   which is  intended to qualify  under  Section
                                   401(k) of the Internal Revenue Code. The plan
                                   covers  substantially  all  employees  of the
                                   Company.  Participating employees are allowed
                                   to contribute up to the maximum dollar amount
                                   allowed by IRS regulations. The Company makes
                                   contributions  to the plan at the  discretion
                                   of management.


10.     Year 2000                  Like   other   organizations,   the   Company
        (Unaudited)                could   be   adversely   affected    if   the
                                   computer  systems the Company,  its suppliers
                                   or    customers    use    do   not   properly
                                   process    and     calculate     date-related
                                   information   and  data   from   the   period
                                   surrounding  and  including  January 1, 2000.
                                   This is  commonly  known as the  "Year  2000"
                                   issue. Additionally,  this issue could impact
                                   non-computer  systems  and  devices  such  as
                                   production equipment,  elevators,  etc. While
                                   the  Company's  project to assess and correct
                                   Y2K related  issues  regarding  the Year 2000
                                   has been  completed,  and the Company has not
                                   experienced   any   significant  Y2K  related
                                   events,  interactions  with other  companies'
                                   systems make it  difficult to conclude  there
                                   will not be future effects.  Consequently, at
                                   this   time,    management   cannot   provide
                                   assurances  that the Year 2000 issue will not
                                   have an impact on the Company's operations.









                                      FS-22
<PAGE>


                                    EXHIBIT A
                            PRIOR PERFORMANCE TABLES


         The tables set forth below present  financial  information with respect
to programs  which were  sponsored  by the  Sponsor.  Each of these  programs is
considered to have  investment  objectives  similar to those of the Fund in that
they each own  interests  in local  limited  partnerships  which own  properties
generating low income housing tax credits and/or benefiting from some other form
of government  assistance.  However,  the principal  investment objective of the
programs  included in Tables IV and V (excluding  ITCF II and Sequoia Manor) was
to provide  income tax losses  which  their  respective  investors  could use to
offset taxable  income from other  sources.  None of these tables are covered by
the reports of independent public accountants set forth in this document.

         For additional information as to the investment objectives and policies
of such prior programs see "Prior Performance  Summary." Additional  information
concerning  prior  performance  is  included  in  Part  II of  the  Registration
Statement  of the  Fund and in the  Form  10-K  annual  reports  for the  public
programs  which file such  reports.  Copies of these 10-K Forms are available to
any investor upon request to the Sponsor. Any such request should be directed to
the  attention of Michael L.  Dickenson,  WNC & Associates,  Inc.,  3158 Redhill
Avenue, Suite 120, Costa Mesa, California 92626.

         The  purpose  of the  tables  is to  provide  information  on the prior
performance  of these  partnerships  so as to permit a  prospective  investor to
evaluate the experience of the Sponsor in sponsoring such limited  partnerships.
The tables consist of:

         Table I         Experience in Raising and Investing Funds
         Table II        Compensation to Sponsor
         Table III       Operating Results of Prior Programs
         Table IV        Results of Completed Programs
         Table V         Sales or Disposals of Properties


Definitions

The following terms used herein have the following meanings:



                                      A-1
<PAGE>



"Acquisition  Cost"  includes  all costs  related  to the  acquisition  of local
limited partnership interests,  including equity contributions,  acquisition and
selection  fees  payable to the  general  partners  and other fees and  expenses
incident to the acquisition of local limited partnership interests.

"Capital  Contributions"  represents the contributions by investors in the prior
partnerships.

"GAAP" means  generally  accepted  accounting  principles as  promulgated in the
United States.

"Months to Invest 90% of Amount  Available for  Investment"  means the length of
time,  in  months,  from  the  offering  date  to the  date  of the  closing  of
acquisitions of local limited partnerships which, in the aggregate,  represented
the investment commitment of 90% of the amount available for investment.

"Percent leverage" means mortgage financing divided by total acquisition cost.

"Sponsor" means WNC & Associates, Inc. and its affiliates.

