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, 2004
                For the quarterly period ended September 30, 2004
                For the quarterly period ended December 31, 2004

                                       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" and "accelerated filer" in Rule 12b-2 of the Exchange Act.:

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 periods ended June 30, 2004, September 30, 2004
                              and December 31, 2004


PART I. FINANCIAL INFORMATION

  Item 1. Financial Statements

  Balance Sheets
     As of June 30, 2004, September 30, 2004, December 31, 2004 and
       March 31, 2004..........................................................3

  Statements of Operations
     For the Three Months Ended June 30, 2004 and 2003.........................4
     For the Three and Six Months Ended September 30, 2004 and 2003............5
     For the Three and Nine Months Ended December 31, 2004 and 2003............6

  Statements of Partners' Equity (Deficit)
     For the Three Months Ended June 30, 2004 .................................7
     For the Six Months Ended September 30, 2004 ..............................7
     For the Nine Months Ended December 31, 2004 ..............................7

  Statements of Cash Flows
     For the Three Months Ended June 30, 2004 and 2003.........................8
     For the Six Months Ended September 30, 2004 and 2003......................9
     For the Nine Months Ended December 31, 2004 and 2003.....................10

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

  Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations.................................24

  Item 3. Quantitative and Qualitative Disclosures About Market Risk..........27

  Item 4.  Controls and Procedures  ..........................................27

PART II. OTHER INFORMATION

  Item 1. Legal Proceedings...................................................28

  Item 1A. Risk Factors.......................................................28

  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds........28

  Item 3.  Defaults Upon Senior Securities....................................28

  Item 4.  Submission of Matters to a Vote of Security Holders................28

  Item 5.  Other Information..................................................28

  Item 6. Exhibits............................................................28

  Signatures..................................................................29

                                       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, 2004            2004                2004           March 31, 2004
                                                    -----------------   -----------------    -----------------   -----------------
ASSETS
                                                    <S>                 <C>                  <C>                 <C>

Cash                                                 $        27,930     $        23,842      $        25,858     $         22,748
Investments in Local Limited Partnerships, net             5,125,511           4,859,851            4,597,380            5,676,458
    (Note 2)                                        -----------------   -----------------    -----------------   -----------------

Total Assets                                         $     5,153,441     $     4,883,693      $     4,623,238     $     5,699,206
                                                    =================   =================    =================   =================

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)                  400,264            417,107               623,923             336,206
                                                    -----------------   -----------------    -----------------   -----------------

Total Liabilities                                            404,264            421,107               627,923             340,206
                                                    -----------------   -----------------    -----------------   -----------------

Partners' equity (deficit):
  General Partner                                           (127,999)          (130,865)             (135,538)            (121,901)
  Limited Partners (25,000 Partnership Units
    authorized; 18,000 Partnership Units issued            4,877,176          4,593,451             4,130,853            5,480,901
    and outstanding)                                -----------------   -----------------    -----------------   -----------------

         Total Partners' Equity                            4,749,177          4,462,586             3,995,315           5,359,000
                                                    -----------------   -----------------    -----------------   -----------------
            Total Liabilities and Partners' Equity   $     5,153,441     $    4,883,693       $     4,623,238     $     5,699,206
                                                    =================   =================    =================   =================

                                       See accompanying notes to financial statements

                                                                3
</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 Ended June 30, 2004 and 2003
                                                              (unaudited)

                                                      2004                              2003
                                                -----------------                -------------------
                                                  Three Months                      Three Months
                                                -----------------                -------------------
                                                <S>                              <C>

  Reporting fees                                 $         4,000                  $           6,206
  Distribution Income                                      1,168                                668
  Recovery of bad debt                                         -                              3,311
                                                -----------------                -------------------
     Total operating income                                5,168                             10,185
                                                -----------------                -------------------

Operating expenses:
  Amortization (Note 2)                                    8,288                              8,361
  Asset management fees (Note 3)                          12,375                             12,375
  Impairment loss (Note 2)                               243,888                            132,387
  Legal and accounting fees                               15,885                              5,559
  Write off of advances to Local Limited
   Partnerships (Note 4)                                  32,000                                  -
  Other                                                    3,798                              5,127
                                                -----------------                -------------------

     Total operating expenses                            316,234                            163,809
                                                -----------------                -------------------

Loss from operations                                    (311,066)                          (153,624)

Equity in losses of Local Limited
 Partnerships (Note 2)                                  (298,771)                          (244,893)

Interest income                                               14                                 22
                                                -----------------                -------------------

Net loss                                         $      (609,823)                 $        (398,495)
                                                =================                ===================

Net loss allocated to:
  General Partner                                $        (6,098)                 $          (3,985)
                                                =================                ===================

  Limited Partners                               $      (603,725)                 $        (394,510)
                                                =================                ===================

Net loss per Partnership Unit                    $           (34)                 $             (22)
                                                =================                ===================

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

                                       See accompanying notes to financial statements

                                                                4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                       STATEMENTS OF OPERATIONS

                                                  For the Three and Six Months Ended
                                                      September 30, 2004 and 2003
                                                              (unaudited)

