Form 10-QSB


       [X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934
                For the Quarterly period ended March 31, 1998

       [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                                 EXCHANGE ACT
             For the transition period from __________  to  __________
                       Commission file number  0-28764

                   (Exact name of small business issuer as
                           specified in its charter)
 Performance Asset Management Fund III, Ltd., A California Limited Partnership

     (State or other jurisdiction                    (IRS Employer
   of incorporation or organization)               Identification No.)
              California                               33-0526128
	
                   (Address of principal executive offices)
           4100 Newport Place, Suite 400, Newport Beach, California
	
                          (Issuer's telephone number)
                                (714) 261-2400

(Former name, former address and former fiscal year, if changed since last
report)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such report(s),
and (2) has been subject to such filing requirements for the past 90 days.
                                                               Yes [X]  No [ ]


              APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by court.  Yes [ ]  No [ ].

                     APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:  [N/A]

     Transitional Small Business Disclosure Format (check one):
                        Yes [ ]  No [X]






                                       1
<PAGE>







                 PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                 A CALIFORNIA LIMITED PARTNERSHIP



                             INDEX TO FORM 10-QSB





                                    PART I


          Item 1.   Financial Statements

          Item 2.   Management's Discussion and Analysis or Plan of Operation



                                   PART II


          Item 1.   Legal Proceedings

          Item 2.   Exhibits and Reports

                                                 
                    Signatures





















                                       2
<PAGE>




                 PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                 A CALIFORNIA LIMITED PARTNERSHIP

                                    PART I




     ITEM 1.   FINANCIAL STATEMENTS


     Index to the Financial Statements for the Partnership:

     Balance Sheets as of March 31, 1998 ...................................4
  
     Statements of Operations for the Three Months Ended March 31,
     1998 and March 31, 1997................................................5

     Statements of Cash Flows for the Three Months Ended March 31,
     1998 and March 31, 1997................................................6

     Notes to Financial Statements..........................................7


     The financial statements have been prepared by Performance Asset Management
     Fund III, Ltd., A California Limited Partnership ("Partnership"), without
     audit, pursuant to the rules and regulations of the Securities and Exchange
     Commission.  Certain information and footnote disclosures normally included
     in financial statements prepared in accordance with generally accepted
     accounting principles have been condensed or omitted pursuant to such rules
     and regulations.  The Partnership believes that the disclosures are
     adequate to make the information presented not misleading when read in
     conjunction with the Partnership's financial statements for the year ended
     December 31, 1997.  The financial information presented reflects all
     adjustments, consisting only of normal recurring adjustments, which are, in
     the opinion of management, necessary for a fair statement of the results
     for the interim periods presented.

















                                       3
<PAGE>
<TABLE>



                  PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                       A CALIFORNIA LIMITED PARTNERSHIP

                                BALANCE SHEET

                                March 31, 1998
                                --------------
                                    ASSETS

<CAPTION>
                                                                1998
                                                             ---------
   <S>                                                  <C>
     Cash and equivalents                                     $275,771

     Cash held in trust                                      2,166,314 

     Investments in distressed loan portfolios, net          2,457,345 

     Due from affiliate                                        162,898 

     Other assets                                               64,480 

     Organization costs, net                                       -
                                                             ---------
          Total assets                                      $5,126,808 
                                                             =========


                       LIABILITIES AND PARTNERS' CAPITAL


     Accounts  payable                                          $4,500

     Due to affiliates, net                                    583,976 
                                                             ---------
          Total liabilities                                    588,476 


     Commitments and contingencies


     General partner's deficit (no units outstanding)         (398,662)
     Limited partners' capital (2,000 units authorized;
     1,998 units issued and outstanding at March 31, 1998)   4,936,994 
                                                             ---------
          Total liabilities and partners' capital           $5,126,808 
                                                             =========






<FN>
The accompanying notes are an integral part of the financial statements. 

