| S  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|------------------------------------------------------------------------------------------------------|

| California                      | 72-1566910          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

----

| PART I. FINANCIAL INFORMATION |
|-------------------------------|
|                          |
|                          | Item 1. | Financial Statements |   |
|                          |   |   |   |
|                          |   | Condensed Balance Sheets |   |
|                          |   |           As of June 30, 2006, September 30, 2006, December 31, 2006 and March 31, 2006 | 3 |
|                          |   |   |   |
|                          |   | Condensed Statements of Operations |   |
|                          |   |           For the Three Months Ended June 30, 2006 and 2005 | 4 |
|                          |   |           For the Three and Six Months Ended September 30, 2006 and 2005 | 5 |
|                          |   |           For the Three and Nine Months Ended December 31, 2006 and 2005 | 6 |
|                          |   |   |   |
|                          |   | Condensed Statements of Partners' Equity (Deficit) |   |
|                          |   |           For the Three Months Ended June 30, 2006 | 7 |
|                          |   |           For the Six Months Ended September 30, 2006 | 7 |
|                          |   |           For the Nine Months Ended December 31, 2006 | 7 |
|                          |   |   |   |
|                          |   | Condensed Statements of Cash Flows |   |
|                          |   |           For the Three Months Ended June 30, 2006 and 2005 | 8 |
|                          |   |           For the Six Months Ended September 30, 2006 and 2005 | 10 |
|                          |   |           For the Nine Months Ended December 31, 2006 and 2005 | 12 |
|                          |   |   |   |
|                          |   | Notes to Condensed Financial Statements | 14 |
|                          |   |   |   |
|                          | Item 2. | Management's Discussion and Analysis of Financial |   |
|                          |   |              Condition and Results of Operations | 28 |
|                          |   |   |   |
|                          | Item 3. | Quantitative and Qualitative Disclosures about Market Risks | 33 |
|                          |   |   |   |
|                          | Item 4. | Controls and Procedures | 33 |
|                          |   |   |   |
| PART II. OTHER INFORMATION    |
|                          |
|                          | Item 1. | Legal Proceedings | 34 |
|                          |   |   |   |
|                          | Item 1A. | Risk Factors | 34 |
|                          |   |   |   |
|                          | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 34 |
|                          |   |   |   |
|                          | Item 3. | Defaults Upon Senior Securities | 34 |
|                          |   |   |   |
|                          | Item 4. | (Removed and Reserved) | 34 |
|                          |   |   |   |
|                          | Item 5. | Other Information | 34 |
|                          |   |   |   |
|                          | Item 6. | Exhibits | 34 |
|                          |   |   |   |
|                          | Signatures |   | 35 |

----

|                                                                                                                                                                                                                                              |   | June 30, 2006 |   | September 30, 2006 |   | December 31, 2006 |   | March 31, 2006 |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------------------|--------|-------------------|--------|----------------|
| ASSETS                                                                                                                                                                                                                                            |   |          |   |               |
| Cash and cash equivalents                                                                                                                                                                                                                         | $      | 6,075,330     | $      | 3,989,998          | $      | 3,051,693         | $      | 8,665,859      |
| Investments in Local Limited Partnerships, net    (Notes 2 and 3)                                                                                                                                                             |   | 10,699,171    |   | 10,943,786         |   | 10,747,908        |   | 9,465,751      |
| Prepaid acquisition fees and costs (Note 3)                                                                                                                                                                                                       |   | 48,716        |   | -                  |   | -                 |   | 200,643        |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
|                Total Assets                                                                                                                                            | $      | 16,823,217    | $      | 14,933,784         | $      | 13,799,601        | $      | 18,332,253     |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
| LIABILITIES AND PARTNERS' EQUITY (DEFICIT)                                                                                                                                                                                                        |   |          |   |               |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
| Liabilities:                                                                                                                                                                                                                                      |   |          |   |               |   |              |   |           |
|   Payables to Local Limited Partnerships (Note 4)                                                                                                                                                                                       | $      | 4,848,181     | $      | 3,109,070          | $      | 2,162,452         | $      | 6,261,462      |
|   Accrued expenses                                                                                                                                                                                                                      |   | 4,150         |   | -                  |   | -                 |   | 4,150          |
|   Accrued fees and expenses due to General Partner      and affiliates (Note 3)                                                                                                                                          |   | 52,868        |   | 83,896             |   | 82,184            |   | 38,081         |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
|               Total Liabilities                                                                                                                                             |   | 4,905,199     |   | 3,192,966          |   |  2,244,636   |   | 6,303,693      |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
| Partners’ Equity (Deficit):                                                                                                                                                                                                                 |   |          |   |               |   |              |   |           |
|   General Partner                                                                                                                                                                                                                       |   | (1,078)       |   | (1,255)            |   | (1,448)           |   | (947)          |
|   Limited Partners (25,000 Partnership Units authorized; 15,019 Partnership Units issued and outstanding)                                                                                                                               |   | 11,919,096    |   | 11,742,073         |   | 11,556,413        |   | 12,029,507     |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
|                Total Partners’ Equity (Deficit)                                                                                                                  |   | 11,918,018    |   | 11,740,818         |   | 11,554,965        |   | 12,028,560     |
|                                                                                                                                                                                                                                              |   |          |   |               |   |              |   |           |
|                Total Liabilities and Partners’ Equity                  (Deficit) | $      | 16,823,217    | $      | 14,933,784         | $      | 13,799,601        | $      | 18,332,253     |

