FINANCIAL
STATEMENTS AND

INDEPENDENT
AUDITOR’S REPORT



MESA
VERDE APARTMENTS, L.P.



DECEMBER
31,2003











MESA VERDE APARTMENTS, L.P.



TABLE OF CONTENTS









|                                 |  | PAGE
|-------------------------------- |  | ----
|                                 |  |     
|INDEPENDENT
    AUDITOR’S REPORT |  | F-2 
|                                 |  |     
|FINANCIAL
    STATEMENT:         |  |     
|                                 |  |     
|BALANCE
    SHEET                |  | F-3 
|                                 |  |     
|NOTES
    TO FINANCIAL STATEMENT |  | F-5 







F-1







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

Certified Public Accountants

Management Consultants



INDEPENDENT
AUDITOR’S REPORT



To the Partners

MESA VERDE
APARTMENTS, L.P.

Roswell,
New Mexico



We
have audited the accompanying balance sheet of MESA VERDE APARTMENTS, L.P., as of December 31, 2003 and the related statements
of operations, changes in partners’ equity (deficit) and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.



We
conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MESA
VERDE APARTMENTS, L.P. as of December 31, 2003 and the results of its operations, changes in partners’ equity and cash flows
for the year then ended in conformity with accounting principles generally accepted in the United States of America.





Metairie,
Louisiana

June 13,
2007



3421 N. Causeway Blvd.,
Suite 701. Metairie, LA 70002     Telephone (504) 837-0770. Fax (504) 837-7102

Member of

IGAF Worldwide - Member
Firms in Principal Cities. PCAOB - Public Company Accounting Oversight BoardAICPA Centers. Center for Public Company Audit Firms (SEC)Governmental Audit Quality Center. Private Companies Practice Section (PCPS)





F-2









MESA VERDE APARTMENTS, L.P.



BALANCE
SHEET



December 31, 2003





|                                         |  | 2003 |           
|---------------------------------------- |  | ---- | ----------
|ASSETS                                   |  |      |           
|Current Assets                           |  |      |           
|Cash
    and Cash Equivalents            |  | $    | 62,745    
|Total
    Current Assets                 |  |      | 62,745    
|                                         |  |      |           
|Restricted
    Deposits & Reserves       |  |      |           
|Replacement
    Reserve                  |  |      | 99,662    
|Total
    Restricted Deposits & Reserves |  |      | 99,662    
|                                         |  |      |           
|Property
    and Equipment               |  |      |           
|Land                                     |  |      | 160,000   
|Building                                 |  |      | 5,827,633 
|Furniture
    & Fixtures                 |  |      | 322,086   
|Accumulated
    Depreciation             |  |      | (1,115,471
|Total
    Property and Equipment         |  |      | 5,194,248 
|                                         |  |      |           
|Other
    Assets                         |  |      |           
|Financing
    Fees - Net                 |  |      | 27,360    
|Total
    Other Assets                   |  |      | 27,360    
|                                         |  |      |           
|TOTAL
    ASSETS                         |  | $    | 5,384,015 





See
accountant’s report and notes to financial statements



F-3







MESA VERDE APARTMENTS, L.P.



BALANCE SHEET



December 31, 2003





|                                                    |  | 2003 |           
|--------------------------------------------------- |  | ---- | ----------
|LIABILITIES AND EQUITY                              |  |      |           
|Current
    Liabilities                             |  |      |           
|Accounts
    Payable                                |  | $    | 40,486    
|Tenant
    Security Deposits                        |  |      | 7,292     
|Accrued
    Interest Payable                        |  |      | 42,385    
|Accrued
    Real Estate Taxes                       |  |      | 77,946    
|Reporting
    Fees Payable                          |  |      | 15,000    
|Current
    Portion Long-Term Debt                  |  |      | 1,871,295 
|Total
    Current Liabilities                       |  |      | 2,054,404 
|                                                    |  |      |           
|Long-Term Debt                                      |  |      |           
|Mortgage
    Payable                                |  |      | 1,871,295 
|Less
    Current Portion Long-Term Debt             |  |      | (1,871,295
|Mortgage
    Payable - Finance Authority            |  |      | 260,679   
|Accrued
    Interest - Deferred - Finance Authority |  |      | 36,612    
|Due
    to Related Parties                          |  |      | 73,826    
|Due
    to Developer                                |  |      | 509,084   
|Total
    Long-Term Debt                            |  |      | 880,201   
|                                                    |  |      |           
|Total
    Liabilities                               |  |      | 2,934,605 
|                                                    |  |      |           
|Partners’
    Equity                                |  |      | 2,449,410 
|                                                    |  |      |           
|TOTAL
    LIABILITIES AND EQUITY                    |  | $    | 5,384,015 





See
accountant’s report and notes to financial statements



F-4







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2003



NOTE
A - ORGANIZATION



MESA
VERDE APARTMENTS, L.P. is a residential real estate property (the Property) consisting of 142 rental units located in Roswell,
New Mexico. The property was built for the purpose of providing affordable housing to qualified individuals and families in the
Roswell community.



MESA
VERDE APARTMENTS, L.P. is a New Mexico limited partnership, which owns the Property. The general partners are Medlock Charitable
Foundation and Shelter Resource Corporation. WNC Housing Tax Credit Fund V, Series 3, L.P., a California limited partnership,
was admitted as the sole limited partner.



The
general partner and the limited partner have a 1% and 99% interest, respectively, in operating profits and losses and tax credits.
Partnership cash flow after operating expenses, debt service and required reserves is distributed per the terms of the Partnership
agreement in varying percentages.



NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



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



Basis
of Accounting



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



Cash
and Cash Equivalents



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



The
partnership treats all non replacement reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking
and savings accounts and certificates of deposit are considered cash equivalents.



F-5







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2003



NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Capitalization
and Depreciation



Land,
buildings and improvements are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated service lives using the straight-line method. Buildings are depreciated over twenty-seven
years using the straight line method. Improvements, equipment and furnishings are depreciated over a period ranging from three
to fifteen years using the straight line method.



Income
Taxes



No
provision or benefit for income taxes has been included in this financial statement since taxable income or loss passes through
to, and is reportable by, the partners individually. The Partnership is eligible to receive low income tax credits as provided
by Section 42 of the internal Revenue Code.



NOTE
C - ESTIMATES



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



NOTE
D - LONG-TERM DEBT



Bank
of America



The
Partnership has a mortgage note payable to Bank of America. The 9.18% mortgage was payable in monthly installments of $15,698,
including interest, to June 1, 2028 at which time the unpaid balance was due and payable in full. The note is collateralized by
all real and personal property of the Partnership.



