Form 10-KSB


[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934 For the Fiscal Year ended December 31, 1997

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
    For the transition period from _______ to ______


                       Commission file number  0-28764


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



            California                                      33-0526128
   -------------------------------              ----------------------------
    (State or other jurisdiction                (IRS Employer Identification
  of incorporation or organization)                             No.)


       4100 Newport Place, Suite 400, Newport Beach, California 92660
       --------------------------------------------------------------
                     (Address of principal executive offices)



                                  (714) 566-3400
                            --------------------------
                            (Issuer's telephone number)


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


                                                  Name of Each Exchange 
     Title of each class                    on which each class is to be
     to be so registered:                              registered: 
               	
            None                                          None
			
Securities to be registered under Section 12 (g) of the Act:

                         (Title of Class)
              Limited Partnership Interests ("Units")

<PAGE>



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


                             INDEX TO FORM 10-KSB


                                   PART I

Item 1.  Description of Business

Item 2.  Description of Property

Item 3.  Legal Proceedings

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

                                  PART II

Item 5.  Market for Units and Related Matters for Holders in 
         Interest

Item 6.  Management's Discussion and Analysis of Financial Condition 
         and Results of Operations

Item 7.  Financial Statements

Item 8.  Changes in and Disagreements with Accountants on Accounting 
         and Financial Disclosure
		
                                  PART III
		
Item 9.  Directors, Executive Officers, Promoters and Control 
         Persons

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and 
         Management

Item 12. Certain Relationships and Related Transactions.
		
Item 13. Exhibits

Signatures 
<PAGE>


                   PERFORMANCE ASSET MANAGEMENT FUND III, LTD., 
                       A CALIFORNIA LIMITED PARTNERSHIP
	
                                    PART I
	
	
ITEM 1.  Description of Business.

The General Partner.
	
     Performance Development, Inc., a California corporation and the 
General Partner of the partnership ("General Partner"), was formed in 
June 1990 to engage in various aspects of the investment banking 
industry.  The General Partner is also the General Partner for various 
other California limited partnerships.
	
Formation of Partnership.
	
	Performance Asset Management III, Ltd. A California Limited 
Partnership, was formed on October 13, 1992, as a limited partnership 
in California pursuant to the provisions of the Revised Limited 
Partnership Act of the State of California ("Partnership") by the filing
of the Certificate of Limited Partnership on Form LP-1 with the State of
California Secretary of State.  The Partnership offered and sold 1,998 limited
partnership interests ("Units"), at a purchase price of $5,000.00 per
Unit.  The offer and sale of the Units were exempt from the registration
requirements of Section 5 of the Securities Act of 1933 ("Securities Act")
because the Units were offered and sold pursuant to an exemption specified
by the provisions of Section 4(2) of the Securities Act and Regulation D
promulgated pursuant thereto.  The total amount contributed to the capital
of the Partnership from purchasers of Units ("Limited Partners") was 
$9,990,000.  As of March 1, 1998, the Partnership had 596 Limited 
Partners.  The executive offices of the Partnership are located at 
4100 Newport Place, Suite 400, Newport Beach, California 92660.  The 
Partnership's telephone number is (714) 566-3400.
	
Business of the Partnership.
	
	The Partnership is engaged in the business of acquiring assets 
originated by federal and state banking and savings institutions loan 
agencies, and other sources, for the purpose of generating income and 
cash flow from managing, operating, collecting, servicing, or selling 
those assets.  Typically, these assets consist of charged off credit 
card contracts, secured and unsecured commercial and consumer loans, 
personal property, notes receivable, and other forms of indebtedness.  
These assets, typically, are purchased and sold as portfolios 
("Portfolios").
	
	The General Partner, on behalf of the Partnership, has entered 
into joint venture agreements with Performance Capital Management, Inc. 
("PCM"), a California corporation and an Affiliate* of the General 
Partner, pursuant to the provisions of which PCM provides acquisition, 
collection and servicing activities for the Partnership.  Presently, 
the General Partner intends for the Partnership to continue its joint 
venture relationship with PCM.  The joint venture agreements generally 
provide that all distributions are shared by the venturers in 
proportion to their respective percentage interests, generally 55% to 
65% for the Partnership and 35% to 45% for PCM.  The General Partner
<PAGE>


has concentrated on purchasing Portfolios for the Partnership, which 
have the potential to generate cash flow to the Partnership with 
effective servicing and collection efforts.  The objective of the 
Partnership is to maximize gain or income from the Portfolios purchased 
with the least amount of expenditure for servicing and collection 
efforts.  The Partnership acquires the Portfolios from PCM.  The 
Portfolios, acquired from third-parties, are sold to the Partnership by 
PCM for amounts determined by the General Partner to be reasonable, 
customary, and competitive in light of the size, type and character of 
the acquired Portfolios and consistent with the Partnership's Agreement 
of Limited Partnership ("Partnership Agreement").  The Partnership 
utilizes the services of PCM to manage, service, and collect on the 
Portfolios.  Additionally, the Partnership sells Portfolios and 
portions of Portfolios in those circumstances in which the General 
Partner determines that such sales are in the best interests of the 
Partnership.
	