         IT  SHOULD  NOT  BE  ASSUMED  THAT  INVESTORS  IN  THIS  OFFERING  WILL
EXPERIENCE  RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE
PARTNERSHIPS  DESCRIBED IN THE  FOLLOWING  TABLES.  INVESTORS  WILL NOT HAVE ANY
INTEREST  IN ANY OF THE  PARTNERSHIPS  DESCRIBED  IN THE TABLES OR IN ANY OF THE
PROPERTIES OWNED BY THE LOCAL LIMITED  PARTNERSHIPS IN WHICH THOSE  PARTNERSHIPS
HAVE INVESTED AS A RESULT OF THE ACQUISITION OF UNITS.











                                      A-2
<PAGE>



                                     TABLE I

TABLE I provides  information  regarding  the raising and  investing of funds by
partnerships  sponsored by the Sponsor which raised funds during the  three-year
and  three-month  period ended March 31, 2000.  The table presents the aggregate
dollar amount of the offering,  the percentage of dollars raised which were used
to pay offering costs,  establish reserves and acquire  investments,  as well as
information  regarding  the percent of leverage  and the timing for both raising
and investing funds. The information concerns investor capital  contributions as
the sole  source  of funds for  investment  and  excludes  the  nominal  capital
contributions by the general partners.





















                                      A-3
<PAGE>




                                                     TABLE I

                                    EXPERIENCE IN RAISING AND INVESTING FUNDS

                                       (January 1, 1997 - March 31, 2000)

                                                             PUBLIC OFERINGS
                                                             ---------------
<TABLE>
                                       HTCF V-4            %         HTCF VI-5          %
                                       --------         -------      ---------       -------
     <S>                                  <C>             <C>           <C>            <C>

Dollar amount offered                $25,000,000                   $25,000,000
                                      ==========                    ==========

Dollar amount raised                 $21,920,450         100.0     $24,945,400       100.0

Less offering expenses:
  Selling commissions & discounts
    paid to non-affiliates (a)         1,590,100           7.2       1,694,100         6.8
  Organizational expenses (b)          1,375,900           6.3       1,689,300         6.8

Reserves                                 737,350           3.4       1,403,300         5.6
                                      ----------          ----      ----------        ----

Amount available for investment      $18,217,100          83.1     $20,158,700        80.8
                                      ==========          ====      ==========        ====

Acquisition costs:
  Prepaid items and fees
    related to purchase of local
    limited partnership inters       $   167,500           0.8      $  185,700         0.7
 Total paid or to be paid for
    local limited partnership
    interests                         16,419,200          74.9      18,225,700        75.1

Acquisition fees                       1,630,400           7.4       1,747,300         7.0
Other                                          -           -.-               -         -.-
                                    ------------          ----      ----------        ----

Total acquisition cost               $18,217,100          83.1     $20,158,700        80.8
                                      ==========          ====      ==========        ====

Percentage leverage (mortgage
  financing divided by total
  acquisition cost)                          53%                           45%

Date offering commenced                     7/96                          6/97

Length of offering (months)                   13                            13

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                      29                            14
-------------------------------
<FN>
(a)       Selling  commissions  were first paid to an  affiliated  broker-dealer
          which reallowed all selling commissions to non-affiliates.
(b)       Consists  of   estimated   legal,   accounting,   printing  and  other
          organization and offering expenses paid by the partnership directly or
          indirectly through the sponsor.
</FN>
</TABLE>




                                      A-4
                                   UNAUDITED
<PAGE>


                                                     TABLE I

                                    EXPERIENCE IN RAISING AND INVESTING FUNDS

                                       (January 1, 1997 - March 31, 2000)

                                                         PUBLIC OFFERINGS
                                                         ----------------
<TABLE>
                                       HTCF VI-6           %         HTCF VI-7          %
                                       ---------         -------     ---------       -------
     <S>                                  <C>             <C>           <C>            <C>
Dollar amount offered                 $25,000,000                   $25,000,000
                                       ==========                    ==========

Dollar amount raised                  $20,456,595       100.0       $ 7,139,775      100.0

Less offering expenses:
  Selling commissions & discounts
    paid to non-affiliates (a)          1,391,245         6.8           493,065        6.9
  Organizational expenses (b)           1,426,166         7.0           428,820        6.0

Reserves (c)                            3,343,264        16.3         1,403,300        5.6
                                        ---------        ----         ---------        ---

Amount available for investment       $14,295,920        69.9       $20,158,700       80.8
                                       ==========        ====        ==========       ====