The
loan was accelerated as of August 1, 2003. All obligations outstanding under this loan have been due and payable in full since
that date. Additionally, unpaid principal has been accruing interest at the Default Rate (9.18% + 3.0%) since August 1, 2003.
Consequently, the entire principal is reported as current portion of long-term debt. This loan was refinanced in 2005.



F-6







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2003



NOTE
D - LONG-TERM DEBT (CONTINUED)



New
Mexico Mortgage Finance Authority



The
Partnership has a note payable to the New Mexico Mortgage Finance Authority. The 5.3% note provides that no principal or interest
payments will be due until February, 2037. The note is collateralized by a deed of trust on the property, which is subordinate
to the Bank’s first deed of trust.



Estimated
principal payments due over the next five years are as follows:





|December
    31, 2004 |  |  | $ | 1,871,295
|--------------------- |  |  | - | ---------
|2005                  |  |  |   | 23,900   
|2006                  |  |  |   | 25,417   
|2007                  |  |  |   | 27,030   
|2008                  |  |  |   | 28,746   
|and
    Thereafter    |  |  |   | 155,586  
|                      |  |  |   |          
|Total                 |  |  | $ | 2,131,974



NOTE
E - MANAGEMENT FEES



The
Partnership entered into a management agreement with Monarch Properties, Inc., Albuquerque, New Mexico. Monarch Properties, Inc.
is not related in any form to any owners, either general or limited partners, of the Partnership. Management fees paid during
the years ended December 31, 2003 were $29,564.



F-7







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2003



NOTE
F - RELATED PARTY TRANSACTIONS



The
Partnership has agreed to pay a developer fee in the amount of $735,611 to Trianon Development, the prior General Partner. As
of December 31, 2003, $509,084 of this obligation had not been paid.



The
Partnership has agreed to pay the limited partner an annual reporting fee of $5,000 for its services in connection with the Partnership’s
accounting matters relating to the limited partner and assisting with preparation of required tax returns and reports. If cash
flow from operations is insufficient to pay the full amount of the reporting fee, the unpaid portion accrues. As of December 31,
2003, cumulative unpaid fees under this agreement were $15,000.



Due
to Related Parties represents cash advances made to the partnership by the limited partner and others. Amounts do not bear interest
and are to be repaid when cash flow from operations permits or upon sale of the rental property. As of December 31, 2003 this
obligation was comprised of the following:





|Trianon
    Management                             |  | $ | 13,826 | 
|-------------------------------------------------- |  | - | ------ | 
|WNC
    Housing Tax Credits Fund V, Series 4, L.P. |  |   | 60,000 | 
|                                                   |  |   |        | 
|Total                                              |  | $ | 73,826 | 



F-8







FINANCIAL
STATEMENTS ANDINDEPENDENT AUDITOR’S REPORT



MESA
VERDE APARTMENTS, L.P.



DECEMBER
31, 2004













MESA VERDE APARTMENTS,
L.P.



TABLE
OF CONTENTS





|                                 |  | PAGE
|-------------------------------- |  | ----
|                                 |  |     
|INDEPENDENT
    AUDITOR’S REPORT |  | F-2 
|                                 |  |     
|FINANCIAL STATEMENT:             |  |     
|                                 |  |     
|BALANCE
    SHEET                |  | F-3 
|                                 |  |     
|NOTES
    TO FINANCIAL STATEMENT |  | F-5 





F-1







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

Certified
Public Accountants

Management
Consultants



INDEPENDENT
AUDITOR’S REPORT



To the Partners

MESA VERDE
APARTMENTS, L.P.

Roswell,
New Mexico



We
have audited the accompanying balance sheet of MESA VERDE APARTMENTS, L.P., as of December 31, 2004 and the related statements
of operations, changes in partners’ equity (deficit) and cash flows for the year then ended. These financial statements
are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these financial statements
based on our audits.



We
conducted our audit in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of MESA
VERDE APARTMENTS, L.P. as of December 31, 2004 and the results of its operations, changes in partners’ equity and cash flows
for the year then ended in conformity with accounting principles generally accepted in the United States of America.





Metairie,
Louisiana

August
29, 2006



3421 N. Causeway Blvd.,
Suite 70. Metairie, LA 70002        Telephone (504) 837-0770. Fax (504) 837-7102

Member of

IGAF Worldwide - Member
Firms in Principal Cities. PCAOB - Public Company Accounting Oversight Board

AICPA Centers. Center for
Public Company Audit Firms (SEC)

Governmental Audit Quality
Center. Private Companies Practice Section (PCPS)





F-2







MESA VERDE APARTMENTS, L.P.



BALANCE
SHEET



December 31, 2004





|ASSETS                           |  |   |           
|-------------------------------- |  | - | ----------
|Current Assets                   |  |   |           
|Cash
    and Cash Equivalents    |  | $ | 118,231   
|Accounts Receivable              |  |   | 49,099    
|Due from Affiliate               |  |   | 37,000    
|Prepaid Insurance                |  |   | 9,991     
|Total Current
    Assets         |  |   | 214,321   
|                                 |  |   |           
|Property and Equipment           |  |   |           
|Land                             |  |   | 160,000   
|Building                         |  |   | 5,831,270 
|Furniture &
    Fixtures         |  |   | 358,070   
|Accumulated
    Depreciation     |  |   | (1,310,004
|Total Property
    and Equipment |  |   | 5,039,336 
|                                 |  |   |           
|Other Assets                     |  |   |           
|Financing Fees
    - Net         |  |   | 26,220    
|Deposits                         |  |   | 1,120     
|Total Other
    Assets           |  |   | 27,340    
|                                 |  |   |           
|TOTAL ASSETS                     |  | $ | 5,280,997 





See accountant’s report
and notes to financial statements





F-3







MESA VERDE APARTMENTS, L.P.



BALANCE SHEET



December 31, 2004





|LIABILITIES AND EQUITY                              |  |   |          
|--------------------------------------------------- |  | - | ---------
|Current Liabilities                                 |  |   |          
|Accounts
    Payable                                |  | $ | 60,481   
|Tenant Security
    Deposits                        |  |   | 15,705   
|Accrued Interest
    Payable                        |  |   | 56,896   
|Accrued Real
    Estate Taxes                       |  |   | 12,127   
|Reporting Fees
    Payable                          |  |   | 15,000   
|Mortgage - Bank                                     |  |   | 1,868,519
|Total Current
    Liabilities                       |  |   | 2,028,728
|                                                    |  |   |          
|Long-Term Debt                                      |  |   |          
|Mortgage Payable
    - Finance Authority            |  |   | 260,679  
|Accrued Interest
    - Deferred - Finance Authority |  |   | 50,428   
|Due to Related
    Parties                          |  |   | 204,660  
|Note Payable
    - Due to Developer                 |  |   | 509,084  
|Total Long-Term
    Debt                            |  |   | 1,024,851
|                                                    |  |   |          
|Total Liabilities                                   |  |   | 3,053,579
|                                                    |  |   |          
|Partners’
    Equity                                |  |   | 2,227,418
|                                                    |  |   |          
|TOTAL LIABILITIES
    AND EQUITY                    |  | $ | 5,280,997





See accountant’s report
and notes to financial statements



F-4







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2004



NOTE
A - ORGANIZATION



MESA
VERDE APARTMENTS, L.P. is a residential real estate property (the Property) consisting of 142 rental units located in Roswell,
New Mexico. The property was built for the purpose of providing affordable housing to qualified individuals and families in the
Roswell community.



