UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  (Mark One)
             [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended March 30, 2001

                              OR

             [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from ______ to ____________

                                     0-19217
                           ---------------------------
                            (Commission File Number)

                     American Tax Credit Properties III L.P.
                     ---------------------------------------
      (Exact name of registrant as specified in its governing instruments)


             Delaware                                           13-3545006
(State or other jurisdiction of                              (I.R.S. Employer
          organization)                                     Identification No.)


Richman Tax Credit Properties III L.P.
599 West Putnam Avenue, 3rd floor
Greenwich, Connecticut                                              06830
--------------------------------------------------------------------------------
 (Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:             (203) 869-0900
                                                                ----------------

Securities registered pursuant to Section 12(b) of the Act:

         None                                           None
----------------------               -------------------------------------------
(Title of each Class)                (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:


                      Units of Limited Partnership Interest
                      -------------------------------------
                                (Title of Class)

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
requirement for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   X
           ----

Registrant has no voting stock.

Documents incorporated by reference:

Part I - pages 20 through 31 and 44 through 66 of the prospectus dated February
7, 1990, as supplemented by Supplement No. 1, Supplement No. 2, Supplement No.
3, Supplement No. 4, Supplement No. 5 and Supplement No. 6 dated June 6, 1990,
November 21, 1990, December 20, 1990, October 30, 1991, December 26, 1991 and
January 15, 1992, respectively, filed pursuant to Rule 424(b)(3) under the
Securities Act of 1933.

<PAGE>

                                     PART I

Item 1.  Business

Formation

American Tax Credit Properties III L.P. ("Registrant"), a Delaware limited
partnership, was formed on September 21, 1989 to invest primarily in leveraged
low-income multifamily residential complexes (the "Property" or "Properties")
which qualify for the low-income tax credit in accordance with Section 42 of the
Internal Revenue Code (the "Low-income Tax Credit"), through the acquisition of
limited partnership equity interests in partnerships (the "Local Partnership" or
"Local Partnerships") that are the owners of the Properties. Registrant
considers its activity to constitute a single industry segment.

Richman Tax Credit Properties III L.P. (the "General Partner"), a Delaware
limited partnership, was formed on September 21, 1989 to act as the general
partner of Registrant. The general partner of the General Partner is Richman
Housing Credits Inc. ("Richman Housing"), a Delaware corporation which is wholly
owned by Richard Paul Richman. Richman Housing is an affiliate of The Richman
Group, Inc. ("Richman Group"), a Delaware corporation founded by Richard Paul
Richman in 1988.

The Amendment No. 2 to the Registration Statement on Form S-11 was filed with
the Securities and Exchange Commission (the "Commission") on February 1, 1990
pursuant to the Securities Act of 1933 under Registration Statement File No.
33-31390 and was declared effective on February 2, 1990. Reference is made to
the prospectus dated February 7, 1990, as supplemented by Supplement No. 1,
Supplement No. 2, Supplement No. 3, Supplement No. 4, Supplement No. 5 and
Supplement No. 6 dated June 6, 1990, November 21, 1990, December 20, 1990,
October 30, 1991, December 26, 1991 and January 15, 1992, respectively, filed
with the Commission pursuant to Rule 424(b)(3) under the Securities Act of 1933
(the "Prospectus"). Pursuant to Rule 12b-23 of the Commission's General Rules
and Regulations promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the description of Registrant's business set forth
under the heading "Investment Objectives and Policies" at pages 44 through 66 of
the Prospectus is incorporated herein by reference.

On March 12, 1990, Registrant commenced, through Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), the offering of up to 150,000 units of
limited partnership interest ("Unit") at $1,000 per Unit to investors. On June
13, 1990, December 27, 1990, December 31, 1991 and January 23, 1992 the closings
for 19,730, 9,622, 5,227 and 1,304 Units, respectively, took place, amounting to
aggregate limited partners' capital contributions of $35,883,000.

Competition

Pursuant to Rule 12b-23 of the Commission's General Rules and Regulations
promulgated under the Exchange Act, the description of Registrant's competition,
general risks, tax risks and partnership risks set forth under the heading "Risk
Factors" at pages 20 through 31 of the Prospectus is incorporated herein by
reference.

Employees

Registrant employs no personnel and incurs no payroll costs. All management
activities of Registrant are conducted by the General Partner. An affiliate of
the General Partner employs individuals who perform the management activities of
Registrant. This entity also performs similar services for other affiliates of
the General Partner.

Tax Reform Act of 1986, Revenue Act of 1987, Technical and Miscellaneous Revenue
Act of 1988, Omnibus Budget Reconciliation Act of 1989, Omnibus Budget
Reconciliation Act of 1990, Tax Extension Act of 1991, Omnibus Budget
Reconciliation Act of 1993, Uruguay Round Agreements Act, Tax and Trade Relief
Extension Act of 1998, Tax and Trade Relief Extension Act of 1999, Community
Renewal Tax Relief Act of 2000 and Economic Growth and Tax Relief Reconciliation
Act of 2001 (collectively the "Tax Acts")

Registrant is organized as a limited partnership and is a "pass through" tax
entity that does not, itself, pay federal income tax. However, the partners of
Registrant who are subject to federal income tax may be affected by the Tax
Acts. Registrant will consider the effect of certain aspects of the Tax Acts on
the partners when making decisions regarding its investments. Registrant does
not anticipate that the Tax Acts will currently have a material adverse impact
on Registrant's business operations, capital resources and plans or liquidity.

                                       2

<PAGE>

Item 2.  Properties

The executive offices of Registrant and the General Partner are located at 599
West Putnam Avenue, 3rd floor, Greenwich, Connecticut 06830. Registrant does not
own or lease any properties. Registrant pays no rent; all charges for leased
space are borne by an affiliate of the General Partner.

Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. The relevant state tax credit agency
has allocated each of Registrant's Local Partnerships an amount of Low-income
Tax Credits, which are generally available for a ten year period from the year
the Property is placed in service (the "Ten Year Credit Period"). The Ten Year
Credit Period is expected to be fully exhausted by the Local Partnerships as of
December 31, 2003. The required holding period of each Property, in order to
avoid Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). In addition, certain of the Local Partnerships have
entered into agreements with the relevant state tax credit agencies whereby the
Local Partnerships must maintain the low-income nature of the Properties for a
period which exceeds the Compliance Period, regardless of any sale of the
Properties by the Local Partnerships after the Compliance Period. The Properties
must satisfy various requirements including rent restrictions and tenant income
limitations (the "Low-income Tax Credit Requirements") in order to maintain
eligibility for the recognition of the Low-income Tax Credit at all times during
the Compliance Period. Once a Local Partnership has become eligible for the
Low-income Tax Credit, it may lose such eligibility and suffer an event of
recapture if its Property fails to remain in compliance with the Low-income Tax
Credit Requirements. Through December 31, 2000, none of the Local Partnerships
have suffered an event of recapture of Low-income Tax Credits.

Although Registrant generally owns a 98.9%-99% limited partnership interest
("Local Partnership Interest") in the Local Partnerships, Registrant and
American Tax Credit Properties II L.P. ("ATCP II"), a Delaware limited
partnership and an affiliate of Registrant, together, in the aggregate, own a
99% Local Partnership Interest in the following Local Partnerships:
<TABLE>
<CAPTION>

                                                           Registrant             ATCP II
                                                           ----------             -------
<S>                                                          <C>                   <C>
             Batesville Family, L.P.                         61.75%                37.25%
             Bruce Housing Associates, L.P.                  61.75                 37.25
              Carrington Limited Dividend Housing
               Association Limited Partnership               65.95                 33.05
             Ivy Family, L.P.                                61.75                 37.25
             Lawrence Road Properties, Ltd.                  61.75                 37.25
             Mirador del Toa Limited Partnership             59.06                 39.94
             Purvis Heights Properties, L.P.                 61.75                 37.25
             Queen Lane Investors                            48.50                 50.50
</TABLE>

Many of the Local Partnerships receive rental subsidy payments, including
payments under Section 8 of Title II of the Housing and Community Development
Act of 1974 ("Section 8") (see descriptions of subsidies on page 7). The subsidy
agreements expire at various times during and after the Compliance Periods of
the Local Partnerships. Since October 1997, the United States Department of
Housing and Urban Development ("HUD") has issued a series of directives related
to project based Section 8 contracts that define owners' notification
responsibilities, advise owners of project based Section 8 properties of what
their options are regarding the renewal of Section 8 contracts, provide guidance
and procedures to owners, management agents, contract administrators and HUD
staff concerning renewal of Section 8 contracts, provide policies and procedures
on setting renewal rents and handling renewal rent adjustments and provide the
requirements and procedures for opting-out of a Section 8 project based
contract. Registrant cannot reasonably predict legislative initiatives and
governmental budget negotiations, the outcome of which could result in a
reduction in funds available for the various federal and state administered
housing programs including the Section 8 program. Such changes could adversely
affect the future net operating income and debt structure of any or all Local
Partnerships currently receiving such subsidy or similar subsidies. One Local
Partnership's Section 8 contracts are currently subject to renewal under
applicable HUD guidelines.

                                       3

<PAGE>

Item 2.  Properties (continued)
<TABLE>
<CAPTION>

                                                                                       Mortgage
Name of Local Partnership                        Number                            loans payable as of     Subsidy
Name of apartment complex                       of rental           Capital           December 31,          (see
Apartment complex location                        units           contribution            2000            footnotes)
--------------------------                        -----           ------------     -------------------    ----------
<S>                                                <C>           <C>                 <C>                  <C>
April Gardens Apartments II
  Limited Partnership
April Gardens Apartments
Las Piedras, Puerto Rico                             48           $  485,581          $1,991,036           (1b&d)

Ashland Park Apartments, L.P.
Ashland Park Apartments
Ashland, Nebraska                                    24              235,732           1,035,140           (1b&d)

Auburn Family, L.P.
Auburn Apartments
Louisville, Mississippi                              16               95,412             466,434           (1b&d)

Batesville Family, L.P.
Westridge Apartments
Batesville, Mississippi                              48              239,716(2)        1,435,270           (1b)

Bay Springs Elderly, L.P.
Bay Springs Manor
Bay Springs, Mississippi                             24              208,820             674,285           (1b&d)

Brisas del Mar Apartments
  Limited Partnership
Brisas del Mar Apartments
Hatillo, Puerto Rico                                 66              668,172           2,644,754           (1b&d)

Bruce Housing Associates, L.P.
Bruce Family Apartments
Bruce, Mississippi                                   40              183,155(2)        1,103,910           (1b&d)

Carrington Limited Dividend
  Housing Association Limited
  Partnership
Carrington Place
Farmington Hills, Michigan                          100            2,174,720(2)        3,382,920           (1c)


Chestnut Park Associates, L.P.
Chestnut Park Apartments
East Orange, New Jersey                              59            4,204,576           5,074,427           (1a)

Chowan Senior Manor Associates
  Limited Partnership
Azalea Garden Senior Manor
  Apartments
Murfreesboro, North Carolina                         33              278,405           1,253,694           (1b&d)

Christian Street Commons
  Associates
Christian Street Commons
  Apartments
Philadelphia, Pennsylvania                           18              581,645             606,464           (1a&b)
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>

Item 2.  Properties (continued)

                                                                                        Mortgage
Name of Local Partnership                        Number                             loans payable as of     Subsidy
Name of apartment complex                       of rental             Capital          December 31,          (see
Apartment complex location                        units            contribution            2000           footnotes)
--------------------------                        -----            ------------            ----           ----------

<S>                                              <C>                <C>                <C>                 <C>
Country View Apartments
Country View Apartments
Pembroke, Maine                                    16               $  279,183          $  935,009          (1b&d)

Desarrollos de Belen Limited
  Partnership
Vista de Jagueyes II Apartments
Aguas Buenas, Puerto Rico                          41                  422,929           1,878,304          (1b&d)

Desarrollos de Emaus Limited
  Partnership
Hucares II Apartments
Naguabo, Puerto Rico                               72                  631,404           3,196,843          (1b&d)

Ellinwood Heights Apartments, L.P.
Ellinwood Heights Apartments
Ellinwood, Kansas                                  24                  156,261             686,270          (1b&d)

Fulton Street Houses Limited
  Partnership
Fulton Street Townhouse
  Apartments
New York, New York                                 35                1,948,081           3,869,930          (1a&b)

Hayes Run Limited Partnership
Mashburn Gap Apartments
Marshall, North Carolina                           34                  322,074           1,421,892          (1b&d)

Howard L. Miller Sallisaw
  Apartments II, L.P.
Sallisaw II Apartments
Sallisaw, Oklahoma                                 24                  130,158             614,170          (1b&d)

Hurlock Meadow Limited
  Partnership
Hurlock Meadow Apartments
Hurlock, Maryland                                  30                  284,218           1,267,123          (1b&d)

Ivy Family, L.P.
Ivy Apartments
Louisville, Mississippi                            32                  135,528(2)          789,071          (1b&d)

Justin Associates
Locust Tower Apartments
Philadelphia, Pennsylvania                         40                1,809,723           2,388,383          (1b&e)

LaBelle Commons, Ltd.
LaBelle Commons
LaBelle, Florida                                   32                  253,580           1,010,630          (1b&d)
Lawrence Road Properties, Ltd.
Hillcrest Apartments
Newton, Mississippi                                24                  123,799(2)          756,927          (1b&d)
</TABLE>

                                       5

<PAGE>

Item 2.  Properties (continued)
<TABLE>
<CAPTION>

                                                                                     Mortgage
Name of Local Partnership                          Number                       loans payable as of     Subsidy
Name of apartment complex                        of rental       Capital            December 31,          (see
Apartment complex location                         units       contribution             2000           footnotes)
--------------------------                         -----       ------------             ----           ----------
<S>                                                  <C>         <C>                <C>                 <C>
Loma Del Norte Limited
  Partnership
Loma Del Norte Apartments
Anthony, New Mexico                                  40          $  314,865         $1,434,206          (1b&d)

Long Reach Associates Limited
  Partnership
Oak Ridge Apartments
Bath, Maine                                          30             448,922          1,475,126          (1b&d)

Mirador del Toa Limited
  Partnership
Mirador del Toa Apartments
Toa Alta, Puerto Rico                                48             284,847(2)       1,876,877          (1b&d)

Moore Haven Commons, Ltd.
Moore Haven Commons
Moore Haven, Florida                                 28             213,402            925,767          (1b&d)
NP-89 Limited Dividend Housing
  Association Limited Partnership
Newport Apartments
Clinton Township, Michigan                          168           2,372,292          4,057,585          (1a,b&g)

