WNC HOUSING TAX CREDIT FUND II LP - 10-K Annual Report

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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

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

For the fiscal year ended ________________________

OR

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

For the transition period from January 1, 1999 to March 31, 1999

Commission file number: 0-20057

WNC HOUSING TAX CREDIT FUND II, L.P.

California 33-0391979
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)

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

(714) 662-5565

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

NONE

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

UNITS OF LIMITED PARTNERSHIP INTEREST

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

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

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

INAPPLICABLE

DOCUMENTS INCORPORATED BY REFERENCE

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

NONE

2

PART I

Item 1. Business

Organization

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

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

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

Description of Business

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

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

3

As of March 31, 1999, the Partnership had invested in twenty-seven Local Limited
Partnerships. Each of these Local Limited Partnerships owns a Housing Complex
that is eligible for the federal Low Income Housing Credit. Certain Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.

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

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

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

Item 2. Properties

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

4

------------------------------ ---------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Estimated Low of Local
Partnership General Partner in Local Limited Investment Number Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------

Airport Road Slidell, Clifford E. Olsen,
Associates, Louisiana Olsen Securities
Limited Corporation $ 334,000 $ 334,000 40 90% $ 695,000 $ 1,450,000

Am-Kent Amite & Olsen Securities
Associates, Kentwood, Corporation 232,000 232,000 32 100% 585,000 1,119,000
Ltd. Louisiana

Arizona I Showlow, Western States
Limited Arizona Housing Corporation
Partnership and Joe W. Roberts
Company 320,000 320,000 42 93% 617,000 1,487,000

Ashland Ashland, Ronald D. Bettencourt 300,000 300,000 40 100% 666,000 1,390,000
Investment Oregon
Group, an
Oregon
Limited
Partnership

Brantley Brantley, Thomas H. Cooksey and
Housing, Alabama Apartment Developers,
Ltd. Inc. 108,000 108,000 19 89% 287,000 575,000

Brian's Village Mannford, Robert W. Green and
Apartments, an Oklahoma Emerald Development
Oklahoma Limited Co., Inc. 176,000 176,000 28 100% 374,000 757,000
Partnership.

Candleridge Perry, Eric A Sheldahl 93,000 93,000 23 100% 224,000 595,000
Apartments of Iowa
Perry, L.P.

Candleridge Runnells, Eric A. Sheldahl 58,000 58,000 15 100% 141,000 377,000
Apartments of Iowa
Runnells, L.P.

5

------------------------------ ---------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Estimated Low of Local
Partnership General Partner in Local Limited Investment Number Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------

Casa Allegre Las Vegas, Western States
Limited New Mexico Housing Corporation,
Partnership ABO Corporation and
Alan D. Nofsker 318,000 318,000 42 100% 635,000 1,394,000

Castroville Castroville, Doublekaye Corp and
Village, Texas Gary L. Kersch 165,000 165,000 40 98% 426,000 954,000
Ltd.

Cherokee Square, Rogersville, Douglas B. Parker and
L.P. Tennessee Billy D. Cobb 202,000 202,000 31 100% 418,000 978,000

Divall Midland Port Gary J. DiVall 234,000 234,000 32 94% 489,000 1,159,000
Associates Washington,
Limited Wisconsin
Partnership II

Eclectic Housing, Eclectic, Thomas H. Cooksey and
Ltd. Alabama Apartment Developers,
Inc. 74,000 74,000 15 100% 216,000 414,000

Elizabeth Square Raceland, Olsen Securities Corp. 356,000 356,000 48 94% 748,000 1,477,000
Associates, Ltd. Louisiana

Emory Capital, Emory, 1600 Capital Company,
L.P. Texas Inc. 85,000 85,000 16 100% 175,000 369,000

Emory Manor, L.P. Emory, 1600 Capital Company,
Texas Inc. 128,000 128,000 24 100% 206,000 552,000

Idalou Manor, Idalou, 1600 Capital Company,
L.P. Texas Inc. 122,000 122,000 24 92% 290,000 619,000

Jefferson Jefferson, 1600 Capital Company,
Capital, Texas Inc. 167,000 167,000 30 87% 269,000 714,000
L.P.

6

------------------------------ ---------------------------------------------
As of March 31, 1999 As of December 31, 1998
------------------------------ ---------------------------------------------
Partnership's Encumbrances
Total Investment Amount of Estimated Low of Local
Partnership General Partner in Local Limited Investment Number Occu- Income Housing Limited
Name Location Name Partnerships Paid to Date of Units pancy Credits Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------

Jefferson Manor, Jefferson, 1600 Capital Company,
L.P. Texas Inc. 179,000 179,000 32 81% 362,000 763,000

Lakeview Limited Beaver Dam, Thomas G. Larson,
Partnership Wisconsin William H. Larson,
and Raymond L.
Tetzlaff 264,000 264,000 40 95% 528,000 1,240,000

Littlefield Littlefield, 1600 Capital Company,
Manor, Texas Inc. 117,000 117,000 24 91% 280,000 595,000
L.P.