MESA
VERDE APARTMENTS, L.P. is a New Mexico limited partnership, which owns the Property. The general partners are Medlock Charitable
Foundation and Shelter Resource Corporation. WNC Housing Tax Credit Fund V, Series 3, L.P., a California limited partnership,
was admitted as the sole limited partner.



The
general partner and the limited partner have a 1% and 99% interest, respectively, in operating profits and losses and tax credits.
Partnership cash flow after operating expenses, debt service and required reserves is distributed per the terms of the Partnership
agreement in varying percentages.



NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



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



Basis
of Accounting



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



Cash
and Cash Equivalents



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



The
partnership treats all non replacement reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking
and savings accounts and certificates of deposit are considered cash equivalents.



F-5







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2004



NOTE
B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Capitalization
and Depreciation



Land,
buildings and improvements are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable
assets to operations over their estimated service lives using the straight-line method. Buildings are depreciated over twenty-seven
years using the straight line method. Improvements, equipment and furnishings are depreciated over a period ranging from three
to fifteen years using the straight line method.



Income
Taxes



No
provision or benefit for income taxes has been included in this financial statement since taxable income or loss passes through
to, and is reportable by, the partners individually. The Partnership is eligible to receive low income tax credits as provided
by Section 42 of the Internal Revenue Code.



NOTE
C - ESTIMATES



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



NOTE
D - LONG-TERM DEBT



Bank
of America



The
Partnership has a mortgage note payable to Bank of America. The 9.18% mortgage was payable in monthly installments of $15,698,
including interest, to June 1, 2028 at which time the unpaid balance was due and payable in full. The note is collateralized by
all real and personal property of the Partnership.



The
loan was accelerated as of August 1, 2003. All obligations outstanding under this loan have been due and payable in full since
that date. Additionally, unpaid principal has been accruing interest at the Default Rate (9.18% + 3.0%) since August 1, 2003.
Consequently, the entire principal is reported as current portion of long-term debt. This loan was refinanced in 2005.



F-6







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2004



NOTE
D - LONG-TERM DEBT (CONTINUED)



New
Mexico Mortgage Finance Authority



The
Partnership has a note payable to the New Mexico Mortgage Finance Authority. The 5.3% note provides that no principal or interest
payments will be due until February, 2037. The note is collateralized by a deed of trust on the property, which is subordinate
to the Bank’s first deed of trust.



Estimated
principal payments due over the next five years are as follows:





|December
    31, 2005 |  |  | $ | 1,868,519 
|--------------------- |  |  | - | ----------
|2006                  |  |  |   | 0         
|2007                  |  |  |   | 0         
|2008                  |  |  |   | 0         
|2009                  |  |  |   | 0         
|and
    Thereafter    |  |  |   | 260,679   
|                      |  |  |   |           
|Total                 |  |  | $ | $2,129,198



NOTE
E - MANAGEMENT FEES



The
Partnership entered into a management agreement with Monarch Properties, Inc., Albuquerque, New Mexico. Monarch Properties, Inc.
is not related in any form to any owners, either general or limited partners, of the Partnership. Management fees paid during
the years ended December 31, 2004 were $23,520.



F-7







MESA
VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER
31, 2004



NOTE
F - RELATED PARTY TRANSACTIONS



The
Partnership has agreed to pay a developer fee in the amount of $735,611 to Trianon Development, the prior General Partner. As
of December 31, 2004, $509,084 of this obligation had not been paid.



The
Partnership has agreed to pay the limited partner an annual reporting fee of $5,000 for its services in connection with the Partnership’s
accounting matters relating to the limited partner and assisting with preparation of required tax returns and reports. If cash
flow from operations is insufficient to pay the full amount of the reporting fee, the unpaid portion accrues. As of December 31,
2004, cumulative unpaid fees under this agreement were $15,000.



Due
to Related Parties represents cash advances made to the partnership by the limited partner and others. Amounts do not bear interest
and are to be repaid when cash flow from operations permits or upon sale of the rental property. As of December 31, 2004 this
obligation was comprised of the following:



|Trianon
    Management                             |  | $ | 13,826  | 
|-------------------------------------------------- |  | - | ------- | 
|WNC
    Housing Tax Credits Fund V, Series 3, L.P. |  |   | 190,834 | 
|                                                   |  |   |         | 
|Total                                              |  | $ | 204,660 | 



NOTE
G - PRIOR PERIOD ADJUSTMENT



During
2004, a prior period adjustment, in the amount of $(49,849), was recognized to adjust prior year mortgage interest to actual.



F-8











FINANCIAL STATEMENTS AND

INDEPENDENT AUDITOR’S REPORT



MESA VERDE APARTMENTS, LP.



DECEMBER 31, 2005 AND 2004











MESA VERDE APARTMENTS, L.P.



TABLE OF CONTENTS



|                                              |  | PAGE
|--------------------------------------------- |  | ----
|                                              |  |     
|INDEPENDENT
    AUDITOR’S REPORT              |  | F-2 
|                                              |  |     
|FINANCIAL
    STATEMENT:                      |  |     
|                                              |  |     
|BALANCE
    SHEETS                            |  | F-3 
|                                              |  |     
|STATEMENTS
    OF INCOME                      |  | F-5 
|                                              |  |     
|STATEMENTS
    OF CHANGES IN PARTNERS’ EQUITY |  | F-6 
|                                              |  |     
|STATEMENTS
    OF CASH FLOWS                  |  | F-7 
|                                              |  |     
|NOTES
    TO FINANCIAL STATEMENT              |  | F-8 



F-1







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

Certified Public Accountants

Management Consultants



INDEPENDENT AUDITOR’S
REPORT



To the Partners

MESA VERDE APARTMENTS, L.P.

Roswell, New Mexico



We have audited the
accompanying balance sheets of MESA VERDE APARTMENTS, L.P., as of December 31, 2005 and 2004 and the related statements of operations,
changes in partners’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility
of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.