----

|                                                    |   | 2006         |   |   | 2005         |
|---------------------------------------------------------|--------|--------------|--------|--------|--------------|
|                                                    |   | Three Months |   |   | Three Months |
|                                                    |   |         |   |   |         |
| Operating expenses:                                     |   |         |   |   |         |
| Amortization (Note 2)                                   | $      | 11,164       |   | $      | 1,991        |
| Asset management fees (Note 3)                          |   | 18,540       |   |   | 2,907        |
| Asset management expenses                               |   | 4,901        |   |   | -            |
| Accounting and legal fees                               |   | 1,057        |   |   | 500          |
| Organization costs                                      |   | -            |   |   | 25,528       |
| Other                                                   |   | 289          |   |   | 3            |
|  Total operating expenses                          |   | 35,951       |   |   | 30,929       |
|                                                    |   |         |   |   |         |
| Loss from operations                                    |   | (35,951)     |   |   | (30,929)     |
|                                                    |   |         |   |   |         |
| Equity in losses of Local Limited Partnerships (Note 2) |   | (154,235)    |   |   | -            |
|                                                    |   |         |   |   |         |
| Interest income                                         |   | 59,179       |   |   | -            |
|                                                    |   |         |   |   |         |
| Net loss                                                | $      | (131,007)    |   | $      | (30,929)     |
|                                                    |   |         |   |   |         |
| Net loss allocated to:                                  |   |         |   |   |         |
| General Partner                                         | $      | (131)        |   | $      | (31)         |
|                                                    |   |         |   |   |         |
| Limited Partners                                        | $      | (130,876)    |   | $      | (30,898)     |
|                                                    |   |         |   |   |         |
| Net loss per Partnership Unit                           | $      | (9)          |   | $      | (5)          |
|                                                    |   |         |   |   |         |
| Outstanding weighted Partnership Units                  |   | 15,019       |   |   | 5,884        |
|                                                    |   |         |   |   |         |

----

|                                                             |   |      |   |      |   |     |   |     |
|------------------------------------------------------------------|--------|-----------|--------|-----------|--------|----------|--------|----------|
|                                                             |   | 2006      |   | 2005      |
|                                                             |   | Three     |   | Six       |   | Three    |   | Six      |
|                                                             |   | Months    |   | Months    |   | Months   |   | Months   |
|                                                             |   |      |   |      |   |     |   |     |
| Operating expenses:                                              |   |      |   |      |   |     |   |     |
|   Amortization (Note 2)                                | $      | 12,028    | $      | 23,192    | $      | 4,818    | $      | 6,809    |
|   Asset management fees (Note 3)                       |   | 23,859    |   | 42,399    |   | 12,235   |   | 15,142   |
|   Asset management expenses                            |   | 2,465     |   | 7,366     |   | -        |   | -        |
|   Accounting and legal fees                            |   | 14,454    |   | 15,511    |   | 18,169   |   | 18,669   |
|   Organization costs                                   |   | -         |   | -         |   | -        |   | 25,528   |
|   Other                                                |   | 1,007     |   | 1,296     |   | 1,663    |   | 1,666    |
|                                                             |   |      |   |      |   |     |   |     |
|     Total operating expenses                 |   | 53,813    |   | 89,764    |   | 36,885   |   | 67,814   |
|                                                             |   |      |   |      |   |     |   |     |
| Loss  from operations                                  |   | (53,813)  |   | (89,764)  |   | (36,885) |   | (67,814) |
|                                                             |   |      |   |      |   |     |   |     |
| Equity in income (losses) of Local Limited Partnerships (Note 2) |   | (171,027) |   | (325,262) |   | 67,610   |   | 67,610   |
|                                                             |   |      |   |      |   |     |   |     |
| Interest income                                                  |   | 47,640    |   | 106,819   |   | 7,900    |   | 7,900    |
|                                                             |   |      |   |      |   |     |   |     |
| Net income (loss)                                                | $      | (177,200) | $      | (308,207) | $      | 38,625   | $      | 7,696    |
|                                                             |   |      |   |      |   |     |   |     |
| Net income (loss) allocated to:                                  |   |      |   |      |   |     |   |     |
|   General Partner                                      | $      | (177)     | $      | (308)     | $      | 39       | $      | 8        |
|                                                             |   |      |   |      |   |     |   |     |
|   Limited Partners                                     | $      | (177,023) | $      | (307,899) | $      | 38,586   | $      | 7,688    |
|                                                             |   |      |   |      |   |     |   |     |
| Net income (loss) per Partnership  Unit                | $      | (12)      | $      | (21)      | $      | 4        | $      | 1        |
|                                                             |   |      |   |      |   |     |   |     |
| Outstanding weighted Partnership   Units                    |   | 15,019    |   | 15,019    |   | 10,645   |   | 8,264    |