	*	The term  Affiliate means (i) any person who directly or 
indirectly controls or is controlled by or under a common control with 
another person or entity; (ii) a person owning or controlling 10% or 
more of the outstanding voting securities of such other person or 
entity; (iii) any officer or director of such other person or entity; 
or (iv) any person who is an officer, director, general partner, 
trustee, or holder of 10% or more of the voting securities or 
beneficial interests of any of the foregoing.
	
Bulk Portfolios.
	
    	Typically, loan accounts are sold by the originating lenders in 
bulk Portfolios that range in size from tens of thousands to multi-
hundred million dollars in outstanding principal balances.  These 
Portfolio sales usually consist of a large quantity of charged off 
credit card contracts, automobile deficiencies, secured and unsecured 
consumer installment loans, commercial loans, and other forms of 
indebtedness.  Although typically only a relatively small percent of 
the total outstanding principal balances of most Portfolios purchased 
by the Partnership can be collected, most of those Portfolios have been 
purchased at discounts sufficient enough that, when coupled with 
effective servicing and collection efforts, profits can be realized and 
the Partnership's objectives can be fulfilled.  The Partnership has 
sold certain acquired Portfolios, or portions thereof, to various third 
parties. Profits from such sales have been used to acquire additional 
assets for the Partnership and to distribute cash to the Limited 
Partners.
	
Acquisition of Portfolios.

    	Because of the experience of PCM in Portfolio acquisition 
transactions, PCM is recognized by the institutions selling charged off 
commercial and consumer indebtedness as one of the larger purchasers of 
distressed consumer indebtedness.  PCM general relies on its own 
contacts and relationships for acquisitions of Portfolios.
	
    	Upon contacting or being contacted by a potential seller of 
Portfolios, PCM will normally request that certain data be submitted 
for due diligence purposes.  By reviewing that data, PCM and the 
General Partner analyze the respective Portfolios by checking an array 
of information, including data integrity, deciphering statutes of 
limitations by state and incorporating other methods to check the
<PAGE>


individual debtors status.  By completing the due diligence process and 
considering the pertinent information regarding a potential Portfolio's 
acquisition, PCM and the General Partner can approximate the value of 
that Portfolio and extend an offer to purchase that Portfolio on terms 
which should enable the Partnership to collect, service and manage that 
Portfolio to a profit.  
	
	The General Partner anticipates that the Partnership will 
continue to purchase Portfolios.  In past years, the Partnership has 
acquired certain Portfolios which have accounts that have been 
rewritten with terms and conditions different from the original 
obligations.  The General Partner anticipates that the Partnership will 
not acquire such Portfolios in the future unless such an opportunity 
arises and the General Partner believes that this opportunity will 
achieve the objectives of the Partnership.
	
	Investments in Portfolios are carried at the lower of cost or 
estimated net realizable value.  Amounts collected on the Portfolios 
acquired by the Partnership are treated as a reduction to the carrying 
basis of the related investment on an individual Portfolio basis.  
Accordingly, income is not recognized by the Partnership until recovery 
of 100% of the original cost of the investment by the Partnership on a 
Portfolio by Portfolio basis occurs.  Estimated net realizable value 
represents the estimate of the General Partner, based upon the General 
Partner's present plans and intentions, of the present value of future 
collections.  As a result of the distressed nature of the loans 
comprising the Portfolios, there is no assurance that the unpaid 
principal balances of those loans will be collected.  Any adjustments 
to the carrying value of the individual Portfolios are recorded in 
results of operations.
	
	As of December 31, 1997, and 1996, the Partnership had 
investments in Portfolios with remaining values of $1,663,174 and 
$2,566,546, respectively.  Collections and sales proceeds obtained by the
Partnership on investments in these Portfolios totaled $908,816 and $4,725,191
during the years ended December 31, 1997 and 1996, respectively.

     The Partnership acquired one Portfolio and three Portfolios 
totaling $25,477 and $2,764,469 during the years December 31, 1997 and 
1996, respectively.
	