Acquisition costs:
  Prepaid items and fees
   related to purchase of local
   limited partnership interest       $   111,334         0.6        $  142,940        2.0
Total paid or to be paid for local
  limited partnership interests        12,749,586        62.3           645,389        9.0
 Acquisition fees                       1,435,000         7.0           500,290        7.0
 Other                                          -         -.-                 -        -.-
                                      -----------        ----      ------------       ----

Total acquisition cost                $14,295,920        69.9        $1,288,619       18.0
                                       ==========        ====         =========       ====

Percentage leverage (mortgage
  financing divided by total
  acquisition cost)                           47%                           45%

Date offering commenced                      7/98                          9/99

Length of offering (months)                    12                           (d)

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                      (c)                           (c)
-------------------------------
<FN>
(a)      Selling  commissions  were first paid  to an  affiliated  broker-dealer
         which reallowed all selling commissions to non-affiliates.
(b)      Consists  of   estimated   legal,   accounting,   printing  and   other
         organization  and offering expenses paid by the partnership directly or
         indirectly through the sponsor.
(c)      Not all properties have been identified as of March 31, 2000. Therefore
         uninvested amounts are included in reserves.
(d)      Offering was continuing as of March 31, 2000.
</FN>
</TABLE>



                                      A-5
                                   UNAUDITED
<PAGE>




                                                        TABLE I

                                       EXPERIENCE IN RAISING AND INVESTING FUNDS

                                            (January 1, 1997 - March 31, 2000)

                                            P R I V A T E    O F F E R I N G S
                                            ----------------------------------
<TABLE>

                                    Three Partnerships            One Partnership             Two Partnerships
                                          Organized in               Organized in                 Organized in
                                                  1997       %            1998(a)        %             1999(b)        %
                                    ------------------      ---     ---------------     ---     ----------------     ---
         <S>                                   <C>          <C>           <C>           <C>           <C>            <C>
Dollar amount offered                     $67,000,000                 $20,000,000                 $80,000,000
                                           ==========                  ==========                  ==========

Dollar amount raised                      $66,384,915     100.0       $19,566,529      100.0      $66,811,546      100.0

Less offering expenses:
  Selling commissions & discounts
  paid to non-affiliates (a)                1,601,968       2.4                 -        0.0          482,000        0.7
  Organizational expenses (b)               1,108,654       1.7           440,247        2.3        1,051,575        1.6
  Reserves                                  5,316,668       8.0           897,904        4.6        7,332,401 (c)   11.0
                                            ---------       ---           -------        ---        ---------       ----


Amount available for investment           $58,357,645      87.9       $18,228,378       93.1      $57,945,570       86.7
                                           ==========      ====        ==========       ====       ==========       ====

Acquisition costs:
  Prepaid items and fees
    related to purchase of local
    limited partnership interest           $  857,182       1.3        $  342,414        1.7      $ 1,065,820        1.6

  Total paid or to be paid for local
    limited partnership interests          53,909,398      81.2        16,861,268       86.2       54,383,340       81.4
  Acquisition fees                          2,217,741       3.3           782,661        4.0        2,223,650        3.3
  Other                                     1,373,324       2.1           242,035        1.2          272,760        0.4
                                            ---------       ---           -------        ---        ---------

Total acquisition cost                    $58,357,645      87.9       $18,228,378       93.1      $57,945,570       86.7
                                           ==========      ====        ==========       ====       ==========       ====

Percent leverage (mortgage
  financing divided by total
  acquisition cost)                               56%                         49%                         49%

Date offering commenced                  10/96 - 9/97                        5/98                1/99 - 10/99

Length of offering (months)                     3 - 7                           4                    4 -  (c)

Months to invest 90% of
  amount available for
  investment (measured from
  beginning of offering)                        3 - 6                           7                         (d)
------------------------------
<FN>
(a)      Selling  commissions  were first paid to  an  affiliated  broker-dealer
         which reallowed all selling commissions to non-affiliates.
(b)      Consists  of   estimated   legal,   accounting,   printing   and  other
         organization and offering expenses paid by the partnership directly  or
         indirectly through the sponsor.
(c)      One  Partnership was only partially  closed and had further  investment
         after March 31, 2000.
(d)      Not all properties have been identified as of March 31, 2000. Therefore
         uninvested amounts are included in reserves.