----

|                                                             |   | 2006      |   | 2005      |
|------------------------------------------------------------------|--------|-----------|--------|-----------|
|                                                             |   | Three     |   | Nine      |   | Three |   | Nine |
|                                                             |   | Months    |   | Months    |   | Months |   | Months |
|                                                             |   |      |   |      |   |   |   |   |
| Operating expenses:                                              |   |      |   |      |   |   |   |   |
|   Amortization (Note 2)                                | $      | 12,323    | $      | 35,515    | $ | 10,187 | $ | 16,996 |
|   Asset management fees (Note 3)                            |   | 26,561    |   | 68,960    |   | 15,799 |   | 30,941 |
|   Asset management expenses                            |   | 1,000     |   | 8,366     |   | - |   | - |
|   Accounting and legal fees                                 |   | 162       |   | 15,673    |   | 9,313 |   | 16,478 |
|   Organization costs                                   |   | -         |   | -         |   | - |   | 25,528 |
|   Other                                                |   | 486       |   | 1,782     |   | 3,109 |   | 4,776 |
|                                                             |   |      |   |      |   |   |   |   |
|     Total operating expenses                 |   | 40,532    |   | 130,296   |   | 38,408 |   | 94,719 |
|                                                             |   |      |   |      |   |   |   |   |
| Loss from operations                                             |   | (40,532)  |   | (130,296) |   | (38,408) |   | (94,719) |
|                                                             |   |      |   |      |   |   |   |   |
| Equity in income (losses) of Local Limited Partnerships (Note 2) |   | (182,789) |   | (508,051) |   | (31,355) |   | 36,255 |
|                                                             |   |      |   |      |   |   |   |   |
| Interest income                                                  |   | 30,033    |   | 136,852   |   | 10,313 |   | 18,212 |
|                                                             |   |      |   |      |   |   |   |   |
| Net loss                                                         | $      | (193,288) | $      | (501,495) | $ | (59,450) | $ | (40,252) |
|                                                             |   |      |   |      |   |   |   |   |
| Net loss allocated to:                                           |   |      |   |      |   |   |   |   |
|   General Partner                                      | $      | (193)     | $      | (501)     | $ | (59) | $ | (40) |
|                                                             |   |      |   |      |   |   |   |   |
|   Limited Partners                                     | $      | (193,095) | $      | (500,994) | $ | (59,391) | $ | (40,212) |
|                                                             |   |      |   |      |   |   |   |   |
| Net loss per Partnership Unit                                    | $      | (13)      | $      | (33)      | $ | (4) | $ | (4) |
|                                                             |   |      |   |      |   |   |   |   |
| Outstanding weighted Partnership Units                           |   | 15,019    |   | 15,019    |   | 14,831 |   | 10,453 |

----

| For the Three Months Ended June 30, 2006           |
|----------------------------------------------------|
|                                               |   | General |   | Limited |   |   |
|                                               |   | Partner |   | Partners |   | Total |
|                                               |   |   |   |   |   |   |
| Partners’ equity (deficit) at March 31, 2006 | $ | (947) | $ | 12,029,507 | $ | 12,028,560 |
|                                               |   |   |   |   |   |   |
| Collection of promissory notes (Note 5)            |   | - |   | 21,340 |   | 21,340 |
|                                               |   |   |   |   |   |   |
| Offering expenses                                  |   | - |   | (875) |   | (875) |
|                                               |   |   |   |   |   |   |
| Net loss                                           |   | (131) |   | (130,876) |   | (131,007) |
|                                               |   |   |   |   |   |   |
| Partners’ equity (deficit) at June 30, 2006  | $ | (1,078) | $ | 11,919,096 | $ | 11,918,018 |
|                                               |   |   |   |   |   |   |

| For the Six Months Ended September 30, 2006            |
|--------------------------------------------------------|
|                                                   |   | General |   | Limited |   |   |
|                                                   |   | Partner |   | Partners |   | Total |
|                                                   |   |   |   |   |   |   |
| Partners’ equity (deficit) at March 31, 2006     | $ | (947) | $ | 12,029,507 | $ | 12,028,560 |
|                                                   |   |   |   |   |   |   |
| Collection of promissory notes (Note 5)                |   | - |   | 21,340 |   | 21,340 |
|                                                   |   |   |   |   |   |   |
| Offering expenses                                      |   | - |   | (875) |   | (875) |
|                                                   |   |   |   |   |   |   |
| Net loss                                               |   | (308) |   | (307,899) |   | (308,207) |
|                                                   |   |   |   |   |   |   |
| Partners’ equity (deficit) at September 30, 2006 | $ | (1,255) | $ | 11,742,073 | $ | 11,740,818 |
|                                                   |   |   |   |   |   |   |

| For the Nine Months Ended December 31, 2006           |
|-------------------------------------------------------|
|                                                  |   | General |   | Limited |   |   |
|                                                  |   | Partner |   | Partners |   | Total |
|                                                  |   |   |   |   |   |   |
| Partners’ equity (deficit) at March 31, 2006    | $ | (947) | $ | 12,029,507 | $ | 12,028,560 |
|                                                  |   |   |   |   |   |   |
| Collection of promissory notes (Note 5)               |   | - |   | 30,000 |   | 30,000 |
|                                                  |   |   |   |   |   |   |
| Offering expenses                                     |   | - |   | (2,100) |   | (2,100) |
|                                                  |   |   |   |   |   |   |
| Net loss                                              |   | (501) |   | (500,994) |   | (501,495) |
|                                                  |   |   |   |   |   |   |
| Partners’ equity (deficit) at December 31, 2006 | $ | (1,448) | $ | 11,556,413 | $ | 11,554,965 |
|                                                  |   |   |   |   |   |   |