Servicing and Collection of Portfolios.
	
	Once a Portfolio is purchased, generating cash flow involves a 
rigorous campaign to locate and contact the maximum number of 
individual debtors.  The General Partner and its Affiliates 
continuously utilize shared data and technology, as well as various 
third party databases, in an attempt to locate individual debtors.  
Once a debtor is contacted, the collection representative begins 
negotiating various payment and settlement options.  These options can 
include payments in full for all outstanding obligations, discounted 
settlements and short-term payment plans.  Normally, because the cost 
basis is extremely low for each account, collection representatives can 
offer more attractive settlement and payment options to individual 
debtors than those debtors have been offered by the originating lender 
or contingent collection firms.
<PAGE>


	The Partnership utilizes the services of PCM exclusively for 
managing, servicing, and collecting the Partnership's Portfolios.  
Therefore, the Partnership is dependent upon PCM for those management, 
servicing, and collection services.  The compensation paid by the 
Partnership to PCM for those services is no less favorable to the 
Partnership than that compensation which would be paid by the 
Partnership to equally qualified but unaffiliated persons.

     The Partnership is completely dependent on PCM for 
managing, servicing and collecting the Partnership's Portfolios.  The 
General Partner is confident that in the event, for whatever reason, 
PCM would be unable to collect, manage and service those Portfolios, 
the General Partner will be able to retain for the benefit of the 
Partnership, another competently qualified entity to service, manage 
and collect those Portfolios for the Partnership, with minimum 
disruption to the business of the Partnership. 

	
Settlement with West Capital Financial Services Corp.
	
	Prior to March 1996, the Partnership also utilized the collection 
services of West Capital Financial Services Corp., a California 
corporation ("WCFSC"), pursuant to a servicing agreement entered into 
in 1992.  In 1994, the General Partner desired to utilize a portion of 
the Partnership's revenues and cash flow for the purpose of causing the 
Partnership to acquire an ownership interest in WCFSC.  In order to 
effectuate that acquisition, on April 8, 1994 the General Partner, on 
behalf of the Partnership and the four other similar California 
partnerships ("PAM Funds"), entered into a Stock Acquisition Agreement 
("Stock Agreement") with WCFSC.  The purpose of the Stock Agreement was 
to acquire, for the Partnership and the PAM Funds, 1,000 shares of no 
par common stock of WCFSC, which 1,000 shares would represent 50% of 
the then issued and outstanding no par common shares of WCFSC.  The 
Stock Agreement provided that the PAM Funds and the Partnership would 
receive credits for approximately $1,881,950 due to the PAM Funds and 
the Partnership from WCFSC, and the Partnership and the PAM Funds would 
then remit cash to WCFSC in the amount of $1,970,000 to WCFSC that was
received from collections on certain Portfolios during the 5 month period
subsequent to the date on which the Stock Agreement was signed.
	
    	Certain differences of opinion developed between the General 
Partner and WCFSC regarding the terms and conditions of the Stock 
Agreement.  As a result, the General Partner, for the benefit of the 
Partnership and its Affiliates, including the PAM Funds, commenced 
litigation against WCFSC and certain of its Affiliates ("WCFSC Dispute").
	
     On February 8, 1996, the parties to the WCFSC Dispute entered 
into a Settlement Agreement and mutual general release ("Settlement 
Agreement") for the purpose of settling and resolving any and all 
disputes existing between the various parties to the WCFSC Dispute. The 
Settlement Agreement resulted in the dismissal of the WCFSC Dispute; 
release by all parties of all claims against other involved parties, 
including those claims relating to the Stock Agreement; and assignment 
and transfer by the Partnership and its Affiliates to WCFSC of certain 
distressed loan Portfolios.
<PAGE>


    	The Settlement Agreement required that WCFSC pay to the 
Partnership and its Affiliates $16,194,850 in exchange for the general 
release, by the Partnership and its Affiliates, of WCFSC and its 
Affiliates from the claims asserted in the WCFSC Dispute.  The 
Settlement Agreement also required the sale to WCFSC by the Partnership 
and its Affiliates of certain interests of the Partnership and its 
Affiliates in certain Portfolios, and the transfer by the Partnership 
and its Affiliates to WCFSC of various other assets and rights.  In 
addition, the Settlement Agreement required the establishment of a 
defense fund of $250,000 that is available to pay legal costs and fees 
incurred by WCFSC to defend any and all actions which may be brought by 
limited partners in the PAM Funds or the Partnership.  To date no such 
actions have been brought. The defense fund terminates in July of 1999.  
Any remaining funds and earned interest will be distributed to the 
Partnership and the PAM Funds.
	