</FN>
</TABLE>


                                      A-6
                                   UNAUDITED
<PAGE>


                                    TABLE II

TABLE II presents information concerning the cumulative compensation paid to the
Sponsor  for the period from  January 1, 1997 to March 31, 2000 with  respect to
programs  presented  in TABLE I and on an  aggregate  basis with  respect to all
other programs which have been sponsored by the Sponsor.





















                                      A-7
<PAGE>



                                    TABLE II

                             COMPENSATION TO SPONSOR

                       (January 1, 1997 - March 31, 2000)

                                PUBLIC OFFERINGS
                                ----------------

                                              HTCF V-4            HTCF VI-5
                                              --------            ---------

Date offering commenced                           7/96                 6/97

Dollar amount raised                       $21,920,450          $24,945,400

Amount paid to sponsor from
  proceeds of offering: (a)
     Dealer manager fees                       166,957              500,000
     Acquisition fees                          985,285            1,669,520
     Non-accountable offering expense                -                    -
     Other                                     166,957              250,000

Dollar amount of cash generated
  from operations before
  deducting payments to sponsor                560,633            (310,992)

Amount paid to sponsor from operations:
   Property management fees                          -                    -
   Asset  management fees(b)                   214,655               36,000
   Reimbursements                                    -                    -
   Leasing commissions                               -                    -

Dollar amount of property sales and
  refinancing before deducting
  payments to sponsor:
     Cash                                            -                    -
     Notes                                           -                    -

Amount paid to sponsor from property
  sales and refinancing:
     Real estate commissions                         -                    -
     Subordinated disposition fee                    -                    -
     Other                                           -                    -
------------------------------------

(a)       Represents  amounts  paid to  sponsor  which  were  not  reallowed  to
          non-affiliates.

(b)       Asset  management  fees were paid  from  partnership  reserves  in the
          instances where amounts paid to sponsor from operations  exceed dollar
          amount of cash generated from operations.





                                      A-8
                                   UNAUDITED
<PAGE>




                                             TABLE II

                                      COMPENSATION TO SPONSOR

                                (January 1, 1997 - March 31, 2000)

                                              PUBLIC OFFERINGS
                                              ----------------

                               HTCF VI-6          HTCF VI-7       Twelve Other
                               ---------          ---------       ------------
                                                                 Public Programs
                                                                 ---------------

Date offering commenced           7/98               7/99         1996 and prior

Dollar amount raised          $ 20,456,595       $ 7,139,775      $134,096,400

Amount paid to sponsor from
  proceeds of offering: (a)
     Dealer manager fees           410,000           132,760                 -
     Acquisition fees            1,435,000           464,660           234,786
     Non-accountable
      acquisition costs                  -           142,940                 -
     Other                         205,000           266,840                 -

Dollar amount of cash
  generated from (used in)
  operations before deducting
  payments to sponsor              116,057            27,424           386,807

Amount paid to sponsor from
  operations:
     Property management fees            -                 -                 -
     Asset management fees (b)      51,614                 -           929,159
     Reimbursements                      -                 -                 -
     Leasing commissions                 -                 -                 -

Dollar amount of property
  sales and refinancing before
  deducting payments to sponsor:
     Cash                                -                 -            51,407
     Notes                               -                 -                 -

Amount paid to sponsor from
  property sales and refinancing:
     Real estate commissions             -                 -                 -
     Incentive fee                       -                 -                 -
     Other                               -                 -                 -
------------------------------------

(a)      Represents  amounts  paid  to  sponsor  which  were  not  reallowed  to
         non-affiliates.

(b)      Asset  management  fees  were  paid from  partnership  reserves  in the
         instances where amounts paid to sponsor from  operations  exceed dollar
         amount of cash generated from operations.