----

|                                                                                                                                                                                                           |   | 2006        |   | 2005      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|-----------|
| Cash flows from operating activities:                                                                                                                                                                          |   |        |   |      |
|   Net loss                                                                                                                                                                                           | $      | (131,007)   | $      | (30,929)  |
|     Adjustments to reconcile net loss to net                                                                                                                                               |   |        |   |      |
|       cash provided by (used in) operating activities:                                                                                                                           |   |        |   |      |
|         Amortization                                                                                                                                                   |   | 11,164      |   | 1,991     |
|         Increase in due from dealers                                                                                                                                   |   | -           |   | (103,000) |
|         Equity in losses of Local Limited Partnerships                                                                                                                 |   | 154,235     |   | -         |
|         Increase (decrease) in accrued fees and expenses due to                                                                                                        |   |        |   |      |
|            General Partner and affiliates                                                                                                               |   | 14,787      |   | (37,765)  |
|                Net cash provided by (used in) operating activities                                                                  |   | 49,179      |   | (169,703) |
|                                                                                                                                                                                                           |   |        |   |      |
| Cash flows from investing activities:                                                                                                                                                                          |   |        |   |      |
|       Capital contributions paid to Local Limited Partnerships                                                                                                                   |   | (2,660,173) |   | (514,981) |
|       Prepaid acquisition costs and fees                                                                                                                                         |   | -           |   | (218,002) |
|       Capitalized acquisition fees and costs                                                                                                                                     |   | -           |   | (114,462) |
|       Loans receivable                                                                                                                                                           |   | -           |   | (135,000) |
|                              Net cash used in investing activities |   | (2,660,173) |   | (982,445) |
|                                                                                                                                                                                                           |   |        |   |      |
|  Cash flows from financing activities:                                                                                                                                                                    |   |        |   |      |
|      Capital contributions received                                                                                                                                                   |   | -           |   | 3,559,465 |
|      Collection of promissory notes                                                                                                                                                   |   | 21,340      |   | -         |
|      Offering expenses                                                                                                                                                                |   | (875)       |   | (445,077) |
|                                                                                                                                                                                                           |   |        |   |      |
|              Net cash provided by financing activities                                                                                        |   | 20,465      |   | 3,114,388 |
|                                                                                                                                                                                                           |   |        |   |      |
| Net increase (decrease) in cash and cash equivalents                                                                                                                                                           |   | (2,590,529) |   | 1,962,240 |
|                                                                                                                                                                                                           |   |        |   |      |
| Cash and cash equivalents, beginning of period                                                                                                                                                                 |   | 8,665,859   |   | 1,883,111 |
|                                                                                                                                                                                                           |   |        |   |      |
| Cash and cash equivalents, end of period                                                                                                                                                                       | $      | 6,075,330   | $      | 3,845,351 |
|  SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION                                                                                                                                                          |   |        |   |      |
|       Taxes paid                                                                                                                                                                 | $      | -           | $      | -         |

----

|                                                                                                                     |    | 2006   |   | 2005   |
|--------------------------------------------------------------------------------------------------------------------------|---------|--------|--------|--------|
|                                                                                                                     |    |   |   |   |
| SIGNIFICANT NONCASH INVESTING AND FINANCINGACTIVITIES: Prepaid acquisition fees and expenses included within due to |    |   |   |   |
|    General Partner and affiliates                                                                         |  $ | -      | $      | 63,630 |
|                                                                                                                     |    |   |   |   |
| Offering expenses included within due to General Partner                                                                 |    |   |   |   |
|   and affiliates                                                                                               | $       | -      | $      | 99,515 |

| The Partnership decreased its prepaid acquisition fees and       |   |    |   |   |
|------------------------------------------------------------------|--------|---------|--------|--------|
| costs and increased its investments in Local LimitedPartnerships | $      | 151,927 | $      | -      |

| The Partnership increased its investments in Local Limited Partnerships for unpaid payables to Local Limited Partnerships | $ | 934,725 | $ | - |
|---------------------------------------------------------------------------------------------------------------------------|---|---------|---|---|

----

|                                                                                                                                                                                   |   |  2006  |   | 2005        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|-------------|
| Cash flows from operating activities:                                                                                                                                                  |   |        |   |        |
|   Net income (loss)                                                                                                                                                          | $      | (308,207)   | $      | 7,696       |
|     Adjustments to reconcile net income (loss) to net                                                                                                              |   |        |   |        |
|       cash provided by (used in) operating activities:                                                                                                   |   |        |   |        |
|         Amortization                                                                                                                           |   | 23,192      |   | 6,809       |
|         Increase in due from dealers                                                                                                           |   | -           |   | (655,500)   |
|         Increase in interest receivable                                                                                                        |   | -           |   | (2,803)     |
|         Equity in (income) losses of Local Limited Partnerships                                                                                |   | 325,262     |   | (67,610)    |
|         Decrease in accrued expenses                                                                                                           |   | (4,150)     |   | -           |
|         Increase in accrued fees and expenses due to                                                                                           |   |        |   |        |
|            General Partner and affiliates                                                                                       |   | 45,815      |   | 36,406      |
|              Net cash provided by (used in) operating activities                                                      |   | 81,912      |   | (675,002)   |
|                                                                                                                                                                                   |   |        |   |        |
| Cash flows from investing activities:                                                                                                                                                  |   |        |   |        |
|       Capital contributions paid to Local Limited Partnerships                                                                                           |   | (4,780,238) |   | (812,675)   |
|       Capitalized acquisition fees and costs                                                                                                             |   | -           |   | (864,326)   |
|       Distributions received from Local Limited Partnerships                                                                                             |   | 2,000       |   | -           |
|                          Net cash used in investing activities |   | (4,778,238) |   | (1,677,001) |
|                                                                                                                                                                                   |   |        |   |        |
|  Cash flows from financing activities:                                                                                                                                            |   |        |   |        |
|      Capital contributions received                                                                                                                           |   | -           |   | 9,675,465   |
|      Collection of promissory notes                                                                                                                           |   | 21,340      |   | -           |
|      Offering expenses                                                                                                                                        |   | (875)       |   | (1,242,354) |
|                                                                                                                                                                                   |   |        |   |        |
|               Net cash provided by financing activities                                                          |   | 20,465      |   | 8,433,111   |
|                                                                                                                                                                                   |   |        |   |        |
| Net increase (decrease) in cash and cash equivalents                                                                                                                                   |   | (4,675,861) |   | 6,081,108   |
|                                                                                                                                                                                   |   |        |   |        |
| Cash and cash equivalents, beginning of period                                                                                                                                         |   | 8,665,859   |   | 1,883,111   |
|                                                                                                                                                                                   |   |        |   |        |
| Cash and cash equivalents, end of period                                                                                                                                               | $      | 3,989,998   | $      | 7,964,219   |
|  SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION                                                                                                                                  |   |        |   |        |
|       Taxes paid                                                                                                                                         | $      | -           | $      | -           |