Nash Hill Associates, Limited
  Partnership
Nash Hill Place
Williamsburg, Massachusetts                          28             302,575          1,465,383          (1b,d&f)

North Calhoun City, L.P.
North Calhoun City Apartments
Calhoun City, Mississippi                            18             146,565            486,400          (1b&d)

Orange City Plaza, Limited
  Partnership
Orange City Plaza Apartments
Orange City, Iowa                                    32             456,090            460,563          (1a)

Puerta del Mar Limited Partnership
Puerta del Mar Apartments
Hatillo, Puerto Rico                                 66             630,570          2,518,144          (1b&d)

Purvis Heights Properties, L.P.
Pineview Apartments
Purvis, Mississippi                                  40             191,512(2)       1,143,029          (1b)

Queen Lane Investors
Queen's Row
Philadelphia, Pennsylvania                           29             597,050(2)       1,553,845          (1b&e)

Somerset Manor, Ltd.
Somerset Manor
Central City, Pennsylvania                           24             208,465            895,620          (1b&d)

Sugar Cane Villas, Ltd.
Sugar Cane Villas
Pahokee, Florida                                     87             751,560          3,300,300          (1b&d)
</TABLE>

                                       6

<PAGE>
<TABLE>
<CAPTION>

Item 2.  Properties (continued)

                                                                                    Mortgage
Name of Local Partnership                         Number                        loans payable as of     Subsidy
Name of apartment complex                        of rental       Capital           December 31,           (see
Apartment complex location                        units        contribution            2000            footnotes)
--------------------------                        -----        ------------     -------------------    ----------
<S>                                                  <C>        <C>                 <C>                 <C>
Summerfield Apartments Limited
  Partnership
Summerfield Apartments
Charlotte, North Carolina                            52         $ 1,088,667         $ 1,734,896         (1b)

Sydney Engel Associates L.P.
(formerly known as Sydney Engel
  Associates)
The Castle
New York, New York                                  224           3,201,874          17,195,726         (1b)

Union Valley Associates Limited
  Partnership
Union Valley Apartments
Union Township, Pennsylvania                         36             371,589           1,443,799         (1b)

Walnut Grove Family, L.P.
Walnut Grove Apartments
Walnut Grove, Mississippi                            24             191,695             845,189         (1b&d)

Waynesboro Apartments Limited
  Partnership
Waynesboro Apartments
Waynesboro, Pennsylvania                             36             360,859           1,479,462         (1b)

West Calhoun City, L.P.
West Calhoun City Apartments
Calhoun City, Mississippi                            28             230,212             762,372         (1b&d)

Westminster Apartments Limited
  Partnership
Westminster Apartments
Philadelphia, Pennsylvania                           42           1,047,993           1,607,972         (1a&b)
                                                                -----------         -----------
                                                                $29,264,476         $85,145,147
                                                                ===========         ===========
</TABLE>


     (1) Description of subsidies:

         (a)      Section 8 of Title II of the Housing and Community Development
                  Act of 1974 allows qualified low-income tenants to pay thirty
                  percent of their monthly income as rent with the balance paid
                  by the federal government.

         (b)      The Local Partnership's debt structure includes a principal or
                  interest payment subsidy.

         (c)      The Michigan State Housing Development Authority allows
                  tenants, who would otherwise pay more than 40% of their income
                  for rent and utilities, to receive rental subsidies.

         (d)      The Rural Housing Service (formerly the Farmers Home
                  Administration) of the United States Department of Agriculture
                  Rental Assistance Program allows qualified low-income tenants
                  to receive rental subsidies.

         (e)      The City of Philadelphia Housing Authority allows qualified
                  low-income tenants to receive rental certificates.

         (f)      The Commonwealth of Massachusetts participates in a rental
                  assistance program.

         (g)      The Local Partnership's Section 8 contracts are currently
                  subject to renewal under applicable HUD guidelines.

     (2) Reflects amount attributable to Registrant only.

                                       7

<PAGE>

Item 3.  Legal Proceedings

Registrant was a defendant in a complaint brought in connection with the alleged
wrongful interference with economic advantage resulting from the delay of
Registrant in providing a list of Unit holders to facilitate a tender offer by
plaintiff. The plaintiff sought compensatory damages of approximately $246,000
and unspecified punitive damages. Registrant filed a motion to dismiss which was
granted in May 2000. The Plaintiff and Registrant agreed to a settlement whereby
Registrant agreed to provide Plaintiff with a list of limited partners and
Plaintiff agreed to waive its right to appeal the summary judgment. Each of the
parties paid its own legal fees arising out of the litigation.

Registrant is not aware of any other material legal proceedings.


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

There were no matters submitted to a vote of the limited partners of Registrant
during the fourth quarter of the fiscal year covered by this report.


                                       8

<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Security Holder
         Matters

Market Information and Holders

There is no established public trading market for Registrant's Units.
Accordingly, accurate information as to the market value of a Unit at any given
date is not available. The number of owners of Units as of May 31, 2001 was
1,436, holding 35,883 Units.

Merrill Lynch follows internal guidelines for providing estimated values of
limited partnerships and other direct investments reported on client account
statements. Pursuant to such guidelines, estimated values for limited
partnership interests reported on Merrill Lynch client account statements (such
as Registrant's Units) are provided to Merrill Lynch by independent valuation
services. These estimated values are based on financial and other information
available to the independent services (i) on the prior August 15th for reporting
on December year-end and subsequent client account statements through the
following May's month-end client account statements and (ii) on March 31st for
reporting on June month-end and subsequent client account statements through the
November month-end client account statements of the same year. In addition,
Registrant may provide an estimate of value to Unit holders from time to time in
Registrant's reports to limited partners. The estimated values provided by the
independent services and Registrant, which may differ, are not market values and
Unit holders may not be able to sell their Units or realize either amount upon a
sale of their Units. In addition, Unit holders may not realize such estimated
values upon the liquidation of Registrant.

Distributions

Registrant owns a limited partnership interest in Local Partnerships that are
the owners of Properties that are leveraged and receive government assistance in
various forms of rental and debt service subsidies. The distribution of cash
flow generated by the Local Partnerships may be restricted, as determined by
each Local Partnership's financing and subsidy agreements. Accordingly,
Registrant does not anticipate that it will provide significant cash
distributions to its partners. There were no cash distributions to the partners
during the years ended March 30, 2001 and 2000.

Low-income Tax Credits, which are subject to various limitations, may be used by
partners to offset federal income tax liabilities. The Low-income Tax Credits
per Unit generated by Registrant and allocated to the limited partners for the
tax years ended December 31, 2000 and 1999 and the cumulative Low-income Tax
Credits allocated from inception through December 31, 2000 are as follows:

                                                                Low-income
                                                               Tax Credits
                                                               -----------

                     Tax year ended December 31, 2000           $  147.07
                     Tax year ended December 31, 1999           $  153.68

                     Cumulative totals                          $1,446.23

Notwithstanding future circumstances which may give rise to recapture or loss of
future benefits (see Part I, Item 2 - Properties, herein), Registrant expects to
generate total Low-income Tax Credits from investments in Local Partnerships of
approximately $1,500 per Unit through December 31, 2003.


                                       9

<PAGE>

Item 6.  Selected Financial Data

The information set forth below presents selected financial data of Registrant.
Additional detailed financial information is set forth in the audited financial
statements included under Part II, Item 8 herein.
<TABLE>
<CAPTION>

                                                                      Years Ended March 30,
                                       -----------------------------------------------------------------------------
                                           2001             2000             1999           1998            1997
                                           ----             ----             ----           ----            ----
<S>                                     <C>             <C>             <C>             <C>             <C>
Interest and other revenue              $    235,418    $    247,106    $    252,224    $    257,645    $    317,065
                                        ============    ============    ============    ============    ============

Equity in loss of investment in
   local partnerships                   $ (1,228,135)   $ (1,764,816)   $ (2,453,590)   $ (2,358,431)   $ (2,509,806)
                                        ============    ============    ============    ============    ============
Net loss                                $ (1,519,430)   $ (2,035,647)   $ (2,756,082)   $ (2,649,323)   $ (2,718,536)
                                        ============    ============    ============    ============    ============

Net loss per unit of limited
   partnership interest                 $     (41.92)   $     (56.16)   $     (76.04)   $     (73.09)   $     (75.00)
                                        ============    ============    ============    ============    ============

                                                                          As of March 30,
                                        ------------------------------------------------------------------------------
                                            2001            2000            1999            1998            1997
                                            ----            ----            ----            ----            ----

Total assets                            $  6,512,494    $  7,579,955    $  9,511,546    $ 12,106,269    $ 15,503,629
                                        ============    ============    ============    ============    ============
</TABLE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Capital Resources and Liquidity

Registrant admitted limited partners in four closings with aggregate limited
partners' capital contributions of $35,883,000. In connection with the offering
of the sale of units, Registrant incurred organization and offering costs of
approximately $4,419,000 and established a working capital reserve of
approximately $2,153,000. The remaining net proceeds of approximately
$29,311,000 (the "Net Proceeds") were available to be applied to the acquisition
of limited partnership interests in local partnerships (the "Local
Partnerships") that own low-income multifamily residential complexes (the
"Property" or "Properties") that qualify for the low-income tax credit in
accordance with Section 42 of the Internal Revenue Code (the "Low-income Tax
Credit"). The Net Proceeds were utilized in acquiring an interest in forty-three
Local Partnerships.

As of March 30, 2001, Registrant has cash and cash equivalents and investments
in bonds totaling $3,495,413, which is available for operating expenses of
Registrant and circumstances which may arise in connection with the Local
Partnerships. As of March 30, 2001, Registrant's investments in bonds represent
corporate bonds of $1,646,257 and U.S. Treasury debt securities of $1,305,438
with various maturity dates ranging from 2002 to 2023. Registrant acquired such
investments in bonds with the intention of utilizing proceeds generated by such
investments to meet its annual obligations. Future sources of Registrant funds
are expected primarily from interest earned on working capital and limited cash
distributions from Local Partnerships.

During the year ended March 30, 2001, Registrant received cash from interest
revenue, maturity/redemption of bonds and distributions from Local Partnerships
and utilized cash for operating expenses and investments in bonds. Cash and cash
equivalents and investments in bonds increased, in the aggregate, by
approximately $169,000 during the year ended March 30, 2001 (which includes a
net unrealized gain on investments in bonds of approximately $194,000, the
amortization of net premium on investments in bonds of approximately $7,000 and
the accretion of zero coupon bonds of approximately $86,000). Notwithstanding
circumstances that may arise in connection with the Properties, Registrant does
not expect to realize significant gains or losses on its investments in bonds,
if any.

During the year ended March 30, 2001, the investment in local partnerships
decreased as a result of Registrant's equity in the Local Partnerships' net loss
for the year ended December 31, 2000 of $1,228,135 (including an adjustment to
Registrant's carrying value of its investment in three Local Partnerships of
$571,000 in accordance with applicable accounting guidelines) (see discussion
below under Results of Operations) and cash distributions received from Local
Partnerships of $20,827 (exclusive of distributions from Local Partnerships of
$8,751 classified as other income). Payable to general partner and affiliate in
the accompanying balance sheet as of March 30, 2001 represents accrued
management and administration fees.

                                       10
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

Results of Operations

Registrant's operating results are dependent upon the operating results of the
Local Partnerships and are significantly impacted by the Local Partnerships'
policies. In addition, the operating results herein are not necessarily the same
for tax reporting. Registrant accounts for its investment in local partnerships
in accordance with the equity method of accounting. Accordingly, the investment
is carried at cost, and is adjusted for Registrant's share of each Local
Partnership's results of operations and by cash distributions received. Equity
in loss of each investment in Local Partnership allocated to Registrant is
recognized to the extent of Registrant's investment balance in each Local
Partnership. Equity in loss in excess of Registrant's investment balance in a
Local Partnership is allocated to other partners' capital in any such Local
Partnership. As a result, the reported equity in loss of investment in local
partnerships is expected to decrease as Registrant's investment balances in the
respective Local Partnerships become zero. The combined statements of operations
of the Local Partnerships reflected in Note 5 to Registrant's financial
statements include the operating results of all Local Partnerships, irrespective
of Registrant's investment balances.

Cumulative losses and cash distributions in excess of investment in local
partnerships may result from a variety of circumstances, including a Local
Partnership's accounting policies, subsidy structure, debt structure and
operating deficits, among other things. In addition, the carrying value of
Registrant's investment in local partnerships may be reduced if the carrying
value is considered to exceed the estimated value derived by management (which
contemplates remaining Low-income Tax Credits and potential residual value,
among other things) ("Local Partnership Carrying Value"). Accordingly,
cumulative losses and cash distributions in excess of the investment or an
adjustment to an investment's carrying value are not necessarily indicative of
adverse operating results of a Local Partnership. See discussion below under
Local Partnership Matters regarding certain Local Partnerships currently
operating below economic break even levels.

Registrant's operations for the years ended March 30, 2001, 2000 and 1999
resulted in net losses of $1,519,430, $2,035,647, and $2,756,082, respectively.
The decrease in net loss from 2000 to 2001 is primarily attributable to a
decrease in equity in loss of investment in local partnerships of approximately
$537,000. The decrease in net loss from 1999 to 2000 is primarily attributable
to a decrease in equity in loss of investment in local partnerships of
approximately $689,000. Equity in loss of investment in local partnerships has
fluctuated over the last three years as a result of (i) Registrant adjusting the
Local Partnership Carrying Value in connection with its investments in certain
Local Partnerships during the years ended March 30, 2001 and 2000 as reflected
in Note 5 to the financial statements, (ii) an impairment loss recorded in
connection with Westminster Apartments Limited Partnership ("Westminster") in
1999 and (iii) changes in the net operating losses of those Local Partnerships
in which Registrant continues to have an investment balance.

The Local Partnerships' net loss of approximately $3,365,000 for the year ended
December 31, 2000 includes depreciation and amortization expense of
approximately $4,088,000 and interest on non-mandatory debt of approximately
$357,000, and does not include required principal payments on permanent
mortgages of approximately $667,000. The Local Partnerships' net loss of
approximately $3,356,000 for the year ended December 31, 1999 includes
depreciation and amortization expense of approximately $4,046,000 and interest
on non-mandatory debt of approximately $353,000, and does not include principal
payments on permanent mortgages of approximately $585,000. The Local
Partnerships' net loss of approximately $5,197,000 for the year ended December
31, 1998 includes depreciation and amortization expense of approximately
$4,058,000, interest on non-mandatory debt of approximately $333,000 and a loss
from impairment of long-lived assets of approximately $1,803,000, and does not
include principal payments on permanent mortgages of approximately $561,000.