                                                        2004                                       2003
                                        -------------------------------------     ---------------------------------------
                                             Three                 Six                 Three                  Six
                                             Months               Months              Months                 Months
                                        -----------------     ---------------     ----------------      -----------------
                                        <S>                   <C>                 <C>                   <C>

Reporting fees                           $         2,900       $       6,900       $        4,481        $        10,687
Distribution income                                    -               1,168                    -                    668
Recovery of bad debt                                   -                   -                    -                  3,311
                                        -----------------     ---------------     ----------------      -----------------
     Total operating income                        2,900               8,068                4,481                 14,666
                                        -----------------     ---------------     ----------------      -----------------

Operating expenses:
  Amortization (Note 2)                            7,798              16,086                8,361                 16,722
  Asset management fees (Note 3)                  12,375              24,750               12,375                 24,750
  Impairment loss (Note 2)                             -             243,888                    -                132,387
  Legal and accounting fees                        2,247              18,132                9,550                 15,109
  Write off of advances to Local
     Limited Partnerships (Note 4)                10,193              42,193                    -                      -
  Other                                            2,221               6,019                1,307                  6,434
                                        -----------------     ---------------     ----------------      -----------------

     Total operating expenses                     34,834             351,068               31,593                195,402
                                        -----------------     ---------------     ----------------      -----------------

Loss from operations                             (31,934)           (343,000)             (27,112)              (180,736)

Equity in losses of Local
  Limited Partnerships (Note 2)                 (254,673)           (553,444)            (244,893)              (489,786)

Interest income                                       16                  30                   37                     59
                                        -----------------     ---------------     ----------------      -----------------

Net loss                                 $      (286,591)      $    (896,414)      $     (271,968)       $      (670,463)
                                        =================     ===============     ================      =================

Net loss allocated to:

  General Partner                        $        (2,866)      $      (8,964)      $       (2,720)       $        (6,705)
                                        =================     ===============     ================      =================

  Limited Partners                       $      (283,725)      $    (887,450)      $     (269,248)       $       (663,758)
                                        =================     ===============     ================      =================

Net loss per

  Partnership Unit                       $           (16)      $         (49)      $          (15)       $           (37)
                                        =================     ===============     ================      =================

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 and Nine Months Ended
                                                      December 31, 2004 and 2003
                                                              (unaudited)

                                                       2004                                       2003
                                        ----------------------------------     ----------------------------------------
                                            Three                Nine               Three                    Nine
                                           Months               Months              Months                  Months
                                        --------------       -------------     -----------------         --------------
                                        <S>                  <C>               <C>                       <C>

Reporting fees                           $      2,000         $     8,900       $         3,706           $     14,393
Distribution income                                 -               1,168                     -                    668
Recovery of bad debt                                -                   -                     -                  3,311
                                        --------------       -------------     -----------------         --------------
    Total income                                2,000              10,068                 3,706                 18,372
                                        --------------       -------------     -----------------         --------------

Operating expenses:
  Amortization (Note 2)                         7,798              23,884                 8,361                 25,083
  Asset management fees  (Note 3)              12,375              37,125                12,375                 37,125
  Impairment loss (Note 2)                          -             243,888                     -                132,387
  Legal and accounting fees                     2,657              20,789                 2,125                 17,234
  Write off of advances to Local
     Limited Partnerships (Note 4)            189,857             232,050                     -                      -
  Other                                         1,927               7,946                 2,416                  8,850
                                        --------------       -------------     -----------------         --------------

    Total operating expenses                 214,614             565,682                 25,277                220,679
                                        --------------       -------------     -----------------         --------------

Loss from operations                        (212,614)           (555,614)               (21,571)              (202,307)

Equity in losses of Local
 Limited Partnerships (Note 2)              (254,673)           (808,117)              (248,659)              (738,445)

Interest income                                   16                  46                     33                     92
                                        --------------       -------------     -----------------         --------------

Net loss                                 $   (467,271)        $(1,363,685)      $      (270,197)          $   (940,660)
                                        ==============       =============     =================         ==============

Net loss allocated to:
  General Partner                        $     (4,673)        $   (13,637)      $        (2,702)          $     (9,407)
                                        ==============       =============     =================         ==============

  Limited Partners                       $   (462,598)        $(1,350,048)      $      (267,495)          $   (931,253)
                                        ==============       =============     =================         ==============

Net loss per

  Partnerships Units                     $        (26)        $       (75)      $           (15)          $        (52)
                                        ==============       =============     =================         ==============

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, 2004, Six Months Ended September 30, 2004
                                                And Nine Months Ended December 31, 2004
                                                              (unaudited)

                                     For the Three Months Ended June 30, 2004
                                                          General               Limited
                                                          Partner              Partners                 Total
                                                       ---------------      ----------------      ------------------
                                                       <S>                  <C>                   <C>

Partners' equity (deficit) at March 31, 2004            $    (121,901)       $    5,480,901        $      5,359,000

Net loss                                                       (6,098)             (603,725)               (609,823)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at June 30, 2004             $    (127,999)       $    4,877,176        $      4,749,177
                                                       ===============      ================      ==================


