UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

                  For the quarterly period ended June 30, 2005
                For the quarterly period ended September 30, 2005
                For the quarterly period ended December 31, 2005

                                       OR

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

             For the transition period from ________ to ___________

                         Commission file number: 0-21895


                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3

                California                               33-6163848
     (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)                 Identification No.)



                     17782 Sky Park Circle, Irvine, CA 92614
                   ( Address of principle executive offices )

                                 (714) 622-5565
                              ( Telephone Number )

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes ___No _X__

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer,  a  non-accelerated  filer.  See the  definitions  of "large
accelerated filer," "accelerated filer in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer___ Accelerated filer___

Non-accelerated filer___X__

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

Yes ___No _X__

<PAGE>

                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                       (A California Limited Partnership)

                               Index to Form 10-Q
                  For the quarterly period ended June 30, 2005
                For the quarterly period ended September 30, 2005
                For the quarterly period ended December 31, 2005

PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements

  Balance Sheets
     As of June 30, 2005, September 30, 2005, December 31, 2005 and
       March 31, 2005..........................................................3

  Statements of Operations
     For the Three Months Ended June 30, 2005 and 2004.........................4
     For the Three and Six Months Ended September 30, 2005 and 2004............5
     For the Three and Nine Months Ended December 31, 2005 and 2004............6

  Statement of Partners' Equity (Deficit)
     For the Three Months Ended June 30, 2005 .................................7
     For the Six Months Ended September 30, 2005 ..............................7
     For the Nine Months Ended December 31, 2005 ..............................7

  Statements of Cash Flows
     For the Three Months Ended June 30, 2005 and 2004.........................8
     For the Six Months Ended September 30, 2005 and 2004......................9
     For the Nine Months Ended December 31, 2005 and 2004.....................10

  Notes to Financial Statements...............................................11

  Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations.................................23

  Item 3. Quantitative and Qualitative Disclosures About Market Risk..........26

  Item 4.  Controls and Procedures  ..........................................26

PART II. OTHER INFORMATION

  Item 1. Legal Proceedings...................................................27

  Item 1A. Risk Factors.......................................................27

  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds........27

  Item 3.  Defaults Upon Senior Securities....................................27

  Item 4.  Submission of Matters to a Vote of Security Holders................27

  Item 5.  Other Information..................................................27

  Item 6. Exhibits............................................................27

  Signatures..................................................................28

                                       2

<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                  (A California Limited Partnership)

                                                            BALANCE SHEETS
                                                              (unaudited)

                                                                        September 30,          December 31,
                                                    June 30, 2005            2005                 2005             March 31, 2005
                                                 ------------------   ------------------   ------------------   ------------------
ASSETS
                                                 <S>                  <C>                   <C>                 <C>

Cash                                              $         15,502     $         21,108      $        21,922     $         28,976
Investments in Local Limited Partnerships,
  net (Note 2)                                           3,061,090            2,921,001            2,683,763            4,284,480
                                                 ------------------   ------------------    -----------------   ------------------
         Total Assets                             $      3,076,592     $      2,942,109      $     2,705,685     $      4,313,456
                                                 ==================   ==================    =================   ==================

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
Accrued expenses                                  $          4,000     $          4,000      $         4,000  $             4,000
Accrued fees and expenses due to
    General Partner and affiliates (Note 3)                655,226              668,932              950,820              640,631
                                                 ------------------   ------------------    -----------------   ------------------
         Total Liabilities                                 659,226              672,932              954,820              644,631
                                                 ------------------   ------------------    -----------------   ------------------

Partners' equity (deficit):
  General Partner                                         (151,318)            (152,799)            (157,983)            (138,803)
  Limited Partners (25,000 Partnership
    Units authorized; 18,000 Partnership
    Units issued and outstanding)                        2,568,684            2,421,976            1,908,848            3,807,628
                                                 ------------------   ------------------    -----------------   ------------------

         Total Partners' Equity                          2,417,366            2,269,177            1,750,865            3,668,825
                                                 ------------------   ------------------    -----------------   ------------------

              Total Liabilities and Partners'
                Equity                            $      3,076,592     $      2,942,109      $     2,705,685     $      4,313,456
                                                 ==================   ==================    =================   ==================

                                       See accompanying notes to financial statements

                                                                3
</TABLE>

<PAGE>

                                WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                      (A California Limited Partnership)

                                          STATEMENTS OF OPERATIONS

                              For the Three Months Ended June 30, 2005 and 2004
                                                 (unaudited)
<TABLE>
<CAPTION>

                                                      2005                              2004
                                                -----------------                -------------------
                                                  Three Months                      Three Months
                                                -----------------                -------------------
                                                <S>                              <C>

Reporting fees                                   $         1,500                  $           4,000
Distribution income                                            -                              1,168
                                                -----------------                -------------------
     Total operating income                                1,500                              5,168
                                                -----------------                -------------------

Operating expenses:
  Amortization (Note 2)                                    6,066                              8,288
  Asset management fees (Note 3)                          12,375                             12,375
  Impairment loss (Note 2)                             1,058,869                            243,888
  Legal and accounting fees                                  300                             15,885
  Write off of advances to Local
    Limited Partnerships (Note 4)                         15,000                             32,000
  Other                                                    1,920                              3,798
                                                -----------------                -------------------

     Total operating expenses                          1,094,530                            316,234
                                                -----------------                -------------------

Loss from operations                                  (1,093,030)                          (311,066)

Equity in losses of Local
  Limited Partnerships (Note 2)                         (158,455)                          (298,771)

Interest income                                               26                                 14
                                                -----------------                -------------------

Net loss                                         $    (1,251,459)                 $        (609,823)
                                                =================                ===================

Net loss allocated to:
  General Partner                                $       (12,515)                 $          (6,098)
                                                =================                ===================

  Limited Partners                               $    (1,238,944)                 $        (603,725)
                                                =================                ===================

Net loss per
  Partnership  Unit                              $           (69)                 $             (34)
                                                =================                ===================

Outstanding weighted
  Partnership  Units                                      18,000                             18,000
                                                =================                ===================
</TABLE>

                             See accompanying notes to financial statements

                                                   4

<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                                       STATEMENTS OF OPERATIONS

                                               For the Three Months and Six Months Ended
                                                      September 30, 2005 and 2004
                                                              (unaudited)


                                                              2005                                 2004
                                               -----------------------------------    -------------------------------
                                                   Three                Six              Three              Six
                                                  Months              Months             Months            Months
                                               --------------     ----------------    -------------     -------------
                                               <S>                <C>                 <C>               <C>

Reporting fees                                  $      1,500       $        3,000      $     2,900       $     6,900
Distribution income                                        -                    -                -             1,168
                                               --------------     ----------------    -------------     -------------
    Total operating income                             1,500                3,000            2,900             8,068
                                               --------------     ----------------    -------------     -------------

Operating expenses:
  Amortization (Note 2)                                5,660               11,726            7,798            16,086
  Asset management fees (Note 3)                      12,375               24,750           12,375            24,750
  Impairment loss (Note 2)                                 -            1,058,869                -           243,888
  Legal and accounting fees                              198                  498            2,247            18,132
  Write off of advances to Local
    Limited Partnerships (Note 4)                      6,914               21,914           10,193            42,193
  Other                                                1,133                3,053            2,221             6,019
                                               --------------     ----------------    -------------     -------------

    Total operating expenses                          26,280            1,120,810           34,834           351,068
                                               --------------     ----------------    -------------     -------------

Loss from operations                                 (24,780)          (1,117,810)         (31,934)         (343,000)

Equity in losses of Local
    Limited Partnerships (Note 2)                   (123,429)            (281,884)        (254,673)         (553,444)

Interest income                                           20                   46               16                30
                                               --------------     ----------------    -------------     -------------
Net loss                                        $   (148,189)          (1,399,648)     $  (286,591)         (896,414)
                                               ==============     ================    =============     =============

Net loss allocated to:
  General Partner                               $     (1,482)      $      (13,996)     $    (2,866)      $    (8,964)
                                               ==============     ================    =============     =============

  Limited Partners                              $   (146,707)      $   (1,385,652)     $  (283,725)      $  (887,450)
                                               ==============     ================    =============     =============

Net loss per Partnership Unit                   $         (8)      $          (77)     $       (16)      $       (49)
                                               ==============     ================    =============     =============

Outstanding weighted Partnership Units                18,000               18,000           18,000            18,000
                                               ==============     ================    =============     =============

                                        See accompanying notes to financial statements

                                                              5
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                                       STATEMENTS OF OPERATIONS

                                 For the Three Months and Nine Months Ended December 31, 2005 and 2004
                                                              (unaudited)