                                      A-9
                                   UNAUDITED
<PAGE>



                                             TABLE II

                                       COMPENSATION TO SPONSOR

                                  (January 1, 1997 - March 31, 2000)

                                          PRIVATE OFFERINGS
<TABLE>
                                    Three Partnerships            One Partnership             Two Partnerships     One Hundred-Three
                                          Organized in               Organized in                 Organized in         Other Private
                                                  1997                       1998                         1999          Partnerships
                                    ------------------            ---------------             ----------------     -----------------
         <S>                                 <C>                        <C>                            <C>                    <C>


Date offering commenced                       Various                      5/98                       Various          1996 & prior

Dollar amount raised                      $66,384,935               $19,566,500                  $ 66,811,546                   N/A

Amount paid to sponsor from
  proceeds of offering: (a)
     Underwriting fees                              -                         -                             -                     -
     Acquisition fees                       2,217,741                   782,661                     2,223,035                     -
     Non-accountable
        acquisition costs                           -                   339,682                     1,060,377                     -
     Other                                    540,544                         -                             -                     -

Dollar amount of cash generated
  from (used in) operations before
  deducting payments to sponsor           (2,869,332)                 (677,731)                     (339,019)                   N/A

Amount paid to sponsor from
  operations:
    Property management fees                        -                         -                             -                     -
    Asset management fees (b)                 199,666                   109,975                       244,626               336,187
    Reimbursements                                  -                         -                             -                58,000
    Leasing commissions                             -                         -                             -                     -


Dollar amount of property sales
  and refinancing before deducting
  payments to sponsor:
     Cash                                           -                         -                             -             2,552,243
     Notes                                          -                         -                             -               881,529


Amount paid to sponsor from property
  sales and refinancing:
     Real estate commissions                        -                         -                             -                     -
     Incentive fee                                  -                         -                             -                     -
     Other                                          -                         -                             -                24,662
------------------------------------
<FN>
(a)      Represents  amounts  paid  to  sponsor  which  were  not  reallowed  to
         non-affiliates.
(b)      Asset  management  fees  were  paid from  partnership  reserves  in the
         instances where amounts paid to sponsor from  operations  exceed dollar
         amount of cash generated from operations.
</FN>
</TABLE>




                                      A-10
                                   UNAUDITED
<PAGE>


                                    TABLE III

TABLE III presents the operating  results for all partnerships  sponsored by the
Sponsor  which  closed  during the five years and three  months  ended March 31,
2000. The prior partnerships are structured as investment partnerships acquiring
interests in operating  partnerships.  The investment  partnerships  account for
such investments  using the equity method of accounting which recognizes each of
such partnership's pro rata share of the operating partnership's total income or
loss. Revenues generated by the investment partnerships consist substantially of
interest on short-term  investments.  This interest income  generally  decreases
after the initial two years of  operations  as funds  available  for  investment
decrease.  This  decrease  in funds  arises  from the  investment  partnership's
payments of capital contributions due.

"Cash  generated from (used in)  operations" is per each program's  Statement of
Cash Flows.

Other  information  included in TABLE III includes data on cash  generated  from
operations  and tax and  cash  distribution  information  per  $1,000  invested,
including Tax Credit allocations.

















                                      A-11
                                   UNAUDITED
<PAGE>



                                                  TABLE III

                                      OPERATING RESULTS OF PRIOR PROGRAMS

                                                  HTCT IV-2
                                                  ---------
<TABLE>
                                        1994(a)        1995       1996         1997       1998       1999(c)         2000(d)
                                        -------     -------     -------     -------     -------      -------         -------
          <S>                             <C>          <C>        <C>          <C>        <C>          <C>             <C>

Gross revenue                           $ 3,475    $179,927    $161,610    $ 74,571    $ 47,017     $  6,850       $  18,374
Less:
   Operating expenses                    16,096      57,965      60,777      65,717      65,402       18,466          81,077
   Interest                              11,173      39,148       5,350           -           -            -               -
   Depreciation and amortization          1,638      26,208      40,109      40,823      32,099       10,230          40,935
   Impairment on investments in
     local partnerships                       -           -           -           -           -            -         766,559
Equity in losses in local
     partnerships                       239,118     628,521     628,631     737,115     658,728      164,683         992,162
                                        -------     -------     -------     -------     -------      -------         -------


Net income (loss) - GAAP basis       $(264,550)  $(571,915)  $(573,257)  $(769,084)  $(709,212)  $ (186,529)   $ (1,862,359)
                                      =========   =========   =========  =========    =========    =========      ==========