    	The proceeds from the Settlement Agreement were allocated to the 
Partnership and its Affiliates, including the PAM Funds, by the General 
Partner in accordance with the respective interests of the Partnership 
and its Affiliates.  Accordingly, the Partnership was allocated 
$5,727,315 of the total settlement proceeds.
	
    	The Settlement Agreement was approved by 87.63% of the Limited 
Partners; 0.02% of the Limited Partners disapproved the Settlement 
Agreement; and 12.35% of the Limited Partners provided no response 
regarding the approval of the Settlement Agreement. 
	
    	Additionally, 91.12% of all the limited partners in the PAM Funds 
and the Partnership, in the aggregate, executed a general release in 
favor of WCFSC.
	
Reorganization of Partnership.
	
     The General Partner is considering the merger, combination, 
reorganization, and rollup ("Rollup") of the PAM Funds and the 
Partnership into Performance Asset Management Company, a Delaware 
corporation  ("PAMCO").  The General Partner is aware of the various 
federal and state rules and regulations regarding the Rollup, and the 
General Partner intends that it and the Partnership will comply with 
those rules and regulations.  In an effort to assure compliance with 
those rules and regulations, the General Partner engaged in 
conversations with representatives from the State of California 
Department of Corporations ("Department") regarding the Rollup.  The 
General Partner and representatives of the Department determined that 
to accommodate the purposes of the General Partner and to expedite, as 
much as possible, the Rollup, the Performance Asset Management Fund 
Trust be established ("Trust").  Accordingly, on or about December 8, 
1995, the Trust was established.   As of December 31, 1997, the total 
amounts on deposit in the Trust totaled $7,628,216, including 
$2,141,594 which is for the direct benefit of the Partnership.
		
Employees.
	
    	The Partnership does not have any employees.  The General Partner 
does not have any employees.  The human resources requirements of the 
Partnership for 1997 were furnished by Vision Capital Services, Corp. a 
California corporation ("Vision") and an Affiliate of the General 
Partner. Vision was formed in January 1997 to provide human resources 
("employees") to PCM, the General Partner, the Partnership and their 
Affiliates.  All employees, while directly employed by Vision, work for 
the benefit of PCM, the General Partner, and the Partnership and their 
Affiliates.  The Partnership reimburses Vision for any expenditures 
paid by Vision on the Partnership's behalf.  Fees and expenses paid by
<PAGE>


the Partnership to Vision are not less favorable to the Partnership 
than those that would be paid by the Partnership to equally qualified 
but unaffiliated persons. In 1996 the services furnished by Vision were 
furnished by Spectrum Capital Management, Inc., a California 
corporation and an Affiliate of the General Partner ("SCM"), under a 
similar reimbursement arrangement.

The Units and Distributions of Cash.
	
	The Units constitute equity interests entitling each Limited 
Partner to a pro rata share of cash distributions made to the Limited 
Partners.  The Partnership Agreement specifies how the cash available for 
distribution, whether occurring from operations or sales or 
refinancing, is to be shared among the Limited Partners and the General 
Partner.  The distributions payable to the Limited Partners are not 
fixed in amount and depend upon the operating results and net sale or 
refinancing proceeds available from the disposition of the Partnership's
assets.
	
Environmental Compliance.
	
     Due to the nature of the Partnership and General Partner's 
business, the Partnership is not subject to any significant costs of 
regulatory compliance with respect to federal, state and local 
environmental laws and rulings, and does not anticipate any significant 
expenses associated with such laws or rulings in the future.
	
Item 2.  Description of Property

Investment Policies.
	
     The Partnership's plan of business provides for the acquisition 
of various types of income producing assets from various sources for 
the purpose of generating revenue and cash available for distribution 
to the Partners and can not be amended without a vote of the 
Limited Partners.  The present intentions of the General Partner are to 
continue to acquire Portfolios.  The General Partner has no current 
intention of acquiring investments in real estate or interests in real 
estate.  The Partnership is not subject to any restrictions or 
limitations on the percentage of assets that may be invested in any one 
type of investment.
	
Property held by the Partnership.
	