Local Partnership Matters

Registrant's primary objective is to provide Low-income Tax Credits to limited
partners generally over a ten year period. The relevant state tax credit agency
has allocated each of Registrant's Local Partnerships an amount of Low-income
Tax Credits, which are generally available for a ten year period from the year
the Property is placed in service (the "Ten Year Credit Period"). The Ten Year
Credit Period is expected to be fully exhausted by the Local Partnerships as of
December 31, 2003. The required holding period of each Property, in order to
avoid Low-income Tax Credit recapture, is fifteen years from the year in which
the Low-income Tax Credits commence on the last building of the Property (the
"Compliance Period"). In addition, certain of the Local Partnerships have
entered into agreements with the relevant state tax credit agencies whereby the
Local Partnerships must maintain the low-income nature of the Properties for a
period which exceeds the Compliance Period, regardless of any sale of the
Properties by the Local Partnerships after the Compliance Period. The Properties
must satisfy various requirements including rent restrictions and tenant income
limitations (the "Low-income Tax Credit Requirements") in order to maintain
eligibility for the recognition of the Low-income Tax Credit at all times during
the Compliance Period. Once

                                       11

<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

a Local Partnership has become eligible for the Low-income Tax Credit, it may
lose such eligibility and suffer an event of recapture if its Property fails to
remain in compliance with the Low-income Tax Credit Requirements. Through
December 31, 2000, none of the Local Partnerships have suffered an event of
recapture of Low-income Tax Credits.

The Properties are principally comprised of subsidized and leveraged low-income
multifamily residential complexes located throughout the United States and
Puerto Rico. Many of the Local Partnerships receive rental subsidy payments,
including payments under Section 8 of Title II of the Housing and Community
Development Act of 1974 ("Section 8"). The subsidy agreements expire at various
times during and after the Compliance Periods of the Local Partnerships. Since
October 1997, the United States Department of Housing and Urban Development
("HUD") has issued a series of directives related to project based Section 8
contracts that define owners' notification responsibilities, advise owners of
project based Section 8 properties of what their options are regarding the
renewal of Section 8 contracts, provide guidance and procedures to owners,
management agents, contract administrators and HUD staff concerning renewal of
Section 8 contracts, provide policies and procedures on setting renewal rents
and handling renewal rent adjustments and provide the requirements and
procedures for opting-out of a Section 8 project based contract. Registrant
cannot reasonably predict legislative initiatives and governmental budget
negotiations, the outcome of which could result in a reduction in funds
available for the various federal and state administered housing programs
including the Section 8 program. Such changes could adversely affect the future
net operating income and debt structure of any or all Local Partnerships
currently receiving such subsidy or similar subsidies. One Local Partnership's
Section 8 contracts are currently subject to renewal under applicable HUD
guidelines.

The Local Partnerships have various financing structures which include (i)
required debt service payments ("Mandatory Debt Service") and (ii) debt service
payments which are payable only from available cash flow subject to the terms
and conditions of the notes, which may be subject to specific laws, regulations
and agreements with appropriate federal and state agencies ("Non-Mandatory Debt
Service or Interest"). In the event rents are not sufficient to cover operating
expenses, Mandatory Debt Service requirements and other charges, certain general
partners of the Local Partnerships (the "Local General Partners") are obligated
to provide advances to cover deficits for a certain period of time up to certain
amounts (the "Deficit Guarantee"). A Local General Partner's funding of such
Deficit Guarantee is dependent on its liquidity or ability to borrow the
required funds. During the year ended December 31, 2000, revenue from operations
of the Local Partnerships have generally been sufficient to cover operating
expenses and Mandatory Debt Service. Substantially all of the Local Partnerships
are effectively operating at or above break even levels, although certain Local
Partnerships' operating information reflects operating deficits that do not
represent cash deficits due to their mortgage and financing structure and the
required deferral of property management fees. However, as discussed below,
certain Local Partnerships' operating information indicates an operating deficit
after taking into account their mortgage and financing structure and any
required deferral of property management fees.

The terms of the partnership agreement of Westminster require the Local General
Partner to advance funds to cover operating deficits through the Compliance
Period. As of December 31, 2000, Westminster is two years in arrears on its
mortgage and over two years in arrears on its replacement reserve and escrow
requirements. Although the Local General Partner had been conducting discussions
with the lender, the lender issued a notice of default. As a result of ongoing
discussions, current proposals include a restructuring of the mortgage and the
potential utilization of replacement reserves to reduce the arrearages. There
can be no assurance that the Local General Partner will be successful in its
negotiations with the lender. Westminster incurred an operating deficit of
approximately $57,000 for the year ended December 31, 2000, which amount
includes a provision for mandatory debt service and replacement reserve deposits
of $6,245 and $1,184 per month, respectively. Registrant's investment balance in
Westminster, after cumulative equity losses, became zero during the year ended
March 30, 1999. Westminster will have generated approximately $6.3 per Unit per
year to the limited partners upon the expiration of its Low-income Tax Credit
allocation in 2003.

Fulton Street Houses Limited Partnership ("Fulton Street") has an escrow of
approximately $311,000 as of December 31, 2000 to cover operating deficits and
there are no Mandatory Debt Service payments or real estate taxes required
during the Compliance Period. Fulton Street reported an operating deficit of
approximately $40,000 for the year ended December 31, 2000. Fulton Street will
have generated approximately $11.7 per Unit per year to the limited partners
upon the expiration of its Low-income Tax Credit allocation in 2001.

The terms of the partnership agreement of Union Valley Associates Limited
Partnership ("Union Valley") require the management agent to defer property
management fees in order to avoid a default under the mortgage. Union Valley
incurred an operating deficit of approximately $24,000 for the year ended
December 31, 2000, which includes property management fees of approximately
$17,000. Payments on the mortgage and real estate taxes are current.
Registrant's investment balance in Union Valley, after cumulative equity losses,
became zero during the year ended March 30, 2001. Union Valley will have
generated approximately $1.9 per Unit per year to the limited partners upon the
expiration of its Low-income Tax Credit allocation in 2001.

                                       12
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (continued)

The terms of the partnership agreement of Moore Haven Commons Ltd. ("Moore
Haven") require the management agent to defer property management fees in order
to avoid a default under the mortgage. Moore Haven incurred an operating deficit
of approximately $30,000 for the year ended December 31, 2000, which includes
property management fees of approximately $10,000. Payments on the mortgage and
real estate taxes are current. Registrant's investment balance in Moore Haven,
after cumulative equity losses, became zero during the year ended March 30,
1995. Moore Haven will have generated approximately $1.2 per Unit per year to
the limited partners upon the expiration of its Low-income Tax Credit allocation
in 2002.


Inflation

Inflation is not expected to have a material adverse impact on Registrant's
operations during its period of ownership of the Local Partnership Interests.


Item 7a.  Quantitative and Qualitative Disclosure About Market Risk

Registrant has invested a significant portion of its working capital reserves in
corporate bonds and U.S. Treasury instruments. The market value of such
investments is subject to fluctuation based upon changes in interest rates
relative to each investment's maturity date. Since Registrant's investments in
bonds have various maturity dates through 2023, the value of such investments
may be adversely impacted in an environment of rising interest rates in the
event Registrant decides to liquidate any such investment prior to its maturity.
Although Registrant may utilize reserves to assist an under performing Property,
it otherwise intends to hold such investments to their respective maturities.
Therefore, Registrant does not anticipate any material adverse impact in
connection with such investments.


                                       13

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.


Item 8.  Financial Statements and Supplementary Data


                             Table of Contents                             Page
                                                                           ----

Independent Auditors' Report................................................15

Balance Sheets..............................................................16

Statements of Operations....................................................17

Statements of Changes in Partners' Equity (Deficit).........................18

Statements of Cash Flows....................................................19

Notes to Financial Statements...............................................21


No financial statement schedules are included because of the absence of the
conditions under which they are required or because the information is included
in the financial statements or the notes thereto.

                                       14

<PAGE>

                          Independent Auditors' Report


To the Partners
American Tax Credit Properties III L.P.

We have audited the accompanying balance sheets of American Tax Credit
Properties III L.P. as of March 30, 2001 and 2000, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for each of the
three years in the period ended March 30, 2001. These financial statements are
the responsibility of the partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of American Tax Credit
Properties III L.P. as of March 30, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
March 30, 2001, in conformity with generally accepted accounting principles.


/s/ Reznick Fedder & Silverman

Bethesda, Maryland
May 17, 2001


                                       15

<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                                 BALANCE SHEETS
                             MARCH 30, 2001 AND 2000

                                                                           Notes          2001               2000
                                                                           -----          ----               ----
ASSETS

<S>                                                                         <C>      <C>                 <C>
Cash and cash equivalents                                                   3,9      $      543,718      $     873,709
Investments in bonds                                                        4,9           2,951,695          2,452,950
Investment in local partnerships                                            5,8           2,987,706          4,236,668
Interest receivable                                                          9               29,375             16,628
                                                                                     --------------      -------------
                                                                                         $6,512,494      $   7,579,955
                                                                                     ==============      =============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

   Accounts payable and accrued expenses                                     8       $    1,182,966      $   1,181,877
   Payable to general partner and affiliate                                 6,8           1,507,546          1,246,404
   Other                                                                                      2,200              6,950
                                                                                     --------------      -------------
                                                                                          2,692,712          2,435,231
                                                                                     --------------      -------------
Commitments and contingencies                                                8

Partners' equity (deficit)                                                  2,4

   General partner                                                                         (277,969)          (262,775)
   Limited partners (35,883 units of limited partnership interest
     outstanding)                                                                         4,010,666          5,514,902
   Accumulated other comprehensive income (loss), net                                        87,085           (107,403)
                                                                                         ----------      -------------
                                                                                          3,819,782          5,144,724
                                                                                         ----------      -------------
                                                                                         $6,512,494     $    7,579,955
                                                                                         ==========     ==============
</TABLE>

                       See Notes to Financial Statements.


                                       16

<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 30, 2001, 2000 AND 1999

                                                        Notes        2001                2000                 1999
                                                        -----        ----                ----                 ----
REVENUE

<S>                                                              <C>                  <C>                  <C>
Interest                                                         $     226,667        $     225,013        $     244,767
Other income from local partnerships                                     8,751               22,093                7,457
                                                                 -------------        -------------        -------------
TOTAL REVENUE                                                          235,418              247,106              252,224
                                                                 -------------        -------------        -------------

EXPENSES

Administration fees                                         8          230,571              230,571              230,571
Management fees                                            6,8         230,571              230,571              230,571
Professional fees                                                       47,601               38,741               67,327
Printing, postage and other                                             17,970               18,054               26,247
                                                                 -------------        -------------        -------------
TOTAL EXPENSES                                                         526,713              517,937              554,716
                                                                 -------------        -------------        -------------

Loss from operations                                                  (291,295)            (270,831)            (302,492)

Equity in loss of investment in local partnerships          5       (1,228,135)          (1,764,816)          (2,453,590)
                                                                 -------------        -------------        -------------

NET LOSS                                                            (1,519,430)          (2,035,647)          (2,756,082)

Other comprehensive income (loss)                           4          194,488             (152,587)              11,902
                                                                 -------------        -------------        -------------
COMPREHENSIVE LOSS                                                $ (1,324,942)       $  (2,188,234)       $  (2,744,180)
                                                                  ============        =============        =============

NET LOSS ATTRIBUTABLE TO                                    2

   General partner                                                $    (15,194)            $(20,356)            $(27,561)
   Limited partners                                                 (1,504,236)          (2,015,291)          (2,728,521)
                                                                 -------------        -------------        -------------

                                                                  $ (1,519,430)       $  (2,035,647)       $  (2,756,082)
                                                                  ============        =============        =============
NET LOSS per unit of limited partnership
   interest (35,883 units of limited partnership                  $     (41.92)       $      (56.16)       $      (76.04)
   interest)                                                      ============        =============        =============
</TABLE>


                       See Notes to Financial Statements.


                                       17

<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
               STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
                    YEARS ENDED MARCH 30, 2001, 2000 AND 1999

                                                                             Accumulated Other
                                                General         Limited        Comprehensive
                                                Partner         Partners     Income (Loss), Net     Total
                                                -------         --------     ------------------     -----

<S>                                         <C>             <C>             <C>                 <C>
Partners' equity (deficit), March 30, 1998   $   (214,858)   $ 10,258,714    $     33,282        $ 10,077,138

Net loss                                          (27,561)     (2,728,521)                         (2,756,082)

Other comprehensive income, net                                                    11,902              11,902
                                             ------------    ------------    ------------        ------------

Partners' equity (deficit), March 30, 1999       (242,419)      7,530,193          45,184           7,332,958

Net loss                                          (20,356)     (2,015,291)                         (2,035,647)

Other comprehensive loss, net                                                    (152,587)           (152,587)
                                             ------------    ------------    ------------        ------------

Partners' equity (deficit), March 30, 2000       (262,775)      5,514,902        (107,403)          5,144,724

Net loss                                          (15,194)     (1,504,236)                         (1,519,430)

Other comprehensive income, net                                                   194,488             194,488
                                             ------------    ------------    ------------        ------------

Partners' equity (deficit), March 30, 2001   $   (277,969)   $  4,010,666    $     87,085       $   3,819,782
                                             ============    ============    ============       =============
</TABLE>


                       See Notes to Financial Statements.


                                       18

<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                            STATEMENTS OF CASH FLOWS
                    YEARS ENDED MARCH 30, 2001, 2000 AND 1999

                                                                            2001               2000                1999
                                                                            ----               ----                ----
CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                      <C>                <C>                <C>
Interest received                                                        $ 153,508          $ 156,395          $ 172,539
Cash used for local partnerships for deferred expenses                      (4,750)            (4,750)            (4,750)
Cash paid for
     administration fees                                                  (100,000)          (100,435)          (100,000)
     management fees                                                      (100,000)          (100,000)          (100,000)
     professional fees                                                     (47,601)           (38,741)           (84,827)
     printing, postage and other expenses                                  (16,881)           (17,368)           (31,250)
                                                                         ---------          ---------          ---------

Net cash used in operating activities                                     (115,724)          (104,899)          (148,288)
                                                                         ---------          ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES

Cash distributions from local partnerships                                  29,578             53,001             36,589
Maturity/redemption of bonds                                               367,065            357,994            259,940
Investment in bonds (includes accrued interest of $14,838)                (610,910)
Transfer from (to) restricted cash                                                                                84,433
Investment in local partnerships                                                                                 (84,433)
                                                                         ---------          ---------          ---------

Net cash provided by (used in) investing activities                       (214,267)           410,995            296,529
                                                                         ---------          ---------          ---------

Net increase (decrease) in cash and cash equivalents                      (329,991)           306,096            148,241

Cash and cash equivalents at beginning of year                             873,709            567,613            419,372
                                                                         ---------          ---------          ---------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                 $ 543,718          $ 873,709          $ 567,613
                                                                         =========          =========          =========

Significant Non-Cash Investing Activities

Unrealized gain (loss) on investments in bonds, net                      $ 194,488          $(152,587)         $  11,902
                                                                         =========          =========          =========

-------------------------------------------------------------------------------------------------------------------------
See reconciliation of net loss to net cash used in operating activities on page
20.
</TABLE>

                       See Notes to Financial Statements.