</TABLE>



                                       4
<PAGE>
<TABLE>




                 PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                       A CALIFORNIA LIMITED PARTNERSHIP

                           STATEMENTS OF OPERATIONS


              For the Three Months Ended March 31, 1998 and 1997
              ---------------------------------------------------

<CAPTION>
                                                         1998           1997
                                                        -------       -------
  <S>                                              <C>            <C>
     Portfolio collections                             $237,044      $215,368 
     Less: portfolio basis recovery                     237,044       215,368 
                                                        -------       -------
        Net investment income                              -             -

     Cost of operations:
        Collection expense                               27,338           210 
        Management fee expense                           15,900        15,275 
        Professional fees                                18,335        34,405 
        Amortization                                       -              344 
        General and administrative expense                  157           940 
                                                        -------       -------
           Total operating expenses                      61,730        51,174
                                                        -------       -------
           Loss from operations                         (61,730)      (51,174)

     Other income:
        Interest                                         34,353         9,717 
        Other                                              -               84
                                                        -------       -------
           Net (loss)                                  ($27,377)     ($41,373)
                                                        =======       =======



     Net income (loss) allocable to general partner     ($2,738)      ($4,137)
                                                         ======        ======
     Net income (loss) allocable to limited partners   ($24,639)     ($37,236)
                                                         ======        ======
     Net income (loss) per limited partnership unit     ($12.33)      ($18.64)
                                                         ======        ======








<FN>
The accompanying notes are an integral part of the financial statements. 





</TABLE>

                                       5
<PAGE>
<TABLE>



                 PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                       A CALIFORNIA LIMITED PARTNERSHIP

                           STATEMENTS OF CASH FLOWS

               For the Three Months Ended March 31, 1998 and 1997
               --------------------------------------------------



<CAPTION>
                                                         1998           1997
                                                        -------       -------
  <S>                                             <C>            <C>
     Cash flows from operating activities:
        Net income (loss)                              ($27,377)     ($41,373)
        Adjustments to reconcile net income (loss)
          to net cash provided by operating
          activities:
            Amortization                                   -              344 
        Decrease (increase) in assets:
            Other assets                                   -             -
            Due from affiliates                        (106,677)     (153,259)
        Increase (decrease) in liabilities:
            Accounts payable                               (719)        2,735 
            Due to affiliates                           119,848        43,380
                                                        -------       -------
     Net cash provided by (used in) operating
        activities                                      (14,925)     (148,173)

     Cash flows provided by (used in) investing
        activities:
        Recovery of portfolio basis                     237,044       215,368 
        Cash held in trust                              (24,720)      352,240 
        Purchase of investments in distressed
          loan portfolios                            (1,031,215)         -
                                                        -------       -------
     Net cash provided by investing activities         (818,891)      567,608

     Cash flows provided by (used in) financing
        activities:
        Distributions to partners                          -         (334,200)
                                                        -------       -------
     Net cash used in financing activities                    0      (334,200)
                                                        -------       -------
     Net (decrease) increase in cash                   (833,816)       85,235

     Cash at beginning of period                      1,109,587       775,755
                                                        -------       -------
     Cash at end of period                             $275,771      $860,990 
                                                        =======       =======





<FN>
The accompanying notes are an integral part of the financial statements.


                                       6
</TABLE>
<PAGE>





                 PERFORMANCE ASSET MANAGEMENT FUND III, LTD.,
                       A CALIFORNIA LIMITED PARTNERSHIP

                        Notes to Financial Statements
                        -----------------------------


	Organization and Description of Business
     ----------------------------------------

     Performance Asset Management Fund III, Ltd., A California Limited
     Partnership ("Partnership"), was formed in September 1992, for the purpose
     of acquiring investments in or direct ownership of distressed loan
     portfolios from financial institutions and other sources. Interests in the
     Partnership were sold in a private placement offering pursuant to
     Regulation D promulgated by the Securities and Exchange Commission on a
     "best efforts" basis; however, the Partnership did not begin its primary
     operations until October 1992.  The general partner of the Partnership is
     Performance Development, Inc., a California corporation ("PDI") ("General
     Partner").

     The Partnership terminates at December 31, 2005.  At that time, the
     Partnership will distribute any remaining cash after payment of Partnership
     obligations following the sale or collection of all assets.

     Profits, losses, and cash distributions are allocated 90% to the limited
     partners and 10% to the General Partner until such time as the limited
     partners have received cash equal to 100% of their contributions to the
     Partnership.  Thereafter, Partnership profits, losses and cash distribu-
     tions are allocated 70% to the limited partners and 30% to the General
     Partner.

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

     The Partnership defines cash equivalents as all highly liquid investments
     with an original maturity of three months or less.  The Partnership
     maintains its cash balances at one bank in accounts which, at times, may
     exceed federally insured limits.  The Partnership uses a cash management
     system whereby idle cash balances are transferred daily into a master
     account and invested in high quality, short-term securities that do not
     enjoy the benefit of the federal insurance.  The General Partner believes
     that these cash balances are not subject to any significant credit risk due
     to the nature of the investments and the strength of the bank and has not
     experienced any past losses with cash and equivalent investments.