Perry County Uniontown, Thomas H. Cooksey and
Housing, Alabama Apartment Developers,
Ltd. Inc. 82,000 82,000 15 100% 215,000 440,000

Pine Hill Pine Hill, Thomas H. Cooksey and
Housing, Alabama Apartment Developers,
Ltd. Inc. 105,000 105,000 19 100% 267,000 564,000

Rociada Partners Hereford, Richard Lee (Rick)
Ltd. Texas Brown 154,000 154,000 28 96% 316,000 731,000

Wadley Housing, Wadley, Thomas H. Cooksey and
Ltd. Alabama Apartment Developers,
Inc. 76,000 76,000 15 93% 213,000 440,000

Whitewater Woods Whitewater, Thomas G. Larson,
Limited Wisconsin William H. Larson,
Partnership and Raymond L.
Tetzlaff 301,000 301,000 40 93% 603,000 1,297,000

Willcox Willcox, John P. Casper
Investment Arizona
Group, an
Arizona
Limited Partnership 246,000 246,000 30 100% 490,000 1,060,000
--------- --------- --- ----- ---------- ----------
$ 4,996,000 $ 4,996,000 784 96% $ 10,735,000 $ 23,510,000
========= ========= === ===== ========== ==========

7

------------------------------------------------
For the year ended December 31, 1998
------------------------------------------------
Low Income
Housing Credits
Rental Net Allocated to
Partnership Name Income Income/(Loss) Partnership
- --------------------------------------------------------------------------------

Airport Road Associates,
Limited $ 152,000 $ (39,000) 99%

Am-Kent Associates, Ltd. 123,000 (40,000) 99%

Arizona I Limited Partnership 129,000 (65,000) 99%

Ashland Investment Group, an
Oregon Limited Partnership 168,000 27,000 99%

Brantley Housing, Ltd. 54,000 (12,000) 99%

Brian's Village Apartments, an
Oklahoma Limited Partnership 102,000 (14,000) 99%

Candleridge Apartments of
Perry, L.P. 117,000 (9,000) 99%

Candleridge Apartments of
Runnells, L.P. 88,000 (5,000) 99%

Casa Allegre Limited
Partnership 172,000 20,000 99%

Castroville Village, Ltd. 146,000 (8,000) 99%

Cherokee Square, L.P. 87,000 (19,000) 99%

Divall Midland Associates
Limited Partnership II 126,000 (31,000) 99%

Eclectic Housing, Ltd. 41,000 (10,000) 99%

Elizabeth Square Associates,
Ltd. 158,000 (45,000) 99%

Emory Capital, L.P. 52,000 (12,000) 99%

8

------------------------------------------------
For the year ended December 31, 1998
------------------------------------------------
Low Income
Housing Credits
Rental Net Allocated to
Partnership Name Income Income/(Loss) Partnership
- --------------------------------------------------------------------------------

Emory Manor, L.P. 77,000 (30,000) 99%

Idalou Manor, L.P. 75,000 (15,000) 99%

Jefferson Capital, L.P. 82,000 (11,000) 99%

Jefferson Manor, L.P. 78,000 (13,000) 99%

Lakeview Limited Partnership 142,000 (21,000) 99%

Littlefield Manor, L.P. 75,000 (15,000) 99%

Perry County Housing, Ltd. 50,000 (9,000) 99%

Pine Hill Housing, Ltd. 58,000 (10,000) 99%

Rociada Partners Ltd. 85,000 (21,000) 99%

Wadley Housing, Ltd. 43,000 (13,000) 99%

Whitewater Woods Limited
Partnership 146,000 (39,000) 99%

Willcox Investment Group, an
Arizona Limited Partnership 119,000 (3,000) 99%
--------- --------
$ 2,745,000 $ (462,000)
========= ========

9

Item 3. Legal Proceedings

NONE.

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

NONE.

PART II.

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

Item 5a.

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

(b) At March 31, 1999, there were 580 Limited Partners.

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

(d) No unregistered securities were sold by the Partnership during the three
months ended March 31, 1999.

Item 5b.

NOT APPLICABLE

Item 6. Selected Financial Data

Selected balance sheet information for the Partnership is as follows:

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

1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
ASSETS
Cash and cash

equivalents $ 175,658 $ 187,707 $ 175,192 $ 181,313 $ 208,303 $ 238,482 $ 237,739
Investments in
limited
partnerships, net 1,460,945 1,750,127 1,533,952 1,828,770 2,005,382 2,606,673 3,289,100
Receivable from
limited
partnerships - - - - - 52,726 -
Other assets - - - - 587 931 3,202
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 1,636,603 $ 1,937,834 $ 1,709,144 $ 2,010,083 $ 2,214,272 $ 2,898,812 $ 3,530,041
========== ========== ========== ========== ========== ========== ==========
LIABILITIES
Accrued fees and
expenses due to
general partner
and affiliates $ 1,055,204 $ 910,531 $ 1,019,071 $ 871,377 $ 758,827 $ 650,875 $ 504,892

PARTNERS' EQUITY 581,399 1,027,303 690,073 1,138,706 1,455,445 2,247,937 3,025,149
---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 1,636,603 $ 1,937,834 $ 1,709,144 $ 2,010,083 $ 2,214,272 $ 2,898,812 $ 3,530,041
========== ========== ========== ========== ========== ========== ==========

10

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

For the Three Months For the Years Ended
Ended March 31 December 31
--------------------------- -----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)