                                       19

<PAGE>
<TABLE>
<CAPTION>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                     STATEMENTS OF CASH FLOWS - (Continued)
                    YEARS ENDED MARCH 30, 2001, 2000 AND 1999

                                                                               2001               2000                1999
                                                                               ----               ----                ----
RECONCILIATION OF NET LOSS TO NET CASH USED IN
  OPERATING ACTIVITIES

<S>                                                                          <C>               <C>               <C>
Net loss                                                                     $(1,519,430)      $(2,035,647)      $(2,756,082)

Adjustments to reconcile net loss to net cash used in
   operating activities

     Equity in loss of investment in local partnerships                        1,228,135         1,764,816         2,453,590
     Distributions from local partnerships classified as other income             (8,751)          (22,093)           (7,457)
     Loss on redemption of bonds                                                   4,167                                 677
     Amortization of net premium on investments in bonds                           7,074            13,207            13,206
     Accretion of zero coupon bonds                                              (86,491)          (86,728)          (86,490)
     Decrease in interest receivable                                               2,091             4,903               378
     Increase in payable to general partner                                      261,142           185,219           130,571
     Increase in accounts payable and accrued expenses                             1,089            76,174           108,069
     Decrease in other liabilities                                                (4,750)           (4,750)           (4,750)
                                                                             -----------       -----------       -----------
NET CASH USED IN OPERATING ACTIVITIES                                        $  (115,724)      $  (104,899)      $  (148,288)
                                                                             ===========       ===========       ===========
</TABLE>


                       See Notes to Financial Statements.


                                       20

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                          NOTES TO FINANCIAL STATEMENTS
                          MARCH 30, 2001, 2000 AND 1999


1.     Organization, Purpose and Summary of Significant Accounting Policies

       American Tax Credit Properties III L.P. (the "Partnership") was formed on
       September 21, 1989 and the Certificate of Limited Partnership of the
       Partnership was filed under the Delaware Revised Uniform Limited
       Partnership Act. There was no operating activity until admission of the
       limited partners on June 13, 1990. The Partnership was formed to invest
       primarily in leveraged low-income multifamily residential complexes (the
       "Property" or "Properties") which qualify for the low-income tax credit
       in accordance with Section 42 of the Internal Revenue Code (the
       "Low-income Tax Credit"), through the acquisition of limited partnership
       equity interests (the "Local Partnership Interests") in partnerships (the
       "Local Partnership" or "Local Partnerships") that are the owners of the
       Properties. Richman Tax Credit Properties III L.P. (the "General
       Partner") was formed on September 21, 1989 to act as the general partner
       of the Partnership.

       Basis of Accounting and Fiscal Year

       The Partnership's records are maintained on the accrual basis of
       accounting for both financial reporting and tax purposes. For financial
       reporting purposes, the Partnership's fiscal year ends March 30 and its
       quarterly periods end June 29, September 29 and December 30. The Local
       Partnerships have a calendar year for financial reporting purposes. The
       Partnership and the Local Partnerships each have a calendar year for
       income tax purposes.

       The Partnership accounts for its investment in local partnerships in
       accordance with the equity method of accounting, under which the
       investment is carried at cost and is adjusted for the Partnership's share
       of each Local Partnership's results of operations and by cash
       distributions received. Equity in loss of each investment in Local
       Partnership allocated to the Partnership is recognized to the extent of
       the Partnership's investment balance in each Local Partnership. Equity in
       loss in excess of the Partnership's investment balance in a Local
       Partnership is allocated to other partners' capital in any such Local
       Partnership. Previously unrecognized equity in loss of any Local
       Partnership is recognized in the fiscal year in which equity in income is
       earned by such Local Partnership or additional investment is made by the
       Partnership. Distributions received subsequent to the elimination of an
       investment balance for any such investment in a Local Partnership are
       recorded as other income from local partnerships.

       The Partnership regularly assesses the carrying value of its investments
       in local partnerships. If the carrying value of an investment in a Local
       Partnership exceeds the estimated value derived by management (which
       contemplates remaining Low-income Tax Credits and estimated residual
       value, among other things), the Partnership reduces its investment in any
       such Local Partnership and includes such reduction in equity in loss of
       investment in local partnerships.

       Use of 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 as of the date of the
       financial statements and the reported amounts of revenue and expenses
       during the reporting period. Actual results could differ from those
       estimates.

       Cash and Cash Equivalents

       The Partnership considers all highly liquid investments purchased with an
       original maturity of three months or less at the date of acquisition to
       be cash equivalents. Cash and cash equivalents are stated at cost, which
       approximates market value.

       Income Taxes

       No provision for income taxes has been made because all income, losses
       and tax credits are allocated to the partners for inclusion in their
       respective tax returns. In accordance with Statement of Financial
       Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," the
       Partnership has included in Note 7 disclosures related to differences in
       the book and tax bases of accounting.

                                       21
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


1.   Organization, Purpose and Summary of Significant Accounting Policies
     (continued)

     Investments in Bonds

     Investments in bonds are classified as available-for-sale and represent
     investments that the Partnership intends to hold for an indefinite period
     of time but not necessarily to maturity. Any decision to sell an investment
     would be based on various factors, including significant movements in
     interest rates and liquidity needs. Investments in bonds are carried at
     estimated fair value and unrealized gains or losses are included as items
     of comprehensive income (loss) and are reported as a separate component of
     partners' equity (deficit).

     Premiums and discounts on investments in bonds are amortized (accreted)
     using the straight-line method over the life of the investment. Amortized
     premiums offset interest revenue, while the accretion of discounts and zero
     coupon bonds are included in interest revenue. Realized gain (loss) on
     redemption or sale of investments in bonds are included in, or offset
     against, interest revenue on the basis of the adjusted cost of each
     specific investment redeemed or sold.

     Reclassifications

     Certain prior years' Local Partnership balances in Note 5 have been
     reclassified to conform to the current year presentation.


2.   Capital Contributions

     On March 12, 1990, the Partnership commenced the offering of units (the
     "Units") through Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
     "Selling Agent"). On June 13, 1990, December 27, 1990, December 31, 1991
     and January 23, 1992, under the terms of the Amended and Restated Agreement
     of Limited Partnership of the Partnership (the "Partnership Agreement"),
     the General Partner admitted limited partners to the Partnership in four
     closings. At these closings, subscriptions for a total of 35,883 Units
     representing $35,883,000 in limited partners' capital contributions were
     accepted. In connection with the offering of Units, the Partnership
     incurred organization and offering costs of $4,418,530, of which $75,000
     was capitalized as organization costs and $4,343,530 was charged to the
     limited partners' equity as syndication costs. The Partnership received a
     capital contribution of $100 from the General Partner.

     Net loss is allocated 99% to the limited partners and 1% to the General
     Partner in accordance with the Partnership Agreement.


3.   Cash and Cash Equivalents

     As of March 30, 2001, the Partnership has cash and cash equivalents of
     $543,718 that are deposited in interest-bearing accounts with an
     institution that is not insured by the Federal Deposit Insurance
     Corporation.


                                       22

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


4.     Investments in Bonds

       The Partnership carries its investments in bonds as available-for-sale
       because such investments are used to facilitate and provide flexibility
       for the Partnership's obligations, including resolving circumstances that
       may arise in connection with the Local Partnerships. Investments in bonds
       are reflected in the accompanying balance sheets at estimated fair value.

       As of March 30, 2001, certain information concerning investments in bonds
is as follows:
<TABLE>
<CAPTION>

                                                                       Gross          Gross         Estimated
                                                      Amortized       unrealized    unrealized        fair
      Description and maturity                          cost           gains          losses          value
      ------------------------                      ----------      -----------     -----------     ----------
<S>                                                 <C>            <C>           <C>               <C>
      Corporate debt securities
         Within one year                             $   100,900   $       444    $      --         $   101,344
         After one year through five years               997,620        22,588           --           1,020,208
         After five years through ten years              504,201        23,449         (2,945)          524,705
                                                     -----------   -----------    -----------       -----------
                                                       1,602,721        46,481         (2,945)        1,646,257

      U.S. Treasury debt securities
         After five years through ten years            1,261,889        43,549           --           1,305,438
                                                     -----------   -----------    -----------       -----------

                                                     $ 2,864,610   $    90,030    $    (2,945)     $  2,951,695
                                                     ===========   ===========    ============     ============
</TABLE>

       As of March 30, 2000, certain information concerning investments in bonds
is as follows:
<TABLE>
<CAPTION>

                                                                       Gross          Gross          Estimated
                                                     Amortized       unrealized     unrealized         fair
      Description and maturity                          cost           gains          losses           value
      ------------------------                      ----------      -----------     -----------      ---------
<S>                                                 <C>            <C>           <C>               <C>
      Corporate debt securities
         Within one year                             $   152,223   $      --      $      (224)    $     151,999
         After one year through five years               302,899          --           (3,436)          299,463
         After five years through ten years              809,524         2,759        (34,022)          778,261
         After ten years                                 221,181          --          (12,579)          208,602
                                                     -----------   -----------    -----------       -----------

                                                       1,485,827         2,759        (50,261)        1,438,325

      U.S. Treasury debt securities
         After five years through ten years            1,074,526          --          (59,901)        1,014,625
                                                     -----------   -----------    -----------       -----------

                                                     $ 2,560,353   $     2,759    $  (110,162)   $    2,452,950
                                                     ===========   ===========    ============     ============
</TABLE>

                                       23
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5.     Investment in Local Partnerships

       As of March 30, 2001, the Partnership owns a limited partnership interest
       in the following Local Partnerships:

             1.  April Gardens Apartments II Limited Partnership;
             2.  Ashland Park Apartments, L.P.;
             3.  Auburn Family, L.P.;
             4.  Batesville Family, L.P.;
             5.  Bay Springs Elderly, L.P.;
             6.  Brisas del Mar Apartments Limited Partnership;
             7.  Bruce Housing Associates, L.P.;
             8.  Carrington Limited Dividend Housing Association Limited
                 Partnership;
             9.  Chestnut Park Associates, L.P.*;
            10.  Chowan Senior Manor Associates Limited Partnership;
            11.  Christian Street Commons Associates;
            12.  Country View Apartments;
            13.  Desarrollos de Belen Limited Partnership;
            14.  Desarrollos de Emaus Limited Partnership;
            15.  Ellinwood Heights Apartments, L.P.;
            16.  Fulton Street Houses Limited Partnership;
            17.  Hayes Run Limited Partnership;
            18.  Howard L. Miller Sallisaw Apartments II, L.P.;
            19.  Hurlock Meadow Limited Partnership;
            20.  Ivy Family, L.P.;
            21.  Justin Associates ("Justin");
            22.  LaBelle Commons, Ltd.;
            23.  Lawrence Road Properties, Ltd.;
            24.  Loma Del Norte Limited Partnership;
            25.  Long Reach Associates Limited Partnership;
            26.  Mirador del Toa Limited Partnership;
            27.  Moore Haven Commons, Ltd.;
            28.  NP-89 Limited Dividend Housing Association Limited Partnership;
            29.  Nash Hill Associates, Limited Partnership;
            30.  North Calhoun City, L.P.;
            31.  Orange City Plaza, Limited Partnership ("Orange City");
            32.  Puerta del Mar Limited Partnership;
            33.  Purvis Heights Properties, L.P.;
            34.  Queen Lane Investors;
            35.  Somerset Manor, Ltd.;
            36.  Sugar Cane Villas, Ltd.;
            37.  Summerfield Apartments Limited Partnership ("Summerfield");
            38.  Sydney Engel Associates L.P. (formerly known as Sydney Engel
                 Associates)*;
            39.  Union Valley Associates Limited Partnership;
            40.  Walnut Grove Family, L.P.;
            41.  Waynesboro Apartments Limited Partnership;
            42.  West Calhoun City, L.P.; and
            43.  Westminster Apartments Limited Partnership ("Westminster").

          * An affiliate of the General Partner is a general partner of and/or
provides services to the Local Partnership.


                                       24

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5.   Investment in Local Partnerships (continued)

     Although the Partnership generally owns a 98.9%-99% limited partnership
     interest in the Local Partnerships, the Partnership and American Tax Credit
     Properties II L.P. ("ATCP II"), a Delaware limited partnership and an
     affiliate of the Partnership, together, in the aggregate, own a 99% Local
     Partnership Interest in the following Local Partnerships:
<TABLE>
<CAPTION>

                                                                     The
                                                                 Partnership           ATCP II
                                                                 -----------           -------

<S>                                                                 <C>                 <C>
                 Batesville Family, L.P.                            61.75%              37.25%
                 Bruce Housing Associates, L.P.                     61.75               37.25
                 Carrington Limited Dividend Housing
                   Association Limited Partnership                  65.95               33.05
                 Ivy Family, L.P.                                   61.75               37.25
                 Lawrence Road Properties, Ltd.                     61.75               37.25
                 Mirador del Toa Limited Partnership                59.06               39.94
                 Purvis Heights Properties, L.P.                    61.75               37.25
                 Queen Lane Investors                               48.50               50.50
</TABLE>


     The Properties are principally comprised of subsidized and leveraged
     low-income multifamily residential complexes located throughout the United
     States and Puerto Rico. The required holding period of each Property, in
     order to avoid Low-income Tax Credit recapture, is fifteen years from the
     year in which the Low-income Tax Credits commence on the last building of
     the Property (the "Compliance Period"). The rents of the Properties are
     controlled by federal and state agencies pursuant to applicable laws and
     regulations. Under the terms of each of the Local Partnership's partnership
     agreements, the Partnership committed to make capital contribution payments
     in the aggregate amount of $29,264,476, all of which has been paid as of
     March 30, 2001. As of December 31, 2000, the Local Partnerships have
     outstanding mortgage loans payable totaling approximately $85,145,000 and
     accrued interest payable on such loans totaling approximately $3,203,000,
     which are secured by security interests and liens common to mortgage loans
     on the Local Partnerships' real property and other assets.