Taxable income (loss) from
     operations                      $(228,979)  $(702,048)  $(641,050)  $(928,847)  $(895,194)  $(1,124,894)            N/A
                                      =========   =========   =========  =========    =========  ============     ==========


Cash generated (used) from
     operations                       $(25,518)    $ 54,970    $ 60,895    $ 52,765    $ 26,255    $ (8,424)      $ (19,827)
Cash generated from sales                     -           -           -           -           -                            -
Cash generated from refinancing               -           -           -           -           -                            -

Less: Cash distributions to
investors                                     -           -           -           -           -            -               -
                                        -------     -------     -------     -------     -------      -------         -------

Cash generated (deficiency) after
  cash distributions and
  special items                      $ (25,518)    $ 54,970    $ 60,895    $ 52,765   $  26,255   $  (8,424)      $ (19,827)
                                      =========   =========   =========   =========   =========    =========      ==========


                                   TAX AND DISTRIBUTION DATA PER $1,000 INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                 (b)  $(82)   (b) $(58)       $(41)       $(59)       $(57)        $(71)             N/A
     From recapture                           -           -           -           -           -            -             N/A
   Capital gain (loss)                        -           -           -           -           -            -             N/A

Federal tax credits                  (b)     21   (b)   70          105         113         124          135             N/A
California tax credits                        -                       -           -           -            -


Cash distributions to investors               -            -          -           -           -            -               -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year
 (original total acquisition costs of
 properties retained divided by total
 original acquisition costs of all
 properties)                                100%         100%       100%       100%         100%         100%            100%
--------------------------------
<FN>
 (a)     Partial year of operations.
 (b)     Tax losses and tax  credits  allocated  to an investor in the first two
         years are dependent upon an investor's entry date. Amount shown is that
         allocated to initial investor.
 (c)     Year  end was  changed  in 1999 for  GAAP  but tax  information  is for
         calendar  year.  GAAP  information  is for three months ended March 31,
         1999 and tax information is for year ended December 31, 1999.
 (d)     Year ended March 31, 2000
 N/A     Tax  results   are   not   available   until  the  preparation  of  the
         partnership's 2000 tax returns.
</FN>
</TABLE>



                                      A-12
                                   UNAUDITED
<PAGE>

                                                         TABLE III

                                           OPERATING RESULTS OF PRIOR PROGRAMS

                                                         CHTC IV-4
<TABLE>
                                        1994(a)        1995       1996         1997       1998       1999(c)         2000(d)
                                        -------     -------     -------     -------     -------      -------         -------
          <S>                             <C>          <C>        <C>          <C>        <C>          <C>             <C>

Gross revenue                          $  1,613    $160,888   $ 147,254   $  65,307   $  46,032    $  7,756       $  31,345
Less:
   Operating expenses                        12      41,325      51,488      45,130      49,409      13,304          99,344
   Interest                              13,387      79,853           -           -           -           -               -
   Depreciation and amortization              -      16,056      24,865      25,419      25,561       6,379          25,639
   Loss from sale of securities               -           -           -           -           -           -          50,522
   Equity in (income) losses in
     local partnerships                 (2,212)     100,224     528,288     806,639     750,114     187,528         817,069
                                       --------    --------     -------     -------     -------      -------        -------

Net income (loss) - GAAP basis        $ (9,574)   $(76,570)  $(457,387)  $(811,881)  $(779,052)    $(199,455)   $ (961,229)
                                      =========   =========   =========   =========   =========    =========     ==========

Taxable income (loss) from
   operations                         $(11,786)   $(60,108)  $(566,147)   (778,340)   (837,679)   (918,330)             N/A
                                      =========   =========   =========   =========   =========   =========       =========

Cash generated (used) from
  operations                          $   1,602   $  26,322   $  95,766   $ 110,356   $  84,603  $ (87,823)      $(67,091)
Cash generated from sales                     -           -           -           -           -           -              -
Cash generated from refinancing               -           -           -           -           -           -              -

Less: Cash distributions to
  investors                                   -           -           -           -           -           -              -
                                       --------    --------     -------     -------     -------     -------        -------

Cash generated (deficiency) after
   cash distributions and
   special items                      $  1,602    $ 26,322   $  95,766   $ 110,356   $  84,603   $ (87,823)      $ (67,091)
                                      =========   =========   =========   =========   =========   =========       =========