Loss from operations $ (46,381) $ (40,643) $ (181,052) $ (173,718) $ (224,004) $ (175,049) $ (172,493)
Equity in loss from
limited partnerships (62,293) (70,760) (267,581) (143,021) (568,488) (602,163) (544,630)
-------- -------- -------- -------- -------- -------- --------
Net loss $ (108,674) $ (111,403) $ (448,633) $ (316,739) $ (792,492) $ (777,212) $ (717,123)
======== ======== ======== ======== ======== ======== ========
Net loss allocated to:
General partner $ (1,087) $ (1,114) $ (4,486) $ (3,167) $ (7,925) $ (7,772) $ (7,171)
======== ======== ======== ======== ======== ======== ========
Limited partners $ (107,587) $ (110,289) $ (444,147) $ (313,572) $ (784,567) $ (769,440) $ (709,952)
======== ======== ======== ======== ======== ======== ========
Net loss per limited
partner unit $ (15.37) $ (15.76) $ (63.45) $ (44.80) $ (112.08) $ (109.92) $ (101.42)
======== ======== ======== ======== ======== ======== ========
Outstanding weighted
limited partner
units $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000 $ 7,000
======== ======== ======== ======== ======== ======== ========

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

1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
Net cash provided by
(used in):
Operating
activities $ (4,910) $ 3,849 $ (12,006) $ (39,229) $ (41,630) $ (5,443) $ 40,620
Investing
activities 5,376 2,545 5,885 12,239 11,451 6,186 (175,289)
-------- -------- -------- -------- -------- -------- --------

Net change in cash
and cash equivalents 466 6,394 (6,121) (26,990) (30,179) 743 (134,669)

Cash and cash
equivalents,
beginning of period 175,192 181,313 181,313 208,303 238,482 237,739 372,408
-------- -------- -------- -------- -------- -------- --------

Cash and cash
equivalents, end of
period $ 175,658 $ 187,707 $ 175,192 $ 181,313 $ 208,303 $ 238,482 $ 237,739
======== ======== ======== ======== ======== ======== ========

Low Income Housing Credit per Unit was as follows for the year ended
December 31:

1998 1997 1996 1995 1994

Federal $ 145 $ 145 $ 145 $ 145 $ 146
State - - - - -
--------- --------- ---------- --------- ----------
Total $ 145 $ 145 $ 145 $ 145 $ 146
========= ========= ========== ========= ==========

11

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

Financial Condition

The Partnership's assets at March 31, 1999 consisted primarily of $176,000 in
cash and aggregate investments in the twenty-seven Local Limited Partnerships of
$1,461,000. Liabilities at March 31, 1999 primarily consisted of $1,052,000 of
accrued annual management fees due to the General Partner.

Results of Operations

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

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The
Partnership's net loss for 1998 was $(449,000), reflecting an increase of
$132,000 from the net loss experienced in 1997. The increase in net loss is
primarily due to equity in losses from limited partnerships which increased to
$(268,000) in 1998 from $(143,000) in 1997.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. The
Partnership's net loss for 1997 was $(317,000), reflecting a decrease of
$475,000 from the net loss experienced in 1996. The decline in net loss is
primarily due to equity in losses from limited partnerships which declined to
$(143,000) in 1997 from $(568,000) in 1996, because the investments in certain
Local Limited Partnerships reached $0 during 1997. Losses from operations in
1997 were $(174,000) compared to $(224,000) in 1996. The reduction in losses
from operations were a result of operating expenses declining from $234,000 in
1996 to $180,000 in 1997.

Cash Flows

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

Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was $(6,000), compared to net cash used in 1997 of $(27,000). The
change was due primarily to a decrease in operating costs paid to third parties
and a decline in distributions from Local Limited Partnerships.

12

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was $(27,000), compared to $(30,000) in 1996. The change was due
primarily to an increase in distributions from limited partnerships and a
decrease in operating expenses.

During the three months ended March 31, 1999 and the year ended December 31,
1998, accrued payables, which consist primarily of related party management fees
due to the General Partner, increased by $36,000 and $148,000, respectively. The
General Partner does not anticipate that these accrued fees will be paid until
such time as capital reserves are in excess of future forseeable working capital
requirements of the Partnership.

The Partnership expects its future cash flows, together with its net available
assets at March 31, 1999, to be sufficient to meet all currently forseeable
future cash requirements.

Impact of Year 2000

WNC & Associates, Inc.

Status of Readiness

Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its ultimate general partner. IT 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 IT systems of WNC are year 2000 compliant.

Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. 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 are year 2000 compliant. The one telephone system will require
the replacement of one computer and one software application, both of which will
be completed on or before October 1, 1999.

Service Providers. WNC also relies on the IT and non-IT systems of service
providers. Service providers include utility companies, financial institutions,
telecommunications carriers, municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider, financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant. There can be no assurance that this
compliance information is correct. There also can be no assurance that the
systems of other, less-important service providers and outside vendors will be
year 2000 compliant.

Costs to Address Year 2000 Issues

The cost to address year 2000 issues for WNC has been less than $20,000. The
cost to replace the telephone system noted above will be less than $5,000. The
cost to deal with potential year 2000 issues of other outside vendors cannot be
estimated at this time.

13

Risk of Year 2000 Issues

The most reasonable and likely result from non-year 2000 compliance of systems
of the service providers noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.

Local Limited Partnerships

Status of Readiness

WNC is in the process of obtaining year 2000 certifications from each Local
General Partner of each Local Limited Partnership. Those certifications will
represent to the Partnership that the IT and non-IT systems critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT systems of property management companies, independent
accountants, electrical power providers, financial institutions and
telecommunications carriers used by the Local Limited Partnership are year 2000
compliant.