----

|                                                                                                                     |   |  2006 |   | 2005   |
|--------------------------------------------------------------------------------------------------------------------------|--------|------------|--------|--------|
|                                                                                                                     |   |       |   |   |
| SIGNIFICANT NONCASH INVESTING AND FINANCINGACTIVITIES: Prepaid acquisition fees and expenses included within due to |   |       |   |   |
| General Partner and affiliates                                                                                           | $      | -          | $      | 18,938 |
|                                                                                                                     |   |       |   |   |
| The Partnership decreased its prepaid acquisition fees and                                                               |   |       |   |   |
| costs and increased its investments in Local LimitedPartnerships                                                         | $      | 200,643    | $      | -      |

| The Partnership increased its investments in Local Limited     |   |    |   |   |
|----------------------------------------------------------------|--------|---------|--------|--------|
| Partnerships for unpaid payables to Local Limited Partnerships | $      | 909,466 | $      | -      |

| The Partnership decreased its investments in Local Limited                       |   |   |   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|
| Partnerships and payables to Local Limited Partnerships for tax credit adjusters | $      | 18,956 | $      | -      |

----

|                                                                                                                                                                                                                 |   | 2006        |   | 2005        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|--------|-------------|
| Cash flows from operating activities:                                                                                                                                                                                |   |        |   |        |
|   Net loss                                                                                                                                                                                                 | $      | (501,495)   | $      | (40,252)    |
|     Adjustments to reconcile net loss to net                                                                                                                                                     |   |        |   |        |
|       cash provided by operating activities:                                                                                                                                           |   |        |   |        |
|         Amortization                                                                                                                                                         |   | 35,515      |   | 16,996      |
|         Decrease in due from dealers                                                                                                                                         |   | -           |   | 376,000     |
|         Increase in interest receivable                                                                                                                                      |   | -           |   | (4,618)     |
|         Increase in prepaid expenses                                                                                                                                         |   | -           |   | (8,500)     |
|         Equity in (income) losses of Local Limited Partnerships                                                                                                              |   | 508,051     |   | (36,255)    |
|         Decrease in accrued expenses                                                                                                                                         |   | (4,150)     |   | -           |
|         Increase (decrease) in accrued fees and expenses due to                                                                                                              |   |        |   |        |
|            General Partner and affiliates                                                                                                                     |   | 44,103      |   | (183,379)   |
|                Net cash provided by operating activities                                                                                  |   | 82,024      |   | 119,992     |
|                                                                                                                                                                                                                 |   |        |   |        |
| Cash flows from investing activities:                                                                                                                                                                                |   |        |   |        |
|       Capital contributions paid to Local Limited Partnerships                                                                                                                         |   | (5,726,090) |   | (1,306,705) |
|       Capitalized acquisition fees and costs                                                                                                                                           |   | -           |   | (984,874)   |
|       Distributions received from Local Limited Partnerships                                                                                                                           |   | 2,000       |   | -           |
|                               Net cash used in investing activities |   | (5,724,090) |   | (2,291,579) |
|                                                                                                                                                                                                                 |   |        |   |        |
|  Cash flows from financing activities:                                                                                                                                                                          |   |        |   |        |
|      Capital contributions received                                                                                                                                                         |   | -           |   | 10,805,965  |
|      Collection of promissory notes                                                                                                                                                         |   | 30,000      |   | -           |
|      Offering expenses                                                                                                                                                                      |   | (2,100)     |   | (1,383,237) |
|                                                                                                                                                                                                                 |   |        |   |        |
|                 Net cash provided by financing activities                                                                            |   | 27,900      |   | 9,422,728   |
|                                                                                                                                                                                                                 |   |        |   |        |
| Net increase (decrease) in cash and cash equivalents                                                                                                                                                                 |   | (5,614,166) |   | 7,251,141   |
|                                                                                                                                                                                                                 |   |        |   |        |
| Cash and cash equivalents, beginning of period                                                                                                                                                                       |   | 8,665,859   |   | 1,883,111   |
|                                                                                                                                                                                                                 |   |        |   |        |
| Cash and cash equivalents, end of period                                                                                                                                                                             | $      | 3,051,693   | $      | 9,134,252   |
|  SUPPLEMENTAL DISCLOSURE OF CASH FLOWINFORMATION                                                                                                                                                                |   |        |   |        |
|       Taxes paid                                                                                                                                                                       | $      | -           | $      | -           |