We conducted our audits
in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the
financial statements referred to above present fairly, in all material respects, the financial position of MESA VERDE APARTMENTS,
L.P. as of December 31, 2005 and 2004 and the results of its operations, changes in partners’ equity and cash flows for
the years then ended in conformity with accounting principles generally accepted in the United States of America.







Metairie, Louisiana

February 10, 2007



3421 N. Causeway Blvd., Suite 701. Metairie,
LA 70002      Telephone (504) 837-0770. Fax (504) 837-7102

Member of

IGAF Worldwide - Member Firms in Principal
Cities. PCAOB - Public Company Accounting Oversight Board

AICPA Centers. Center for Public Company
Audit Firms (SEC)

Governmental Audit Quality Center. Private
Companies Practice Section (PCPS)



F-2







MESA VERDE APARTMENTS, L.P.



BALANCE SHEETS



December 31, 2005 and 2004



|                                         |  | 2005 |            |   | 2004 |  
|---------------------------------------- |  | ---- | ---------- | - | ---- | -
|ASSETS                                   |  |      |            |   |      |  
|Current Assets                           |  |      |            |   |      |  
|Cash
    and Cash Equivalents            |  | $    | 6,083      |   |      | $
|Accounts
    Receivable                  |  |      | 37,742     |   |      |  
|Due
    from Affiliate                   |  |      | 37,000     |   |      |  
|Prepaid
    Insurance                    |  |      | 9,075      |   |      |  
|Total
    Current Assets                 |  |      | 89,900     |   |      |  
|                                         |  |      |            |   |      |  
|Restricted
    Deposits & Reserves       |  |      |            |   |      |  
|Operating
    Reserve                    |  |      | 32,051     |   |      |  
|Replacement
    Reserve                  |  |      | 31,872     |   |      |  
|Total
    Restricted Deposits & Reserves |  |      | 63,923     |   |      |  
|                                         |  |      |            |   |      |  
|Property
    and Equipment               |  |      |            |   |      |  
|Land                                     |  |      | 160,000    |   |      |  
|Building                                 |  |      | 5,831,270  |   |      |  
|Furniture
    & Fixtures                 |  |      | 358,070    |   |      |  
|Accumulated
    Depreciation             |  |      | (1,508,044 | ) |      |  
|Total
    Property and Equipment         |  |      | 4,841,296  |   |      |  
|                                         |  |      |            |   |      |  
|Other Assets                             |  |      |            |   |      |  
|Financing
    Fees - Net                 |  |      | 40,258     |   |      |  
|Deposits                                 |  |      | 1,120      |   |      |  
|Total
    Other Assets                   |  |      | 41,378     |   |      |  
|                                         |  |      |            |   |      |  
|TOTAL
    ASSETS                         |  | $    | 5,036,497  |   |      | $



See accountant’s report and notes
to financial statements



F-3







MESA VERDE APARTMENTS, L.P.



BALANCE SHEETS



December 31, 2005 and 2004



|                                                    |  | 2005 |           |   | 2004 |  
|--------------------------------------------------- |  | ---- | --------- | - | ---- | -
|LIABILITIES
    AND EQUITY                          |  |      |           |   |      |  
|Current Liabilities                                 |  |      |           |   |      |  
|Accounts
    Payable                                |  | $    | 16,485    |   |      | $
|Tenant
    Security Deposits                        |  |      | 13,205    |   |      |  
|Accrued
    Interest Payable                        |  |      | 8,972     |   |      |  
|Accrued
    Real Estate Taxes                       |  |      | 14,427    |   |      |  
|Reporting
    Fees Payable                          |  |      | 20,000    |   |      |  
|Current
    Portion Long-Term Debt                  |  |      | 21,132    |   |      |  
|Total
    Current Liabilities                       |  |      | 94,221    |   |      |  
|                                                    |  |      |           |   |      |  
|Long-Term Debt                                      |  |      |           |   |      |  
|Mortgage
    Payable                                |  |      | 1,745,039 |   |      |  
|Less
    Current Portion Long-Term Debt             |  |      | (21,132   | ) |      |  
|Mortgage
    Payable - Finance Authority            |  |      | 260,679   |   |      |  
|Accrued
    Interest - Deferred - Finance Authority |  |      | 64,244    |   |      |  
|Due
    to Related Parties                          |  |      | 594,149   |   |      |  
|Due
    to Developer                                |  |      | 509,084   |   |      |  
|Total
    Long-Term Debt                            |  |      | 3,152,063 |   |      |  
|                                                    |  |      |           |   |      |  
|Total Liabilities                                   |  |      | 3,246,284 |   |      |  
|                                                    |  |      |           |   |      |  
|Partners’
    Equity                                |  |      | 1,790,213 |   |      |  
|                                                    |  |      |           |   |      |  
|TOTAL
    LIABILITIES AND EQUITY                    |  | $    | 5,036,497 |   |      | $



See accountant’s report and notes
to financial statements



F-4







MESA VERDE APARTMENTS, L.P.



STATEMENTS OF INCOME



For The Years Ended December 31, 2005
and 2004



|                                    |  | 2005 |           |   | 2004 |  
|----------------------------------- |  | ---- | --------- | - | ---- | -
|REVENUES                            |  |      |           |   |      |  
|Rent
    Revenue                    |  | $    | 652,296   |   |      | $
|Vacancy
    Loss                    |  |      | (106,183  | ) |      |  
|Laundry
    Revenue                 |  |      | 3,763     |   |      |  
|NSF
    & Late Fee Revenue          |  |      | 5,533     |   |      |  
|Insurance
    Proceeds              |  |      | 26,859    |   |      |  
|Other
    Revenue                   |  |      | 2,972     |   |      |  
|Total
    Revenue                   |  |      | 585,240   |   |      |  
|                                    |  |      |           |   |      |  
|EXPENSES                            |  |      |           |   |      |  
|Administrative                      |  |      | 233,585   |   |      |  
|Utilities                           |  |      | 55,924    |   |      |  
|Operating
    and Maintenance       |  |      | 206,752   |   |      |  
|Taxes
    and Insurance             |  |      | 66,659    |   |      |  
|Interest
    Expense                |  |      | 230,309   |   |      |  
|Depreciation
    & Amortization     |  |      | 224,942   |   |      |  
|Total
    Expenses                  |  |      | 1,018,171 |   |      |  
|                                    |  |      |           |   |      |  
|Net
    Operating Income (Loss)     |  |      | (432,931  | ) |      |  
|                                    |  |      |           |   |      |  
|Other Revenue
    (Expense)         |  |      |           |   |      |  
|Interest
    Income                 |  |      | 726       |   |      |  
|Entity
    Expense - Reporting Fees |  |      | (5,000    | ) |      |  
|Total
    Other Revenue (Expense)   |  |      | (4,274    | ) |      |  
|                                    |  |      |           |   |      |  
|NET
    INCOME (LOSS)               |  | $    | (437,205  | ) |      | $



See accountant’s report and notes
to financial statements



F-5







MESA VERDE
APARTMENTS, L.P.