There can be no assurance that the representations in the certifications will be
correct. There also can be no assurance that the systems of other,
less-important service providers and outside vendors, upon which the Local
Limited Partnerships rely, will be year 2000 compliant.

Costs to Address Year 2000 Issues

There will be no cost to the Partnership as a result of assessing year 2000
issues for the Local Limited Partnerships. The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.

Risk of Year 2000 Issues

There may be Local General Partners who indicate that they or their property
management company are not year 2000 compliant and do not have plans to become
year 2000 compliant before the end of 1999. There may be other Local General
Partners who are unwilling to respond to the certification request. The most
likely result of either non-compliance or failure to respond will be the removal
and replacement of the property management company and/or the Local General
Partner with year 2000 compliant operators.

Despite the efforts to obtain certifications, there can be no assurance that the
Partnership will be unaffected by year 2000 issues. The most reasonable and
likely result from non-year 2000 compliance will be the disruption of normal
business operations for the Local Limited Partnerships, including but not
limited to the possible failure to properly collect rents and meet their
obligations in a timely manner. This disruption would, in turn, lead to delays
by the Local Limited Partnerships in performing reporting and fiduciary
responsibilities on behalf of the Partnership. The worst-case scenario would
include the initiation of foreclosure proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary to minimize the risk of foreclosure, including the removal and
replacement of a Local General Partner by the Partnership. These delays would
likely be temporary and would likely not have a material effect on the
Partnership or WNC.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8. Financial Statements and Supplementary Data

14

Report of Independent Certified Public Accountants

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

We have audited the accompanying balance sheets of WNC Housing Tax Credit Fund
II, L.P. (a California Limited Partnership) (the "Partnership") as of March 31,
1999 and December 31, 1998, and the related statements of operations, partners'
equity (deficit) and cash flows for the three months ended March 31, 1999 and
the year ended December 31, 1998. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits. A significant
portion of the financial statements of the limited partnerships in which the
Partnership is a limited partner were audited by other auditors whose reports
have been furnished to us. As discussed in Note 2 to the financial statements,
the Partnership accounts for its investments in limited partnerships using the
equity method. The portion of the Partnership's investment in limited
partnerships audited by other auditors represented 58% and 59% of the total
assets of the Partnership at March 31, 1999 and December 31, 1998, respectively.
Our opinion, insofar as it relates to the amounts included in the financial
statements for the limited partnerships which were audited by others, is based
solely on the reports of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.

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

/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP

Orange County, California
July 12, 1999

15

INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
II, L.P. ( a California Limited Partnership) (the "Partnership") as of December
31, 1997, and the related statements of operations, partners' equity (deficit)
and cash flows for each of the years in the two-year period ended December 31,
1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the financial statements of the
limited partnerships in which WNC Housing Tax Credit Fund II, L.P. is a limited
partner. These investments, as discussed in Note 2 to the financial statements,
are accounted for by the equity method. The investments in these limited
partnerships represented 91% of the total assets of WNC Housing Tax Credit Fund
II, L.P. at December 31, 1997. The financial statements of the limited
partnerships were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included for these
limited partnerships, is based solely on the reports of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund II, L.P. (a California
Limited Partnership) as of December 31, 1997, and the results of its operations
and its cash flows for each of the years in the two-year period ended December
31, 1997, in conformity with generally accepted accounting principles.

/s/ CORBIN & WERTZ
CORBIN & WERTZ
Irvine, California
March 13, 1998

16

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

BALANCE SHEETS

March 31 December 31
------------------------------ ------------------------------
1999 1998 1998 1997
---- ---- ---- ----
(Unaudited)
ASSETS

Cash and cash equivalents $ 175,658 $ 187,707 $ 175,192 $ 181,313
Investments in limited partnerships,
net (Note 2) 1,460,945 1,750,127 1,533,952 1,828,770
---------- ---------- ---------- ----------
$ 1,636,603 $ 1,937,834 $ 1,709,144 $ 2,010,083
========== ========== ========== ==========
LIABILITIES AND PARTNERS' EQUITY
(DEFICIT)

Liabilities:
Accrued fees and expenses due
to General Partner and affiliates
(Note 3) $ 1,055,204 $ 910,531 $ 1,019,071 $ 871,377
---------- ---------- ---------- ----------
Commitments and contingencies

Partners' equity (deficit):
General partner (53,728) (49,269) (52,641) (48,155)
Limited partners (12,000 units
authorized; 7,000 units issued
and outstanding) 635,127 1,076,572 742,714 1,186,861
---------- ---------- ---------- ----------
Total partners' equity 581,399 1,027,303 690,073 1,138,706
---------- ---------- ---------- ----------
$ 1,636,603 $ 1,937,834 $ 1,709,144 $ 2,010,083
========== ========== ========== ==========

See accompanying notes to financial statements
17

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

STATEMENTS OF OPERATIONS

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

1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)