     Equity in loss of investment in local partnerships is limited to the
     Partnership's investment balance in each Local Partnership; any such excess
     is applied to other partners' capital in any such Local Partnership (see
     Note 1). The amount of such excess losses applied to other partners'
     capital was $2,468,205, $1,599,522 and $2,502,485 for the years ended
     December 31, 2000, 1999 and 1998, respectively, as reflected in the
     combined statements of operations of the Local Partnerships reflected
     herein Note 5.

     As of December 31, 2000, Westminster is two years in arrears on its
     mortgage and over two years in arrears on its replacement reserve and
     escrow requirements. Although the Local General Partner had been
     conducting discussions with the lender, the lender issued a notice of
     default. As a result of ongoing discussions, current proposals include
     a restructuring of the mortgage and the potential utilization of
     replacement reserves to reduce the arrearages. There can be no
     assurance that the Local General Partner will be successful in its
     negotiations with the lender.

     As a result of management's assessment of the carrying value of the
     investment in local partnerships under applicable accounting guidelines
     (see Note 1), the Partnership reduced its investment in Justin, Orange City
     and Summerfield by $230,000, $155,000 and $186,000, respectively during the
     year ended March 30, 2001 and in Justin and Summerfield by $60,000 and
     $166,000, respectively during the year ended March 30, 2000. Such losses
     are included in equity in loss of investment in local partnerships in the
     accompanying statements of operations of the Partnership for the years
     indicated.

     The Properties are subject to evaluation for the existence of permanent
     impairment under applicable accounting guidelines, whereby the carrying
     value of the real property may be adjusted downward based on results of
     operations and other events. As a result of such evaluation, the
     accompanying statement of operations of the Local Partnerships for the year
     ended December 31, 1998 reflected herein Note 5 includes loss from
     impairment of $1,802,881 in connection with Westminster.

     The combined balance sheets of the Local Partnerships as of December 31,
     2000 and 1999 and the combined statements of operations of the Local
     Partnerships for the years ended December 31, 2000, 1999 and 1998 are
     reflected on pages 26 and 27, respectively.

                                       25

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999

5.     Investment in Local Partnerships (continued)

       The combined balance sheets of the Local Partnerships as of December 31,
2000 and 1999 are as follows:
<TABLE>
<CAPTION>

                                                                                2000                   1999
                                                                                ----                   ----
      ASSETS

<S>                                                                       <C>                     <C>
Cash and cash equivalents                                                 $  1,358,025            $  1,515,733
Rents receivable                                                               400,684                 415,459
Escrow deposits and reserves                                                 4,915,062               4,772,669
Land                                                                         3,910,215               3,910,215
Buildings and improvements (net of accumulated depreciation of
  $39,068,817 and $35,035,895)                                              74,658,814              78,393,812
Intangible assets (net of accumulated amortization of
  $472,905 and $490,393)                                                       629,033                 670,822
Other                                                                          948,134                 845,257
                                                                          ------------            ------------
                                                                          $ 86,819,967            $ 90,523,967
                                                                          ============            ============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities

  Accounts payable and accrued expenses                                   $    821,999            $    599,251
  Due to related parties                                                     5,021,176               5,028,110
  Mortgage loans                                                            85,145,147              85,793,473
  Notes payable                                                                  9,850                  16,893
  Accrued interest                                                           3,203,151               2,826,511
  Other                                                                        644,370                 866,170
                                                                          ------------            ------------
                                                                            94,845,693              95,130,408
                                                                          ------------            ------------
Partners' equity (deficit)

  American Tax Credit Properties III L.P.
     Capital contributions, net of distributions                            28,935,106              28,965,604
     Cumulative loss                                                       (25,172,417)            (24,515,282)
                                                                          ------------            ------------
                                                                             3,762,689               4,450,322
                                                                          ------------            ------------

  General partners and other limited partners, including ATCP II
     Capital contributions, net of distributions                              (223,032)               (199,479)
     Cumulative loss                                                       (11,565,383)             (8,857,284)
                                                                          ------------            ------------
                                                                           (11,788,415)             (9,056,763)
                                                                          ------------            ------------
                                                                            (8,025,726)             (4,606,441)
                                                                          ------------            ------------
                                                                          $ 86,819,967            $ 90,523,967
                                                                          ============            ============
</TABLE>

                                       26
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5.     Investment in Local Partnerships (continued)

       The combined statements of operations of the Local Partnerships for the
       years ended December 31, 2000, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                                        2000                   1999                   1998
                                                                        ----                   ----                   ----
      REVENUE

<S>                                                                  <C>                   <C>                   <C>
      Rental                                                         $ 10,778,097          $ 10,621,830          $ 10,515,750
      Interest and other                                                  400,732               427,800               398,028
                                                                     ------------          ------------          ------------
      Total Revenue                                                    11,178,829            11,049,630            10,913,778
                                                                     ------------          ------------          ------------
      EXPENSES

      Administrative                                                    2,400,469             2,169,727             2,119,651
      Utilities                                                         1,080,099             1,052,458               988,768
      Operating, maintenance and other                                  2,552,119             2,580,230             2,578,748
      Taxes and insurance                                               1,237,907             1,246,212             1,235,007
      Financial                                                         3,185,319             3,311,308             3,327,901
      Depreciation and amortization                                     4,088,150             4,045,640             4,057,813
      Loss from impairment of long-lived assets                                                                     1,802,881
                                                                     ------------          ------------          ------------
      Total Expenses                                                   14,544,063            14,405,575            16,110,769
                                                                     ------------          ------------          ------------
      NET LOSS                                                       $ (3,365,234)         $ (3,355,945)         $ (5,196,991)
                                                                     ============          ============          ============
      NET LOSS ATTRIBUTABLE TO

         American Tax Credit Properties III L.P.                     $   (657,135)         $ (1,538,816)         $ (2,453,590)
         General partners and other limited
           partners, including ATCP II, which includes
           specially allocated items of revenue to certain
           general partners of $1,697 in 1998, and
           $2,468,205, $1,599,522 and $2,502,485 of
           Partnership loss in excess of investment                    (2,708,099)           (1,817,129)           (2,743,401)
                                                                     ------------          ------------          ------------
                                                                     $ (3,365,234)         $ (3,355,945)         $ (5,196,991)
                                                                     ============          ============          ============
</TABLE>

                                       27

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5. Investment in Local Partnerships (continued)

Investment activity with respect to each Local Partnership for the year ended
March 30, 2001 is as follows:

<TABLE>
<CAPTION>
                                                                            Cash
                                           Investment    Partnership's    Adjustment to    Cash        distributions
                                            in Local       equity in        carrying     distributions   classified as   Investment
                                           Partnership    income (loss)   value during    received      other income    in Local
                                            balance as      for the           the        during the     during the    Partnership
                                               of          year ended      year ended    year ended      year ended   balance as of
                                             March 30,     December 31,      March 30,    March 30,       March 30,      March 30,
Name of Local Partnership                      2000           2000             2001         2001            2001           2001
---------------------------------------- ------------- ----------------- --------------- ------------- --------------- -------------
<S>                                         <C>             <C>        <C>    <C>         <C>             <C>            <C>
April Gardens Apartments II Limited         $         --    $       -- (2)    $  --       $      --       $     --       $      --
  Partnership
Ashland Park Apartments, L.P.                         --            -- (2)       --              --             --              --
Auburn Family, L.P.                               19,555       (11,395)          --              --             --           8,160
Batesville Family, L.P.                               --            -- (2)       --              --             --              --
Bay Springs Elderly, L.P.                         32,594       (21,417)          --              --             --          11,177
Brisas del Mar Apartments Limited                     --            -- (2)       --              --             --              --
  Partnership
Bruce Housing Associates, L.P.                        --            -- (2)       --              --             --              --
Carrington Limited Dividend Housing
  Association Limited Partnership                772,151      (162,048)          --              --             --         610,103
Chestnut Park Associates, L.P.                        --            -- (2)       --              --             --              --
Chowan Senior Manor Associates Limited
  Partnership                                         --            -- (2)       --          (1,580)         1,580              --
Christian Street Commons Associates                   --            -- (2)       --              --             --              --
Country View Apartments                          113,812      (31,108)           --            (750)            --          81,954
Desarrollos de Belen Limited Partnership              --            -- (2)       --              --             --              --
Desarrollos de Emaus Limited Partnership              --            -- (2)       --              --             --              --
Ellinwood Heights Apartments, L.P.                10,648        3,746            --              --             --          14,394
Fulton Street Houses Limited Partnership          12,431      (12,431) (1)       --              --             --              --
Hayes Run Limited Partnership                         --            -- (2)       --          (1,785)         1,785              --
Howard L. Miller Sallisaw Apartments II,          16,974       (7,250)           --          (1,440)            --           8,284
  L.P.
Hurlock Meadow Limited Partnership                    --            -- (2)       --          (1,764)         1,764              --
Ivy Family, L.P.                                      --            -- (2)       --              --             --              --
Justin Associates                                722,439     (124,392)         (230,000) (3)     --             --         368,047
LaBelle Commons, Ltd.                              9,009       (9,009) (1)       --          (2,500)         2,500              --
Lawrence Road Properties, Ltd.                        --            -- (2)       --              --             --              --
Loma Del Norte Limited Partnership                59,530      (27,907)           --              --             --          31,623
Long Reach Associates Limited Partnership         89,126      (53,369)           --              --             --          35,757
Mirador del Toa Limited Partnership                   --            -- (2)       --              --             --              --
Moore Haven Commons, Ltd.                             --            -- (2)       --              --             --              --
NP-89 Limited Dividend Housing Association
  Limited Partnership                          1,201,027      (40,093)           --         (10,000)            --       1,150,934
Nash Hill Associates, Limited Partnership        105,747      (21,109)           --          (3,637)            --          81,001
North Calhoun City, L.P.                          54,525      (13,056)           --              --             --          41,469
Orange City Plaza, Limited Partnership           372,067       (6,066)         (155,000) (3)     --             --         211,001
Puerta del Mar Limited Partnership                    --            -- (2)       --              --             --              --
Purvis Heights Properties, L.P.                   53,603       (7,624)           --              --             --          45,979
Queen Lane Investors                              64,360      (64,360) (1)       --              --             --              --
Somerset Manor, Ltd.                                  --            -- (2)       --          (1,122)         1,122              --
Sugar Cane Villas, Ltd.                               --            -- (2)       --              --             --              --
Summerfield Apartments Limited Partnership       440,299      (20,855)         (186,000) (3) (5,000)            --         228,444
Sydney Engel Associates L.P.                          --            -- (2)       --              --             --              --
Union Valley Associates Limited                   14,388      (14,388) (1)       --              --             --              --
  Partnership
Walnut Grove Family, L.P.                             --            -- (2)       --              --             --              --

Waynesboro Apartments Limited Partnership             --            -- (2)       --              --             --              --
West Calhoun City, L.P.                           72,383      (13,004)           --              --             --          59,379
Westminster Apartments Limited Partnership            --            -- (2)       --              --             --              --
                                            ------------   --------------    ------------- --------       --------      ----------
                                            $  4,236,668   $ (657,135)       $ (571,000)   $(29,578)      $  8,751      $2,987,706
                                            ============   ==============    ============= ========       ========      ==========
</TABLE>

(1)      The Partnership's equity in loss of an investment in a Local
         Partnership is limited to the remaining investment balance.

(2)      Additional equity in loss of investment is not allocated to the
         Partnership until equity in income is earned or additional investment
         is made by the Partnership.

(3)      The Partnership has adjusted the investment's carrying value in
         accordance with applicable accounting guidelines.

                                       28

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5. Investment in Local Partnerships (continued)

Investment activity with respect to each Local Partnership for the year ended
March 30, 2000 is as follows:

<TABLE>
<CAPTION>
                                                                                                            Cash
                                           Investment    Partnership's    Adjustment to    Cash        distributions
                                            in Local       equity in        carrying     distributions   classified as  Investment
                                           Partnership    income (loss)   value during    received      other income    in Local
                                            balance as      for the           the        during the     during the    Partnership
                                               of          year ended      year ended    year ended      year ended   balance as of
                                             March 30,     December 31,      March 30,    March 30,       March 30,      March 30,
Name of Local Partnership                      1999           1999            2000          2000            2000           2000
---------------------------------------- ------------- ----------------- --------------- ------------- --------------- -------------
<S>                                         <C>             <C>        <C>    <C>         <C>             <C>            <C>

April Gardens Apartments II Limited         $         --    $       -- (2)   $      --       $ (1,920)      $   1,920    $      --
  Partnership
Ashland Park Apartments, L.P.                         --            -- (2)          --              --             --           --
Auburn Family, L.P.                               27,276        (7,721)             --              --             --       19,555
Batesville Family, L.P.                               --            -- (2)          --          (1,330)         1,330           --
Bay Springs Elderly, L.P.                         50,532       (17,938)             --              --             --       32,594
Brisas del Mar Apartments Limited                     --            -- (2)          --          (2,640)         2,640           --
  Partnership
Bruce Housing Associates, L.P.                    15,567       (15,567) (1)         --              --             --           --
Carrington Limited Dividend Housing
  Association Limited Partnership                896,926      (124,775)             --              --             --      772,151
Chestnut Park Associates, L.P.                   420,223      (420,223) (1)         --              --             --           --
Chowan Senior Manor Associates Limited
  Partnership                                         --            -- (2)          --          (1,580)         1,580           --
Christian Street Commons Associates                   --            -- (2)          --              --             --           --
Country View Apartments                          133,932       (20,120)             --              --             --      113,812
Desarrollos de Belen Limited Partnership          43,039       (43,039) (1)         --              --             --           --
Desarrollos de Emaus Limited Partnership          74,619       (74,619) (1)         --              --             --           --
Ellinwood Heights Apartments, L.P.                 8,209         2,439              --              --             --       10,648
Fulton Street Houses Limited Partnership         286,952      (274,521)             --              --             --       12,431
Hayes Run Limited Partnership                         --            -- (2)          --          (1,785)         1,785           --
Howard L. Miller Sallisaw Apartments II,          16,836           138              --          (1,588)         1,588       16,974
  L.P.
Hurlock Meadow Limited Partnership                    --            -- (2)          --              --             --           --
Ivy Family, L.P.                                   3,728        (3,728) (1)         --              --             --           --
Justin Associates                                893,800      (111,361)         (60,000) (3)        --             --      722,439
LaBelle Commons, Ltd.                             51,349       (39,840)             --          (2,500)            --        9,009
Lawrence Road Properties, Ltd.                        --            -- (2)          --          (1,007)         1,007           --
Loma Del Norte Limited Partnership                95,699       (34,169)             --          (2,000)            --       59,530
Long Reach Associates Limited Partnership        117,375       (28,249)             --              --             --       89,126
Mirador del Toa Limited Partnership                   --            -- (2)          --          (1,144)         1,144           --
Moore Haven Commons, Ltd.                             --            -- (2)          --              --             --           --
NP-89 Limited Dividend Housing Association
  Limited Partnership                          1,349,014      (127,987)             --         (20,000)            --    1,201,027
Nash Hill Associates, Limited Partnership        135,800       (30,053)             --              --             --      105,747
North Calhoun City, L.P.                          66,551       (12,026)             --              --             --       54,525
Orange City Plaza, Limited Partnership           375,625        (3,558)             --              --             --      372,067
Puerta del Mar Limited Partnership                    --            -- (2)          --          (2,640)         2,640           --
Purvis Heights Properties, L.P.                   60,336        (5,325)             --          (1,408)            --       53,603
Queen Lane Investors                             134,021       (69,661)             --              --             --       64,360
Somerset Manor, Ltd.                                  --            -- (2)          --              --             --           --
Sugar Cane Villas, Ltd.                               --            -- (2)          --          (6,459)         6,459           --
Summerfield Apartments Limited Partnership       627,741       (16,442)          (166,000) (3)  (5,000)            --      440,299
Sydney Engel Associates L.P.                          --            -- (2)          --              --             --           --
Union Valley Associates Limited                   45,694       (31,306)             --              --             --       14,388
  Partnership
Walnut Grove Family, L.P.                             --            -- (2)          --              --             --           --
Waynesboro Apartments Limited Partnership         12,447       (12,447) (1)         --              --             --           --
West Calhoun City, L.P.                           89,101       (16,718)             --              --             --       72,383
Westminster Apartments Limited Partnership            --            -- (2)          --              --             --           --
                                            ------------   --------------    ------------- --------       --------      ----------
                                             $  6,032,392   $(1,538,816)      $(226,000)       $(53,001)      $ 22,093   $4,236,668
                                            ============   ==============    ============= ========       ========      ==========
</TABLE>