    	The Partnership held the following investment property as of 
December 31 for the years specified:

<TABLE>
<CAPTION>
              Property                       1997                1996
     -------------------------         ---------------     --------------
<S>                                   <C>                  <C>
     Cash Held in Trust                  $2,141,594           $2,656,338 
		
     Net Investments in Portfolios        1,663,174            2,566,546         
</TABLE>
<PAGE>


	The PAM Funds and the Partnership have interests in cash and 
equivalents totaling $7,628,216 which was distributed by WCFSC to the 
Trust and used for the benefit of, among other parties, the 
Partnership.  The Partnership's portion of such amounts is included as 
Cash Held in Trust at December 31, 1997.
	
	Portfolios are carried at the lower of cost or estimated net 
realizable value.  Amounts collected on the loans acquired by the 
Partnership are treated as a reduction to the carrying basis of the 
related Portfolio.  Accordingly, income is not recognized by the 
Partnership until recovery of 100% of the cost to the Partnership of 
the respective Portfolio.  Estimated net realizable value represents 
the General Partner's estimate, based on its present plans and 
intentions, of the present value of future collections.  As a result of 
the distressed nature of the loans comprising the Portfolios, no 
interest is earned on outstanding balances, and there is no assurance 
that the unpaid principal balances of those loans will be collected. 
Any adjustments to the carrying value of the individual Portfolios are 
recorded in results of operations.
	
Executive Office.
	
     The General Partner's and Partnership's executive offices are 
located in Newport Beach, California in a facility of approximately 
15,000 square feet, which is shared among a number of affiliated 
companies.  Neither the General Partner nor the Partnership is party to 
the lease for these offices.

Item 3. Legal Proceedings.

Legal Proceedings.

	The legal action specified in this section is the only legal 
action pending against the Partnership and no additional legal actions 
against the Partnership are contemplated.  Additionally, the legal 
actions in which the General Partner and certain of its Affiliates are 
involved are specified below.

	On or about October 31, 1997, SunAmerica, Inc., a Maryland 
corporation; SunAmerica Life Insurance Company, an Arizona corporation; 
WCFSC; and WCFSC Special Purpose Corporation, a California corporation, 
as Plaintiffs, filed a Complaint in United States District Court for 
the Central District of California alleging (i) violations of Section 
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated 
pursuant thereto; (ii) fraud and deceit; and (iii) gross negligence.  
Specified in the Complaint as Defendants are Vincent E. Galewick, 
President of the General Partner; the Partnership and the PAM Funds; 
and the General Partner ("Performance Defendants").   None of the 
Performance Defendants have been served with the Complaint, and the 
Performance Defendants became aware of the allegations in the Complaint 
on or about November 7, 1997.

	The Complaint, in essence, alleges that Michael A. Joplin, the 
then President of WCFSC, engaged in wrongful, deceptive and fraudulent 
conduct in connection with the purchase and sale of certain securities.  
Additionally, that Complaint alleges that the Performance Defendants 
participated in that conduct.
<PAGE>


	None of the Performance Defendants participated, either directly 
or indirectly, in any wrongful, deceptive and fraudulent conduct in 
connection with the purchase and sale of those securities.

	As part of their settlement of various disputes with WCFSC, the 
Performance Defendants entered into the Settlement Agreement which 
includes a thorough and comprehensive mutual general release ("Release").
Pursuant to the provisions of the Release, WCFSC, for itself and 
its shareholders, officers, directors, affiliates, agents, successors, 
and assigns, forever and unequivocally released, acquitted and 
discharged the Performance Defendants and their officers, directors, 
employees, shareholders, partnerships, affiliates, agents, successors, 
and assigns.  Therefore, it is the opinion of counsel for the 
Performance Defendants that the Performance Defendants have been 
completely and unconditionally released from any liability arising from 
their relationships and transactions with WCFSC.

	The Performance Defendants deny each and every allegation in that 
litigation matter and shall defend that litigation matter vigorously.  
Moreover, Plaintiffs in that lawsuit have represented to the court that 
they are amending their complaint. On or about March 10, 1998, 
Plaintiffs  attorney filed a declaration under penalty of perjury with 
the court which stated that,  Based on Plaintiffs  investigations to 
date, defendants Vincent Galewick, Performance Development, Inc. and 
Performance Asset Management Funds, Ltd. are not expected to be named 
as defendants in the amended complaint.   It is the opinion of counsel 
for the Performance Defendants that all the Performance Defendants may 
be dismissed from that lawsuit.  Moreover, it is the opinion of counsel 
for the Performance Defendants that any resolution of that litigation 
matter other than dismissal should be resolved favorably for the 
Performance Defendants and, therefore, the resolution of that 
litigation matter should not (i) affect the ability of the General 
Partner to function as the General Partner and manage operations of the 
Partnerships, or (ii) materially and adversely affect the General 
Partner or the Partnerships.
  