Interest income $ 3,627 $ 3,850 $ 9,224 $ 5,785 $ 10,157
Distribution income 500 - - - -
--------- ---------- --------- --------- ---------
Total income 4,127 3,850 9,224 5,785 10,157
--------- ---------- --------- --------- ---------
Operating expenses:
Amortization (Note 2) 5,338 5,338 21,352 21,352 21,352
Asset management fees (Note 3) 36,226 36,226 144,903 144,903 144,903
Other 8,944 2,929 24,021 13,248 67,906
--------- ---------- --------- --------- ---------
Total operating expenses 50,508 44,493 190,276 179,503 234,161
--------- ---------- --------- --------- ---------

Loss from operations (46,381) (40,643) (181,052) (173,718) (224,004)

Equity in losses of limited
partnerships (Note 2) (62,293) (70,760) (267,581) (143,021) (568,488)
--------- ---------- --------- --------- ---------
Net loss $ (108,674) $ (111,403) $ (448,633) $ (316,739) $ (792,492)
========= ========== ========= ========= =========
Net loss allocated to:
General partner $ (1,087) $ (1,114) $ (4,486) $ (3,167) $ (7,925)
========= ========== ========= ========= =========
Limited partners $ (107,587) $ (110,289) $ (444,147) $ (313,572) $ (784,567)
========= ========== ========= ========= =========
Net loss per limited partnership
unit $ (15.37) $ (15.76) $ (63.45) $ (44.80) $ (112.08)
========= ========== ========= ========= =========
Outstanding weighted limited
partner units 7,000 7,000 7,000 7,000 7,000
========= ========== ========= ========= =========

See accompanying notes to financial statements
18

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

STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

For The Three Months Ended March 31, 1999 and
For The Years Ended December 31, 1998, 1997 and 1996

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

Partners' equity (deficit)
at January 1, 1996 $ (37,063) $ 2,285,000 $ 2,247,937

Net loss (7,925) (784,567) (792,492)
--------- --------- ---------
Partners' equity (deficit)
at December 31, 1996 (44,988) 1,500,433 1,455,445

Net loss (3,167) (313,572) (316,739)
--------- --------- ---------
Partners' equity (deficit)
at December 31, 1997 (48,155) 1,186,861 1,138,706

Net loss (4,486) (444,147) (448,633)
--------- --------- ---------
Partners' equity (deficit)
at December 31, 1998 (52,641) 742,714 690,073

Net loss (1,087) (107,587) (108,674)
--------- --------- ---------
Partners' equity (deficit)
at March 31, 1999 $ (53,728) $ 635,127 $ 581,399
========= ========= =========

See accompanying notes to financial statements
19

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

STATEMENTS OF CASH FLOWS

For the Three Months Ended
March 31 For the Years Ended December 31
---------------------------- -------------------------------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
(Unaudited)
Cash flows from operating activities:

Net loss $ (108,674) $ (111,403) $ (448,633) $ (316,739) $ (792,492)
Write-off of receivables from
limited partnerships - - - - 52,726
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Amortization 5,338 5,338 21,352 21,352 21,352
Equity in losses of limited
partnerships 62,293 70,760 267,581 143,021 568,488
Change in other assets - - - 587 344
Increase in accrued fees and
expenses due to general
partner and affiliates 36,133 39,154 147,694 112,550 107,952
--------- --------- --------- --------- ---------
Net cash provided by (used
in) operating activities (4,910) 3,849 (12,006) (39,229) (41,630)
--------- --------- --------- --------- ---------
Cash flows from investing activities:
Distributions from limited
partnerships 5,376 2,545 5,885 12,239 11,451
--------- --------- --------- --------- ---------
Net increase (decrease) in cash and
cash equivalents 466 6,394 (6,121) (26,990) (30,179)

Cash and cash equivalents, beginning
of period 175,192 181,313 181,313 208,303 238,482
--------- --------- --------- --------- ---------
Cash and cash equivalents, end of
period $ 175,658 $ 187,707 $ 175,192 $ 181,313 $ 208,303
========= ========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:

Taxes paid $ - $ - $ 800 $ 800 $ 800
========= ========= ========= ========= =========

See accompanying notes to financial statements
20

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

NOTES TO FINANCIAL STATEMENTS

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

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

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

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

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

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

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

Change in Reporting Year End

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

Due to the change in year end, unaudited financial information as of and for the
three months ended March 31, 1998 is included in the financial statements for
comparative purposes only. The financial statements as of and for the three
months ended March 31, 1998 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of financial position and results of
operations of the Partnership for the interim period.

21

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Risks and Uncertainties

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

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

Method of Accounting For Investments in Limited Partnerships

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

Losses from limited partnerships for the years ended December 31, 1998, 1997 and
1996 have been recorded by the Partnership based on reported results provided by
the Local limited Partnerships. Losses from limited partnerships for the three
months ended March 31, 1999 and 1998 have been estimated by management of the
Partnership. Losses from Local Limited Partnerships allocated to the Partnership
are not recognized to the extent that the investment balance would be adjusted
below zero.

22

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Offering Expenses

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

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.

Cash and Cash Equivalents

The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
March 31, 1999 and December 31, 1998 and 1997, the Partnership had cash
equivalents of $146,848, $143,633 and $135,471, respectively.

Concentration of Credit Risk

At March 31, 1999, the Partnership maintained cash balances at certain financial
institutions in excess of the federally insured maximum.

Reclassifications

Certain prior year balances have been reclassified to conform to the 1998
presentation.