                                    For the Six Months Ended September 30, 2004
                                                          General               Limited
                                                          Partner              Partners                 Total
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at March 31, 2004            $    (121,901)       $    5,480,901        $      5,359,000

Net loss                                                       (8,964)             (887,450)               (896,414)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at September 30, 2004        $    (130,865)       $    4,593,451        $      4,462,586
                                                       ===============      ================      ==================


                                    For the Nine Months Ended December 31, 2004
                                                          General               Limited
                                                          Partner              Partners                 Total
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at March 31, 2004            $    (121,901)       $    5,480,901        $      5,359,000

Net loss                                                      (13,637)           (1,350,048)             (1,363,685)
                                                       ---------------      ----------------      ------------------

Partners' equity (deficit) at December 31, 2004         $    (135,538)       $    4,130,853        $      3,995,315
                                                       ===============      ================      ==================

                                       See accompanying notes to financial statements

                                                                7
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                       STATEMENTS OF CASH FLOWS

                                           For the Three Months Ended June 30, 2004 and 2003
                                                              (unaudited)

                                                                            2004                 2003
                                                                        --------------      ---------------
                                                                        <S>                 <C>

Cash flows from operating activities:
  Net loss                                                               $   (609,823)       $    (398,495)
    Adjustments to reconcile net loss to net
      cash provided by operating activities:
        Amortization                                                            8,288                8,361
        Impairment loss                                                       243,888              132,387
        Equity in losses of Local Limited Partnerships                        298,771              244,893
        Advances to Local Limited Partnerships                                (32,000)                   -
        Write off of Advances to Local Limited Partnerships                    32,000                    -
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                      64,058               23,061
                                                                        --------------      ---------------
        Net cash provided by operating activities                               5,182               10,207
                                                                        --------------      ---------------

Cash flow provided by investing activities:
    Distributions received from Local Limited Partnerships                          -                  500
                                                                        --------------      ---------------
Net cash provided by investing activities                                           -                  500
                                                                        --------------      ---------------

Net increase in cash                                                            5,182               10,707

Cash, beginning of period                                                      22,748               18,348
                                                                        --------------      ---------------

Cash, end of period                                                      $     27,930        $      29,055
                                                                        ==============      ===============

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, 2004 and 2003
                                                              (unaudited)

                                                                            2004                 2003
                                                                        --------------      ---------------
                                                                        <S>                 <C>

Cash flows from operating activities:
  Net loss                                                               $   (896,414)       $    (670,463)
    Adjustments to reconcile net loss to net
      cash provided by (used in) operating activities:
        Amortization                                                           16,086               16,722
        Impairment loss                                                       243,888              132,387
        Equity in losses of Local Limited Partnerships                        553,444              489,786
        Advances to Local Limited Partnerships                                (42,193)                   -
        Write off of advances to Local Limited Partnerships                    42,193                    -
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                      80,901               36,293
                                                                        --------------      ---------------
        Net cash provided by (used in) operating activities                    (2,095)               4,725
                                                                        --------------      ---------------

Cash flows provided by investing activities:
   Distributions received from Local Limited Partnerships                       3,189                2,824
                                                                        --------------      ---------------
Net cash provided by investing activities                                       3,189                2,824
                                                                        --------------      ---------------

Net increase in cash                                                            1,094                7,549

Cash, beginning of period                                                      22,748               18,348
                                                                        --------------      ---------------

Cash, end of period                                                      $     23,842        $      25,897
                                                                        ==============      ===============

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, 2004 and 2003
                                                              (unaudited)
                                                                             2004                 2003
                                                                        ---------------      ---------------
                                                                        <S>                  <C>

Cash flows from operating activities:
  Net loss                                                               $  (1,363,685)       $    (940,660)
    Adjustments to reconcile net loss to net
      cash provided by (used in) operating activities:
        Amortization                                                            23,884               25,083
        Impairment loss                                                        243,888              132,387
        Equity in losses of Local Limited Partnerships                         808,117              738,445
        Advances to Local Limited Partnerships                                (232,050)                   -
        Write off of advances to Local Limited Partnerships                    232,050                    -
        Change in accrued  fees and expenses due to
           General Partner and affiliates                                      287,717               50,223
                                                                        ---------------      ---------------
        Net cash provided by (used in) operating activities                        (79)               5,478
                                                                        ---------------      ---------------

Cash flows used in investing activities:
      Distributions received from Local Limited Partnerships                     3,189                2,824
                                                                        ---------------      ---------------
Net cash provided by investing activities                                        3,189                2,824
                                                                        ---------------      ---------------

Net increase in cash                                                             3,110                8,302

Cash, beginning of period                                                       22,748               18,348
                                                                        ---------------      ---------------

Cash, end of period                                                      $      25,858        $      26,650
                                                                        ===============      ===============

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 - CONTINUED

      For the quarterly periods ended June 30, 2004, September 30, 2004 and
                                December 31, 2004
                                   (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, 2004,  six months ended  September 30, 2004 and nine months ended
December  31, 2004 are not  necessarily  indicative  of the results  that may be
expected  for the fiscal year ending March 31,  2005.  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,
2004.