	Accordingly, the General Partner is informed and, therefore, 
believes that a subsequent, amended complaint may be filed in this 
matter and that none of the Performance Defendants will be specified as 
defendants in that subsequent amended complaint.  No assurance can be 
given that any such subsequent amended complaint will, in fact, be 
filed or, if filed, that any of the Performance Defendants will not be 
specified as defendants.  If the Partnership or the General Partner 
remain as defendants in that litigation action, there can be no 
assurance or guaranty that the resolution of such litigation action 
will not have a material adverse effect on the business or financial 
resources of the General Partner or the Partnership.

     The General Partner; Income Network Company, a California 
corporation and an Affiliate of the General Partner; and Vincent E. 
Galewick are named as Defendants in a pending litigation matter 
entitled Margarita K. Kanne and Louis H. Knoop v. Sundance Resources; 
Prospect Fund, 1991 II et al. In that action the Plaintiffs allege 
violations of certain provisions of the California Corporations Code 
and the Securities Act and common law fraud. The General Partner, 
Income Network Company, and Mr. Galewick deny each and every such 
allegation in that litigation matter and are defending that litigation 
matter vigorously. The causes of action alleged in that litigation 
matter against the defendants regarding those violations of the
<PAGE>


     California Corporations Code and the Securities Act were dismissed by 
summary adjudication entered in favor of those defendants. It is the 
opinion of counsel for the General Partner that any resolution of that 
litigation matter should not (i) affect the ability of the General 
Partner to function as the General Partner and manage operations of the 
Partnerships or (ii) materially and adversely affect the General 
Partner or the Partnerships.

Indemnification of General Partner

	A provision has been made in the Partnership Agreement to provide 
that the General Partner shall have no liability to the Partnership for 
any loss occurring because of any act or omission by the General 
Partner; provided however, that the General Partner's conduct was in 
the best interest of the Partnership; provided, further, however, that 
the General Partner's conduct did not constitute fraud, bad faith, 
gross misconduct or gross negligence.  As a result, Limited Partners 
may have a more limited right of action in certain circumstances than 
they would in the absence of such a provision in the Partnership 
Agreement.

	The Partnership Agreement  also provides that, to the extent 
permitted by law, the Partnership shall indemnify the General Partner 
against liability and related expenses (including attorney's fees) 
incurred in dealings with third parties; provided, however, the conduct 
of the General Partner is consistent with the standards described in 
the preceding paragraph.  The General Partner is not indemnified 
against liabilities occurring pursuant to the provisions of the 
Securities Act.  The Partnership shall not pay for any insurance 
insuring the liability of the General Partner or any other persons for 
actions or omissions for which indemnification is not permitted by the 
Partnership Agreement; provided, however, the General Partner may be an 
additional insured party on policies obtained for the benefit of the 
Partnership to the extent there is no additional cost to the 
Partnership or decrease in the insurance proceeds payable to the 
Partnership.

                     DISCLOSURE OF COMMISSION'S POSITION ON 
                 INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 
  
     INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE ACT 
MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE 
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN 
INFORMED THAT IN THE OPINION OF THE COMMISSION SUCH INDEMNIFICATION IS 
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS, THEREFORE, 
UNENFORCEABLE. 

Bankruptcy Proceedings

	The Partnership has not been a party, directly or indirectly, to 
any bankruptcy, receivership, or similar proceedings.

Reorganization

	The Partnership is not now a party to any material 
reclassification, merger, consolidation, or purchase or sale of a 
significant amount of assets not in the ordinary course of business; 
provided, however, it is contemplated that the Partnership shall be 
reorganized, merged, consolidated, and rolled up with and into PAMCO.
<PAGE>





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

	In January 1996, the General Partner submitted to the Limited 
Partners for vote the acceptance of the Settlement Agreement.  The 
Settlement Agreement was approved by 87.63% of the Limited Partners; 
less than 1% of the Limited Partners disapproved of the Settlement 
Agreement; and 12.35% of the Limited Partners provided no responses 
regarding the approval of the Settlement Agreement.



PART II.

Item 5. Market for Units and Related Matters for Holders in Interest.
	
	The Units are not publicly traded or transferable to other 
purchasers.  Accordingly, no market information is provided.
	
	As of March 1, 1998, the Partnership had 596 Limited Partners.
	