Net Loss Per Limited Partner Unit

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

Reporting Comprehensive Income

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

23

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS

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

The Partnership's investment in Local Limited Partnerships shown in the balance
sheets at December 31, 1998 and 1997 are approximately $1,028,000 and $905,000,
respectively, greater than the Partnership's equity as shown in the Local
Limited Partnerships' combined financial statements. This difference is
primarily due to unrecorded losses, as discussed below, acquisition, selection
and other costs related to the acquisition of the investments which have been
capitalized in the Partnership's investment account. Capitalized costs are being
amortized over 30 years.

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

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

At March 31, 1999, the investment accounts in certain Local Limited Partnerships
have reached a zero balance. Consequently, a portion of the Partnership's
estimate of its share of losses for the three month period ended March 31, 1999
amounting to approximately $52,058 have not been recognized. The Partnership's
share of losses during the years ended December 31, 1998 and 1997 amounting to
approximately $189,571 and $426,917, respectively, have not been recognized. As
of March 31, 1999, the aggregate share of net losses not recognized by the
Partnership amounted to $668,546.

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

For the Three
Months Ended For the Years Ended
March 31 December 31
--------------- -----------------------------------
1999 1998 1997
---- ---- ----

Investments per balance sheet, beginning of period $ 1,533,952 $ 1,828,770 $ 2,005,382
Equity in losses of limited partnerships (62,293) (267,581) (143,021)
Distributions received (5,376) (5,885) (12,239)
Amortization of paid acquisition fees and costs (5,338) (21,352) (21,352)
---------- ---------- ----------
Investments per balance sheet, end of period $ 1,460,945 $ 1,533,952 $ 1,828,770
========== ========== ==========

24

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

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

COMBINED CONDENSED BALANCE SHEETS

1998 1997
---- ----
ASSETS

Buildings and improvements,
net of accumulated
depreciation of $6,940,000
and $6,159,000 for 1998
and 1997, respectively $ 22,025,000 $ 22,715,000
Land 1,354,000 1,354,000
Other assets 2,023,000 1,812,000
----------- -----------
$ 25,402,000 $ 25,881,000
=========== ===========
LIABILITIES

Mortgage loan payable $ 23,510,000 $ 23,195,000
Due to related parties 183,000 137,000
Other liabilities 445,000 846,000
----------- -----------
24,138,000 24,178,000
----------- -----------
PARTNERS' CAPITAL

WNC Housing Tax Credit Fund II, L.P. 506,000 924,000
Other partners 758,000 779,000
------------ -----------
1,264,000 1,703,000
------------ -----------
$ 25,402,000 $ 25,881,000
=========== ===========

25

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

COMBINED CONDENSED STATEMENTS OF OPERATIONS

1998 1997 1996
---- ---- ----
Total revenues, including interest
and rent subsidies $ 3,273,000 $ 3,179,000 $ 3,068,000
--------- --------- ---------
Expenses:
Operating expenses 1,951,000 1,984,000 1,837,000
Interest expense 953,000 920,000 937,000
Depreciation and amortization 831,000 851,000 868,000
--------- --------- ---------
Total expenses 3,735,000 3,755,000 3,642,000
--------- --------- ---------
Net loss $ (462,000) $ (576,000) $ (574,000)
========= ========= =========
Net loss allocable to the Partnership $ (457,000) $ (570,000) $ (568,000)
========= ========= =========
Net loss recorded by the Partnership $ (268,000) $ (143,000) $ (568,000)
========= ========= =========

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

NOTE 3 - RELATED PARTY TRANSACTIONS

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

Acquisition fees of up to 9% of the gross proceeds from the sale of
Units as compensation for services rendered in connection with the
acquisition of Local Limited Partnerships. At the end of all periods
presented, the Partnership incurred acquisition fees of $630,000.
Accumulated amortization of these capitalized costs was $165,980,
$160,730 and $139,731 as of March 31, 1999 and December 31, 1998 and
1997, respectively.

Reimbursement of costs incurred by an affiliate of WNC in connection
with the acquisition of Local Limited Partnerships. These
reimbursements have not exceeded 1.7% of the gross proceeds. As of the
end of all periods presented, the Partnership incurred acquisition
costs of $10,581 which have been included in investments in limited
partnerships. Accumulated amortization was insignificant for all
periods presented.

26

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

NOTES TO FINANCIAL STATEMENTS - CONTINUED

For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
For The Years Ended December 31, 1998, 1997 and 1996

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

An annual management fee equal to 0.5% of the invested assets of the
Local Limited Partnerships, including the Partnership's allocable
share of the mortgages. Management fees of $36,226 were incurred
during the three months ended March 31, 1999 and $144,903 were
incurred during 1998, 1997 and 1996, respectively, of which $0 was
paid during the three months ended March 31, 1999 and $0, $32,000 and
$35,000 were paid in 1998, 1997 and 1996, respectively.

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

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

March 31 December 31
-------------- ----------------------------
1999 1998 1997
---- ---- ----
Advances from WNC $ 2,963 $ 3,056 $ 263

Asset management fee payable 1,052,241 1,016,015 871,114
---------- ---------- ----------
$ 1,055,204 $ 1,019,071 $ 871,377
========== ========== ==========

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

NOTE 4 - INCOME TAXES

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

27

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

NOT APPLICABLE

PART III.

Item 10. Directors and Executive Officers of the Registrant

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

Directors and Executive Officers of WNC & Associates, Inc.