                                                               2005                                2004
                                               -----------------------------------    -------------------------------
                                                    Three              Nine               Three             Nine
                                                   Months             Months              Months           Months
                                               --------------     ----------------    -------------     -------------
                                               <S>                <C>                 <C>               <C>

Reporting fees                                  $      1,500       $        4,500      $     2,000       $     8,900
Distribution Income                                        -                    -                -             1,168
                                               --------------     ----------------    -------------     -------------
    Total operating income                             1,500                4,500            2,000            10,068
                                               --------------     ----------------    -------------     -------------

Operating expenses:
  Amortization (Note 2)                                5,660               17,386            7,798            23,884
  Asset management fees (Note 3)                      12,375               37,125           12,375            37,125
  Impairment loss (Note 2)                                 -            1,058,869                -           243,888
  Legal and accounting fees                            5,550                6,048            2,657            20,789
  Write off of advances from Local
    Limited Partnerships (Note 4)                    261,522              283,436          189,857           232,050
  Other                                                3,158                6,211            1,927             7,946
                                               --------------     ----------------    -------------     -------------

    Total operating expenses                         288,265            1,409,075          214,614           565,682
                                               --------------     ----------------    -------------     -------------

Loss from operations                                (286,765)          (1,404,575)        (212,614)         (555,614)

Equity in losses of Local
 Limited Partnerships (Note 2)                      (231,578)            (513,462)        (254,673)         (808,117)

Interest income                                           31                   77               16                46
                                               --------------     ----------------    -------------     -------------

Net loss                                        $   (518,312)      $   (1,917,960)     $  (467,271)      $(1,363,685)
                                               ==============     ================    =============     =============

Net loss allocated to:
  General Partner                               $     (5,183)      $      (19,180)     $    (4,673)      $   (13,637)
                                               ==============     ================    =============     =============

  Limited Partners                              $   (513,129)      $   (1,898,780)     $  (462,598)      $(1,350,048)
                                               ==============     ================    =============     =============

Net loss per Partnerships Unit                  $        (29)      $         (105)     $       (26)      $       (75)
                                               ==============     ================    =============     =============

Outstanding weighted Partnership Units                18,000               18,000           18,000            18,000
                                               ==============     ================    =============     =============

                                        See accompanying notes to financial statements

                                                              6
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                               STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                             For the Three Months Ended June 30, 2005, Six Months Ended September 30, 2005
                                                and Nine Months Ended December 31, 2005
                                                              (unaudited)


                                     For the Three Months Ended June 30, 2005

                                                          General              Limited
                                                          Partner              Partners                 Total
                                                       ---------------      ----------------      ------------------
                                                       <S>                  <C>                   <C>

Partners' equity (deficit) at March 31, 2005            $    (138,803)       $    3,807,628        $      3,668,825

Net loss                                                      (12,515)           (1,238,944)             (1,251,459)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at June 30, 2005             $    (151,318)       $    2,568,684        $      2,417,366
                                                       ===============      ================      ==================


                                    For the Six Months Ended September 30, 2005

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

Partners' equity (deficit) at March 31, 2005            $    (138,803)       $    3,807,628        $      3,668,825

Net loss                                                      (13,996)           (1,385,652)             (1,339,648)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at September 30, 2005        $    (152,799)       $    2,421,976        $      2,269,177
                                                       ===============      ================      ==================


                                    For the Nine Months Ended December 31, 2005

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

Partners' equity (deficit) at March 31, 2005            $    (138,803)       $    3,807,628        $      3,668,825

Net loss                                                      (19,180)           (1,898,780)             (1,917,960)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at December 31, 2005         $    (157,983)       $    1,908,848        $      1,750,865
                                                       ===============      ================      ==================


                                        See accompanying notes to financial statements

                                                              7
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                                       STATEMENTS OF CASH FLOWS

                                           For the Three Months Ended June 30, 2005 and 2004
                                                              (unaudited)

                                                                            2005                 2004
                                                                        --------------      ---------------
                                                                       <S>                  <C>

Cash flows from operating activities:
  Net loss                                                              $  (1,251,459)       $    (609,823)
    Adjustments to reconcile net loss to net
      cash provided by (used in) operating activities:
        Amortization                                                            6,066                8,288
        Impairment loss                                                     1,058,869              243,888
        Equity in losses of Local Limited Partnerships                        158,455              298,771
        Advances to Local Limited Partnerships                                (15,000)             (32,000)
        Write off of advances to Local Limited Partnerships                    15,000               32,000
        Change in accrued  fees and expenses due to
          General Partner and affiliates                                       14,595               64,058
                                                                        --------------      ---------------
        Net cash provided by (used in) operating activities                   (13,474)               5,182
                                                                        --------------      ---------------


Net increase (decrease) in cash                                               (13,474)               5,182

Cash, beginning of period                                                      28,976               22,748
                                                                        --------------      ---------------

Cash, end of period                                                      $     15,502        $      27,930
                                                                        ==============      ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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


                                       See accompanying notes to financial statements

                                                              8
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                                       STATEMENTS OF CASH FLOWS

                                         For the Six Months Ended September 30, 2005 and 2004
                                                              (unaudited)

                                                                            2005                 2004
                                                                        --------------      ---------------
                                                                        <S>                 <C>

Cash flows from operating activities:
  Net loss                                                               $ (1,399,648)       $    (896,414)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
        Amortization                                                           11,726               16,086
        Impairment loss                                                     1,058,869              243,888
        Equity in losses of Local Limited Partnerships                        281,884              553,444
        Advances made to Local Limited Partnerships                          (21,914)              (42,193)
        Write off of advances to Local Limited Partnerships                    21,914               42,193
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                      28,301               80,901
                                                                        --------------      ---------------
        Net cash used in operating activities                                 (18,868)              (2,095)
                                                                        --------------      ---------------

Cash flows provided by investing activities:
        Distributions received from Local Limited Partnerships                 11,000                3,189
                                                                        --------------      ---------------
        Net cash provided by investing activities                              11,000                3,189
                                                                        --------------      ---------------

Net increase (decrease) in cash                                                (7,868)               1,094

Cash, beginning of period                                                      28,976               22,748
                                                                        --------------      ---------------

Cash, end of period                                                      $     21,108        $      23,842
                                                                        ==============      ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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


                                       See accompanying notes to financial statements

                                                              9
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                             WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                                                   (A California Limited Partnership)

                                                       STATEMENTS OF CASH FLOWS

                                         For the Nine Months Ended December 31, 2005 and 2004
                                                              (unaudited)
                                                                            2005                 2004

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

Cash flows from operating activities:
  Net loss                                                               $ (1,917,960)       $  (1,363,685)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
        Amortization                                                           17,386               23,884
        Equity in losses of Local Limited Partnerships                        513,462              808,117
        Impairment loss                                                     1,058,869              243,888
        Advances made to Local Limited Partnerships                         (283,436)             (232,050)
        Write off of advances to Local Limited Partnerships                   283,436              232,050
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                     310,189              287,717
                                                                        --------------      ---------------
        Net cash used in operating activities                                 (18,054)                 (79)
                                                                        --------------      ---------------

Cash provided by  investing activities:
       Distributions received from Local Limited Partnerships                  11,000                3,189
                                                                        --------------      ---------------

       Net cash provided by investing activities                               11,000                3,189
                                                                        --------------      ---------------

Net increase (decrease) in cash                                                (7,054)               3,110

Cash, beginning of period                                                      28,976               22,748
                                                                        --------------      ---------------

Cash, end of period                                                      $     21,922        $      25,858
                                                                        ==============      ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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


                                                                        ==============      ===============

                                       See accompanying notes to financial statements

                                                              10
</TABLE>


<PAGE>

                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

      For the quarterly periods ended June 30, 2005 September 30, 2005 and
                                December 31, 2005
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

General
-------

The accompanying  condensed unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for quarterly  reports under Section 13 or 15(d) of the Securities  Exchange Act
of 1934.  Accordingly,  they do not include all of the information and footnotes
required by  accounting  principles  generally  accepted in the United States of
America for complete  financial  statements.  In the opinion of management,  all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair  presentation  have been included.  Operating  results for the three months
ended June 30, 2005,  six months ended  September 30, 2005 and nine months ended
December  31, 2005 are not  necessarily  indicative  of the results  that may be
expected  for the fiscal year ending March 31,  2006.  For further  information,
refer  to  the  financial  statements  and  footnotes  thereto  included  in the
Partnership's  annual  report on Form 10-K for the fiscal  year ended  March 31,
2005.