STATEMENTS
OF CHANGES IN PARTNERS’ EQUITY



For The Years Ended December 31, 2005
and 2004



|                         |  | 2005 |           |   | 2004 |  
|------------------------ |  | ---- | --------- | - | ---- | -
|Balance, January
    1   |  | $    | 2,227,418 |   |      | $
|Capital Contributions    |  |      | 0         |   |      |  
|Net Income
    (Loss)    |  |      | (437,205  | ) |      |  
|Distributions            |  |      | 0         |   |      |  
|Prior Period Adjustments |  |      | 0         |   |      |  
|Balance, December 31     |  | $    | 1,790,213 |   |      | $



See accountant’s
report and notes to financial statements



F-6







MESA VERDE
APARTMENTS, L.P.



STATEMENTS
OF CASH FLOWS



For The Years Ended December 31, 2005
and 2004



|                                                                                      |  | 2005 |            |   | 2004 |  
|------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | -
|Cash flows
    from operating activities                                              |  |      |            |   |      |  
|Net
    Income                                                                        |  | $    | (437,205   | ) |      | $
|Adjustments
    to reconcile net income to net cash provided by operating activities: |  |      |            |   |      |  
|Prior period adjustment                                                               |  |      | 0          |   |      |  
|Depreciation
    and amortization                                                     |  |      | 184,002    |   |      |  
|(Increase)
    decrease in accounts receivable                                        |  |      | 11,357     |   |      |  
|(Increase)
    decrease in prepaid expenses                                           |  |      | 916        |   |      |  
|(Increase)
    decrease in due from affiliates                                        |  |      | 0          |   |      |  
|(Increase)
    decrease in deposits receivable                                        |  |      | 0          |   |      |  
|Increase
    (decrease) in accounts payable                                           |  |      | (43,996    | ) |      |  
|Increase
    (decrease) in interest payable                                           |  |      | (47,924    | ) |      |  
|Net
    change in tenants’ security deposits held                                     |  |      | (2,500     | ) |      |  
|Increase
    (decrease) in reporting fees payable                                     |  |      | 0          |   |      |  
|Increase
    (decrease) real estate taxes payable                                     |  |      | 2,300      |   |      |  
|Total
    adjustments                                                                 |  |      | 104,155    |   |      |  
|Net
    cash provided (used) by operating activities                                  |  |      | (333,050   | ) |      |  
|Cash flow
    from investing activities:                                              |  |      |            |   |      |  
|Cash
    payments for the purchase of property                                        |  |      | 0          |   |      |  
|Transfer
    (to) from operating reserves                                             |  |      | (32,051    | ) |      |  
|Transfer
    (to) from replacement reserve                                            |  |      | 68,318     |   |      |  
|Net
    cash provided (used) by investing activities                                  |  |      | 36,267     |   |      |  
|Cash flow
    from financing activities:                                              |  |      |            |   |      |  
|Increase
    (Payments) Related Party Debts                                           |  |      | 389,489    |   |      |  
|Increase
    Accrued Interest                                                         |  |      | 13,816     |   |      |  
|Principal
    payments on long-term debt                                              |  |      | (1,873,480 | ) |      |  
|Increase
    (payments) reporting fees payable                                        |  |      | 5,000      |   |      |  
|Proceeds
    long term debt                                                           |  |      | 1,750,000  |   |      |  
|Net
    cash provided (used) by financing activities                                  |  |      | 284,825    |   |      |  
|Net increase
    (decrease) in cash and equivalents                                   |  |      | (11,958    | ) |      |  
|Cash
    and equivalents, beginning of year                                           |  |      | 18,041     |   |      |  
|Cash
    and equivalents, end of year                                                 |  | $    | 6,083      |   |      | $
|Supplemental
    disclosures of cash flow information:                                |  |      |            |   |      |  
|Cash paid
    during the year for:                                                    |  |      |            |   |      |  
|Interest
    expense                                                                  |  | $    | 264,417    |   |      | $



See accountant’s report and notes
to financial statements



F-7







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL
STATEMENTS



DECEMBER 31, 2005 and 2004



NOTE A - ORGANIZATION



MESA VERDE APARTMENTS, L.P. is a residential
real estate property (the Property) consisting of 142 rental units located in Rosweli, New Mexico. The property was built for
the purpose of providing affordable housing to qualified individuals and families in the Rosweli community.



MESA VERDE APARTMENTS, L.P. is a New Mexico
limited partnership, which owns the Property. The general partners are Medlock Charitable Foundation and Shelter Resource Corporation.
WNC Housing Tax Credit Fund V, Series 3, L.P., a California limited partnership, was admitted as the sole limited partner.



The general partner and the limited partner
have a 1% and 99% interest, respectively, in operating profits and losses arid tax credits. Partnership cash flow after operating
expenses, debt service and required reserves is distributed per the terms of the Partnership agreement in varying percentages.



NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES



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



Basis of Accounting



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



Cash and Cash Equivalents



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



The partnership treats all non replacement
reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking and savings accounts and certificates
of deposit are considered cash equivalents.



F-8







MESA VERDE APARTMENTS, LP.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2005 and 2004



NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Capitalization and Depreciation



Land, buildings and improvements are recorded
at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their
estimated service lives using the straight-line method. Buildings are depreciated over twenty-seven years using the straight line
method. Improvements, equipment and furnishings are depreciated over a period ranging from three to fifteen years using the straight
line method.



Income Taxes



No provision or benefit for income taxes
has been included in this financial statement since taxable income or loss passes through to, and is reportable by, the partners
individually. The Partnership is eligible to receive low income tax credits as provided by Section 42 of the Internal Revenue
Code.



NOTE C - ESTIMATES



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



NOTE D - LONG-TERM DEBT



Bank of America



The Partnership has a mortgage note payable
to Bank of America. The 9.18% mortgage was payable in monthly installments of $15,698, including interest, to June 1, 2028 at
which time the unpaid balance was due and payable in full. The note is collateralized by all real and personal property of the
Partnership.



The loan was accelerated as of August
1, 2003. All obligations outstanding under this loan have been due and payable in full since that date. Additionally, unpaid principal
has been accruing interest at the Default Rate (9.18% + 3.0%) since August 1, 2003. Consequently, the entire principal is reported
as current portion of long-term debt. This loan was refinanced in 2005.



F-9







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2005 and 2004



NOTE D - LONG-TERM DEBT (CONTINUED)



U.S. Bank



In July 2005, the Partnership entered
into a new loan agreement with U.S. Bank in the original amount of $1,750,000. The 6.17% mortgage is payable in monthly installments
of $10,684 through July 2015.