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

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

John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC
Capital Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates, Inc., a provider
of engineering and construction services to the oil refinery and petrochemical
industries, which he co-founded in 1973. Mr. Lester graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.

Wilfred N. Cooper, Jr., age 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
investment and acquisition activities with respect to real estate since he
joined the Sponsor in 1988. Prior to this, he served as Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate
Director of NAHB. He graduated from The American University in 1985 with a
Bachelor of Arts degree.

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

28

Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn 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 in California and Texas.

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. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. Mr. Riha graduated from the California State University,
Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business
Administration with a concentration in Accounting and is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants.

Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., a real estate
development and management firm. Mr. Garban is a member of the International
Association of Financial Planners. He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland, age 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 with WNC & Associates, Inc. since 1994. Prior to that, he
served on the development team of the Bixby Ranch that constructed apartment
units and Class A office space in California and neighboring states, and as a
land acquisition coordinator with Lincoln Property Company where he identified
and analyzed multi-family developments. Mr. Buckland graduated from California
State University, Fullerton in 1992 with a Bachelor of Science degree in
Business Finance.

David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.

Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.

Item 11. Executive Compensation

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

(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of invested assets (the sum of the Partnership's Investment
in Local Limited Partnership Interests and the Partnership's allocable
share of the amount of the mortgage loans on and other debts related to,
the Housing Complexes owned by such Local Limited Partnerships). Fees of
$36,226 and 144,903 were incurred during the three months ended March 31,
1999 and the year ended December 31, 1998, respectively. The Partnership
made no payments to the General Partner or its affiliates for those fees
during the three months ended March 31, 1999 and the year ended December
31, 1998.

29

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

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

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

Item 12. Security Ownership of Certain Beneficial Owners and Management

(a) Security Ownership of Certain Beneficial Owners

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

(b) Security Ownership of Management

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

(c) Changes in Control

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

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

Item 13. Certain Relationships and Related Transactions

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

30

PART IV.

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

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

Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, March 31, 1999 and 1998 (Unaudited) and December 31,
1998 and 1997
Statements of Operations for the three months ended March 31, 1999 and
1998 (Unaudited) and for the years ended December 31, 1998, 1997 and
1996
Statements of Partners' Equity (Deficit) for the three months ended
March 31, 1999 and for the years ended December 31, 1998, 1997 and
1996
Statements of Cash Flows for the three months ended March 31, 1999 and
1998 (Unaudited) and for the years ended December 31, 1998, 1997 and
1996
Notes to Financial Statements

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

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

(b) Reports on Form 8-K.

1. A Form 8-K dated May 13, 1999 was filed on May 19, 1999 reporting the
Partnership's change in fiscal year end to March 31. No financial
statements were included.

(c) Exhibits.

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

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

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

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

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

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

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

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

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

31

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

32

Report of Independent Certified Public Accountants on
Financial Statement Schedules

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

The audits referred to in our report dated July 12, 1999, relating to the 1999
and 1998 financial statements of WNC Housing Tax Credit Fund II, L.P. (the
"Partnership"), which is contained in Item 8 of this Form 10-K, included the
audit of the accompanying financial statement schedules. The financial statement
schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statement schedules
based upon our audits.

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

/s/ BDO SEIDMAN, LLP
BDO SEIDMAN, LLP

Orange County, California
July 12, 1999

33

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

---------------------------------- ---------------------------------------------------
March 31, 1999 As of December 31, 1998
---------------------------------- ---------------------------------------------------
Partnership's Total Amount of Encumbrances of Net
Investment in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Airport Road Associates, Slidell,
Limited Louisiana $ 334,000 $ 334,000 $ 1,450,000 $ 1,858,000 $ 580,000 $ 1,278,000

Am-Kent Associates, Ltd. Amite &
Kentwood,
Louisiana 232,000 232,000 1,119,000 1,585,000 424,000 1,161,000

Arizona I Limited Showlow,
Partnership Arizona 320,000 320,000 1,487,000 1,968,000 412,000 1,556,000

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

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

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

Candleridge Apartments of Perry, Iowa 93,000 93,000 595,000 747,000 180,000 567,000
Perry, L.P.

Candleridge Apartments of Runnells,
Runnells, L.P. Iowa 58,000 58,000 377,000 471,000 114,000 357,000

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

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

34

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

---------------------------------- ---------------------------------------------------
March 31, 1999 As of December 31, 1998
---------------------------------- ---------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Investment Local Limited Property and Accumulated Book
Partnership Name Location Limited Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Cherokee Square, L.P. Rogersville,
Tennessee 202,000 202,000 978,000 1,225,000 202,000 1,023,000

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

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

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

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

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

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

Jefferson Capital, L.P. Jefferson,
Texas 167,000 167,000 714,000 962,000 286,000 676,000

Jefferson Manor, L.P. Jefferson,
Texas 179,000 179,000 763,000 1,004,000 304,000 700,000

35

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

---------------------------------- ---------------------------------------------------
March 31, 1999 As of December 31, 1998
---------------------------------- ---------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Lakeview Limited Beaver Dam,
Partnership Wisconsin 264,000 264,000 1,240,000 1,585,000 325,000 1,260,000

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

Perry County Housing, Ltd. Uniontown,
Alabama 82,000 82,000 440,000 523,000 107,000 416,000