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 Federal  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 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 to be 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,  2003
10-K/A.

                                       11

<PAGE>

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, 2004, 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.

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, 2004. As of December 31, 2004, no Housing  Complexes
had been selected for  disposition.  Subsequent to December 31, 2004 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

                                       13

<PAGE>

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

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, 2004, September 30, 2004, December 31, 2004 and 2003, respectively have
been recorded by the Partnership.  Management's  estimate for the three, six and
nine-month  periods are 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,
amortization  of 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, 2004,  September 30,
2004  and  December  31,  2004,  eight  investment  accounts  in  Local  Limited
Partnerships had reached a zero balance.

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.  The
Partnership had no cash equivalents for all periods presented.

                                       14

<PAGE>

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

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.

Impairment
----------

A loss in value from 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.

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

Acquisition  fees  and  costs  are  being  amortized  over 30  years  using  the
straight-line  method.  Amortization expense for the three months ended June 30,
2004 and 2003 was  $8,288 and  $8,361,  respectively.  For the six months  ended
September  30, 2004 and 2003  amortization  expense  was  $16,086  and  $16,722,
respectively,  and for the nine months  ended  December 31, 2004 and 2003 it was
$23,884 and $25,083, respectively.

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.

                                       15

<PAGE>

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

As of the periods  presented,  the Partnership has 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 $243,888 and $132,387, during the three months ended June 30,
2004 and 2003, respectively.  There were no additional impairment losses for the
periods ended September 30, 2004 and 2003 and December 31, 2004 and 2003.

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, 2004             March 31, 2004
                                                              ---------------------      ------------------
                                                              <S>                        <C>

     Investments per balance sheet, beginning of period        $         5,676,458        $      6,780,198
     Impairment loss                                                      (243,888)               (132,387)
     Distributions received from Local Limited Partnerships                      -                  (3,824)
     Equity in losses of Local Limited Partnerships                       (298,771)               (934,158)
     Amortization of capitalized acquisition fees and costs                 (8,288)                (33,371)
                                                               --------------------      ------------------
     Investments per balance sheet, end of period              $         5,125,511        $      5,676,458
                                                               ====================      ==================


                                                                   For the Six               For the Year
                                                                   Months Ended                  Ended
                                                                September 30, 2004          March 31, 2004
                                                              ---------------------      ------------------
     Investments per balance sheet, beginning of period        $         5,676,458        $      6,780,198
     Impairment loss                                                      (243,888)               (132,387)
     Distributions received from Local Limited Partnerships                 (3,189)                 (3,824)
     Equity in losses of Local Limited Partnerships                       (553,444)               (934,158)
     Amortization of capitalized acquisition fees and costs                (16,086)                (33,371)
                                                              ---------------------      ------------------
     Investments per balance sheet, end of period              $         4,859,851        $      5,676,458
                                                              =====================      ==================
</TABLE>

                                                 16

<PAGE>

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

                                                                   For the Nine              For the Year
                                                                   Months Ended                  Ended
                                                                December 31, 2004           March 31, 2004
                                                              ---------------------      ------------------
                                                              <S>                        <C>

     Investments per balance sheet, beginning of period        $         5,676,458        $      6,780,198
     Impairment loss                                                      (243,888)               (132,387)
     Distributions received from Local Limited Partnerships                 (3,189)                 (3,824)
     Equity in losses of Local Limited Partnerships                       (808,117)               (934,158)
     Amortization of capitalized acquisition fees and costs                (23,884)                (33,371)
                                                              ---------------------      ------------------
     Investments per balance sheet, end of period              $         4,597,380        $      5,676,458
                                                              =====================      ==================


                                                               For the Three Months          For the Year
                                                                      Ended                      Ended
                                                                  June 30, 2004             March 31, 2004
                                                              ---------------------      ------------------
     Investments in Local Limited Partnerships, net            $         4,417,469        $      4,920,070
     Acquisition fees and costs, net of accumulated
       amortization of $613,253 and $564,907                               708,042                 756,388
                                                              ---------------------      ------------------
     Investments per balance sheet, end of period              $         5,125,511        $      5,676,458
                                                              =====================      ==================


                                                                For the Six Months           For the Year
                                                                      Ended                      Ended
                                                                September 30, 2004          March 31, 2004
                                                              ---------------------      ------------------
     Investments in Local Limited Partnerships, net            $         4,159,607        $      4,920,070
     Acquisition fees and costs, net of accumulated
       amortization of $621,051 and $564,907                               700,244                 756,388
                                                              ---------------------      ------------------
     Investments per balance sheet, end of period              $         4,859,851        $      5,676,458
                                                              =====================      ==================


                                                                For the Nine Months          For the Year
                                                                      Ended                      Ended
                                                                December 31, 2004           March 31, 2004
                                                              ---------------------      ------------------
     Investments in Local Limited Partnerships, net            $         3,904,934        $      4,920,070
     Acquisition fees and costs, net of accumulated
       amortization of $628,849 and $564,907                               692,446                 756,388
                                                              ---------------------      ------------------
     Investments per balance sheet, end of period              $         4,597,380        $      5,676,458
                                                              =====================      ==================
</TABLE>