Organization
------------

WNC Housing Tax Credit Fund V, L.P., Series 3, a California Limited  Partnership
(the  "Partnership"),  was formed on March 28, 1995, under the laws of the state
of California.  The Partnership was formed to invest  primarily in other limited
partnerships or limited liability companies ("Local Limited Partnerships") which
own and operate  multi-family  housing complexes ("Housing  Complexes") that are
eligible for low income  housing tax credits ("Low Income Housing Tax Credits").
The local general partners (the "Local General  Partners") of each Local Limited
Partnership retain  responsibility  for maintaining,  operating and managing the
Housing Complexes.  Each Local Limited  Partnership is governed by its agreement
of limited partnership (the "Local Limited Partnership Agreement").

The general partner of the Partnership is WNC & Associates,  Inc.  ("Associates"
or the  "General  Partner").  The  chairman  and  president  of  Associates  own
substantially  all of the outstanding  stock of Associates.  The business of the
Partnership  is  conducted   primarily  through  the  General  Partner,  as  the
Partnership has no employees of its own.

The Partnership shall continue in full force and effect until December 31, 2050,
unless terminated prior to that date,  pursuant to the partnership  agreement or
law.

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

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission  on July 26, 1995,  the  Partnership  commenced a public  offering of
25,000 Units of Limited Partnership Interest ("Partnership Units") at a price of
$1,000 per  Partnership  Unit. As of the close of the public offering on January
21, 1996 a total of 18,000 Partnership Units  representing  $17,558,985 had been
sold. Holders of Partnership Units are referred to herein as "Limited Partners".
The General Partner has a 1% interest in operating  profits and losses,  taxable
income and losses,  each available for distribution from the Partnership and tax
credits of the Partnership. The Limited Partners will be allocated the remaining
99% of these items in proportion to their respective investments.

Sempra Energy Financial, a California corporation,  which is not an affiliate of
the Partnership or General Partner,  has purchased 4,560 Units, which represents
25.3% of the Partnership  Units  outstanding for the Partnership.  Sempra Energy
Financial  invested  $4,282,600.  A discount  of  $277,400  was allowed due to a
volume discount. On July 1, 2006 Sempra Energy Financial transferred their 4,560
Partnership  Units to Sempra  Section 42, LLC.  See Item 12(b) in the year ended
March 31, 2003 10-K/A. Western Financial Savings Bank, which is not an affiliate
of the Partnership or General Partner,  has purchased 1,068  Partnership  Units,
which  represent  5.9% of the Units  outstanding  for the  Partnership.  Western
Financial  Savings Bank invested  $1,000,000.  A discount of $68,000 was allowed
due to a volume discount. See Item 12(b) in the year ended March 31, 2005 10-K.

                                       11

<PAGE>

                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

      For the quarterly periods ended June 30, 2005, September 30, 2005 and
                                December 31, 2005
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

The proceeds from the  disposition of any of the Housing  Complexes will be used
first to pay  debts and  other  obligations  per the  respective  Local  Limited
Partnership Agreement.  Any remaining proceeds will then be paid to the partners
of the Local Limited Partnership,  including the Partnership, in accordance with
the terms of the particular Local Limited Partnership  Agreement.  The sale of a
Housing  Complex  may  be  subject  to  other   restrictions   and  obligations.
Accordingly,  there can be no assurance that a Local Limited Partnership will be
able to sell its Housing Complex.  Even if it does so, there can be no assurance
that any  significant  amounts of cash will be distributed  to the  Partnership.
Should  such  distributions  occur,  the  Limited  Partners  will be entitled to
receive  distributions  from the proceeds remaining after payment of Partnership
obligations and funding reserves, equal to their capital contributions and their
return on  investment  (as defined in the  Partnership  Agreement).  The General
Partner  would then be  entitled  to  receive  proceeds  equal to their  capital
contributions  from the remainder.  Any additional sale or refinancing  proceeds
will  be  distributed  90% to the  Limited  Partners  (in  proportion  to  their
respective investments) and 10% to the General Partner.

Risks and Uncertainties
-----------------------

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The  Low  Income   Housing  Tax  Credits   rules  are   extremely   complicated.
Noncompliance  with these rules results in the loss of future Low Income Housing
Tax  Credits  and the  fractional  recapture  of Low Income  Housing Tax Credits
already taken. In most cases the annual amount of Low Income Housing Tax Credits
that an  individual  can use is limited to the tax liability due on the person's
last $25,000 of taxable income. The Local Limited  Partnerships may be unable to
sell the Housing  Complexes  at a price which  would  result in the  Partnership
realizing cash distributions or proceeds from the transaction.  Accordingly, the
Partnership  may be unable to distribute any cash to its Limited  Partners.  Low
Income  Housing Tax Credits may be the only  benefit from an  investment  in the
Partnership.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income  Housing Tax  Credits,  a  fractional  recapture  of prior Low
Income Housing Tax Credits,  and a loss of the  Partnership's  investment in the
Housing  Complex  would  occur.  The  Partnership  is  a  limited  partner  or a
non-managing  member  of  each  Local  Limited  Partnership.   Accordingly,  the
Partnership  will have very  limited  rights with respect to  management  of the
Local  Limited  Partnerships.  The  Partnership  will rely  totally on the Local
General  Partners.  Neither  the  Partnership's  investments  in  Local  Limited
Partnerships,  nor  the  Local  Limited  Partnerships'  investments  in  Housing
Complexes,  are readily marketable.  To the extent the Housing Complexes receive
government financing or operating subsidies,  they may be subject to one or more
of the  following  risks:  difficulties  in  obtaining  tenants  for the Housing
Complexes;  difficulties  in  obtaining  rent  increases;  limitations  on  cash
distributions;  limitations  on  sales  or  refinancing  of  Housing  Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations
on removal of Local  General  Partners;  limitations  on subsidy  programs;  and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property and Low Income  Housing Tax Credits and recapture of Low Income
Housing Tax  Credits  previously  taken.  The value of real estate is subject to
risks  from  fluctuating  economic   conditions,   including  employment  rates,
inflation,  tax, environmental,  land use and zoning policies, supply and demand
of similar properties, and neighborhood conditions, among others.

                                       12

<PAGE>


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge the tax treatment of tax items.  The amount of Low Income  Housing Tax
Credits and tax losses allocable to the Limited Partners could be reduced if the
IRS were  successful  in such a  challenge.  The  alternative  minimum tax could
reduce tax benefits from an investment in the  Partnership.  Changes in tax laws
could also impact the tax benefits from an investment in the Partnership  and/or
the value of the Housing Complexes.

No trading  market for the  Partnership  Units exists or is expected to develop.
Limited  Partners  may be unable to sell  their  Partnership  Units  except at a
discount  and  should  consider  their  Partnership  Units  to  be  a  long-term
investment.  Individual  Limited Partners will have no recourse if they disagree
with actions authorized by a vote of the majority of Limited Partners.

The  Partnership   currently  has  insufficient  working  capital  to  fund  its
operations.  Associates  has agreed to continue  providing  advances  sufficient
enough  to  fund  the  operations  and  working  capital   requirements  of  the
Partnership through September 30, 2010.

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

Exit Strategy
-------------

The IRS  compliance  period for Low Income  Housing  Tax  Credit  properties  is
generally  15 years from  occupancy  following  construction  or  rehabilitation
completion.  Associates was one of the first in the industry to offer syndicated
investments  using the Low Income Housing Tax Credits.  The initial programs are
completing their compliance  periods. As of December 31, 2005, none of the Local
Limited Partnerships had completed the 15 year compliance period.

With  that in  mind,  the  Partnership  is  continuing  to  review  the  Housing
Complexes,  with special  emphasis on the more mature Housing  Complexes such as
any that have satisfied the IRS compliance  requirements.  The review  considers
many factors, including extended use requirements (such as those due to mortgage
restrictions  or state  compliance  agreements),  the  condition  of the Housing
Complexes, and the tax consequences to the Limited Partners from the sale of the
Housing Complexes.

                                       13

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Upon  identifying  those  Housing  Complexes  with the highest  potential  for a
successful sale, refinancing or syndication,  the Partnership expects to proceed
with  efforts to  liquidate  them.  The  objective  is to  maximize  the Limited
Partners'  return  wherever   possible  and,   ultimately,   to  wind  down  the
Partnership.  Local Limited Partnership interests may be disposed of any time by
the  General  Partner  in its  discretion.  While  liquidation  of  the  Housing
Complexes continues to be evaluated,  the dissolution of the Partnership was not
imminent as of December 31, 2005. As of December 31, 2005, no Housing  Complexes
had been sold or selected for  disposition.  Subsequent to December 31, 2005 one
Housing  Complex,  Cascade Pines,  had been sold (see Note 5) and one additional
Housing Complex, Patten Towers II, L.P., had been identified for disposition.