     The Partnership received interest income from these investments of $34,353
     and $9,717 for the three months ended March 31, 1998 and March 31, 1997,
     respectively.







                                       7
<PAGE>




     Cash Held in Trust
     ------------------

     The General Partner anticipates that the Partnership and Performance Asset
     Management Fund, Ltd., A California Limited Partnership; Performance Asset
     Management Fund II, Ltd., A California Limited Partnership; Performance
     Asset Management Fund IV, Ltd., A California Limited Partnership; and,
     Performance Asset Management Fund V, Ltd., A California Limited Partner-
     ship, all affiliates of the Partnership ("PAM Funds") may, in the future,
     be reorganized and merged into Performance Asset Management Company, a
     Delaware Corporation ("PAMCO") ("Rollup").  In an effort to accomplish
     the Rollup, the General Partner, on behalf of the Partnership and the PAM
     Funds, entered into an agreement on December 12, 1995, with the State of
     California Department of Corporations, pursuant to the provisions of
     which the Performance Asset Management Fund Trust ("Trust") was created.
     Certain funds of the Partnership are held by the Trust and these funds
     held in trust are subject to the terms of the Trust agreement.  The
     Trust was the recipient of those funds resulting from the settlement of
     certain then pending litigation between the Partnership and its affiliates
     and West Capital Financial Services Corp. ("WCFSC") and its affiliates.
     The trust fund balance, until Trust termination, must exceed $5,000,000
     which is comprised of funds from the Partnership and the PAM Funds.  The
     Trust will terminate and the trustee will distribute all of the remaining
     funds held by the trustee on August 18, 1998, if the Rollup is not com-
     pleted by such date.  The Partnership's share of the Trust's funds at March
     31, 1998 and December 31, 1997 was $2,166,314 and $2,141,594, respectively.


     Investments in Distressed Loan Portfolios and Revenue Recognition
     -----------------------------------------------------------------

     Investments in distressed loan portfolios are carried at the lower of cost
     or estimated net realizable value.  Amounts collected are treated as a
     reduction to the carrying basis of the related investment on an individual
     portfolio basis and are reported in the Statement of Operations as
     portfolio collections.  Under the cost recovery method of revenue
     recognition used by the Partnership, net investment income is not
     recognized until 100% recovery of the carrying value of the investment in
     each portfolio occurs.  Estimated net realizable value represents
     management's estimates, based on its present plans and intentions, of the
     present value of future collections.  Due to the distressed nature of
     these investments, no interest is earned on outstanding balances, and
     there is no assurance that the unpaid balances of these investments will
     ultimately be collected.  Any adjustments reducing the carrying value of
     the individual portfolios are recorded in the results of operations as a
     general and administrative expense.

     Organization Costs, Net
     -----------------------

     Organization costs include legal and other professional fees incurred
     related to the initial organization of the Partnership.  These costs are
     capitalized and amortized using the straight-line method over five years.
     Organization costs were fully amortized at December 31, 1997.


                                       8
<PAGE>


     Professional Expenses
     ---------------------

     Professional expenses are incurred in relation to ongoing accounting and
     legal assistance.

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

     No provision for income taxes has been provided for in the financial
     statements, except for the Partnership's minimum state franchise tax
     liability of $800.  All partners report individually on their share of
     Partnership operating results.

     Estimates
     ---------

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


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

     Disclosure regarding: Forward Looking Statements
     ------------------------------------------------

     The information contained in this report on Form 10-QSB, other than
     historical facts, contains "forward-looking statements" (as such term is
     defined within the meaning of the Private Securities Litigation Reform
     Act of 1995) including, without limitation, statements as to the
     Partnership's objective to grow through future portfolio acquisitions and
     portfolio account sales, the Partnership's ability to realize operating
     efficiencies in the integration of its acquisitions, trends in the
     Partnership's future operating performance, and statements as to the
     Partnership's or the General Partner's, expectations and opinions.
     Forward looking statements may be identified by the use of forward looking
     terminology, such as "may", "will", "expect", "believes", "estimate",
     "anticipate", "probable", "possible", "should", "could", "continue",
     or similar terms, variations of those terms or the negative of those
     terms.  Forward-looking statements are subject to risks and uncertainties
     and may be affected by various factors which may cause actual results to
     differ materially from those in the forward-looking statements.  In
     addition to the factors discussed in this report, certain risks,
     uncertainties and other factors, including, without limitation, the risk
     that the Partnership will not be able to realize operating efficiencies in
     the integration of its acquisitions, risks associated with growth and
     future acquisitions, fluctuations in quarterly operating results, and the
     other risks detailed from time to time in the Partnership's filings with
     the Securities and Exchange Commission, including the Partnership's Annual
     Report on Form 10-KSB, dated on March 31, 1998, can cause actual results
     and developments to be materially different from those expressed or implied
     by such forward-looking statements. 