New Mexico Mortgage Finance Authority



The Partnership has a note payable to
the New Mexico Mortgage Finance Authority. The 5.3% note provides that no principal or interest payments will be due until February,
2037. The note is collateralized by a deed of trust on the property, which is subordinate to the Bank’s first deed of trust.



Estimated principal payments due over the next five years are
as follows:





|December
    31, 2006 |  |  | $ | 21,132   
|--------------------- |  |  | - | ---------
|2007                  |  |  |   | 22,473   
|2008                  |  |  |   | 23,900   
|2009                  |  |  |   | 25,417   
|2010                  |  |  |   | 27,030   
|and
    Thereafter    |  |  |   | 1,885,766
|                      |  |  |   |          
|Total                 |  |  | $ | 2,005,718



NOTE E - MANAGEMENT FEES



The Partnership entered into a management
agreement with Monarch Properties, Inc., Albuquerque, New Mexico. Monarch Properties, Inc. is not related in any form to any owners,
either general or limited partners, of the Partnership. Management fees paid during the years ended December 31, 2005 were $26,839.



F-10







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2005 and 2004



NOTE F - RELATED PARTY TRANSACTIONS



The Partnership has agreed to pay a developer
fee in the amount of $735,611 to Trianon Development, the prior General Partner. As of December 31, 2005, $509,084 of this obligation
had not been paid.



The Partnership has agreed to pay the
limited partner an annual reporting fee of $5,000 for its services in connection with the Partnership’s accounting matters
relating to the limited partner and assisting with preparation of required tax returns and reports. If cash flow from operations
is insufficient to pay the full amount of the reporting fee, the unpaid portion accrues. As of December 31, 2005, cumulative unpaid
fees under this agreement were $20,000.



Due to Related Parties represents cash
advances made to the partnership by the limited partner and others. Amounts do not bear interest and are to be repaid when cash
flow from operations permits or upon sale of the rental property. As of December 31, 2005 this obligation was comprised of the
following:





|Trianon
    Management                             |  | $ | 13,826  | 
|-------------------------------------------------- |  | - | ------- | 
|WNC
    Nebraska                                   |  |   | 312,948 | 
|WNC
    Housing Tax Credits Fund V, Series 3, L.P. |  |   | 267,375 | 
|                                                   |  |   |         | 
|Total                                              |  | $ | 594,149 | 



NOTE G - PRIOR PERIOD ADJUSTMENT



During 2004, a prior period adjustment,
in the amount of $(49,849), was recognized to adjust prior year mortgage interest to actual.



F-11













FINANCIAL STATEMENTS
AND

INDEPENDENT AUDITOR’S
REPORT



MESA VERDE APARTMENTS,
L.P.



DECEMBER 31, 2006 AND
2005















MESA VERDE APARTMENTS,
L.P.



TABLE OF CONTENTS



|                                              |  | PAGE
|--------------------------------------------- |  | ----
|                                              |  |     
|INDEPENDENT
    AUDITOR’S REPORT              |  | F-2 
|                                              |  |     
|FINANCIAL STATEMENT:                          |  |     
|                                              |  |     
|BALANCE
    SHEETS                            |  | F-3 
|                                              |  |     
|STATEMENTS
    OF INCOME                      |  | F-5 
|                                              |  |     
|STATEMENTS
    OF CHANGES IN PARTNERS’ EQUITY |  | F-6 
|                                              |  |     
|STATEMENTS
    OF CASH FLOWS                  |  | F-7 
|                                              |  |     
|NOTES
    TO FINANCIAL STATEMENT              |  | F-8 





F-1







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

Certified Public Accountants

Management Consultants



INDEPENDENT
AUDITOR’S REPORT



To the Partners

MESA VERDE APARTMENTS, LP.

Roswell, New Mexico



We have audited the accompanying
balance sheets of MESA VERDE APARTMENTS, L.P., as of December 31, 2006 and 2005 and the related statements of operations, changes
in partners’ equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility
of the Partnership’s management. Our responsibility is to express an opinion on these financial statements based on our
audits.



We conducted our audits
in accordance with the Standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial
statements referred to above present fairly, in ail material respects, the financial position of MESA VERDE APARTMENTS, L.P. as
of December 31, 2006 and 2005 and the results of its operations, changes in partners’ equity and cash flows for the years
then ended in conformity with accounting principles generally accepted in the United States of America.





Metairie, Louisiana

April 27, 2007



3421 N. Causeway Blvd.,
Suite 701. Metairie, LA 70002     Telephone (504) 837-0770. Fax (504) 837-7102

Member of

IGAF Worldwide - Member
Firms in Principal Cities. PCAOB - Public Company Accounting Oversight BoardAICPA Centers. Center for Public Company Audit Firms (SEC)Governmental Audit Quality Center. Private Companies Practice Section (PCPS)



F-2







MESA VERDE APARTMENTS, L.P.



BALANCE
SHEETS



December 31, 2006 and 2005



|                                         |  | 2005 |            |   | 2005 |  
|---------------------------------------- |  | ---- | ---------- | - | ---- | -
|ASSETS                                   |  |      |            |   |      |  
|Current Assets                           |  |      |            |   |      |  
|Cash
    and Cash Equivalents            |  | $    | 28,147     |   |      | $
|Accounts Receivable                      |  |      | 19,973     |   |      |  
|Due from Affiliate                       |  |      | 37,000     |   |      |  
|Prepaid Insurance                        |  |      | 17,426     |   |      |  
|Total Current
    Assets                 |  |      | 102,546    |   |      |  
|                                         |  |      |            |   |      |  
|Restricted Deposits &
    Reserves       |  |      |            |   |      |  
|Operating Reserve                        |  |      | 19,586     |   |      |  
|Replacement
    Reserve                  |  |      | 44,508     |   |      |  
|Total Restricted
    Deposits & Reserves |  |      | 64,094     |   |      |  
|                                         |  |      |            |   |      |  
|Property and Equipment                   |  |      |            |   |      |  
|Land                                     |  |      | 160,000    |   |      |  
|Building                                 |  |      | 5,831,270  |   |      |  
|Furniture &
    Fixtures                 |  |      | 358,070    |   |      |  
|Accumulated
    Depreciation             |  |      | (1,702,655 | ) |      |  
|Total Property
    and Equipment         |  |      | 4,646,685  |   |      |  
|                                         |  |      |            |   |      |  
|Other Assets                             |  |      |            |   |      |  
|Financing Fees
    - Net                 |  |      | 39,575     |   |      |  
|Deposits                                 |  |      | 1,120      |   |      |  
|Total Other
    Assets                   |  |      | 40,695     |   |      |  
|                                         |  |      |            |   |      |  
|TOTAL ASSETS                             |  | $    | 4,854,020  | $ |      |  



See accountant’s report
and notes to financial statements



F-3







MESA VERDE APARTMENTS, L.P.