----

|                                                             |   |  2006 |   | 2005   |
|------------------------------------------------------------------|--------|------------|--------|--------|
|                                                             |   |       |   |   |
| SIGNIFICANT NONCASH INVESTING AND FINANCINGACTIVITIES:      |   |       |   |   |
| The Partnership decreased its prepaid acquisition fees and       |   |       |   |   |
| costs and increased its investments in Local LimitedPartnerships | $      | 200,643    | $      | -      |

| The Partnership increased its investments in Local LimitedPartnerships for unpaid payables to Local Limited Partnerships | $ | 909,466 | $ | - |
|--------------------------------------------------------------------------------------------------------------------------|---|---------|---|---|

| The Partnership decreased its investments in Local Limited                       |   |   |   |   |
|----------------------------------------------------------------------------------|--------|--------|--------|--------|
| Partnerships and payables to Local Limited Partnerships for tax credit adjusters | $      | 19,722 | $      | -      |

----

----

----

----

----

----

----

|   |                                               |   | For the ThreeMonths EndedJune 30, 2006 |   | For the Year EndedMarch 31, 2006 |
|--------|----------------------------------------------------|--------|----------------------------------------|--------|----------------------------------|
|   | Investments per balance sheet, beginning of period | $      | 9,465,751                              | $      | 1,525,688                        |
|   | Capital contributions paid, net                    |   | 312,167                                |   | 2,024,053                        |
|   | Capital contributions payable                      |   | 934,725                                |   | 6,026,996                        |
|   | Impairment loss                                    |   | -                                      |   | (737,778)                        |
|   | Equity in losses of Local Limited Partnerships     |   | (154,235)                              |   | (146,997)                        |
|   | Amortization of paid acquisition fees and costs    |   | (11,129)                               |   | (27,310)                         |
|   | Capitalized acquisition fees and costs             |   | 151,927                                |   | 988,537                          |
|   | Amortization of warehouse interest and costs       |   | (35)                                   |   | (133)                            |
|   | Syndication costs                                  |   | -                                      |   | (40,000)                         |
|   | Tax credit adjustments                             |   | -                                      |   | (183,305)                        |
|   | Investments per balance sheet, end of period       | $      | 10,699,171                             | $      | 9,465,751                        |

|   |                                                   |    | For the SixMonths EndedSeptember 30, 2006 |    | For the Year EndedMarch 31, 2006 |
|--------|--------------------------------------------------------|---------|-------------------------------------------|---------|----------------------------------|
|   | Investments per balance sheet, beginning of period     | $       | 9,465,751                                 | $       | 1,525,688                        |
|   | Capital contributions paid, net                        |    | 737,336                                   |    | 2,024,053                        |
|   | Capital contributions payable                          |    | 909,466                                   |    | 6,026,996                        |
|   | Impairment loss                                        |    | -                                         |    | (737,778)                        |
|   | Equity in losses of Local Limited Partnerships         |    | (325,262)                                 |    | (146,997)                        |
|   | Amortization of paid acquisition fees and costs        |    | (23,122)                                  |    | (27,310)                         |
|   | Capitalized acquisition fees and costs                 |    | 200,643                                   |    | 988,537                          |
|   | Distributions received from Local Limited Partnerships |    | (2,000)                                   |    | -                                |
|   | Amortization of warehouse interest and costs           |    | (70)                                      |    | (133)                            |
|   | Syndication costs                                      |    | -                                         |    | (40,000)                         |
|   | Tax credit adjustments                                 |    | (18,956)                                  |    | (183,305)                        |
|   | Investments per balance sheet, end of period           |  $ | 10,943,786                                |  $ | 9,465,751                        |

----

|   |                                                   |   | For the NineMonths EndedDecember 31, 2006 |   | For the Year EndedMarch 31, 2006 |
|--------|--------------------------------------------------------|--------|-------------------------------------------|--------|----------------------------------|
|   | Investments per balance sheet, beginning of period     | $      | 9,465,751                                 | $      | 1,525,688                        |
|   | Capital contribution paid, net                         |   | 737,336                                   |   | 2,024,053                        |
|   | Capital contribution payable                           |   | 909,466                                   |   | 6,026,996                        |
|   | Impairment loss                                        |   | -                                         |   | (737,778)                        |
|   | Equity in losses of Local Limited Partnerships         |   | (508,051)                                 |   | (146,997)                        |
|   | Amortization of paid acquisition fees and costs        |   | (35,410)                                  |   | (27,310)                         |
|   | Capitalized acquisition fees and costs                 |   | 200,643                                   |   | 988,537                          |
|   | Distributions received from Local Limited Partnerships |   | (2,000)                                   |   | -                                |
|   | Amortization of warehouse interest and costs           |   | (105)                                     |   | (133)                            |
|   | Syndication costs                                      |   | -                                         |   | (40,000)                         |
|   | Tax credit adjustments                                 |   | (19,722)                                  |   | (183,305)                        |
|   | Investments per balance sheet, end of period           | $      | 10,747,908                                | $      | 9,465,751                        |

|                                                                               |   | For the Three Months EndedJune 30, 2006 |   | For the Year EndedMarch 31, 2006 |
|------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------|
| Investments in Local Limited Partnerships, net                                     | $      | 9,432,077                               | $      | 8,339,420                        |
| Acquisition fees and costs, net of accumulated amortization of $39,683 and $28,519 |   | 1,267,094                               |   | 1,126,331                        |
| Investments per balance sheet, end of period                                       | $      | 10,699,171                              | $      | 9,465,751                        |