(1)      The Partnership's equity in loss of an investment in a Local
         Partnership is limited to the remaining investment balance.

(2)      Additional equity in loss of investment is not allocated to the
         Partnership until equity in income is earned or additional investment
         is made by the Partnership.

(3)      The Partnership has adjusted the investment's carrying value in
         accordance with applicable accounting guidelines.


                                       29

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5.     Investment in Local Partnerships (continued)

       Property information for each Local Partnership as of December 31, 2000
is as follows:
<TABLE>
<CAPTION>

                                                           Mortgage                      Buildings and    Accumulated
        Name of Local Partnership                       loans payable        Land        improvements     depreciation
      ------------------------------------------------- --------------- --------------- ---------------- ---------------
<S>                                                     <C>             <C>             <C>              <C>
      April Gardens Apartments II Limited Partnership   $  1,991,036    $    39,984     $  2,471,902        $(998,626)
      Ashland Park Apartments, L.P.                        1,035,140          50,160       1,247,739         (457,269)
      Auburn Family, L.P.                                    466,434          20,000         561,357         (198,012)
      Batesville Family, L.P.                              1,435,270          52,000       1,808,219         (609,824)
      Bay Springs Elderly, L.P.                              674,285          38,000         846,080         (293,951)
      Brisas del Mar Apartments Limited Partnership        2,644,754         100,280       3,290,880       (1,354,794)
      Bruce Housing Associates, L.P.                       1,103,910          16,000       1,441,646         (568,592)
      Carrington Limited Dividend Housing Association
        Limited Partnership                                3,382,920         200,000       6,485,189       (2,501,459)
      Chestnut Park Associates, L.P.                       5,074,427         781,700       8,654,778       (3,064,146)
      Chowan Senior Manor Associates Limited               1,253,694          86,101       1,513,684         (560,178)
        Partnership
      Christian Street Commons Associates                    606,464              --           7,545             (537)
      Country View Apartments                                935,009          35,698       1,215,505         (284,621)
      Desarrollos de Belen Limited Partnership             1,878,304          96,190       2,533,339         (689,198)
      Desarrollos de Emaus Limited Partnership             3,196,843         214,000       4,044,563       (1,043,084)
      Ellinwood Heights Apartments, L.P.                     686,270          10,000         871,992         (245,786)
      Fulton Street Houses Limited Partnership             3,869,930               2       6,021,918       (1,938,143)
      Hayes Run Limited Partnership                        1,421,892          85,060       1,495,752         (388,850)
      Howard L. Miller Sallisaw Apartments II, L.P.          614,170          39,000         732,695         (213,978)
      Hurlock Meadow Limited Partnership                   1,267,123          49,525       1,575,933         (553,711)
      Ivy Family, L.P.                                       789,071          11,000       1,047,168         (419,211)
      Justin Associates                                    2,388,383          27,472       4,368,720       (1,424,597)
      LaBelle Commons, Ltd.                                1,010,630          98,947       1,184,937         (372,806)
      Lawrence Road Properties, Ltd.                         756,927          50,000         940,652         (309,845)
      Loma Del Norte Limited Partnership                   1,434,206          84,874       1,800,954         (467,538)
      Long Reach Associates Limited Partnership            1,475,126         118,446       1,878,409         (518,151)
      Mirador del Toa Limited Partnership                  1,876,877         105,000       2,335,713         (971,059)
      Moore Haven Commons, Ltd.                              925,767          73,645       1,197,000         (455,461)
      NP-89 Limited Dividend Housing Association
        Limited Partnership                                4,057,585         150,000       7,435,816       (2,540,636)
      Nash Hill Associates, Limited Partnership            1,465,383         123,876       1,693,440         (451,537)
      North Calhoun City, L.P.                               486,400          12,000         632,110         (224,352)
      Orange City Plaza, Limited Partnership                 460,563          53,904       1,043,250         (306,166)
      Puerta del Mar Limited Partnership                   2,518,144         115,000       3,093,084       (1,293,225)
      Purvis Heights Properties, L.P.                      1,143,029          47,000       1,493,777         (464,232)
      Queen Lane Investors                                 1,553,845          60,301       2,752,080         (976,098)
      Somerset Manor, Ltd.                                   895,620          53,383       1,104,377         (409,744)
      Sugar Cane Villas, Ltd.                              3,300,300          58,500       4,088,461       (1,528,169)
      Summerfield Apartments Limited Partnership           1,734,896         195,411       2,688,512         (631,615)
      Sydney Engel Associates L.P.                        17,195,726         284,305      19,443,724       (7,122,448)
      Union Valley Associates Limited Partnership          1,443,799          97,800       1,757,216         (453,356)
      Walnut Grove Family, L.P.                              845,189          30,000       1,029,505         (365,230)
      Waynesboro Apartments Limited Partnership            1,479,462          76,000       1,790,366         (489,623)
      West Calhoun City, L.P.                                762,372          18,000       1,029,702         (357,756)
      Westminster Apartments Limited Partnership           1,607,972          51,651       1,077,942         (551,203)
                                                         -----------     -----------    ------------     ------------
                                                         $85,145,147     $ 3,910,215    $113,727,631     $(39,068,817)
                                                         ===========     ===========    ============     ============
</TABLE>

                                       30

<PAGE>

                                      AMERICAN TAX CREDIT PROPERTIES III L.P.
                                    NOTES TO FINANCIAL STATEMENTS - (Continued)
                                           MARCH 30, 2001, 2000 AND 1999


5.     Investment in Local Partnerships (continued)

       Property information for each Local Partnership as of December 31, 1999
is as follows:
<TABLE>
<CAPTION>

                                                           Mortgage                      Buildings and    Accumulated
        Name of Local Partnership                        loans payable       Land        improvements    depreciation
      ------------------------------------------------- ---------------- -------------- ---------------- --------------
<S>                                                     <C>              <C>            <C>              <C>
      April Gardens Apartments II Limited Partnership   $  1,995,920     $   39,984     $  2,474,445        $(900,878)
      Ashland Park Apartments, L.P.                        1,037,908           50,160      1,247,739         (412,108)
      Auburn Family, L.P.                                    468,586           20,000        559,613         (177,304)
      Batesville Family, L.P.                              1,438,380           52,000      1,808,219         (564,567)
      Bay Springs Elderly, L.P.                              675,921           38,000        846,080         (263,005)
      Brisas del Mar Apartments Limited Partnership        2,652,057          100,280      3,237,383       (1,216,720)
      Bruce Housing Associates, L.P.                       1,107,099           16,000      1,441,646         (513,333)
      Carrington Limited Dividend Housing Association
        Limited Partnership                                3,412,991          200,000      6,480,320       (2,265,163)
      Chestnut Park Associates, L.P.                       5,134,372          781,700      8,654,778       (2,750,150)
      Chowan Senior Manor Associates Limited               1,258,346           86,101      1,513,684         (500,846)
        Partnership
      Christian Street Commons Associates                    613,742               --          7,545             (263)
      Country View Apartments                                937,490           35,698      1,215,505         (250,566)
      Desarrollos de Belen Limited Partnership             1,884,487           96,190      2,503,941         (599,736)
      Desarrollos de Emaus Limited Partnership             3,201,079          214,000      4,039,147         (906,392)
      Ellinwood Heights Apartments, L.P.                     688,038           10,000        869,105         (230,188)
      Fulton Street Houses Limited Partnership             3,869,930                2      6,014,925       (1,707,348)
      Hayes Run Limited Partnership                        1,425,500           85,060      1,494,521         (349,948)
      Howard L. Miller Sallisaw Apartments II, L.P.          615,616           39,000        729,561         (200,951)
      Hurlock Meadow Limited Partnership                   1,270,656           49,525      1,567,621         (496,595)
      Ivy Family, L.P.                                       793,732           11,000      1,045,671         (380,755)
      Justin Associates                                    2,422,484           27,472      4,349,750       (1,261,983)
      LaBelle Commons, Ltd.                                1,013,370           98,947      1,184,937         (329,736)
      Lawrence Road Properties, Ltd.                         758,834           50,000        929,308         (286,048)
      Loma Del Norte Limited Partnership                   1,437,699           84,874      1,785,888         (414,513)
      Long Reach Associates Limited Partnership            1,478,729          118,446      1,877,387         (465,541)
      Mirador del Toa Limited Partnership                  1,882,326          105,000      2,332,836         (875,410)
      Moore Haven Commons, Ltd.                              928,151           73,645      1,197,000         (413,476)
      NP-89 Limited Dividend Housing Association
        Limited Partnership                                4,148,026          150,000      7,410,587       (2,262,372)
      Nash Hill Associates, Limited Partnership            1,469,157          123,876      1,693,440         (403,557)
      North Calhoun City, L.P.                               489,654           12,000        632,110         (201,259)
      Orange City Plaza, Limited Partnership                 486,007           53,904      1,043,250         (272,571)
      Puerta del Mar Limited Partnership                   2,525,101          115,000      3,053,054       (1,162,576)
      Purvis Heights Properties, L.P.                      1,146,172           47,000      1,457,715         (428,264)
      Queen Lane Investors                                 1,563,392           60,301      2,749,423         (873,639)
      Somerset Manor, Ltd.                                   897,825           53,383      1,101,110         (369,232)
      Sugar Cane Villas, Ltd.                              3,308,477           58,500      4,088,461       (1,381,514)
      Summerfield Apartments Limited Partnership           1,760,666          195,411      2,686,365         (559,855)
      Sydney Engel Associates L.P.                        17,438,225          284,305     19,443,724       (6,411,867)
      Union Valley Associates Limited Partnership          1,447,381           97,800      1,757,216         (409,408)
      Walnut Grove Family, L.P.                              847,086           30,000      1,029,505         (323,919)
      Waynesboro Apartments Limited Partnership            1,483,359           76,000      1,790,366         (445,441)
      West Calhoun City, L.P.                                769,944           18,000      1,026,277         (317,781)
      Westminster Apartments Limited Partnership           1,609,558           51,651      1,058,549         (479,117)
                                                        ------------      -----------   ------------     ------------
                                                        $ 85,793,473      $ 3,910,215   $113,429,707     $(35,035,895)
                                                        ============      ===========   ============     ============
</TABLE>

                                       31


<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


5. Investment in Local Partnerships (continued)

     The summary of property activity during the year ended December 31, 2000 is
as follows:
<TABLE>
<CAPTION>

                                                                            Net change
                                                  Balance as of        during the year ended         Balance as of
                                                December 31, 1999       December 31, 2000          December 31, 2000
                                                -----------------       -----------------          -----------------

<S>                                             <C>                    <C>                        <C>
      Land                                      $      3,910,215       $            --            $       3,910,215
      Buildings and improvements                     113,429,707               297,924                  113,727,631
                                                ----------------       ---------------            -----------------
                                                     117,339,922               297,924                  117,637,846
      Accumulated depreciation                       (35,035,895)           (4,032,922)                 (39,068,817)
                                                ----------------       ---------------            -----------------
                                                $     82,304,027       $    (3,734,998)           $      78,569,029
                                                ================       ===============            =================
</TABLE>


6.   Transactions with General Partner and Affiliates

     For the years ended March 30, 2001, 2000 and 1999, the Partnership paid
     and/or incurred the following amounts to the General Partner and/or
     affiliates in connection with services provided to the Partnership:
<TABLE>
<CAPTION>

                                                          2001                     2000                       1999
                                                    -------------------       -------------------       --------------------
                                                    Paid       Incurred       Paid       Incurred       Paid        Incurred
                                                   -------------------       --------------------       -------------------

<S>                                             <C>         <C>           <C>          <C>          <C>
           Management fees (see Note 8)          $  100,000   $  230,571   $  100,000   $  230,571   $  100,000   $   230,571

           Administration fees (see Note 8)      $  100,000   $  230,571   $    2,699   $   57,347   $       --   $        --
</TABLE>

     For the years ended December 31, 2000, 1999 and 1998, the Local
     Partnerships paid and/or incurred the following amounts to the General
     Partner and/or affiliates in connection with services provided to the Local
     Partnerships:

<TABLE>
<CAPTION>
                                                   -------------------       --------------------       -------------------
                                                         2000                      1999                       1998
                                                   Paid       Incurred       Paid        Incurred       Paid       Incurred
                                                   -------------------       --------------------       -------------------

<S>                                             <C>           <C>           <C>          <C>           <C>          <C>
            Property management fees            $   7,387      $  31,754    $  29,805   $   31,864    $ 10,505     $ 31,343