                                                 17

<PAGE>

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

Selected financial information for the three months ended June 30, 2004 and 2003
from the unaudited combined condensed financial  statements of the Local Limited
Partnerships in which the Partnership has invested is as follows:
<TABLE>
<CAPTION>

                                         COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                                2004                      2003
                                                                        --------------------     --------------------
                                                                        <S>                      <C>

                 Revenues                                                $          973,000       $        1,350,000
                                                                        --------------------     --------------------
                 Expenses:
                    Interest expense                                                267,000                  378,000
                    Depreciation and amortization                                   310,000                  379,000
                    Operating expenses                                              694,000                1,370,000
                                                                        --------------------     --------------------
                 Total expenses                                                   1,271,000                2,127,000
                                                                        --------------------     --------------------

                 Net loss                                                $         (298,000)      $         (777,000)
                                                                        ====================     ====================
                 Net loss allocable to the Partnership                   $         (305,000)      $         (766,000)
                                                                        ====================     ====================
                 Net loss recorded by the Partnership                    $         (299,000)      $         (245,000)
                                                                        ====================     ====================
</TABLE>

                                                 18

<PAGE>

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

Selected  financial  information for the six months ended September 30, 2004 and
2003 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:
<TABLE>
<CAPTION>

                                         COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                                2004                      2003
                                                                        --------------------     --------------------
                                                                        <S>                      <C>

                 Revenues                                                $        1,946,000       $        2,700,000
                                                                        --------------------     --------------------
                 Expenses:
                    Interest expense                                                534,000                  756,000
                    Depreciation and amortization                                   620,000                  758,000
                    Operating expenses                                            1,388,000                2,740,000
                                                                        --------------------     --------------------
                 Total expenses                                                   2,542,000                4,254,000
                                                                        --------------------     --------------------

                 Net loss                                                $         (596,000)      $       (1,554,000)
                                                                        ====================     ====================
                 Net loss allocable to the Partnership                   $         (609,000)      $       (1,539,000)
                                                                        ====================     ====================
                 Net loss recorded by the Partnership                    $         (553,000)      $         (490,000)
                                                                        ====================     ====================
</TABLE>


Selected  financial  information for the nine months ended December 31, 2004 and
2003 from the unaudited  combined  condensed  financial  statements of the Local
Limited Partnerships in which the Partnership has invested is as follows:
<TABLE>
<CAPTION>

                                         COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                                2004                     2003
                                                                        --------------------     --------------------
                                                                        <S>                      <C>

                 Revenues                                                $        2,920,000       $        4,049,000
                                                                        --------------------     --------------------
                 Expenses:
                    Interest expense                                                802,000                1,134,000
                    Depreciation and amortization                                   930,000                1,136,000
                    Operating expenses                                            2,082,000                4,111,000
                                                                        --------------------     --------------------
                 Total expenses                                                   3,814,000                6,381,000
                                                                        --------------------     --------------------

                 Net loss                                                $         (894,000)      $       (2,332,000)
                                                                        ====================     ====================
                 Net loss allocable to the Partnership                   $         (914,000)      $       (2,309,000)
                                                                        ====================     ====================
                 Net loss recorded by the Partnership                    $         (808,000)      $         (738,000)
                                                                        ====================     ====================
</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 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").  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,  2004,  September  30,  2004 and  December  31,  2004  cumulative
advances to one Local  Limited  Partnership,  Cascade  Pines  totaled $0, $0 and
$145,  617,  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, 2004,  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  $391,339,  $401,257 and $411,715 at December 31,
2004, September 30, 2004 and June 30, 2004,  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,  which have been included in  investments in Local Limited
          Partnerships.  Accumulated amortization of these capitalized costs was
          $531,544,  $524,000,  $516,456  and  $508,912 as of December 31, 2004,
          September 30, 2004, June 30, 2004 and March 31, 2004, 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 $97,305,  $97,051,  $96,797,  and $55,995 as of December 31, 2004,
          September 30, 2004, June 30, 2004 and March 31, 2004, respectively.

     (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  Partnership,
          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, 2004 and 2003.  For each of the six months
          ended  September 30, 2004 and 2003,  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, 2004 and 2003.  The
          Partnership  paid the General  Partner or its  affiliates  $0 of those
          fees during each of the three months ended June 30, 2004 and 2003. For
          the six months ended September 30, 2004 and 2003 the Partnership  paid
          $0 and  $10,000,  respectively.  For  each of the  nine  months  ended
          December  31,  2004 and 2003,  the  Partnership  paid $0 and  $10,000,
          respectively.

     (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 for each of the three months ended June
          30, 2004 and 2003 and each of the six months ended  September 30, 2004
          and 2003. Operating expense  reimbursements were $0 and $2,986 for the
          nine months ended December 31, 2004 and 2003, respectively.