Method of Accounting for Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting,  whereby the Partnership adjusts its investment
balance for its share of the Local Limited  Partnerships'  results of operations
and for any  contributions  made and  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting of the sum of the remaining future Low Income
Housing  Tax  Credits  estimated  to be  allocated  to the  Partnership  and the
estimated  residual value to the Partnership.  If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  consistent  with  those  of the
Partnership.  Costs incurred by the Partnership in acquiring the investments are
capitalized as part of the investment and are being amortized over 30 years (See
Note 2).

"Equity in losses of Local Limited  Partnerships"  for each of the periods ended
June 30, 2005, September 30, 2005, December 31, 2005 and 2004, respectively have
been recorded by the Partnership.  Management's  estimate for the three, six and
nine-month  period is based on either actual  unaudited  results reported by the
Local Limited  Partnerships or historical  trends in the operations of the Local
Limited Partnerships.  In subsequent annual financial statements, upon receiving
the actual annual results reported by the Local Limited Partnerships, management
reverses its prior estimate and records the actual results reported by the Local
Limited Partnerships.  Equity in losses of Local Limited Partnerships  allocated
to the Partnership are not recognized to the extent that the investment  balance
would be adjusted  below zero. As soon as the investment  balance  reaches zero,
the related costs of acquiring the investment are impaired. If the Local Limited
Partnerships  reported net income in future years,  the Partnership  will resume
applying  the equity  method only after its share of such net income  equals the
share of net losses not  recognized  during the  period(s) the equity method was
suspended (see Note 2).

The  Partnership  does not  consolidate the accounts and activities of the Local
Limited  Partnerships,  which are considered  Variable  Interest  Entities under
Financial    Accounting   Standards   Board   Interpretation   No.   46-Revised,
"Consolidation  of Variable Interest  Entities",  because the Partnership is not
considered the primary beneficiary.  The Partnership's balance in investments in
Local Limited Partnerships, plus the risk of recapture of tax credits previously
recognized  on such  investments,  represents  the  maximum  exposure to loss in
connection  with such  investments.  The  Partnership's  exposure to loss on the
Local  Limited   Partnerships  is  mitigated  by  the  condition  and  financial
performance of the underlying  Housing  Complexes as well as the strength of the
local  General  Partners  and their  guarantees  against Low Income  Housing Tax
Credit recapture.

Distributions  received by the  Partnership  are accounted for as a reduction of
the investment balance.  Distributions received after the investment has reached
zero are recognized as distribution  income. As of June 30, 2005,  September 30,
2005 and  December 31, 2005,  ten, ten and eleven  investment  accounts in Local
Limited Partnerships had reached a zero balance, respectively.

                                       14

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Use of Estimates
----------------

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

Cash and Cash Equivalents
-------------------------

The  Partnership  considers  all  highly  liquid  investments  with an  original
maturity of three months or less when purchased to be cash equivalents.  For all
periods presented, the Partnership had no cash equivalents.

Reporting Comprehensive Income
------------------------------

The  Statement of Financial  Accounting  Standards  ("SFAS") No. 130,  Reporting
Comprehensive  Income  established  standards  for the  reporting and display of
comprehensive  income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
for all periods presented, as defined by SFAS No. 130.

Income Taxes
------------

No provision for income taxes has been  recorded in the financial  statements as
any  liability  and or benefits  for income  taxes flows to the  partners of the
Partnership and is their obligation and/or benefit.  For income tax purposes the
Partnership reports on a calendar year basis.

Net Loss Per Partnership Unit
-----------------------------

Net loss per Partnership  Unit is calculated  pursuant to Statement of Financial
Accounting  Standards No. 128, Earnings Per Share. Net loss per Partnership Unit
includes no dilution  and is computed  by  dividing  loss  allocated  to Limited
Partners by the weighted average number of Partnership Units outstanding  during
the  period.  Calculation  of  diluted  net  loss  per  Partnership  Unit is not
required.

Revenue Recognition
-------------------

The  Partnership  is entitled to receive  reporting  fees from the Local Limited
Partnerships.  The  intent  of  the  reporting  fees  is  to  offset  (in  part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited  Partnerships.  Due to the  uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

Impairment
----------

A loss in value of a Local Limited Partnership other than a temporary decline is
recorded  as an  impairment  loss.  Impairment  is  measured  by  comparing  the
investment  carrying  amount to the sum of the total of the remaining Low Income
Housing Tax Credits  allocated to the  Partnership  and the  estimated  residual
value to the Partnership.

                                       15

<PAGE>

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------

Amortization
------------

Acquisition  fees  and  costs  are  being  amortized  over 30  years  using  the
straight-line  method.  Amortization  expense for each of the three months ended
June 30, 2005 and 2004 was $6,066 and $8,288,  respectively.  For the six months
ended September 30, 2005 and 2004 amortization  expense was $11,726 and $16,086,
respectively  and for the nine months  ended  December  31, 2005 and 2004 it was
$17,386 and $23,884, respectively.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the periods  presented,  the Partnership had acquired limited  partnership
interests  in 17 Local  Limited  Partnerships,  each of which  owns one  Housing
Complex  consisting of an aggregate of 1,120  apartment  units.  The  respective
Local General Partners of the Local Limited  Partnerships  manage the day to day
operations  of the entities.  Significant  Local  Limited  Partnership  business
decisions, as defined,  require approval from the Partnership.  The Partnership,
as a Limited  Partner,  is generally  entitled to 99%, as specified in the Local
Limited  Partnership  agreements,  of the operating profits and losses,  taxable
income and  losses,  and Low Income  Housing  Tax  Credits of the Local  Limited
Partnerships,  except for one for the  investments  in which it is  entitled  to
49.49% of such amount.

A loss in value of a Local Limited Partnership other than a temporary decline is
recorded  as an  impairment  loss.  Impairment  is  measured  by  comparing  the
investment  carrying  amount to the sum of the total amount of the remaining Low
Income  Housing Tax  Credits  allocated  to the  Partnership  and the  estimated
residual value to the  Partnership.  Accordingly,  the  Partnership  recorded an
impairment  loss of $1,058,869 and $243,888,  during the three months ended June
30, 2005 and 2004, respectively.  There were no additional impairment losses for
the periods ended September 30, 2005 and 2004 and December 31, 2005 and 2004.

The following is a summary of the equity method  activity of the  investments in
Local Limited Partnerships for the periods presented below:
<TABLE>
<CAPTION>

                                                                  For the Three           For the Year
                                                                   Months Ended              Ended
                                                                  June 30, 2005          March 31, 2005
                                                               ------------------      ------------------
                                                               <S>                     <C>

     Investments per balance sheet, beginning of period         $      4,284,480        $      5,676,458
     Impairment loss                                                  (1,058,869)               (243,888)
     Distributions received from Local Limited
       Partnerships                                                            -                  (4,773)
     Equity in losses of Local Limited Partnerships                     (158,455)             (1,111,635)
     Amortization of capitalized acquisition fees and
       costs                                                              (6,066)                (31,682)
                                                               ------------------      ------------------
     Investments per balance sheet, end of period               $      3,061,090        $      4,284,480
                                                               ==================      ==================
</TABLE>

                                       16

<PAGE>

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                  For the Six             For the Year
                                                                  Months Ended               Ended
                                                               September 30, 2005        March 31, 2005
                                                               ------------------      ------------------
                                                               <S>                     <C>

     Investments per balance sheet, beginning of period         $      4,284,480        $      5,676,458
     Impairment loss                                                  (1,058,869)               (243,888)
     Distributions received from Local Limited Partnerships              (11,000)                 (4,773)
     Equity in losses of Local Limited Partnerships                     (281,884)             (1,111,635)
     Amortization of capitalized acquisition fees and
       costs                                                             (11,726)                (31,682)
                                                               ------------------      ------------------
     Investments per balance sheet, end of period               $      2,921,001        $      4,284,480
                                                               ==================      ==================


                                                                  For the Nine            For the Year
                                                                  Months Ended               Ended
                                                                December 31, 2005        March 31, 2005
                                                               ------------------      ------------------
     Investments per balance sheet, beginning of period         $      4,284,480        $      5,676,458
     Impairment loss                                                  (1,058,869)               (243,888)
     Distributions received from Local Limited Partnerships              (11,000)                 (4,773)
     Equity in losses of Local Limited Partnerships                     (513,462)             (1,111,635)
     Amortization of capitalized acquisition fees and
       costs                                                             (17,386)                (31,682)
                                                               ------------------      ------------------
     Investments per balance sheet, end of period               $      2,683,763        $      4,284,480
                                                               ==================      ==================