----

|                                                                               |   | For the Six Months EndedSeptember 30, 2006 |   | For the Year EndedMarch 31, 2006 |
|------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|----------------------------------|
| Investments in Local Limited Partnerships, net                                     | $      | 9,640,004                                  | $      | 8,339,420                        |
| Acquisition fees and costs, net of accumulated amortization of $51,711 and $28,519 |   | 1,303,782                                  |   | 1,126,331                        |
| Investments per balance sheet, end of period                                       | $      | 10,943,786                                 | $      | 9,465,751                        |
|                                                                               |   |                                       |   |                             |
|                                                                               |   | For the Nine Months EndedDecember 31, 2006 |   | For the Year EndedMarch 31, 2006 |
| Investments in Local Limited Partnerships, net                                     | $      | 9,456,449                                  | $      | 8,339,420                        |
| Acquisition fees and costs, net of accumulated amortization of $64,034 and $28,519 |   | 1,291,459                                  |   | 1,126,331                        |
| Investments per balance sheet, end of period                                       | $      | 10,747,908                                 | $      | 9,465,751                        |

----

| COMBINED CONDENSED STATEMENTS OF OPERATIONS |
|---------------------------------------------|
|                                        |   |   |   |            2006 |   | 2005 |
|                                        | Revenues | $ | 376,000 | $ | - |
|                                        | Expenses: |   |   |   |   |
|                                        |   Interest expense |   | 103,000 |   | - |
|                                        |   Depreciation and amortization |   | 145,000 |   | - |
|                                        |   Operating expenses |   | 301,000 |   | - |
|                                        |     Total expenses |   | 549,000 |   | - |
|                                        |   |   |   |   |   |   |
|                                        | Net loss | $ | (173,000) | $ | - |
|                                        |  Net loss allocable to the Partnership | $ | (173,000) | $ | - |
|                                        | Net loss recorded by the Partnership | $ | (154,000) | $ | - |

|          COMBINED CONDENSED STATEMENTS OF OPERATIONS |
|---------------------------------------------------------------------------------------------------|
|                                                                                              |   |   |   | 2006 |   | 2005 |
|                                                                                              | Revenues | $ | 795,000 | $ | 447,000 |
|                                                                                              | Expenses: |   |   |   |   |
|                                                                                              |   Interest expense |   | 222,000 |   | 33,000 |
|                                                                                              |   Depreciation and amortization |   | 303,000 |   | 35,000 |
|                                                                                              |   Operating expenses |   | 651,000 |   | 311,000 |
|                                                                                              |     Total expenses |   | 1,156,000 |   | 379,000 |
|                                                                                              |   |   |   |   |   |
|                                                                                              | Net income (loss) | $ | (361,000) | $ | 68,000 |
|                                                                                              | Net income (loss) allocable to the Partnership | $ | (356,000) | $ | 68,000 |
|                                                                                              | Net income (loss) recorded by the Partnership | $ | (325,000) | $ | 68,000 |

----

| COMBINED CONDENSED STATEMENTS OF OPERATIONS |
|---------------------------------------------|
|                                        |   |   |   |               2006 |   | 2005 |
|                                        | Revenues | $ | 1,235,000 | $ | 845,000 |
|                                        | Expenses: |   |   |   |   |
|                                        |   Interest expense |   | 352,000 |   | 138,000 |
|                                        |   Depreciation and amortization |   | 468,000 |   | 102,000 |
|                                        |   Operating expenses |   | 960,000 |   | 569,000 |
|                                        |     Total expenses |   | 1,780,000 |   | 809,000 |
|                                        |   |   |   |   |   |   |
|                                        | Net income (loss) | $ | (545,000) | $ | 36,000 |
|                                        |  Net income (loss) allocable to the Partnership | $ | (531,000) | $ | 36,000 |
|                                        | Net income (loss) recorded by the Partnership | $ | (508,000) | $ | 36,000 |