            Insurance and other services           22,953         22,687       15,009       15,275      23,117       34,455


</TABLE>

                                       32

<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


7.   Taxable Loss

     A reconciliation of the financial statement net loss of the Partnership for
     the years ended March 30, 2001, 2000 and 1999 to the tax return net loss
     for the years ended December 31, 2000, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>

                                                                       2001                  2000                  1999
                                                                       ----                  ----                  ----

Financial  statement  net loss for the  years  ended
<S>                                                                 <C>                  <C>                 <C>
   March 30, 2001, 2000, and 1999                                   $(1,519,430)         $(2,035,647)         $(2,756,082)

Add (less) net transactions occurring between
   January 1, 1998 and March 30, 1998                                        --                   --              (76,012)
   January 1, 1999 and March 30, 1999                                        --              (90,310)              90,310
   January 1, 2000 and March 30, 2000                                   (64,238)              64,238                   --
   January 1, 2001 and March 30, 2001                                    73,432                   --                   --
                                                                    -----------          -----------          -----------
Adjusted financial statement net loss for the years
   ended December 31, 2000, 1999 and 1998                            (1,510,236)          (2,061,719)          (2,741,784)

Adjustment to management and administration
   fees pursuant to Internal Revenue Code
   Section 267                                                          263,465              144,150              130,571


Differences arising from equity in loss of
   investment in local partnerships                                  (2,035,429)          (1,468,355)            (903,119)

Interest revenue                                                            417                  677              210,630

Other differences                                                       (25,742)             (13,965)              (9,629)
                                                                    -----------          -----------          -----------
Tax return net loss for the years ended
   December 31, 2000, 1999 and 1998                                 $(3,307,525)         $(3,399,212)         $(3,313,331)
                                                                    ===========          ===========          ===========
</TABLE>

       The differences between the investment in local partnerships for tax and
       financial reporting purposes as of December 31, 2000 and 1999 are as
       follows:
<TABLE>
<CAPTION>

                                                                            2000                   1999
                                                                            ----                   ----

<S>                                                                   <C>                     <C>
      Investment in local partnerships - financial reporting          $   3,762,689           $  4,450,322
      Investment in local partnerships - tax                             (2,286,662)             1,007,401
                                                                      -------------           ------------
                                                                      $   6,049,351           $  3,442,921
                                                                      =============           ============
</TABLE>

       Payable to general partner and affiliate in the accompanying balance
       sheets represents accrued management and administrative fees not
       deductible for tax purposes pursuant to Internal Revenue Code Section
       267.


                                       33
<PAGE>

                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


8.     Commitments and Contingencies

       Pursuant to the Partnership Agreement, the Partnership incurs an annual
       management fee ("Management Fee") and an annual additional management fee
       ("Additional Management Fee") payable to the General Partner for its
       services in connection with the management of the affairs of the
       Partnership. The annual Management Fee is equal to .14% of all proceeds
       as of December 31 of any year, invested or committed for investment in
       Local Partnerships plus all debts of the Local Partnerships related to
       the Properties ("Invested Assets"). The Partnership incurred a Management
       Fee of $161,400 for each of the three years ended March 30, 2001. The
       annual Additional Management Fee is equal to .06% of Invested Assets. The
       Partnership incurred an Additional Management Fee of $69,171 for each of
       the three years ended March 30, 2001. Such amounts are aggregated and
       reflected under the caption management fees in the accompanying financial
       statements. Unpaid Management Fees and Additional Management Fees in the
       amount of $1,322,327 and $1,191,756 are included in payable to general
       partner and affiliate in the accompanying balance sheets as of March 30,
       2001 and 2000, respectively.

       In addition, pursuant to the Partnership Agreement, the Partnership is
       authorized to contract for administrative services provided to the
       Partnership. From the inception of the Partnership through November 23,
       1999, such administrative services were provided by ML Fund
       Administrators Inc. ("MLFA"), an affiliate of the Selling Agent, pursuant
       to an Administrative Services Agreement. MLFA resigned the performance of
       its basic services under the Administrative Services Agreement effective
       November 23, 1999, with certain transitional services continued through
       April 30, 2000. The General Partner transitioned the administrative
       services to an affiliate of the General Partner without any changes to
       the terms of the Administrative Services Agreement. Pursuant to such
       agreement, the Partnership incurs an annual administration fee
       ("Administration Fee") and an annual additional administration fee
       ("Additional Administration Fee") for administrative services provided to
       the Partnership. The annual Administration Fee is equal to .14% of
       Invested Assets. The Partnership incurred an Administration Fee of
       $161,400 for each of the three years ended March 30, 2001. The annual
       Additional Administration Fee is subject to certain provisions of the
       Partnership Agreement and is equal to .06% of Invested Assets. The
       Partnership incurred an Additional Administration Fee of $69,171 for each
       of the three years ended March 30, 2001. Such amounts are aggregated and
       reflected under the caption administration fees in the accompanying
       financial statements. Unpaid Administration Fees and Additional
       Administration Fees due to MLFA in the amount of $1,136,673 are included
       in accounts payable and accrued expenses in the accompanying balance
       sheets as of March 30, 2001 and 2000. Unpaid Administration Fees and
       Additional Administration Fees due to an affiliate of the General Partner
       in the cumulative amount of $185,219 and $54,648 are included in due to
       general partner and affiliate in the accompanying balance sheets as of
       March 30, 2001 and 2000, respectively.

       The rents of the Properties, many of which receive rental subsidy
       payments, including payments under Section 8 of Title II of the Housing
       and Community Development Act of 1974 ("Section 8"), are subject to
       specific laws, regulations and agreements with federal and state
       agencies. The subsidy agreements expire at various times during and after
       the Compliance Periods of the Local Partnerships. Since October 1997, the
       United States Department of Housing and Urban Development ("HUD") has
       issued a series of directives related to project based Section 8
       contracts that define owners' notification responsibilities, advise
       owners of project based Section 8 properties of what their options are
       regarding the renewal of Section 8 contracts, provide guidance and
       procedures to owners, management agents, contract administrators and HUD
       staff concerning renewal of Section 8 contracts, provide policies and
       procedures on setting renewal rents and handling renewal rent adjustments
       and provide the requirements and procedures for opting-out of a Section 8
       project based contract. The Partnership cannot reasonably predict
       legislative initiatives and governmental budget negotiations, the outcome
       of which could result in a reduction in funds available for the various
       federal and state administered housing programs including the Section 8
       program. Such changes could adversely affect the future net operating
       income and debt structure of any or all Local Partnerships currently
       receiving such subsidy or similar subsidies. One Local Partnership's
       Section 8 contracts are currently subject to renewal under applicable HUD
       guidelines.

                                       34

<PAGE>


                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                   NOTES TO FINANCIAL STATEMENTS - (Continued)
                          MARCH 30, 2001, 2000 AND 1999


9.     Fair Value of Financial Instruments

       The following disclosure of the estimated fair value of financial
       instruments is made in accordance with the requirements of SFAS No. 107,
       "Disclosures about Fair Value of Financial Instruments." The estimated
       fair value amounts have been determined using available market
       information, assumptions, estimates and valuation methodologies.

       Cash and cash equivalents

       The carrying amount approximates fair value.

       Investments in bonds

       Fair value is estimated based on market quotes provided by an independent
       service as of the balance sheet dates.

       Interest receivable

       The carrying amount approximates fair value due to the terms of the
underlying investments.


       The estimated fair value of the Partnership's financial instruments as of
       March 30, 2001 and 2000 are disclosed elsewhere in the financial
       statements.


                                       35

<PAGE>

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

None

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

Registrant has no officers or directors. The General Partner manages
Registrant's affairs and has general responsibility and authority in all matters
affecting its business. The responsibilities of the General Partner are
currently carried out by Richman Housing. The executive officers and directors
of Richman Housing are:
<TABLE>
<CAPTION>

                                         Served in present
Name                                     Capacity since 1                       Position held
----                                     ----------------                       -------------

<S>                                     <C>                                    <C>
Richard Paul Richman                     September 21, 1989                     President and Director
Neal Ludeke                              September 21, 1989                     Vice President and Treasurer
David A. Salzman                         September 21, 1989                     Vice President
Gina S. Scotti                           September 21, 1989                     Secretary

------------------------------------------------------------------------------------------------------------
</TABLE>

1 Director holds office until his successor is elected and qualified. All
officers serve at the pleasure of the Director.

Richard Paul Richman, age 53, is the sole Director and President of Richman
Housing. Mr. Richman is the President and principal stockholder of Richman
Group. Mr. Richman is involved in the syndication, development and management of
residential property. Mr. Richman is also a director of Wilder Richman Resources
Corp., an affiliate of Richman Housing and the general partner of Secured Income
L.P., a director of Wilder Richman Historic Corporation, an affiliate of Richman
Housing and the general partner of Wilder Richman Historic Properties II, L.P.,
a director of Richman Tax Credit Properties Inc., an affiliate of Richman
Housing and the general partner of the general partner of American Tax Credit
Properties L.P., a director of Richman Tax Credits Inc., an affiliate of Richman
Housing and the general partner of the general partner of American Tax Credit
Properties II L.P. and a director of Richman American Credit Corp., an affiliate
of Richman Housing and the manager of American Tax Credit Trust, a Delaware
statutory business trust.

Neal Ludeke, age 43, is a Vice President and the Treasurer of Richman Housing.
Mr. Ludeke, a Vice President and the Treasurer of Richman Group, is engaged
primarily in the syndication, asset management and finance operations of Richman
Group. In addition, Mr. Ludeke is a Vice President and the Treasurer of Richman
Asset Management, Inc. ("RAM"), an affiliate of Richman Housing. Mr. Ludeke's
responsibilities in connection with RAM include various partnership management
functions.

David A. Salzman, age 40, is a Vice President of Richman Housing and a minority
stockholder of Richman Group. Mr. Salzman is responsible for the acquisition and
development of residential real estate for syndication as a Vice President of
acquisitions of Richman Group.

Gina S. Scotti, age 45, is the Secretary of Richman Housing. Ms. Scotti is a
Vice President and the Secretary of Richman Group. As the Director of Investor
Services, Ms. Scotti is responsible for communications with investors.


Item 11.  Executive Compensation

Registrant has no officers or directors. Registrant does not pay the officers or
director of Richman Housing any remuneration. During the year ended March 30,
2001, Richman Housing did not pay any remuneration to any of its officers or its
director.


Item 12.  Security Ownership of Certain Beneficial Owners and Management

As of May 31, 2001, no person or entity was known by Registrant to be the
beneficial owner of more than five percent of the Units. Richman Housing is
wholly owned by Richard Paul Richman.


                                       36

<PAGE>

Item 13.  Certain Relationships and Related Transactions

The General Partner and certain of its affiliates are entitled to receive
certain fees and reimbursement of expenses and have received/earned fees for
services provided to Registrant as described in Notes 6 and 8 to the audited
financial statements included in Item 8 - "Financial Statements and
Supplementary Data" herein.

Transactions with General Partner and Affiliates

The net tax losses and Low-income Tax Credits generated by Registrant during the
year ended December 31, 2000 allocated to the General Partner were $33,075 and
$53,307, respectively. The net tax losses and Low-income Tax Credits generated
by the General Partner during the year ended December 31, 2000 (from the
allocation of Registrant discussed above) and allocated to Richman Housing were
$26,733 and $43,089, respectively.

Indebtedness of Management.

No officer or director of the General Partner or any affiliate of the foregoing
was indebted to Registrant at any time during the year ended March 30, 2001.


                                       37
<PAGE>


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

    (a) Financial Statements, Financial Statement Schedules and Exhibits

            (1)  Financial Statements

            See Item 8 - "Financial Statements and Supplementary Data."

            (2)  Financial Statement Schedules

            No financial statement schedules are included because of the absence
            of the conditions under which they are required or because the
            information is included in the financial statements or the notes
            thereto.

            (3)  Exhibits

<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------

<S>               <C>                                                <C>
     10.1         April Gardens Apartments II Limited Partnership    Exhibit 10.1 to Form 10-Q Report
                  (A Delaware Limited Partnership) Amended and       dated December 30, 1990
                  Restated Agreement of Limited Partnership          (File No. 33-31390)

     10.2         Ashland Park Apartments, L.P. Second Amended and   Exhibit 10.2 to Form 10-K Report
                  Restated Agreement of Limited Partnership          dated March 30, 1991
                                                                     (File No. 33-31390)

     10.3         Auburn Family, L.P. Amended and Restated Limited   Exhibit 10.1 to Form 10-Q Report
                  Partnership Agreement and Certificate of Limited   dated December 31, 1991
                  Partnership                                        (File No. 0-19217)

     10.4         Amended No. 2 to the Batesville Family, L.P.       Exhibit 10.2 to Form 10-Q Report
                  Amended and Restated Agreement of Limited          dated December 30, 1990
                  Partnership                                        (File No. 33-31390)

     10.5         Batesville Family, L.P. Amendment No. 3 to the     Exhibit 10.2 to Form 10-Q Report
                  Amended and Restated Agreement of Limited          dated December 31, 1991
                  Partnership                                        (File No. 0-19217)

     10.6         Bay Springs Elderly, L.P. (A Mississippi Limited   Exhibit 10.1 to Form 10-Q Report
                  Partnership) Amended and Restated Limited          dated September 29, 1991
                  Partnership Agreement and Certificate of Limited   (File No. 0-19217)
                  Partnership

     10.7         Brisas del Mar Apartments Limited Partnership (A   Exhibit 10.3 to Form 10-Q Report
                  Delaware Limited Partnership) Amended and          dated December 30, 1990
                   Restated Agreement of Limited Partnership         (File No. 33-31390)

     10.8         Amendment No. 1 to the Bruce Housing Associates,   Exhibit 10.8 to Form 10-K Report
                  L.P. Amended and Restated Agreement of Limited     dated March 30, 1992
                  Partnership                                        (File No. 33-31390)
</TABLE>

                                       38

<PAGE>
<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------

<S>               <C>                                                <C>
     10.9         Amendment No. 2 to the Bruce Housing Associates,   Exhibit 10.4 to Form 10-Q Report
                  L.P. Amended and Restated Agreement of Limited     dated December 30, 1990
                  Partnership                                        (File No. 33-31390)

     10.10        Bruce Housing Associates, L.P. Amendment No. 3     Exhibit 10.3 to Form 10-Q Report
                  to the Amended and Restated Agreement of Limited   dated December 31, 1991
                  Partnership                                        (File No. 0-19217)

     10.11        Carrington Limited Dividend Housing Association    Exhibit 10.1 to Form 10-Q Report
                  Limited Partnership Amended and Restated           dated September 29, 1990
                  Agreement of Limited Partnership                   (File No. 33-31390)