                                                                  For the Three           For the Year
                                                                  Months Ended               Ended
                                                                  June 30, 2005          March 31, 2005
                                                               ------------------      ------------------
     Investments in Local Limited Partnerships, net             $      2,562,237        $      3,749,531
     Acquisition fees and costs, net of accumulated
       amortization of $822,442 and $786,346                             498,853                 534,949
                                                               ------------------      ------------------

     Investments per balance sheet, end of period               $      3,061,090        $      4,284,480
                                                               ==================      ==================


                                                                  For the Six             For the Year
                                                                  Months Ended               Ended
                                                               September 30, 2005        March 31, 2005
                                                               ------------------      ------------------
     Investments in Local Limited Partnerships, net             $      2,427,808        $      3,749,531
     Acquisition fees and costs, net of accumulated
       amortization of $828,102 and $786,346                             493,193                 534,949
                                                               ------------------      ------------------

     Investments per balance sheet, end of period               $      2,921,001        $      4,284,480
                                                               ==================      ==================
</TABLE>

                                                      17

<PAGE>

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                  For the Nine            For the Year
                                                                  Months Ended               Ended
                                                                December 31, 2005        March 31, 2005
                                                               ------------------      ------------------
                                                               <S>                     <C>

     Investments in Local Limited Partnerships, net             $      2,332,439        $      3,749,531
     Acquisition fees and costs, net of accumulated
      amortization of $969,971 and $786,346                              351,324                 534,949
                                                               -------------------      -----------------
     Investments per balance sheet, end of period               $      2,683,763        $      4,284,480
                                                               ==================      ==================
</TABLE>

Selected financial information for the three months ended June 30, 2005 and 2004
from the unaudited combined condensed financial  statements of the Local Limited
Partnerships in which the Partnership has invested is as follows:

                                COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                       2005                       2004
                                                               ----------------------      ------------------
                                                               <S>                         <C>

        Revenues                                                $          1,034,000        $        973,000
                                                               ----------------------      ------------------
        Expenses:
          Interest expense                                                   231,000                 267,000
          Depreciation and amortization                                      310,000                 310,000
          Operating expenses                                                 818,000                 694,000
                                                               ----------------------      ------------------
            Total expenses                                                 1,359,000               1,271,000
                                                               ----------------------      ------------------

        Net loss                                                $           (325,000)       $       (298,000)
                                                               ======================      ==================
        Net loss allocable to the Partnership                   $           (323,000)       $       (305,000)
                                                               ======================      ==================
        Net loss recorded by the Partnership                    $           (158,000)       $       (299,000)
                                                               ======================      ==================
</TABLE>

                                                      18

<PAGE>

                  WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

      For the quarterly periods ended June 30, 2004, September 30, 2004 and
                                December 31, 2004
                                   (unaudited)

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------

Selected  financial  information for the six months ended September 30, 2005 and
2004 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:

                                COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                       2005                       2004
                                                               ----------------------      ------------------
                                                               <S>                         <C>

        Revenues                                                $          2,068,000        $      1,946,000
                                                               ----------------------      ------------------
        Expenses:
          Interest expense                                                   462,000                 534,000
          Depreciation and amortization                                      620,000                 620,000
          Operating expenses                                               1,637,000               1,388,000
                                                               ----------------------      ------------------
        Total expenses                                                     2,719,000               2,542,000
                                                               ----------------------      ------------------

        Net loss                                                $           (651,000)       $       (596,000)
                                                               ======================      ==================
        Net loss allocable to the Partnership                   $           (646,000)       $       (609,000)
                                                               ======================      ==================
        Net loss recorded by the Partnership                    $           (282,000)       $       (553,000)
                                                               ======================      ==================
</TABLE>

Selected  financial  information for the nine months ended December 31, 2005 and
2004 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:

                                COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                       2005                       2004
                                                               ----------------------      ------------------
                                                               <S>                         <C>

        Revenues                                                $          3,103,000        $      2,920,000
                                                               ----------------------      ------------------
        Expenses:
          Interest expense                                                   693,000                 802,000
          Depreciation and amortization                                      930,000                 930,000
          Operating expenses                                               2,456,000               2,082,000
                                                               ----------------------      ------------------
        Total expenses                                                     4,079,000               3,814,000
                                                               ----------------------      ------------------

        Net loss                                                $           (976,000)       $       (894,000)
                                                               ======================      ==================
        Net loss allocable to the Partnership                   $           (970,000)       $       (914,000)
                                                               ======================      ==================
        Net loss recorded by the Partnership                    $           (513,000)       $       (808,000)
                                                               ======================      ==================
</TABLE>

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

                                            19

<PAGE>

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, continued
-------------------------------------------------------------

Troubled Housing Complexes
--------------------------

The Partnership has a 99% limited partnership  investment in Cascade Pines, L.P.
II ("Cascade  Pines").  Cascade was a defendant in a wrongful  death lawsuit and
related injury lawsuit. Cascade carries general liability and extended liability
insurance.  The  wrongful  death claim and related  injury  lawsuit was settled,
released and  dismissed.  Liability  insurance  covered the  settlement.  Due to
continued operating deficits,  an associate of WNC, Shelter Resource Corporation
(SRC)  became  the  managing  general  partner  of  Cascade  in  November  2003.
Operations  improved until late 2004 when the Atlanta Housing  Authority  ceased
all rental  assistance  contracts  with  Cascade  thereby  causing  irreversible
operating problems. In January 2005 Cascade filed for and was granted bankruptcy
protection.  In January 2007 Cascade  successfully sold the apartment  community
with the approval of the bankruptcy  court. The property was sold to an investor
that was going to rent the  affordable  apartment  units to market rate  tenants
thereby  creating  an event of  recapture  for the  Partnership  as the  limited
partner of Cascade.

As of June 30,  2005,  September  30,  2005 and  December  31,  2005  cumulative
advances to one Local  Limited  Partnership,  Cascade  Pines  totaled  $145,617,
$145,617 and $354,146,  respectively. Total cumulative advances to Cascade Pines
totaled $1,155,728.  The Partnership had received cash advances from the General
Partner or  affiliates,  which were in turn advanced to Cascade Pines to aid the
property  with its  operational  issues.  When Cascade Pines was sold during the
year ended March 31, 2007,  there were no net cash  proceeds and  therefore  the
advances that were  previously made by the General Partner to the Partnership to
fund the advances to Cascade Pines were forgiven.  The cancellation of that debt
is considered a capital  contribution  by the General Partner to the Partnership
and as such it is reflected in the  statement of partners'  equity  (deficit) in
the Partnership's financial statements.

Subsequent to December 31, 2005,  one Local Limited  Partnership,  Patten Towers
L.P. II ("Patten Towers"),  had a  less-than-satisfactory  score from HUD on the
2006 and 2007  property  inspection.  HUD  currently has the authority to revoke
their housing  assistance program ("HAP") with Patten Towers and thereby suspend
all rental  assistance for the tenants of Patten  Towers.  If HUD were to revoke
the HAP contract then most of the current  tenants would be unable to make their
rental payments thereby denying Patten Towers with the necessary monthly revenue
it needs to pay all costs and  expenses.  Patten  Towers  requested and received
approval from HUD to participate in a follow-up inspection.  As of January 2009,
HUD  re-inspected  the property and Patten Towers  received an acceptable  score
from HUD thereby allowing the property to continue to participate in the housing
assistance  program.  Patten Towers is currently listed for sale with a national
brokerage firm. Any sale transaction contemplated will require that the property
maintain compliance with the Section 42 tax credit provisions,  thereby avoiding
recapture of any previously claimed tax credits.

The Partnership has a 99% limited partnership investment in Heritage Apartments,
L.P.  ("Heritage").  Heritage is a defendant in several  wrongful death lawsuits
and related injury  lawsuits.  Heritage  carries general  liability and extended
liability insurance. The management of Heritage has confirmed that the insurance
company is paying the  remaining six claims which range from $500 - $2,000 each.
If for any reason Heritage be unsuccessful in its defense and the insurer denies
coverage or the insurance coverage proves to be inadequate,  the Partnership may
be required to sell its  investment  or may  otherwise  lose its  investment  in
Heritage,  which  approximated  $261,353,  $271,536 and $281,719 at December 31,
2005, September 30, 2005 and June 30, 2005,  respectively.  Loss of the Heritage
investment  could  result in the  cessation  and  recapture  of tax  credits and
certain prior tax deductions.  As of the date of this report no losses have been
recognized and management does not expect losses to occur.