----

| (a)   | Acquisition fees of 7% of the gross proceeds from the sale of Partnership Units as compensation for services rendered in connection with the acquisition of Local Limited Partnerships.  As of all periods presented, the Partnership incurred cumulative acquisition fees of $1,051,330. As of June 30, September 30, December 31 and March 31, 2006, $37,890, $0, $0 and $156,056, respectively, were included in prepaid acquisition costs and fees and $1,013,440, $1,051,300, $1,051,330 and $895,274, respectively, were included in investments in Local Limited Partnerships. Accumulated amortization of these capitalized costs was $30,560, $39,887, $49,443 and $22,063 as of June 30, 2006, September 30, 2006, December 31, 2006 and March 31, 2006, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Acquisition costs of 2% of the gross proceeds from the sale of Partnership Units as reimbursement of costs incurred by of the General Partner or by an affiliate of Associates in connection with the acquisition of Local Limited Partnerships.  As of all periods presented, the Partnership incurred acquisition costs of $300,380. As of June 30, September 30, December 31 and March 31, 2006, $10,826, $0, $0 and $44,587, respectively, were included in prepaid acquisition fees and costs and $289,554, $300,380, $300,380 and $255,793, respectively, were included in investments in Local Limited Partnerships. Accumulated amortization of these capitalized costs was $8,938, $11,603, $14,335 and $6,305 as of June 30, 2006, September 30, 2006, December 31, 2006 and March 31, 2006, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (c)   | Selling commissions of 7% of the net proceeds from the sale of the Partnership Units is payable to WNC Capital Corp. As of June 30, September 30, December 31 and March 31, 2006, the Partnership incurred selling commissions of $927,820, $927,820, $929,045, and $926,945, respectively |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | A non-accountable organization and offering and underwriting expense reimbursement, collectively equal to 4% of the gross proceeds from the sale of the Partnership Units, a dealer manager fee equal to 2% of the gross proceeds from the sale of the Partnership Units, and reimbursement for retail selling commissions advanced by the General Partner or affiliates on behalf of the Partnership. The Partnership incurred non-accountable organization and offering and underwriting expense reimbursement costs totaling $600,760 and dealer manager fees totaling $300,380 as of all periods presented.  All other organizational and offering expenses, inclusive of the non-accountable organization and offering and underwriting expense reimbursement, and dealer manager fees, are not to exceed 13% of the gross proceeds from the sale of the Partnership Units. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)  | An annual asset management fee not to exceed 0.5% of the invested assets of the Partnership, as defined. “Invested Assets” means the sum of the Partnership’s investment in Local Limited Partnership interests and the Partnership’s allocable share of mortgage loans on and other debts related to the Housing Complexes owned by such Local Limited Partnerships.   Asset management fees of $18,540 and $2,907 were incurred during the three months ended June 30, 2006 and 2005, respectively. For the six months ended September 30, 2006 and 2005, the Partnership incurred asset management fees of $42,399 and $15,142, respectively. Asset management fees of $68,960 and $30,941 were incurred during the nine months ended December 31, 2006 and 2005, respectively. The Partnership paid the General Partner or its affiliates $10,000 and $0 of those fees during the three months ended June 30, 2006 and 2005, respectively $20,000 and $0 during the six months ended September 30, 2006 and 2005, respectively, and $27,500 and $10,000 during the nine months ended December 31, 2006 and 2005, respectively. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f)   | A subordinated disposition fee in an amount equal to 1% of the sale price of real estate sold by the Local Limited Partnerships.  Payment of this fee is subordinated to the Limited Partners receiving distributions equal to their capital contributions and their return on investment (as defined in the partnership agreement) and is payable only if services are rendered in the sales effort.  No such fee was incurred for all periods presented. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g)   | The Partnership reimburses the General Partner or its affiliates for operating expenses incurred on behalf of the Partnership. Operating expense reimbursements were $0 during the each of three months ended June 30, 2006 and 2005, $4,906 and $0 during the six months ended September 30, 2006 and 2005, respectively, and $27,326 and $0 during the nine months ended December 31, 2006 and 2005, respectively. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (h) | WNC Holding, LLC (“Holding”), a wholly owned subsidiary of Associates, acquires investments in Local Limited Partnerships using funds from a secured warehouse line of credit.  Such investments are warehoused by Holding until transferred to syndicated partnerships as investors are identified.  The transfer of the warehoused investments is typically achieved through the admittance of the syndicated partnership as the Limited Partner of the Local Limited Partnership and the removal of Holding as the Limited Partner.  Consideration paid to Holding for the transfer of its interest in the Local Limited Partnership generally consists of cash reimbursement of capital contribution installment(s) paid to the Local Limited Partnerships by Holding, assumption of the remaining capital contributions payable due to the Local Limited Partnership and financing costs and interest charged by Holding.  As of all periods presented the Partnership incurred financing costs of $2,511 and interest of $1,272 which are included in investments in Local Limited Partnerships.  The accumulated amortization of these financing costs and interest was $185, $221, $256 and $151 as of June 30, September 30, December 31 and March 31, 2006, respectively. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |                                                                                                                            |   | June 30,2006 |   | September 30, 2006 |   | December 31, 2006 |   | March 31, 2006 |
|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------------------|--------|-------------------|--------|----------------|
|   |                                                                                                                            |   |         |   |               |   |              |   |           |
|   | Asset management fee payable                                                                                                    | $      | 47,962       | $      | 61,821             | $      | 80,882            | $      | 38,081         |
|   | Expenses paid by the General    Partner or an affiliate on    behalf of the Partnership |   | 4,906        |   | 22,075             |   | 1,302             |   | -              |
|   |     Total                                                                                                   | $      | 52,868       | $      | 83,896             | $      | 82,184            | $      | 38,081         |

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| Part II. | Other Information                                                                                 |
|----------|---------------------------------------------------------------------------------------------------|
|     |                                                                                              |
| Item 1.  | Legal Proceedings                                                                                 |
|     |                                                                                              |
|     | NONE                                                                                              |
|     |                                                                                              |
| Item 1A. | Risk Factors                                                                                      |
|     |                                                                                              |
|     | No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K. |
|     |                                                                                              |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                       |
|     |                                                                                              |
|     | NONE                                                                                              |
|     |                                                                                              |
| Item 3.  | Defaults Upon Senior Securities                                                                   |
|     |                                                                                              |
|     | NONE                                                                                              |
|     |                                                                                              |
| Item 4.  | (Removed and Reserved)                                                                            |
|     |                                                                                              |
| Item 5.  | Other Information                                                                                 |
|     |                                                                                              |
|     | NONE                                                                                              |
|     |                                                                                              |
| Item 6.  | Exhibits                                                                                          |

| 31.1 | Certification of the Chief Executive Officer pursuant to Rule 13a-14 or 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification of the Chief Financial Officer pursuant to Rule 13a-14 or 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith) |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Section 1350 Certification of the Chief Executive Officer. (filed herewith) |
|------|-----------------------------------------------------------------------------|

| 32.2 | Section 1350 Certification of the Chief Financial Officer. (filed herewith) |
|------|-----------------------------------------------------------------------------|

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----