                                   TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED

Federal income tax results
  Ordinary income (loss)
     From operations                (b)  $(12)     (b)  $(9)       $(49)      $(69)       $(72)       $(75)          N/A
     From recapture                          -             -           -          -           -           -          N/A
  Capital gain (loss)                        -             -           -          -           -         (4)          N/A

Federal tax credits                          -     (b)    18          64         86          99         102          N/A
California tax credits                       -     (b)    53          70         91          67          27          N/A

Cash distributions to investors              -             -          -           -           -           -            -

Amount (in percentage terms)
 remaining invested in program
 properties at end of year
 (original total acquisition costs of
 properties retained divided by total
 original acquisition costs of all
 properties)                              100%         100%        100%       100%         100%         100%        100%
--------------------------------
<FN>

(a)       Partial year of operations.

(b)       Tax losses and tax credits  allocated  to an investor in the first two
          years are dependent upon an investor's entry  date.  Amount  shown  is
          that allocated to initial investors.

(c)       Year end was changed  in 1999  for  GAAP  but tax  information  is for
          calendar year. GAAP information is for three months  ended  March  31,
          1999 and tax information is for year ended December 31, 1999.

(d)       Year ended March 31, 2000

N/A       Tax  results  are  not  available   until  the   preparation   of  the
          partnership's 2000 tax returns.
</FN>
</TABLE>
                                      A-13
                                   UNAUDITED
<PAGE>
                                                         TABLE III

                                             OPERATING RESULTS OF PRIOR PROGRAMS

                                                          HTCF V-3
<TABLE>
                                              1995(a)            1996           1997          1998        1999(d)       2000(e)
                                              -------         -------        -------       -------        -------       -------
          <S>                                  <C>              <C>            <C>           <C>            <C>           <C>

Gross revenue                                $  3,487      $  209,940     $  121,703    $   55,326      $   9,994    $   35,848
Less:
   Operating expenses                          12,379          69,130         66,884        71,626         21,510        97,136
   Interest                                         -               -              -             -              -             -
   Depreciation and amortization                  454          23,436         34,605        35,765          8,875        42,439
   Impairment on investments in
     local partnerships                             -               -              -             -              -       995,804
   Equity in losses in local
     partnerships                                 343         185,071        789,697     1,175,333        293,818       853,824
                                              -------         -------        -------     ---------        -------      --------

Net income (loss) - GAAP basis               $  9,689      $ (67,697)    $ (769,483)  $(1,227,398)    $ (314,209)  $(1,953,355)
                                               ======        ========      =========   ===========      =========   ===========

Taxable income (loss) from
  operations                                  $ 2,522     $ (128,969)   $(1,060,301)  $(1,409,234)   $(1,422,550)           N/A
                                                =====        ========    ===========   ===========    ===========
Cash generated (used) from
  operations                                  $ 3,402     $ (205,999)     $  102,215    $   60,991    $  (45,335)   $  (59,825)
Cash generated from sales                           -               -              -             -              -             -
Cash generated from refinancing                     -               -              -             -              -             -
Less: Cash distributions to
  investors                                         -               -              -             -              -             -
                                              -------         -------        -------     ---------        -------      --------
Cash generated (deficiency) after
  cash distributions and special items        $ 3,402     $ (205,999)     $  102,215   $    60,991    $  (45,335)   $  (59,825)
                                                =====       =========        =======       =======        =======       =======

                                  TAX AND DISTRIBUTION DATA PER $1,OOO INVESTED
                                  ----------------------------------------------
Federal income tax results
  Ordinary income (loss)
     From operations                        (b)    $2     (b)  $ (26)          $(58)         $(78)          $(78)           N/A
     From recapture                                 -               -              -             -              -           N/A
  Capital gain (loss)                               -               -              -             -              -           N/A

Federal tax credits                         (b)     3     (b)      62             84           137            137           N/A
California tax credits                              -               -              -             -              -

Cash distributions to investors
  Source (on GAAP basis)
      Investment income                             -               -              -             -              -             -
      Return of capital                             -               -              -             -              -             -
  Source (on cash basis)
      Sales                                         -