                                       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, 2004            2004                 2004             March 31, 2004
                                              ----------------    -----------------    -----------------     ---------------
                                              <S>                 <C>                  <C>                   <C>

       Accrued asset management fees           $      188,000      $       200,375      $       212,750       $     175,625
       Expenses paid by the General
         Partners or an affiliates
         on behalf of the Partnership                  21,319               25,787               30,371              77,313
       Advances made to Partnership
         from General Partner of
         affiliates                                   190,945              190,945              380,802              83,268
                                              ----------------    -----------------    -----------------     ---------------
       Total                                   $      400,264      $       417,107      $       623,923       $     336,206
                                              ================    =================    =================     ===============
</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,  2004,  the  Partnership  advanced
$231,780 to four of the Local Limited Partnerships in which the Partnership is a
limited partner.  The Local Limited  Partnerships  have experienced  operational
issues.  As  of  December  31,  2004,  total  advances  made  to  Local  Limited
Partnerships  were  $458,390 in which  $458,390 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, 2004,  the  Partnership  advanced to the Local
Limited Partnerships $32,000, $10,193, and $189,857, 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,  2004,  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. Advances
made to Cascade Pines were $0, $0 and $145, 617 as of June 30,  September 30 and
December 31, 2004, respectively.

Subsequent to December 31, 2004, the General  Partner forgave past advances made

                                       22

<PAGE>

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

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
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, 2004,  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,  our  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,  2004 and 2003,  the three and six  months  ended
September  30, 2004 and 2003,  and the three and nine months ended  December 31,
2004 and 2003, and should be read in conjunction with the condensed consolidated
financial statements and accompanying notes included within this report.

Financial Condition

The Partnership's assets at June 30, 2004 consisted primarily of $28,000 in cash
and  aggregate  investments  in the  seventeen  Local  Limited  Partnerships  of
$5,126,000.  Liabilities  at June 30, 2004  primarily  consisted  of $400,000 of
accrued annual asset management fees and  reimbursement for expenses paid by the
General Partner and/or its affiliates and $4,000 of accrued expenses.

The Partnership's assets at September 30, 2004 consisted primarily of $24,000 in
cash and aggregate  investments in the seventeen  Local Limited  Partnerships of
$4,860,000. Liabilities at September 30, 2004 primarily consisted of $417,000 of
accrued annual asset management fees and  reimbursement for expenses paid by the
General Partner and/or its affiliates and $4,000 of accrued expenses.

The Partnership's  assets at December 31, 2004 consisted primarily of $26,000 in
cash and aggregate  investments in the seventeen  Local Limited  Partnerships of
$4,597,000.  Liabilities  at December 31, 2004  consisted of $624,000 of accrued
annual asset management fees and  reimbursement for expenses paid by the General
Partner and/or its affiliates and $4,000 of accrued expenses.

Results of Operations

Three Months  Ended June 30, 2004  Compared to Three Months Ended June 30, 2003.
The  Partnership's  net loss  for the  three  months  ended  June  30,  2004 was
$(610,000), reflecting an increase of approximately $(211,000) from the net loss
of $(398,000) for the three months ended June 30, 2003. The increase in net loss
was  primarily  due to the  increase  in  impairment  loss  of  $(111,000).  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  investments  compared to the current  carrying
value of each of the  investments.  There was also an increase of  $(32,000)  in
write off of advances to Local Limited  Partnerships  for the three months ended
June 30, 2004  compared to the three months  ended June 30,  2003.  The advances
were made during the three  months  ended June 30, 2004 and reserved in the same
period. A Local Limited Partnership was experiencing some operational issues and
the Partnership advanced the funds that were necessary.  In addition,  there was

                                       24
<PAGE>

an  increase  of equity in losses of limited  partnerships  which  increased  by
$(54,000) to $(299,000) for the three months ended June 30, 2004 from $(245,000)
for the three  months  ended June 30,  2003.  The equity in losses can vary each
year  depending on the  operations  of each of the Local  Limited  Partnerships.
Additionally  the accounting  and legal expenses  increased by $(10,000) for the
three  months  ended June 30, 2004  compared to the three  months ended June 30,
2003 due to a  timing  issue of  accounting  work  being  performed.  The  other
operating  expenses also decreased by $1,000. The reporting fee income decreased
by  $(2,000)  for the three  months  ended June 30,  2004  compared to the three
months ended June 30, 2003 due to the fact that Local Limited  Partnerships  pay
the reporting fee to the Partnership when the Local Limited  Partnership's  cash
flow will allow for the payment.