                                       9
<PAGE>




     Results of Operations.
     ----------------------

     Collections for the three months ended March 31, 1998 increased 10% to
     $237,044 from $215,368 for the comparable period ended March 31, 1997.
     This increase is due to the acquisition of an additional portfolio that is
     being serviced by the Partnership's affiliated servicer, Performance
     Capital Management Inc., a California corporation ("PCM").  All
     collections received for the three months ended March 31, 1998 were
     reflected as portfolio recoveries and, accordingly, no investment income
     was recorded for this period.

     The Partnership acquired one portfolio during the first quarter of 1998.
     Collections from this portfolio and one other portfolio comprised approx-
     imately 65% of total portfolio collections for the three months ended March
     31, 1998.  Collections for the months ended January 31, 1998, February 28,
     1998, and March 31, 1998, totaled $74,146, $65,868, and $97,030, respec-
     tively.

     Total operating expenses was 26% of portfolio collections for the three
     months ended March 31, 1998, which compares to 24% for the comparable
     period ended 1997.  Total operating expenses increased 20.6% to $61,730
     for the three months ended March 31, 1998, compared to $51,174 for the
     three months ended March 31, 1997.  This increase is primarily due to the
     increase in collection expenses to $27,338 for the first quarter of 1998,
     compared to $210 for the similar period in 1997.  The increase in collec-
     tion expenses is attributed to the acquisition of one large portfolio in
     the first quarter of 1998.  At the time that the Partnership acquires a
     portfolio, certain initial collection expenses are associated with the
     acquisition that includes direct mailing expenses and other costs.  These
     expenses were not necessary during the first quarter of 1997 because there
     were no portfolio acquisitions during that period.  The Partnership
     realized a decrease in professional fees of approximately 47% to $18,335
     for the three months ended March 31, 1998 from $34,405 for the similar
     period ended 1997.  This decrease is related to fewer legal fees associated
     with the Rollup.

     Financial Condition, Liquidity and Capital Resources.
     -----------------------------------------------------

     The Partnership's total assets increased approximately 2% to $5,126,808
     as of March 31, 1998, from $5,035,056 at December 31, 1997.  The increase
     was primarily attributed to the acquisition of one portfolio that offset
     the reduction of investments in distressed loan portfolios.  This increase
     in investments in distressed loan portfolios is directly related to the
     decrease of $833,816 in cash and equivalents.  Due from affiliates
     increased 189% to $162,898 from $56,221, which was primarily the result of
     increased portfolio collections from existing portfolios, as well as
     portfolio collections from the new portfolio, recorded but not yet paid.
     The increase in due to affiliates as of March 31, 1998 was due primarily
     to management fees and the reimbursement of legal expenses to the General
     Partner recorded but not yet paid.





                                      10
<PAGE>





     The Partnership acquired one new distressed portfolio asset during the
     three months ended March 31, 1998.  The General Partner anticipates that
     the Partnership will acquire additional portfolios in the near future.
     Future acquisitions will depend on the asset market, which continues to
     grow in size and diversity.  The General Partner believes that it will
     continue to acquire low-end-priced distressed portfolios for the
     Partnership; however, the General Partner will continue to evaluate
     assets with different pricing and debtor account structure in order to
     determine whether such portfolios can generate strong immediate cash
     flows and provide additional liquidity to the Partnership.

     The Partnership has made no future commitments with credit card origi-
     nators and other financial institutions to acquire portfolio assets.
     The General Partner and PCM plan to use their present contacts and
     relationships to identify and acquire additional assets at optimal
     prices, and believe that they will have no difficulties in identifying
     and acquiring such assets.  Distributions were suspended in the third
     quarter of 1997 in anticipation of the contemplated reorganization of
     the Partnership with the PAM Funds into PAMCO.  The General Partner also
     believes current cash reserves and future portfolio collection proceeds
     will be sufficient to acquire anticipated portfolio assets in the next
     twelve months.