BALANCE SHEETS



December 31, 2006 and 2005



|                                                    |  | 2006 |           |   | 2005 |  
|--------------------------------------------------- |  | ---- | --------- | - | ---- | -
|LIABILITIES AND EQUITY                              |  |      |           |   |      |  
|Current Liabilities                                 |  |      |           |   |      |  
|Accounts
    Payable                                |  | $    | 27,675    |   |      | $
|Tenant Security
    Deposits                        |  |      | 11,118    |   |      |  
|Accrued Interest
    Payable                        |  |      | 9,170     |   |      |  
|Accrued Real
    Estate Taxes                       |  |      | 12,362    |   |      |  
|Reporting Fees
    Payable                          |  |      | 25,000    |   |      |  
|Current Portion
    Long-Term Debt                  |  |      | 22,473    |   |      |  
|Total Current
    Liabilities                       |  |      | 107,798   |   |      |  
|                                                    |  |      |           |   |      |  
|Long-Term Debt                                      |  |      |           |   |      |  
|Mortgage Payable                                    |  |      | 1,725,467 |   |      |  
|Less Current
    Portion Long-Term Debt             |  |      | (22,473   | ) |      |  
|Mortgage Payable
    - Finance Authority            |  |      | 260,679   |   |      |  
|Accrued Interest
    - Deferred - Finance Authority |  |      | 78,060    |   |      |  
|Due to Related
    Parties                          |  |      | 702,123   |   |      |  
|Due to Developer                                    |  |      | 509,084   |   |      |  
|Total Long-Term
    Debt                            |  |      | 3,252,940 |   |      |  
|                                                    |  |      |           |   |      |  
|Total Liabilities                                   |  |      | 3,360,738 |   |      |  
|                                                    |  |      |           |   |      |  
|Partners’
    Equity                                |  |      | 1,493,282 |   |      |  
|                                                    |  |      |           |   |      |  
|TOTAL LIABILITIES
    AND EQUITY                    |  | $    | 4,854,020 |   |      | $



See accountant’s report
and notes to financial statements



F-4







MESA VERDE APARTMENTS, L.P.



STATEMENTS
OF INCOME



For The Years Ended December
31, 2006 and 2005



|                                    |  | 2006 |          |   | 2005 |  
|----------------------------------- |  | ---- | -------- | - | ---- | -
|REVENUES                            |  |      |          |   |      |  
|Rent
    Revenue                    |  | $    | 652,296  |   |      | $
|Vacancy Loss                        |  |      | (136,398 | ) |      |  
|Laundry Revenue                     |  |      | 4,135    |   |      |  
|NSF & Late
    Fee Revenue          |  |      | 6,775    |   |      |  
|Insurance Proceeds                  |  |      | 0        |   |      |  
|Other Revenue                       |  |      | 7,387    |   |      |  
|Total Revenue                       |  |      | 534,195  |   |      |  
|                                    |  |      |          |   |      |  
|EXPENSES                            |  |      |          |   |      |  
|Administrative                      |  |      | 169,581  |   |      |  
|Utilities                           |  |      | 69,416   |   |      |  
|Operating and
    Maintenance       |  |      | 190,341  |   |      |  
|Taxes and Insurance                 |  |      | 79,041   |   |      |  
|Interest Expense                    |  |      | 122,651  |   |      |  
|Depreciation
    & Amortization     |  |      | 195,293  |   |      |  
|Total Expenses                      |  |      | 826,323  |   |      |  
|                                    |  |      |          |   |      |  
|Net Operating
    Income (Loss)     |  |      | (292,128 | ) |      |  
|                                    |  |      |          |   |      |  
|Other Revenue (Expense)             |  |      |          |   |      |  
|Interest Income                     |  |      | 195      |   |      |  
|Entity Expense
    - Reporting Fees |  |      | (5,000   | ) |      |  
|Total Other
    Revenue (Expense)   |  |      | (4,805   | ) |      |  
|                                    |  |      |          |   |      |  
|NET INCOME (LOSS)                   |  | $    | (296,933 | ) |      | $



See accountant’s report
and notes to financial statements



F-5







MESA VERDE APARTMENTS,
L.P.



STATEMENTS
OF CHANGES IN PARTNERS’ EQUITY



For The Years Ended
December 31, 2006 and 2005



|                         |  | 2006 |           |   | 2005 |  
|------------------------ |  | ---- | --------- | - | ---- | -
|Balance, January 1       |  | $    | 1,790,215 |   |      | $
|Capital Contributions    |  |      | 0         |   |      |  
|Net Income (Loss)        |  |      | (296,933  | ) |      |  
|Distributions            |  |      | 0         |   |      |  
|Prior Period Adjustments |  |      | 0         |   |      |  
|Balance, December 31     |  | $    | 1,493,282 |   |      | $



See accountant’s
report and notes to financial statements



F-6







MESA VERDE APARTMENTS, L.P.



STATEMENTS
OF CASH FLOWS



For The Years Ended December
31, 2006 and 2005



|                                                                                      |  | 2006 |          |   | 2005 |  
|------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | -
|Cash flows from operating
    activities                                              |  |      |          |   |      |  
|Net
    Income                                                                        |  | $    | (296,933 | ) |      | $
|Adjustments
    to reconcile net income to net cash provided by operating activities: |  |      |          |   |      |  
|Depreciation and
    amortization                                                     |  |      | 195,293  |   |      |  
|(Increase) decrease
    in accounts receivable                                        |  |      | 17,769   |   |      |  
|(Increase) decrease
    in prepaid expenses                                           |  |      | (8,351   | ) |      |  
|Increase (decrease)
    in accounts payable                                           |  |      | 11,193   |   |      |  
|Increase (decrease)
    in interest payable                                           |  |      | 198      |   |      |  
|Net change in
    tenants’ security deposits held                                     |  |      | (2,087   | ) |      |  
|Increase (decrease)
    in reporting fees payable                                     |  |      | 5,000    |   |      |  
|Increase (decrease)
    real estate taxes payable                                     |  |      | 0        |   |      |  
|Increase (decrease)
    in accrued liabilities                                        |  |      | (2,065   | ) |      |  
|Total adjustments                                                                     |  |      | 216,950  |   |      |  
|Net cash
    provided (used) by operating activities                                  |  |      | (79,983  | ) |      |  
|                                                                                      |  |      |          |   |      |  
|Cash flow from investing
    activities:                                              |  |      |          |   |      |  
|Transfer (to)
    from operating reserves                                             |  |      | 12,465   |   |      |  
|Transfer (to)
    from replacement reserve                                            |  |      | (12,636  | ) |      |  
|Net cash
    provided (used) by investing activities                                  |  |      | (171     | ) |      |  
|                                                                                      |  |      |          |   |      |  
|Cash flow from financing
    activities:                                              |  |      |          |   |      |  
|Increase (Payments)
    Related Party Debts                                           |  |      | 107,974  |   |      |  
|Increase Accrued
    Interest                                                         |  |      | 13,816   |   |      |  
|Principal payments
    on long-term debt                                              |  |      | (19,572  | ) |      |  
|Proceeds long
    term debt                                                           |  |      | 0        |   |      |  
|Net cash
    provided (used) by financing activities                                  |  |      | 102,218  |   |      |  
|                                                                                      |  |      |          |   |      |  
|Net increase (decrease)
    in cash and equivalents                                   |  |      | 22,064   |   |      |  
|Cash and equivalents,
    beginning of year                                           |  |      | 6,083    |   |      |  
|Cash and equivalents,
    end of year                                                 |  | $    | 28,147   |   |      | $
|                                                                                      |  |      |          |   |      |  
|Supplemental disclosures
    of cash flow information:                                |  |      |          |   |      |  
|Cash paid during
    the year for:                                                    |  |      |          |   |      |  
|Interest expense                                                                      |  | $    | 108,638  |   |      | $