Three  Months  Ended  September  30,  2004  Compared to the Three  Months  Ended
September  30,  2003  The  Partnership's  net loss for the  three  months  ended
September  30, 2004 was  $(287,000),  reflecting  an  increase of  approximately
$(15,000) from the net loss of $(272,000)  for the three months ended  September
30,  2003.  There was an  increase  of equity in losses of limited  partnerships
which  increased by $(10,000) to $(255,000) for the three months ended September
30, 2004 from  $(245,000)  for the three months ended  September  30, 2003.  The
equity in losses can vary each year  depending on the  operations of each of the
Local Limited Partnerships. There was also an increase of $(10,000) in write off
of advances to Local  Limited  Partnerships  for the three months ended June 30,
2004  compared to the three  months  ended June 30,  2003.  The advance was made
during the three  months  ended  September  30,  2004 and  reserved  in the same
quarter.  A Local Limited  Partnership was experiencing some operational  issues
and the  Partnership  advanced the funds that were necessary.  Additionally  the
reporting fee income  decreased by $(2,000) for the three months ended September
30, 2004  compared to the three months ended  September 30, 2003 due to the fact
that Local Limited  Partnerships  pay the reporting fee to the Partnership  when
the  Local  Limited  Partnership's  cash flow will  allow for the  payment.  The
accounting  and legal  expenses  decreased  by $7,000 for the three months ended
September  30, 2004  compared to the three months ended  September  30, 2003. As
discussed in the above  comparison  between three months ended June 30, 2004 and
three months ended June 30, 2003, the difference in the accounting  expense is a
timing issue.

Six Months Ended  September 30, 2004 Compared to the Six Months Ended  September
30, 2003 The  Partnership's net loss for the six months ended September 30, 2004
was $(896,000),  reflecting an increase of approximately $(226,000) from the net
loss of $(670,000) for the six months ended  September 30, 2003. The increase in
net loss was primarily due to the increase in impairment loss of $(111,000). 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  investments  compared to the current  carrying
value of each of the investments. There was also an increase of equity in losses
of limited  partnerships  which increased by $(64,000) to $(554,000) for the six
months  ended  September  30,  2004 from  $(490,000)  for the six  months  ended
September  30,  2003.  The equity in losses can vary each year  depending on the
operations of each of the Local Limited  Partnerships.  The reporting fee income
decreased by $(4,000) for the six months ended  September  30, 2004  compared to
the six months  ended  September  30,  2003 due to the fact that  Local  Limited
Partnerships  pay the  reporting fee to the  Partnership  when the Local Limited
Partnership's  cash flow will allow for the  payment.  The  recovery of bad debt
income also  decreased by $(3,000) for the six months ended  September  30, 2004
compared to the six months ended September 30, 2003. Additionally,  there was an
increase of $(42,000) in write off of advances to Local Limited Partnerships for
the six months ended  September 30, 2004 due to an advance being made during the
six months ended  September  30, 2004 and  reserved for in the same period.  The
accounting  and legal  expenses  increased  by $(3,000) for the six months ended
September  30, 2004  compared to the six months ended  September 30, 2003 due to
the timing issue of accounting work being performed.

Three Months Ended December 31, 2004 Compared to the Three Months Ended December
31, 2003 The Partnership's net loss for the three months ended December 31, 2004
was $(467,000),  reflecting an increase of approximately $(197,000) from the net
loss of $(270,000) for the three months ended December 31, 2003. The increase is
largely due to $(190,000) in write off of advances to Local Limited Partnerships
for the three months ended  December 31, 2004 compared to the three months ended
December 31, 2003.  The advance was made during the three months ended  December
31, 2004 and reserved for in the same quarter.  A Local Limited  Partnership was
experiencing some operational issues and the Partnership advanced the funds that
were  necessary.  There was also an  increase  of  equity  in losses of  limited
partnerships  which  increased  by $(6,000) to  $(255,000)  for the three months
ended December 31, 2004 from  $(249,000) for the three months ended December 31,
2003.  The equity in losses can vary each year  depending on the  operations  of
each of the Local Limited  Partnerships.  The reporting fee income  decreased by
$(2,000)  for the three months  ended  December  31, 2004  compared to the three
months ended  December 31, 2003 due to the fact that Local Limited  Partnerships
pay the reporting fee to the  Partnership  when the Local Limited  Partnership's
cash flow will allow for the payment.

                                       25

<PAGE>

Nine Months Ended  December 31, 2004 Compared to Nine Months Ended  December 31,
2003 The  Partnership's net loss for the nine months ended December 31, 2004 was
$(1,364,000),  reflecting an increase of  approximately  $(423,000) from the net
loss of $(941,000)  for the nine months ended December 31, 2003. The increase in
net loss was primarily due to the increase in impairment loss of $(111,000). 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  investments  compared to the current  carrying
value of each of the  investments.  There was also an increase of  $(232,000) in
write off of advances to Local  Limited  Partnerships  for the nine months ended
December  31, 2004  compared to the nine months ended  December  31,  2003.  The
advances  were made during the nine months ended  December 31, 2004 and reserved
for in the nine month period. A Local Limited  Partnership was experiencing some
operational  issues and the Partnership  advanced the funds that were necessary.
There was also an  increase  of equity in losses of limited  partnerships  which
increased by $(70,000) to $(808,000) for the nine months ended December 31, 2004
from  $(738,000)  for the nine months ended  December  31,  2003.  The equity in
losses  can vary  each year  depending  on the  operations  of each of the Local
Limited  Partnerships.  The accounting and legal expenses  increased by $(4,000)
for the nine months ended  December  31, 2004  compared to the nine months ended
December 31, 2003 due to the timing issue of accounting work being performed.  A
decrease of $1,000 in  amortization  and a decrease of $1,000 in other  expenses
for the nine  months  ended  December  31, 2004  offset the other  increases  in
operating expenses.  The reporting fee income decreased by $(5,000) for the nine
months ended  December 31, 2004  compared to the nine months ended  December 31,
2003 due to the fact that Local  Limited  Partnerships  pay the reporting fee to
the Partnership  when the Local Limited  Partnership's  cash flow will allow for
the payment.