	The Partnership provided cash distributions of $800,400 and 
$295,925 to Limited Partners during the years ended December 31, 1997 
and 1996, respectively.  The Partnership recorded distributions of 
$88,800 and $35,775 to the General Partner during the years ended 
December 31, 1997 and 1996, respectively. Distributions have been 
suspended in anticipation of the reorganization and merger of the 
Partnership and the PAM Funds into PAMCO.


Item 6. Management's Discussion and Analysis of Financial Condition and 
        Results of Operations.


Results of Operations
	
	Comparison of the year ended December 31, 1997 to the year ended 
December 31, 1996.
	
     Collections from the Partnership's Portfolios decreased 
approximately 81% to $908,816 for the year ended December 31, 1997, 
from $4,725,191 for the comparable period in 1996.  This decrease in 
collections was primarily attributable to proceeds received in 1996 
from the settlement and sale of the Partnership's Portfolios to WCFSC.  
Subsequent to April 1996, PCM provided all servicing and collection 
services for the Partnership and will continue to do so.  The 
Partnership, in conjunction with PCM and other affiliated Partnerships 
also sold portions of previously acquired Portfolios to independent 
third-party purchasers.  Proceeds recorded from such sales totaled 
$54,711 for the period ended December 31, 1997.
<PAGE>




     The Partnership is completely dependent on PCM for managing, servicing
and collecting the Partnership's Portfolios.  The General Partner is confident
that in the event, for whatever reason, PCM would be unable to collect, manage
and service those Portfolios, the General Partner will be able to retain for
the benefit of the Partnership, another competently qualified entity to service,
manage and collect those Portfolios for the Partnership, with minimum 
disruption to the business of the Partnership. 

	Net investment income decreased approximately 43% to zero from 
$884,915 in 1996 due to the proceeds recived from the WCFSC Settlement Agree-
ment in 1996.  Durng the year ended December 31, 1996, the Partnership held
twelve Portfolios in which 100% of the original cost was recovered and net
investment income was recorded for these Portfolios.  This is attributed
entirely to the settlement and sale of the Portfolios related to the Settlement
Agreement with WCFSC.
	
     The Partnership received proceeds from three Portfolio sales to third
parties of $54,711, of which 100% were characterized as recoveries of invest-
ment and reflected as Portfolio collections for the year ended December 31, 
1997.  For the comparable period ended December 31, 1996, three 
Portfolio sales to third parties totaled $112,820, of which 100% were
characterized as recoveries of investment and characterized as Portfolio
collections. The General Partner believes that proceeds from both collections
and Portfolio account sales will increase in subsequent periods.
	
     Total operating expenses decreased approximately 18% to $320,836 
for the year ended December 31, 1997, which compares to $392,357 for 
the comparable period in 1996. Collection expenses decreased 
approximately 38% for the year ended December 31, 1997, to $45,241 from 
$73,542 for the comparable period in 1996.  The decrease in collection 
expenses is attributed primarily to the fact that less Portfolios were 
maintained by the Partnership due to the settlement and sale of the 
Partnership's Portfolios to WCFSC pursuant to the Settlement Agreement 
with WCFSC.  The decrease in professional fees of approximately 23% to 
$195,199 for the year ended December 31, 1997 from $254,453 in 1996 is 
also attributed to the Settlement Agreement with WCFSC.

	The General Partner continuously evaluates the collectibility of 
distressed loan balances, and reduces the carrying value of the 
investments based on such evaluations.  The Partnership has recorded an 
allowance for possible Portfolio losses on investments in specific 
distressed loan Portfolios of $20,033 as of December 31, 1997. 
			
Financial Condition.
	
     The Partnership's total assets decreased approximately 18% to 
$5,035,056 as of December 31, 1997, from $6,120,078 at December 31, 
1996.  This decrease is primarily attributed to Portfolio collection 
proceeds of $908,816 of which 100% was recorded as a reduction of
<PAGE>



investment Portfolio assets.  The following table is a summary of the 
activity of investments in Portfolio assets for the year ended December 
31, 1997.
	
     Carrying Value of Portfolios, January 1, 1997          $2,566,546
	
     Carrying Value of Portfolio Accounts Sold                 (54,711)  
	
     Collections of Portfolio Basis (Carrying Value)          (854,105)

     Provision for Portfolio Losses                            (20,033)
	
     Cost of Investment Portfolio Acquired                      25,477
                                                            ----------
     Carrying Value of Portfolios, December 31, 1997        $1,663,174
                                                            ==========


Liquidity and Resources.
	