See accountant’s report
and notes to financial statements



F-7







MESA VERDE APARTMENTS, L.P.



NOTES
TO FINANCIAL STATEMENTS



DECEMBER 31, 2006 and 2005



NOTE A - ORGANIZATION



MESA VERDE APARTMENTS, L.P.
is a residential real estate property (the Property) consisting of 142 rental units located in Roswell, New Mexico. The property
was built for the purpose of providing affordable housing to qualified individuals and families in the Roswell community.



MESA VERDE APARTMENTS, L.P.
is a New Mexico limited partnership, which owns the Property. The general partners are Medlock Charitable Foundation and Shelter
Resource Corporation. WNC Housing Tax Credit Fund V, Series 3, L.P., a California limited partnership, was admitted as the sole
limited partner.



The general partner and the
limited partner have a 1% and 99% interest, respectively, in operating profits and losses and tax credits. Partnership cash flow
after operating expenses, debt service and required reserves is distributed per the terms of the Partnership agreement in varying
percentages.



NOTE B - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



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



Basis of Accounting



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



Cash and Cash Equivalents



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



The partnership treats all
non replacement reserve, escrows and security deposit funds as cash equivalents. Cash on hand, in checking and savings accounts
and certificates of deposit are considered cash equivalents.



F-8







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2006 and 2005



NOTE B - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)



Capitalization and Depreciation



Land, buildings and improvements
are recorded at cost. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives using the straight-line method. Buildings are depreciated over twenty-seven years using the
straight line method. Improvements, equipment and furnishings are depreciated over a period ranging from three to fifteen years
using the straight line method.



Income Taxes



No provision or benefit for
income taxes has been included in this financial statement since taxable income or loss passes through to, and is reportable by,
the partners individually. The Partnership is eligible to receive low income tax credits as provided by Section 42 of the Internal
Revenue Code.



NOTE C-ESTIMATES



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



NOTE D - LONG-TERM DEBT



Bank of America



The Partnership has a mortgage
note payable to Bank of America. The 9.18% mortgage was payable in monthly installments of $15,698, including interest, to June
1, 2028 at which time the unpaid balance was due and payable in full. The note is collateralized by all real and personal property
of the Partnership.



The loan was accelerated as
of August 1, 2003. All obligations outstanding under this loan have been due and payable in full since that date. Additionally,
unpaid principal has been accruing interest at the Default Rate (9.18% + 3.0%) since August 1, 2003. Consequently, the entire
principal is reported as current portion of long-term debt. This loan was refinanced in 2005.



F-9







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2006 and 2005



NOTE D - LONG-TERM DEBT (CONTINUED)



U.S. Bank



In July 2005, the Partnership
entered into a new loan agreement with U.S. Bank in the original amount of $1,750,000. The 6.17% mortgage is payable in monthly
installments of $10,684 through July 2015.



New Mexico Mortgage Finance
Authority



The Partnership has a note
payable to the New Mexico Mortgage Finance Authority. The 5.3% note provides that no principal or interest payments will be due
until February, 2037. The note is collateralized by a deed of trust on the property, which is subordinate to the Bank’s
first deed of trust.



Estimated principal payments
due over the next five years are as follows:





|December
    31, 2007 |  |  | $ | 22,473   
|--------------------- |  |  | - | ---------
|2008                  |  |  |   | 23,900   
|2009                  |  |  |   | 25,417   
|2010                  |  |  |   | 27,030   
|2011                  |  |  |   | 28,746   
|and
    Thereafter    |  |  |   | 1,858,580
|                      |  |  |   |          
|Total                 |  |  | $ | 1,986,146



NOTE E - MANAGEMENT FEES



The Partnership entered into
a management agreement with Monarch Properties, Inc., Albuquerque, New Mexico. Monarch Properties, Inc. is not related in any
form to any owners, either general or limited partners, of the Partnership. Management fees paid during the years ended December
31, 2006 were $25,193.



F-10







MESA VERDE APARTMENTS, L.P.



NOTES TO FINANCIAL STATEMENTS



DECEMBER 31, 2006 and 2005



NOTE F - RELATED PARTY TRANSACTIONS



The Partnership has agreed
to pay a developer fee in the amount of $735,611 to Trianon Development, the prior General Partner. As of December 31, 2006, $509,084
of this obligation had not been paid.



The Partnership has agreed
to pay the limited partner an annual reporting fee of $5,000 for its services in connection with the Partnership’s accounting
matters relating to the limited partner and assisting with preparation of required tax returns and reports. If cash flow from
operations is insufficient to pay the full amount of the reporting fee, the unpaid portion accrues. As of December 31, 2006, cumulative
unpaid fees under this agreement were $25,000.



Due to Related Parties represents
cash advances made to the partnership by the limited partner and others. Amounts do not bear interest and are to be repaid when
cash flow from operations permits or upon sale of the rental property. As of December 31, 2006 this obligation was comprised of
the following:





|Trianon
    Management                            |  | $ | 13,826  | 
|------------------------------------------------- |  | - | ------- | 
|WNC
    Nebraska.                                 |  |   | 377,805 | 
|WNC
    Housing Tax Credits Fund V, Series 3, L.P |  |   | 310,492 | 
|                                                  |  |   |         | 
|Total                                             |  | $ | 702,123 | 



F-11