Capital Resources and Liquidity

Three  Months  Ended June 30, 2004  Compared to Three Months Ended June 30, 2003
Net cash  provided  during  the three  months  ended June 30,  2004 was  $5,000,
compared to net cash  provided  during the three  months  ended June 30, 2003 of
$11,000,  reflecting  a change of  $(6,000).  The  change  was due to a $(5,000)
decrease in cash  provided by operating  activities  and a $(1,000)  decrease in
cash  provided by investing  activities.  During the three months ended June 30,
2004,  the  Partnership  collected  reporting  fee income of $5,000  compared to
$7,000 for the three months ended June 30, 2003.  There was also a miscellaneous
income of $3,000  for the three  month  ended June 30,  2003 while  there was no
miscellaneous  income for the three months ended June 30, 2004. During the three
month ended June 30, 2004, the  Partnership  received an advance of $32,000 from
General Partner and made an advance of $32,000 to one Local Limited  Partnership
which caused zero net effect, while no advances were received or made during the
three months ended June 30, 2003. The advances were due to several Local Limited
Partnerships experiencing cash flow issues.

Six Months Ended  September 30, 2004 Compared to Six Months Ended  September 30,
2003 Net cash  provided  during  the six months  ended  September  30,  2004 was
$1,000,  compared to net cash provided during the six months ended September 30,
2003 of $8,000,  reflecting  a change of  $(7,000).  During the six months ended
September 30, 2004, the Partnership  made advances of $42,000 to a Local Limited
Partnerships while there were no advances made to any Local Limited Partnerships
for the six months ended  September  30, 2003. A Local Limited  Partnership  was
experiencing some operational issues and the Partnership  advanced the necessary
funds.  The  Partnership  also received  $32,000 from the General  Partner or an
affiliate  for the six months ended  September  30,  2004.  The advance from the
General  Partner or an affiliate was used to fund the advances that were made in
the same six  month  period  to a Local  Limited  Partnership.  The  Partnership
collected  $7,000  and  $1,000  in  reporting  fees  and  distribution   income,
respectively,  for the six months ended  September 30, 2004 compared to $11,000,
$1,000 and $3,000  during the six months ended  September 30, 2003 for reporting
fees,  distribution  income and recovery of bad debt. The cash received resulted
in a net  decrease of $(7,000) in cash for the six months  ended  September  30,
2004.  Reporting fees and distribution  income will vary year to year due to the
fact that Local Limited  Partnerships  pay the reporting  fees and  distribution
income to the Partnership  when the Local Limited  Partnership's  cash flow will
allow for the payment.  The recovery of bad debt income  recognized  for the six
months ended September 30, 2003 was due to a previously written off advance that
was  subsequently  collected  by the  Partnership.  During the six months  ended
September  30, 2003 the  Partnership  paid the General  Partner or an  affiliate
$(10,000)  in accrued  asset  management  fees and  reimbursement  of  operating
expenses  compared to no payments for the six months ended  September  30, 2004.
The  Partnership  had cash  available  for the payments in 2003 and did not have
sufficient cash balances in 2004 for any payments to the General Partner.

Nine Months Ended  December 31, 2004 Compared to Nine Months Ended  December 31,
2003 Net cash provided during the nine months ended December 31, 2004 was $3,000

                                       26

<PAGE>

compared net cash  provided  during the nine months  ended  December 31, 2003 of
$8,000,  which  reflected  a $(5,000)  decrease.  During  the nine  month  ended
December  31,  2004,  Partnership  received an advance of $222,000  from General
Partner and made an advance of $232,000 to Local Limited  Partnerships  while an
advance was neither  received nor made during the nine month ended  December 31,
2003. The advances were due to several Local Limited  Partnerships  experiencing
cash flow issues.  For the nine months ended  December 31, 2004 the  Partnership
paid the  General  Partner  and  affiliates  $0 for  asset  management  fees and
reimbursement for expenses paid on behalf of the Partnership compared to $13,000
paid for the nine months  ended  December  31, 2003.  The  Partnership  had cash
available for the payments in 2003 and did not have  sufficient cash balances in
2004 for any payments to the General Partner. The Partnership  collected $10,000
in total income for the nine months ended  December 31, 2004 compared to $18,000
during the nine months ended  December 31, 2003 which resulted in the net change
of $(8,000).

During the three,  six and nine months ended June 30, 2004,  September  30, 2004
and December 31, 2004,  accrued  payables,  which  consist  primarily of related
party  management  fees and  advances due to the General  Partner,  increased by
$64,000,  $81,000 and $288,000.  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, 2004, to be  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.

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.

          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.

                                       27

<PAGE>

(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,
          2004,  September  30,  2004 and  December  31,  2004  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

tem 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
          herewith)

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

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<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.
Chairman 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.


                                       29