                                       20

<PAGE>

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

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

     (a)  Acquisition  fees of up to 7.5% of the gross proceeds from the sale of
          Partnership  Units as compensation for services rendered in connection
          with the acquisition of Local Limited Partnerships.  At the end of all
          periods  presented,  the  Partnership  incurred  acquisition  fees  of
          $1,200,785.  Accumulated  amortization of these  capitalized costs was
          $849,461,  $707,592,  $701,932  and  $665,836 as of December 31, 2005,
          September 30, 2005, June 30, 2005 and March 31, 2005, respectively.

     (b)  Reimbursement of costs incurred by the General Partner or an affiliate
          of  Associates  in connection  with the  acquisition  of Local Limited
          Partnerships.  These  reimbursements have not exceeded 1% of the gross
          proceeds.  As of the end of all  periods  presented,  the  Partnership
          incurred  acquisition  costs of $120,510,  which have been included in
          investments in Local Limited  Partnerships.  Accumulated  amortization
          was  $120,510 as of December 31, 2005,  September  30, 2005,  June 30,
          2005 and March 31, 2005.

     (c)  An annual  asset  management  fee equal to the  greater  amount of (i)
          $2,000 for each Housing complex, or (ii) 0.275% of gross proceeds.  In
          either case, the fee will be decreased or increased  annually based on
          changes to the  Consumer  Price Index.  However,  in no event will the
          maximum amount exceed 0.2% of the invested assets of the Partnerships,
          as  defined.  "Invested  assets"  means  the sum of the  Partnership's
          investment  and  Local  Limited  Partnerships  and  the  Partnership's
          allocable share of the amount of mortgage loans on and the other debts
          related to Housing Complexes owned by such Local Limited Partnerships.
          Asset  management  fees of $12,375  were  incurred  during each of the
          three months ended June 30, 2005 and 2004.  For each of the six months
          ended  September 30, 2005 and 2004,  the  Partnership  incurred  asset
          management  fees of $24,750.  Management fees of $37,125 were incurred
          during each of the nine months ended  December 31, 2005 and 2004.  The
          Partnership  paid the General  Partner or its  affiliates  $0 of those
          fees during the three  months  ended June 30,  2005 and 2004,  the six
          months  ended  September  30, 2005 and 2004 and the nine months  ended
          December 31, 2005 and 2004.

     (d)  A subordinated  disposition  fee in an amount equal to 1% of the sales
          price of real estate sold.  Payment of this fee is subordinated to the
          limited partners  receiving a preferred return of 14% through December
          31, 2006 and 6% thereafter (as defined in the  Partnership  Agreement)
          and is payable only if the General  Partner or its  affiliates  render
          services in the sales  effort.  No such fees were  incurred for any of
          the periods presented.

     (e)  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 three months ended June 30,
          2005 and 2004,  the six months ended  September  30, 2005 and 2004 and
          the nine months ended December 31, 2005 and 2004.

                                       21

<PAGE>

NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------

The accrued fees and expenses due to General Partner and affiliates consisted of
the following at:
<TABLE>
<CAPTION>

                                                                 September 30,         December 31,
                                             June 30, 2005           2005                 2005             March 31, 2005
                                           ----------------    -----------------    -----------------     ---------------
                                           <S>                 <C>                  <C>                   <C>

       Accrued asset management fees        $      237,500      $       249,875      $       262,250       $     225,125
       Expenses paid by the General
        Partners or an affiliates
        on behalf of the Partnership               112,601              113,932              122,625             110,380
       Advances made to Partnership
        from the General Partner or
        affiliates                                 305,125              305,125              565,945             305,126
                                           ----------------    -----------------    -----------------     ---------------
       Total                                $      655,226      $       668,932      $       950,820       $     640,631
                                           ================    =================    =================     ===============
</TABLE>


The General  Partner and/or its affiliates do not anticipate  that these accrued
fees will be paid in full until such time as capital  reserves  are in excess of
future foreseeable working capital requirements of the Partnership.

NOTE 4 - ADVANCES TO LOCAL LIMITED PARTNERSHIPS
-----------------------------------------------

During the nine  months  ended  December  31,  2005,  the  Partnership  advanced
approximately  $283,436 to five of the Local Limited  Partnerships  in which the
Partnership  is  a  limited  partner.  These  Local  Limited  Partnerships  have
experienced  operational issues. As of December 31, 2005, total advances made to
Local  Limited  Partnerships  were  $741,826,  all of which  was  reserved.  The
Partnership  determined  the  recoverability  of these advances to be improbable
and,  accordingly,  a reserve had been recorded.  For the quarter  periods ended
June 30,  September 30, and December 31, 2005, the  Partnership  advanced to the
Local Limited Partnerships $15,000, $6,914 and $261,522, respectively.

NOTE 5 - SUBSEQUENT EVENTS
--------------------------

In January  2007,  one Housing  Complex  had been sold,  Cascade  Pines,  L.P.II
("Cascade").  This Local Limited Partnership  started to experience  operational
issues  during the year ended March 31, 2003 and  continued to have  operational
issues  primarily  due to cash flow issues.  As discussed in Note 2 Cascade lost
all its rental  assistance  contracts in late 2004,  thereby  creating cash flow
issues that were not correctable.  Therefore the Partnership  deemed it to be to
the benefit of the Partnership to sell its interest in Cascade.

Subsequent  to December  31,  2005,  cumulative  advances  to one Local  Limited
Partnership,  Cascade Pines, L.P., II ("Cascade Pines") totaled $1,155,728.  The
Partnership  had received cash advances from the General  Partner or affiliates,
which  were in turn  advanced  to  Cascade  Pines to aid the  property  with its
operational  issues. When Cascade Pines was sold during the year ended March 31,
2007,  there were no net cash  proceeds and  therefore  the  advances  that were
previously  made by the General  Partner to the Partnership to fund the advances
to Cascade Pines were forgiven.  The  cancellation  of that debt is considered a
capital  contribution  by the General  Partner to the Partnership and as such it
will  be  reflected  in the  statement  of  partners'  equity  (deficit)  in the
Partnership's financial statements for the year ended March 31, 2007.

Subsequent to December 31, 2005, the General  Partner forgave past advances made
to the  Partnership  totaling  $1,432,427.  The  Partnership  had received  cash
advances from the General Partner or affiliates,  which were in turn advanced to
certain Local Limited  Partnerships  to help aid the Local Limited  Partnerships
with  their operational issues. The  advances were deemed to be uncollectible by

                                       22

<PAGE>

NOTE 5 - SUBSEQUENT EVENTS, continued
-------------------------------------

the  General  Partner  therefore  the debt was  forgiven  and was  recorded as a
capital contribution made by the General Partner to the Partnership.

Subsequent to December 31, 2005,  one Local Limited  Partnership,  Patten Towers
L.P. II ("Patten Towers"),  had a  less-than-satisfactory  score from HUD on the
2006 and 2007  property  inspection.  HUD  currently has the authority to revoke
their housing  assistance program ("HAP") with Patten Towers and thereby suspend
all rental  assistance for the tenants of Patten  Towers.  If HUD were to revoke
the HAP contract then most of the current  tenants would be unable to make their
rental payments thereby denying Patten Towers with the necessary monthly revenue
it needs to pay all costs and  expenses.  Patten  Towers  requested and received
approval from HUD to participate in a follow-up inspection.  As of January 2009,
HUD  re-inspected  the property and Patten Towers  received an acceptable  score
from HUD thereby allowing the property to continue to participate in the housing
assistance  program.  Patten Towers is currently listed for sale with a national
brokerage firm. Any sale transaction contemplated will require that the property
maintain compliance with the Section 42 tax credit provisions,  thereby avoiding
recapture  of any  previously  claimed  tax  credits.  Patten  Towers  has  been
identified for disposition.

                                       23

<PAGE>

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

Forward Looking Statements

With the exception of the  discussion  regarding  historical  information,  this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-Q contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  the  Partnership  future  cash  flows and  ability  to obtain
sufficient financing, level of operating expenses,  conditions in the Low Income
Housing Tax Credit property market and the economy in general,  as well as legal
proceedings.  Historical results are not necessarily indicative of the operating
results for any future period.

Subsequent  written and oral  forward  looking  statements  attributable  to the
Partnership  or persons  acting on its behalf are  expressly  qualified in their
entirety by  cautionary  statements in this Form 10-Q and in other reports filed
with the Securities and Exchange Commission.  The following discussion should be
read in conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
three  months  ended  June 30,  2005 and 2004,  the three and six  months  ended
September  30, 2005 and 2004,  and the three and nine months ended  December 31,
2005 and 2004,  and should be read in  conjunction  with the combined  condensed
financial statements and accompanying notes included within this report.