Pine Hill Housing, Ltd. Pine Hill,
Alabama 105,000 105,000 564,000 668,000 125,000 543,000

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

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

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

Willcox Investment Group, Willcox,
an Arizona Limited Arizona 246,000 246,000 1,060,000 1,322,000 263,000 1,059,000
Partnership ---------- ---------- ---------- ---------- ---------- ----------
$ 4,996,000 $ 4,996,000 $ 23,510,000 $ 30,319,000 $ 6,940,000 $ 23,379,000
========== ========== ========== ========== ========== ==========

36

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

--------------------------------------------------------------------------------------
For the year ended December 31, 1998
--------------------------------------------------------------------------------------

Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------

Airport Road Associates, Limited $ 152,000 $ (39,000) 1990 Completed 27.5

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

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

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

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

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

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

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

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

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

Cherokee Square, L.P. 87,000 (19,000) 1990 Completed 50

Divall Midland Associates Limited
Partnership II 126,000 (31,000) 1990 Completed 27.5

Eclectic Housing, Ltd. 41,000 (10,000) 1992 Completed 40

Elizabeth Square Associates, Ltd. 158,000 (45,000) 1994 Completed 27.5

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

37

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

--------------------------------------------------------------------------------------
For the year ended December 31, 1998
--------------------------------------------------------------------------------------

Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------

Emory Manor, L.P. 77,000 (30,000) 1990 Completed 30

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

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

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

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

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

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

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

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

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

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

Willcox Investment Group,
an Arizona Limited Partnership 119,000 (3,000) 1990 Completed 50
--------- ---------
$ 2,745,000 $ (462,000)
========= =========

38

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998

--------------------------------------------------------------------------------------
As of December 31, 1998
--------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Airport Road Associates, Slidell,
Limited Louisiana $ 334,000 $ 334,000 $ 1,450,000 $ 1,858,000 $ 580,000 $ 1,278,000

Am-Kent Associates, Ltd. Amite &
Kentwood,
Louisiana 232,000 232,000 1,119,000 1,585,000 424,000 1,161,000

Arizona I Limited Showlow,
Partnership Arizona 320,000 320,000 1,487,000 1,968,000 412,000 1,556,000

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

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

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

Candleridge Apartments of Perry, Iowa 93,000 93,000 595,000 747,000 180,000 567,000
Perry, L.P.

Candleridge Apartments of Runnells,
Runnells, L.P. Iowa 58,000 58,000 377,000 471,000 114,000 357,000

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

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

39

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998

--------------------------------------------------------------------------------------
As of December 31, 1998
--------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Cherokee Square, L.P. Rogersville,
Tennessee 202,000 202,000 978,000 1,225,000 202,000 1,023,000

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

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

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

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

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

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

Jefferson Capital, L.P. Jefferson,
Texas 167,000 167,000 714,000 962,000 286,000 676,000

Jefferson Manor, L.P. Jefferson,
Texas 179,000 179,000 763,000 1,004,000 304,000 700,000

40

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998

---------------------------------------------------------------------------------------
As of December 31, 1998
---------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------

Lakeview Limited Beaver Dam,
Partnership Wisconsin 264,000 264,000 1,240,000 1,585,000 325,000 1,260,000

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

Perry County Housing, Ltd. Uniontown,
Alabama 82,000 82,000 440,000 523,000 107,000 416,000

Pine Hill Housing, Ltd. Pine Hill,
Alabama 105,000 105,000 564,000 668,000 125,000 543,000

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

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

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

Willcox Investment Group, Willcox,
an Arizona Limited Arizona 246,000 246,000 1,060,000 1,322,000 263,000 1,059,000
Partnership ---------- ---------- ---------- ---------- ---------- ----------
$ 4,996,000 $ 4,996,000 $ 23,510,000 $ 30,319,000 $ 6,940,000 $ 23,379,000
========== ========== ========== ========== ========== ==========

41

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998

--------------------------------------------------------------------------------------
For the year ended December 31, 1998
--------------------------------------------------------------------------------------

Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------

Airport Road Associates, Limited $ 152,000 $ (39,000) 1990 Completed 27.5

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

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

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

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

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

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

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

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

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

Cherokee Square, L.P. 87,000 (19,000) 1990 Completed 50

Divall Midland Associates Limited
Partnership II 126,000 (31,000) 1990 Completed 27.5

Eclectic Housing, Ltd. 41,000 (10,000) 1992 Completed 40

Elizabeth Square Associates, Ltd. 158,000 (45,000) 1994 Completed 27.5

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

42

WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998

--------------------------------------------------------------------------------------
For the year ended December 31, 1998
--------------------------------------------------------------------------------------

Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------

Emory Manor, L.P. 77,000 (30,000) 1990 Completed 30

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

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

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

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

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

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

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

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

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

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

Willcox Investment Group,
an Arizona Limited Partnership 119,000 (3,000) 1990 Completed 50
--------- ---------
$ 2,745,000 $ (462,000)
========= =========

43

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

WNC HOUSING TAX CREDIT FUND II, L.P.

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

By: /s/ John B. Lester, Jr.
John B. Lester, Jr.,
President of WNC & Associates, Inc.

Date: August 4, 1999

By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: August 4, 1999

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

Date: August 4, 1999

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

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

Date: August 4, 1999

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

Date: August 4, 1999

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

Date: August 4, 1999

44