     10.12        Carrington Limited Dividend Housing Association    Exhibit 10.2 to Form 10-Q Report
                  Limited Partnership Second Amended and Restated    dated September 29, 1990
                  Agreement of Limited Partnership                   (File No. 33-31390)

     10.13        Carrington Limited Dividend Housing Association    Exhibit 10.5 to Form 10-Q Report
                  Limited Partnership Amendment No. 1 to the         dated December 30, 1990
                  Second Amended and Restated Agreement of Limited   (File No. 33-31390)
                  Partnership

     10.14        Chestnut Park Associates, L.P. Amended and         Exhibit 10.3 to Form 10-Q Report
                  Restated Agreement of Limited Partnership          dated September 29, 1990
                                                                     (File No. 33-31390)

     10.15        Chowan Senior Manor Associates Limited             Exhibit 10.15 to Form 10-K Report
                  Partnership Amended and Restated Agreement of      dated March 30, 1992
                  Limited Partnership                                (File No. 33-31390)

     10.16        Christian Street Commons Associates Amended and    Exhibit 10.16 to Form 10-K Report
                  Restated Limited Partnership Agreement and         dated March 30, 1992
                  Certificate of Limited Partnership                 (File No. 33-31390)

     10.17        Country View Apartments Second Amended and         Exhibit 10.17 to Form 10-K Report
                  Restated Limited Partnership Agreement and         dated March 30, 1992
                  Certificate of Limited Partnership                 (File No. 33-31390)

     10.18        Desarrollos de Belen Limited Partnership Amended   Exhibit 10.18 to Form 10-K Report
                  and Restated Agreement of Limited Partnership      dated March 30, 1992
                                                                     (File No. 33-31390)

     10.19        Desarrollos de Emaus Limited Partnership Amended   Exhibit 10.19 to Form 10-K Report
                  and Restated Agreement of Limited Partnership      dated March 30, 1992
                                                                     (File No. 33-31390)

     10.20        Ellinwood Heights Apartments, L.P. Amended and     Exhibit 10.1 to Form 10-Q Report
                  Restated Agreement of Limited Partnership          dated June 29, 1991
                                                                     (File No. 0-19217)
</TABLE>

                                       39
<PAGE>

<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------

<S>               <C>                                                <C>
     10.21        Fulton Street Houses Limited Partnership Amended   Exhibit 10.21 to Form 10-K Report
                  and Restated Agreement of Limited Partnership      dated March 30, 1992
                                                                     (File No. 33-31390)

     10.22        Hayes Run Limited Partnership Amended and          Exhibit 10.2 to Form 10-Q Report
                  Restated Agreement of Limited Partnership          dated June 29, 1991
                                                                     (File No. 0-19217)

     10.23        Howard L. Miller Sallisaw Apartments II, L.P.      Exhibit 10.10 to Form 10-K Report
                  Third Amended and Restated Agreement and           dated March 30, 1991
                  Certificate of Limited Partnership                 (File No. 33-31390)

     10.24        Hurlock Meadow Limited Partnership Amended and     Exhibit 10.24 to Form 10-K Report
                  Restated Limited Partnership Agreement             dated March 30, 1992
                                                                     (File No. 33-31390)

     10.25        Amendment No. 1 to the Ivy Family, L.P. Amended    Exhibit 10.6 to Form 10-Q Report
                  and Restated Agreement of Limited Partnership      dated December 30, 1990
                                                                     (File No. 33-31390)

     10.26        Ivy Family, L.P. Amendment No. 3 to the Amended    Exhibit 10.4 to Form 10-Q Report
                  and Restated Agreement of Limited Partnership      dated December 31, 1991
                                                                     (File No. 0-19217)

     10.27        Justin Associates Amended and Restated Agreement   Exhibit 10.7 to Form 10-Q Report
                  and Certificate of Limited Partnership             dated December 30, 1990
                                                                     (File No. 33-31390)

     10.28        LaBelle Commons, Ltd. Amended and Restated         Exhibit 10.13 to Form 10-K Report
                  Agreement of Limited Partnership                   dated March 30, 1991
                                                                     (File No. 33-31390)

     10.29        LaBelle Commons, Ltd. Amendment No. 1 to Amended   Exhibit 10.29 to Form 10-K Report
                  and Restated Agreement of Limited Partnership      dated March 30, 1992
                                                                     (File No. 33-31390)

     10.30        Amendment No. 2 to the Lawrence Road Properties,   Exhibit 10.8 to Form 10-Q Report
                  Ltd. Amended and Restated Agreement of Limited     dated December 30, 1990
                  Partnership                                        (File No. 33-31390)

     10.31        Lawrence Road Properties, Ltd. Amendment No. 3     Exhibit 10.5 to Form 10-Q Report
                  to the Amended and Restated Agreement of Limited   dated December 31, 1991
                  Partnership                                        (File No. 0-19217)

     10.32        Loma Del Norte Limited Partnership Amended and     Exhibit 10.2 to Form 10-Q Report
                  Restated Limited Partnership Agreement             dated September 29, 1991
                                                                     (File No. 0-19217)

     10.33        Long Reach Associates Limited Partnership Sixth    Exhibit 10.15 to Form 10-K Report
                  Amended and Restated Agreement of Limited          dated March 30, 1991
                  Partnership                                        (File No. 33-31390)
</TABLE>

                                       40
<PAGE>

<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------

<S>               <C>                                                <C>
     10.34        Mirador del Toa Limited Partnership Amended and    Exhibit 10.16 to Form 10-K Report
                  Restated Agreement of Limited Partnership          dated March 30, 1991
                                                                     (File No. 33-31390)

     10.35        Amendment No. 1 to the Mirador del Toa Limited     Exhibit 10.17 to Form 10-K Report
                  Partnership Amended and Restated Agreement of      dated March 30, 1991
                  Limited Partnership                                (File No. 33-31390)

     10.36        Moore Haven Commons, Ltd. Amended and Restated     Exhibit 10.9 to Form 10-Q Report
                  Agreement of Limited Partnership                   dated December 30, 1990
                                                                     (File No. 33-31390)

     10.37        NP-89 Limited Dividend Housing Association         Exhibit 10.3 to Form 10-Q Report
                  Limited Partnership Second Restated and Amended    dated June 29, 1991
                  Agreement of Limited Partnership                   (File No. 0-19217)

     10.38        Nash Hill Associates, Limited Partnership          Exhibit 10.37 to Form 10-K Report
                  Amended and Restated Agreement of Limited          dated March 30, 1992
                  Partnership                                        (File No. 33-31390)

     10.39        North Calhoun City, L.P. (A Mississippi Limited    Exhibit 10.3 to Form 10-Q Report
                  Partnership) Amended and Restated Limited          dated September 29, 1991
                  Partnership Agreement and Certificate of Limited   (File No. 0-19217)
                  Partnership

     10.40        Orange City Plaza, Limited Partnership Amended     Exhibit 10.40 to Form 10-K Report
                  and Restated Partnership Agreement                 dated March 30, 1992
                                                                     (File No. 33-31390)

     10.41        Puerta del Mar Limited Partnership (A Delaware     Exhibit 10.10 to Form 10-Q Report
                  Limited Partnership) Amended and Restated          dated December 30, 1990
                  Agreement of Limited Partnership                   (File No. 33-31390)

     10.42        Amendment No. 2 to the Purvis Heights              Exhibit 10.11 to Form 10-Q Report
                  Properties, L.P. Amended and Restated Agreement    dated December 30, 1990
                  of Limited Partnership                             (File No. 33-31390)

     10.43        Purvis Heights Properties, L.P. Amendment No. 3    Exhibit 10.6 to Form 10-Q Report
                  to the Amended and Restated Agreement of Limited   dated December 31, 1991
                  Partnership                                        (File No. 0-19217)

     10.44        Queen Lane Investors Amendment No. 1 to Amended    Exhibit 10.12 to Form 10-Q Report
                  and Restated Agreement and Certificate of          dated December 30, 1990
                  Limited Partnership                                (File No. 33-31390)

     10.45        Somerset Manor, Ltd. Amended and Restated          Exhibit 10.13 to Form 10-Q Report
                  Agreement and Certificate of Limited Partnership   dated December 30, 1990
                                                                     (File No. 33-31390)

     10.46        Sugar Cane Villas, Ltd. Amended and Restated       Exhibit 10.23 to Form 10-K Report
                  Agreement of Limited Partnership                   dated March 30, 1991
                                                                     (File No. 33-31390)
</TABLE>

                                       41
<PAGE>
<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------

<S>               <C>                                                <C>
     10.47        Summerfield Apartments Limited Partnership         Exhibit 10.47 to Form 10-K Report
                  Amended and Restated Agreement of Limited          dated March 30, 1992
                  Partnership                                        (File No. 33-31390)

     10.48        Amendment No.1 to the Summerfield Apartments       Exhibit 10.48 to Form 10-K Report
                  Limited Partnership Amended and Restated           dated March 30, 1999
                  Agreement of Limited Partnership                   (File No. 0-19217)

     10.49        Sydney Engel Associates Second Amended and         Exhibit 10.4 to Form 10-Q Report
                  Restated Agreement of Limited Partnership          dated September 29, 1990
                                                                     (File No. 33-31390)

     10.50        First Amendment to Second Amended and Restated     Exhibit 10.49 to Form 10-K Report
                  Agreement of Limited Partnership of Sydney Engel   dated March 30, 1997
                  Associates                                         (File No. 0-19217)

     10.51        Second Amendment to Second Amended and Restated    Exhibit 10.50 to Form 10-K Report
                  Agreement of Limited Partnership of Sydney Engel   dated March 30, 1997
                  Associates L.P.                                    (File No. 0-19217)

     10.52        Third Amendment to Second Amended and Restated     Exhibit 10.51 to Form 10-K Report
                  Agreement of Limited Partnership of Sydney Engel   dated March 30, 1997
                  Associates L.P.                                    (File No. 0-19217)

     10.53        Fourth Amendment to Second Amended and Restated    Exhibit 10.52 to Form 10-K Report
                  Agreement of Limited Partnership of Sydney Engel   dated March 30, 1997
                  Associates L.P.                                    (File No. 0-19217)

     10.54        Union Valley Associates Limited Partnership        Exhibit 10.14 to Form 10-Q Report
                  Amended and Restated Agreement and Certificate     dated December 30, 1990
                  of Limited Partnership                             (File No. 33-31390)

     10.55        Walnut Grove Family, L.P. (A Mississippi Limited   Exhibit 10.4 to Form 10-Q Report
                  Partnership) Amended and Restated Limited          dated September 29, 1991
                  Partnership Agreement and Certificate of Limited   (File No. 0-19217)
                  Partnership

     10.56        Waynesboro Apartments Limited Partnership          Exhibit 10.15 to Form 10-Q Report
                  Amended and Restated Agreement and Certificate     dated December 30, 1990
                  of Limited Partnership                             (File No. 33-31390)

     10.57        West Calhoun City, L.P. (A Mississippi Limited     Exhibit 10.5 to Form 10-Q Report
                  Partnership) Amended and Restated Limited          dated September 29, 1991
                  Partnership Agreement and Certificate of Limited   (File No. 0-19217)
                  Partnership

     10.58        Westminster Apartments Limited Partnership         Exhibit 10.53 to Form 10-K Report
                  Second Amended and Restated Agreement of Limited   dated March 30, 1992
                  Partnership                                        (File No. 33-31390)
</TABLE>

                                       42

<PAGE>

<TABLE>
<CAPTION>

                                                                           Incorporated by
                          Exhibit                                           Reference to
                          -------                                           ------------
<S>               <C>                                                <C>

     28.0         Pages 20 through 31, 44 through 71 and 78         Exhibit 28.0 to Form 10-K Report
                  through 80 of Prospectus filed pursuant to Rule   dated March 30, 1990
                  424(b)(3) under Securities Act of 1933            (File No. 33-31390)

     28.1         Pages 14 through 19 of Prospectus filed pursuant  Exhibit 28.1 to Form 10-K Report
                  to Rule 424(b)(3) under Securities Act of         dated March 30, 1991
                  1933                                              (File No. 33-31390)

     28.2         Supplement No. 1 dated June 6, 1990 to Prospectus Exhibit 28.2 to Form 10-K Report
                                                                    dated March 30, 1991
                                                                    (File No. 33-31390)

     28.3         Supplement No. 2 dated November 21, 1990 to       Exhibit 28.3 to Form 10-K Report
                  Prospectus                                        dated March 30, 1991
                                                                    (File No. 33-31390)

     28.4         Supplement No. 3 dated December 20, 1990 to       Exhibit 28.4 to Form 10-K Report
                  Prospectus                                        dated March 30, 1991
                                                                    (File No. 33-31390)

     28.5         Supplement No. 4 dated October 30, 1991 to        Exhibit 28.5 to Form 10-K Report
                  Prospectus                                        dated March 30, 1992
                                                                    (File No. 33-31390)

     28.6         Supplement No. 5 dated December 26, 1991 to       Exhibit 28.6 to Form 10-K Report
                  Prospectus                                        dated March 30, 1992
                                                                    (File No. 33-31390)

     28.7         Supplement No. 6 dated January 15, 1992 to        Exhibit 28.7 to Form 10-K Report
                  Prospectus                                        dated March 30, 1990
                                                                    (File No. 33-31390)
</TABLE>

    (b) Reports on Form 8-K

    No reports on Form 8-K were filed by Registrant during the last quarter of
the period covered by this report.

    (c) Exhibits

    See (a)(3) above.

(d)      Financial Statement Schedules

    See (a)(2) above.


                                       43

<PAGE>

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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.


                                     AMERICAN TAX CREDIT PROPERTIES III L.P.
                                     (a Delaware limited partnership)

                                     By: Richman Tax Credit Properties III L.P.,
                                         General Partner

                                     by: Richman Housing Credits Inc.,
                                         general partner

Dated:  June 28, 2001                /s/ Richard Paul Richman
        -------------                ----------------------------------
                                     by: Richard Paul Richman
                                         President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.

     Signature                        Title                          Date
     ---------                        -----                          ----

   /s/ Richard Paul Richman        President, Chief                June 28, 2001
   -----------------------------   Executive Officer
   (Richard Paul Richman)          and Director of the
                                   general partner of the
                                   General Partner

   /s/ Neal Ludeke                 Vice President and Treasurer    June 28, 2001
   -----------------------------   of the general partner of the
   (Neal Ludeke)                   General Partner (Principal
                                   Financial and Accounting
                                   Officer of Registrant)


                                       44