Financial Condition

The  Partnership's  assets at June 30, 2005  consisted  primarily  of $16,000 in
cash,  aggregate  investments  in the seventeen  Local Limited  Partnerships  of
$3,061,000. Liabilities at June 30, 2005 consisted of $655,000 of accrued annual
asset  management  fees and advances  payable to the General  Partner and/or its
affiliates and $4,000 in accrued expenses.

The Partnership's assets at September 30, 2005 consisted primarily of $21,000 in
cash,  aggregate  investments  in the seventeen  Local Limited  Partnerships  of
$2,921,000.  Liabilities  at September 30, 2005 consisted of $669,000 of accrued
annual asset  management fees and advances payable to the General Partner and/or
its affiliates and $4,000 in accrued expenses.

The Partnership's  assets at December 31, 2005 consisted primarily of $22,000 in
cash and aggregate  investments in the seventeen  Local Limited  Partnerships of
$2,684,000.  Liabilities  at December 31, 2005  consisted of $951,000 of accrued
annual asset  management fees and advances payable to the General Partner and/or
its affiliates and $4,000 in accrued expenses.

                                       24

<PAGE>

Results of Operations

Three Months  Ended June 30, 2005  Compared to Three Months Ended June 30, 2004.
The  Partnership's  net loss  for the  three  months  ended  June  30,  2005 was
$(1,251,000), reflecting an increase of approximately $641,000 from the net loss
of  $(610,000)  for the three  months  ended June 30,  2004.  The  increase  was
primarily due to an increase in impairment  loss of  $(815,000).  The impairment
loss can vary each year  depending on the annual  decrease in Low Income Housing
Tax Credits  allocated to the  Partnership  and the current  estimated  residual
value of the Partnership  compared to the current  carrying value of each of the
investments  to the  Partnership.  There was a  decrease  of equity in losses of
Local Limited  Partnerships of $140,000 to $(159,000) for the three months ended
June 30, 2005 from  $(299,000)  for the three months  ended June 30,  2004.  The
decrease  in  equity  in  losses  of Local  Limited  Partnerships  is due to the
Partnership not  recognizing  losses of additional  Local Limited  Partnerships,
which investment  balances had reached zero. Since the  Partnership's  liability
with respect to its  investments is limited,  losses in excess of investment are
not recognized.  Additionally the accounting and legal fees decreased by $16,000
for the three months ended June 30, 2005 compared to the three months ended June
30, 2004 due to the timing of when the accounting  work is performed.  The write
off of advances to Local Limited partnerships  decreased by $17,000 to $(15,000)
for the three  months  ended June 30, 2005 from  $(32,000)  for the three months
ended  June  30,  2004.  A  Local  Limited  Partnership  was  experiencing  some
operational  issues and the  Partnership  advanced the funds that were necessary
but reserved fully in the same quarter  period.  The reporting fees decreased by
$(3,000) and the distribution  income decreased by $(1,000) due to the fact that
Local Limited  Partnerships  pay reporting fees and  distribution  income to the
Partnership  when the  Local  Limited  Partnership's  cash flow  allows  for the
payment.

Three  Months  Ended  September  30,  2005  Compared to the Three  Months  Ended
September  30,  2004  The  Partnership's  net loss for the  three  months  ended
September  30,  2005 was  $(148,000),  reflecting  a decrease  of  approximately
$139,000  from the net loss of $(287,000)  for the three months ended  September
30, 2004.  The decrease in net loss was  primarily due to the decrease of equity
in losses of Local Limited  Partnerships of $131,000 to $(123,000) for the three
months  ended  September  30,  2005 from  $255,000  for the three  months  ended
September  30,  2004.  The  decrease  in  equity  in  losses  of  Local  Limited
Partnerships  is due to the  Partnership  not  recognizing  losses of additional
Local Limited  Partnerships,  which investment  balances had reached zero. Since
the Partnershi's liability with respect to its investments is limited, losses in
excess of investment are not recognized.  Additionally  the accounting and legal
fees decreased by $2,000 for the three months ended  September 30, 2005 compared
to the three  months  ended  September  30,  2004 due to the  timing of when the
accounting  work is performed.  There was a decrease in write off of advances to
Local  Limited   partnerships  of  $3,000.  A  Local  Limited   Partnership  was
experiencing some operational issues and the Partnership advanced the funds that
were necessary and reserved for them in the same quarter.

Six Months Ended  September 30, 2005 Compared to the Six Months Ended  September
30, 2004 The  Partnership's net loss for the six months ended September 30, 2005
was  $(1,400,000),  reflecting an increase of approximately  ($504,000) from the
net loss of $(896,000) for the six months ended September 30, 2004. There was an
increase in impairment loss of $(815,000) for the six months ended September 30,
2005  compared to September  30, 2004.  The  impairment  loss can vary each year
depending on the annual decrease in Low Income Housing Tax Credits  allocated to
the  Partnership  and the current  estimated  residual value of the  Partnership
compared  to the  current  carrying  value  of  each of the  investments  to the
Partnership.  The large increase in impairment  loss was offset by a decrease of
equity in losses of Local Limited Partnerships of $271,000 to $(282,000) for the
six months ended  September  30, 2005 from  $(553,000)  for the six months ended
September  30,  2004.  The  decrease  in  equity  in  losses  of  Local  Limited
Partnerships  is due to the  Partnership  not  recognizing  losses of additional
Local Limited  Partnerships,  which investment  balances had reached zero. Since
the Partnership's  liability with respect to its investments is limited,  losses
in excess of investment are not  recognized.  There was also a decrease in write
off of advances to Local  Limited  Partnerships  of $20,000 to $(22,000) for the
six months  ended  September  30, 2005 from  $(42,000)  for the six months ended
September  30,  2004.  A  Local  Limited   Partnership  was  experiencing   some
operational  issues and the  Partnership  advanced the funds that were necessary
and reserved for them in the same quarter. The advances can vary from quarter to
quarter  depending on how the operations of the Local Limited  Partnerships  are
doing.  The  accounting  and legal fees  decreased by $18,000 for the six months
ended September 30, 2005 compared to the six months ended September 30, 2004 due
to the timing of when the accounting  work is performed.  The reporting fees and
distribution income also decreased by $(4,000) and $(1,000), respectively due to
the fact that Local Limited  Partnerships  pay reporting  fees and  distribution
income to the Partnership when the Local Limited  Partnership's cash flow allows
for the payment.

                                       25

<PAGE>

Three Months Ended December 31, 2005 Compared to the Three Months Ended December
31, 2004 The Partnership's net loss for the three months ended December 31, 2005
was $(518,000),  reflecting an increase of approximately  $(51,000) from the net
loss of $(467,000)  for the three months ended  December 31, 2004.  There was an
increase of $(72,000) in write off of advances to Local Limited  Partnerships to
$(262,000)  for the three  months ended  December 31, 2005 due to advances  made
during the three  months  ended  December  31, 2005 and reserved for in the same
quarter from $(190,000) advanced and reserved in the three months ended December
31, 2004. A Local Limited  Partnership was experiencing  some operations  issues
and the Partnership advanced the funds that were necessary. There was a decrease
of equity in losses of Local Limited  Partnership  of $23,000 to $(232,000)  for
the three months ended  December 31, 2005 from  $(255,000)  for the three months
ended  December  31,  2004.  The  decrease in equity in losses of Local  Limited
Partnerships  is due to the fact  that the  equity in  losses  allocated  to the
Partnership  were less in the three months ended December 31, 2005 but there was
also a  $136,208  write  off of  acquisition  costs  and fees for an  investment
balance that reached zero in the quarter.  The write off of acquisition fees and
costs  are  recognized  as equity  in  losses.  The  accounting  and legal  fees
increased by $(3,000) for the three months ended  December 31, 2005  compared to
the three months ended  December 31, 2004. As discussed  above,  the  accounting
expense difference is a timing issue.