     Impact of Additional Partnership Acquisitions and Resources on Operations.
     --------------------------------------------------------------------------

     The General Partner anticipates that additional future portfolio acquisi-
     tions and continued expansion will improve the Partnership's liquidity,
     profitability and financial condition, as a result of increased portfolio
     collections.  The General Partner anticipates that in order to supplement
     such growth, PCM must continue to increase the amount of its collection
     representatives and human resources.  The General Partner anticipates that
     existing management will be able to supervise the additional portfolio
     growth of the Partnership. The General Partner, in conjunction with PCM
     and other affiliates, is seeking office space in which PCM and the
     Partnership plan to move their facilities.  The General Partner believes
     that this move will provide the Partnership with the adequate operating
     facilities for the future growth of the Partnership.

     A proposal is currently under consideration by the General Partner,
     pursuant to which the PAM Funds and the Partnership would merge with and
     into PAMCO.  The result of the proposed merger would be that a series of
     interrelated changes to the current organizational form of PAMCO would
     be implemented, including (a) merging the Partnership and the PAM Funds
     with and into PAMCO, as a result of which PAMCO would be the sole
     surviving entity; (b) terminating the PAM Funds and the Partnership and
     (c) converting the Limited Partners interests in the Partnership into
     common shares issued by PAMCO.







                                      11
<PAGE>





     Year 2000 Compliance.
     ---------------------

     The General Partner recognizes that the arrival of the Year 2000 poses a
     unique challenge to the ability of the computer systems of PCM used to
     service, manage and collect the portfolios in which the Partnership has
     an interest, to recognize properly and process date sensitive information
     related to the date change from December 31, 1999 to January 1, 2000.  As
     the century date change occurs, date-sensitive systems may recognize the
     Year 2000 as 1900, or not at all.  This inability to recognize or treat
     properly the Year 2000 may cause PCM's computer systems to process finan-
     cial and operational information incorrectly, which could have a material
     adverse effect on the Partnership's results of operations.  PCM has
     assessed and begun remedial work relating to PCM's computer software
     programs and business processes to provide for PCM's ability to continue
     to function effectively.

     In 1997, PCM began the process of identifying, evaluating and implementing
     changes to PCM's computer programs necessary to address the Year 2000
     issue.  The General Partner is currently addressing the Partnership's
     internal Year 2000 issue by coordinating with PCM in connection with PCM's
     modification of existing programs and conversions to new programs.
     The General Partner is also in communication with financial institutions
     and other entities with which PCM and the Partnership conduct business to
     help them identify and resolve the Year 2000 issue as it relates to the
     Partnership's business operations.  An assessment of the readiness of
     those third party institutions and entities with which the Partnership
     does business is ongoing.  While PCM and the General Partner are
     confident that PCM will complete assessment and remediation of PCM's
     computer software, there can be no assurance that the necessary modifica-
     tions and conversions by those third party institutions and entities with
     which PCM and the Partnership conduct business will be completed in a
     timely manner, which could have a material adverse effect on the
     Partnership's results of operations.  The total cost to the Partnership
     associated with the required modifications and conversions is not expected
     to be material to the Partnership's results of operations and financial
     position and is being expensed as incurred.


                         PART II - OTHER INFORMATION

     Item 1. Legal Proceedings.

     Reference is made to the Partnership's Form 10-KSB dated March 31, 1998,
     in which such legal proceedings were reported in Part I, Item 3, "Legal
     Proceedings".  The Partnership, by this reference, makes that disclosure
     a part of this Form 10-QSB.










                                      12
<PAGE>





     Item 2.   Exhibits and Reports.


     (a)  Exhibits

     Exhibit Number                             Exhibit

           1                Certificate of Limited Partnership Form LP-1
                            (Charter Document) *

           2                Agreement of Limited Partnership (Instrument
                            defining the rights of Security Holders)  **


     *     Reference is made to the Partnership's Form 10-KSB, dated March 31,
     1997, in which that Certificate of Limited Partnership was included as
     an exhibit. The Partnership, by this reference, makes that Certificate of
     Limited Partnership a part of this Form 10-QSB.

     **    Reference is made to the Partnership's Form 10-KSB, dated March 31,
     1997, in which that Agreement of Limited Partnership was included as an
     exhibit. The Partnership, by this reference, makes that Agreement of
     Limited Partnership a part of this Form 10-QSB.




                                  SIGNATURES



     In accordance with Section 13 or 15(d) of the Exchange Act, the Partnership
     caused this report to be signed on its behalf by the undersigned, thereunto
     duly authorized.


     Dated: May 15, 1998 Performance Asset Management Fund III, Ltd.,
                         --------------------------------------------
                         A California Limited Partnership
                         --------------------------------
                                 (Registrant)


     By:   /S/Vincent E. Galewick
           ----------------------
           Vincent E. Galewick
           President of the General Partner,
           Performance Development, Inc.








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<PAGE>