Nine Months Ended  December 31, 2005 Compared to Nine Months Ended  December 31,
2004 The  Partnership's net loss for the nine months ended December 31, 2005 was
$(1,918,000),  reflecting an increase of  approximately  ($554,000) from the net
loss of $(1,364,000)  for the nine months ended December 31, 2004.  There was an
increase in impairment  loss of $(815,000).  The  impairment  loss can vary each
year  depending  on the  annual  decrease  in Low  Income  Housing  Tax  Credits
allocated to the  Partnership  and the current  estimated  residual value to the
Partnership compared to the current carrying value of each of the investments to
the  Partnership.  There  was also an  increase  of  $(51,000)  in write  off of
advances to Local Limited  Partnerships  for the nine months ended  December 31,
2005  compared to the nine months  ended  December  31,  2004.  A Local  Limited
Partnership  was  experiencing  some  operational  issues  and  the  Partnership
advanced the funds that were  necessary and reserved for it in the same quarter.
The  advances to Local  Limited  Partnerships  can vary from  quarter to quarter
depending on the operations of the individual Local Limited  Partnerships and if
the Partnership agrees to pay the advances,  the Partnership is not obligated to
make such  advances.  There was a decrease of equity in losses of Local  Limited
Partnership  of $294,000 to  $(514,000)  for the nine months ended  December 31,
2005 from  $(808,000)  for the nine months ended December 31, 2004. The decrease
in equity in losses of Local Limited  Partnerships is due to the Partnership not
recognizing  losses of additional Local Limited  Partnerships,  which investment
balances had reached zero. Since the Partnership's liability with respect to its
investments is limited,  losses in excess of investment are not recognized.  The
accounting  and legal  fees  decreased  by  $15,000  for the nine  months  ended
December 31, 2005 compared to the nine months ended December 31, 2004 due to the
timing  of when  the  accounting  work is  performed.  The  reporting  fees  and
distribution income also decreased by $(4,000) and $(1,000), respectively due to
the fact that Local Limited  Partnerships  pay reporting  fees and  distribution
income to the Partnership when the Local Limited  Partnership's cash flow allows
for the payment.

Capital Resources and Liquidity

Three  Months  Ended June 30, 2005  Compared to Three Months Ended June 30, 2004
Net cash used  during  the  three  months  ended  June 30,  2005 was  $(13,000),
compared to net cash  provided  during the three  months  ended June 30, 2004 of
$5,000  reflecting a change of $(18,000).  The Partnership  collected  $2,000 in
reporting  fees for the three  months  ended June 30,  2005  compared  to $4,000
during the three months ended June 30, 2004, which resulted in a net decrease of
$(2,000).  For the three months ended June 30, 2005 the Partnership  received no
advances  from the  General  Partner  and made  $(15,000)  of  advances to Local
Limited  Partnerships  compared to $32,000 of advance  received from the General
Partner and $(32,000) of advances made to a Local Limited Partnership during the
three months ended June 30, 2004.  Advances to Local  Limited  Partnerships  can
vary from year to year  depending  on the  operations  of the  individual  Local
Limited Partnerships.

Six Months Ended  September 30, 2005 Compared to Six Months Ended  September 30,
2004 Net cash used during the six months ended  September 30, 2005 was $(8,000),
compared to net cash  provided  by the six months  ended  September  30, 2004 of
$1,000,  reflecting  a change of  $(9,000).  This  change was  primarily  due to
$(22,000)  advanced to a Local Limited  Partnership  during the six months ended
September  30, 2005 compared to $(42,000) of advances made during the six months
ended  September 30, 2004 and no advances  received from General  Partner during
the six months ended September 31, 2005 compared to $32,000 of advances received
from  General  Partner  for  the  six  months  ended  September  31,  2004.  The
Partnership  collected  $7,000  in  reporting  fees  for  the six  months  ended
September 30, 2004 compared to $3,000 during the six months ended  September 30,
2005 as well as $1,000 in  distribution  income  that was  received  for the six

                                       26

<PAGE>

months ended September 30, 2004 compared to no  distribution  income for the six
months ended September 30, 2005 due to the fact that Local Limited  Partnerships
pay reporting fees and  distribution  income to the  Partnership  when the Local
Limited Partnership's cash flow allows for the payment. The Partnership received
$11,000 in  distributions  compared to $3,000 for the six months ended September
30, 2004, which was a net increase of $8,000 in cash.

Nine Months Ended  December 31, 2005 Compared to Nine Months Ended  December 31,
2004 Net cash used during the nine months ended  December 31, 2005 was $(7,000),
compared to net cash provided  during the nine months ended December 31, 2004 of
$3,000,  reflecting  a change of  $(10,000).  This change was  primarily  due to
$261,000 in advances  received from the General  Partner or an affiliate for the
nine months  ended  December  31, 2005  compared to $222,000 for the nine months
ended December 31, 2004. Those advances from the General Partner or an affiliate
were  then  advanced  to  Local  Limited  Partnerships  that  were  experiencing
operational  issues.  During the nine months ended December 31, 2005,  there was
advances to Local  Limited  Partnerships  of  $(283,000)  compared to $(232,000)
during the nine months ended December 31, 2004. The Partnership collected 11,000
in distributions  for the nine months ended December 31, 2005 compared to $3,000
for the nine  months  ended  December  31, 2004 which  accounted  for the $8,000
increase in  investing  activities.  The  Partnership  also  received  $5,000 in
reporting fees and no distribution income for the nine months ended December 31,
2005  compared to $9,000 and  $1,000,  respectively  for the nine  months  ended
December 31,  2004,  which  resulted in a net decrease in cash of $(5,000).  The
reporting  fees and  distribution  income  can vary from year to year due to the
fact that the Local Limited  Partnerships  pay reporting  fees and  distribution
income to the Partnership when the Local Limited  Partnership's cash flow allows
for the payment.

During the three,  six and nine months ended June 30, 2005,  September  30, 2005
and December 31, 2005,  accrued  payables,  which  consist  primarily of related
party  management  fees and  advances due to the General  Partner,  increased by
$15,000,  $28,000  and  $310,000,  respectively.  The General  Partner  does not
anticipate  that these accrued fees and advances will be paid until such time as
capital  reserves are in excess of foreseeable  working capital  requirements of
the Partnership.

The Partnership  expects its future cash flows,  together with its net available
assets  as of  December  31,  2005,  to be  insufficient  to meet all  currently
foreseeable  future  cash  requirements.  Associates  have  agreed  to  continue
providing advances  sufficient enough to fund the operations and working capital
requirements of the Partnership through September 30, 2010.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

         NOT APPLICABLE

Item 4.  Controls and Procedures

(a)      Disclosure controls and procedures
         ----------------------------------

          As of the end of the periods covered by this report, the Partnership's
          General Partner,  under the supervision and with the  participation of
          the Chief Executive Officer and Chief Financial Officer of Associates,
          carried out an evaluation of the  effectiveness  of the  Partnership's
          "disclosure controls and procedures" as defined in Securities Exchange
          Act of 1934 Rule  13a-15 and  15d-15.  Based on that  evaluation,  the
          Chief  Executive  Officer and Chief  Financial  Officer have concluded
          that,  as of  the  end of the  period  covered  by  this  report,  the
          Partnership's disclosure controls and procedures were not effective to
          ensure  that  material  information  required to be  disclosed  in the
          Partnership's periodic report filings with SEC is recorded, processed,
          summarized and reported within the time period  specified by the SEC's
          rules  and  forms,  consistent  with  the  definition  of  "disclosure
          controls and procedures" under the Securities Exchange Act of 1934.

          The Partnership must rely on the Local Limited Partnerships to provide
          the  Partnership  with  certain  information  necessary  to the timely
          filing  of  the  Partnership's   periodic  reports.   Factors  in  the
          accounting at the Local Limited Partnerships have caused delays in the
          provision  of such  information  during past  reporting  periods,  and
          resulted in the  Partnership's  inability to file its periodic reports
          in a timely manner.

                                       27

<PAGE>

          Once the Partnership has received the necessary  information  from the
          Local Limited Partnerships,  the Chief Executive Officer and the Chief
          Financial Officer of Associates believe that the material  information
          required to be disclosed in the Partnership's  periodic report filings
          with SEC is effectively recorded, processed,  summarized and reported,
          albeit not in a timely manner. Going forward, the Partnership will use
          the means reasonably within its power to impose procedures designed to
          obtain from the Local Limited  Partnerships the information  necessary
          to the timely filing of the Partnership's periodic reports.

(b)      Changes in internal controls
         ----------------------------

          There were no  changes  in the  Partnership's  internal  control  over
          financial  reporting that occurred  during the quarters ended June 30,
          2005,  September  30,  2005 and  December  31,  2005  that  materially
          affected,   or  are  reasonably  likely  to  materially   affect,  the
          Partnership's internal control over financial reporting.

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.  Submission of Matters to a Vote of Security Holders

         NONE

Item 5.  Other Information

         NONE

Item 6.   Exhibits

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

31.2      Certification  of the  Principal  Financial  Officer  pursuant to Rule
          13a-14  and  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 here
          with)

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

                                       28

<PAGE>

          Pursuant to the  requirements of the Securities  Exchange Act of 1934,
          the  registrant has duly caused this report to be signed on its behalf
          by the undersigned, thereunto duly authorized.

WNC HOUSING TAX CREDIT FUND V, L.P., SERIES 3


By:  WNC & ASSOCIATES, INC.                 General Partner




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

Date:  October 5, 2009




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

Date:  October 5, 2009

                                       29