	The Partnership relies on proceeds from Portfolio collections and 
sales to fund additional acquisitions of Portfolios and Partnership 
working capital requirements.  Portfolio collections are principally 
dependent on the resources and performance of PCM. The Partnership is 
completely dependent on PCM for managing, servicing and collecting the 
Partnership's Portfolios.  The General Partner is confident that in the 
event, for whatever reason, PCM would be unable to collect, manage and 
service those Portfolios, the General Partner will be able to retain 
for the benefit of the Partnership, another competently qualified 
entity to service, manage and collect those Portfolios for the 
Partnership, with minimum disruption to the business of the 
Partnership. 

	At December 31, 1997, the Partnership had cash and equivalents 
available for operations of $1,109,587 compared to $775,755 at December 
31, 1996. The General Partner anticipates that cash and equivalent 
balances at December 31, 1997 will be sufficient to finance current and 
forecasted operations.
	
	The Partnership acquired one new distressed loan Portfolio 
totaling $25,477 in the fiscal year ended December 31, 1997, and 
anticipates that the Partnership will acquire additional Portfolios in 
the near future.  Future acquisitions will depend on the asset market, 
which continues to grow in size and diversity.  The General Partner 
believes that the Partnership will continue to acquire low-priced 
distressed Portfolios; however, the General Partner will continue to 
evaluate assets with different pricing and debtor account structure to 
determine whether such Portfolios can generate significant immediate 
cash flows and provide additional liquidity to the Partnership.
	
	The Partnership has made no future commitments with credit card 
originators and other financial institutions to acquire Portfolios.  
The General Partner and PCM plan to use their present contacts and
relationships to identify and acquire additional assets for the Partnership
at optimal prices, and believe that they will have no difficulties in
identifying and acquiring such assets.  Distributions were suspended to
Limited Partners in the third quarter of 1997 in anticipation of the
contemplated reorganization of the Partnership and the PAM Funds into PAMCO.  
<PAGE>


Impact of Additional Partnership Acquisitions on Operations.
	
	The General Partner anticipates that additional Portfolio 
acquisitions and continued expansion will improve the Partnership's 
liquidity, profitability and financial condition, as a result of 
increased Portfolio collections and sales.  The General Partner 
anticipates that in order to supplement such growth, PCM must continue 
to increase its total number of collection representatives and human 
resources.  The General Partner anticipates that existing management 
will be able to supervise the additional Portfolio growth of the 
Partnership, as well as facilitate any increase of the Partnership's 
Portfolio sales activities.  The General Partner, in conjunction with 
PCM and other Affiliates, is seeking to lease office space in which PCM 
and the Partnership plan to move their facilities.  The General Partner 
believes that this move will provide the Partnership with adequate 
operating facilities for the future growth of the Partnership.

Trends in the Distressed Debt Industry

	According to a recent report in a 1997 supplement to Collections 
and Credit Risk magazine, PCM is one of the top five purchasers of bad 
debt in the United States.  Most of the top fifty purchasers of bad debt 
maintain well-established collections operations and service and 
collect on the bad debt which they purchase.  A secondary layer of 
competition for distressed asset portfolios are companies that buy debt 
in bulk and break it up into smaller portfolios that are then resold
to collection agencies, private investors and attorneys.  Traditional
collection agencies and attorneys purchase bad debt to diversify their
operations and add debt they own to contingency collection work for
others.  Moreover, industry sources estimate that about a quarter of the
buyers of bad debt in 1997 were outside investors with no experience in
the collections industry who thereafter arranged for collection agencies
to collect the debt, either through joint ventures or contingency placement.
While accurate figures are elusive, it is estimated that the volume of bad
debt purchased in the United States in 1997 ranged from $12 billion to
$18 billion.

     The amount of debt available for sale in the industry continues to 
increase. Financial institutions previously had forwarded all their 
accounts after charge-off to collection agencies for further collection 
activity as standard operating procedure. After being at an agency for 
six to twelve months, accounts would be returned to the lender and then 
forwarded to additional agencies, sometimes as many as five times. In order 
to streamline operations and control costs, many institutions are now 
looking towards the sale of some or all of these accounts as a means to get 
immediate revenue for these accounts. Additionally, not only does the 
total amount of debt continue to rise year after year, but the 
percentage of those debts that becomes charged-off also continues to 
grow. These factors continue to create market opportunities for the 
buyers of distressed financial instruments as more institutions 
discover the advantages of selling their debts. The General Partner 
believes that the Partnership is well positioned to take advantage of these
trends in the distressed debt industry in its next fiscal year.    

<PAGE>


Year 2000 Disclosure
	
	The General Partner recognizes that the arrival of the Year 2000 
poses a unique challenge to the ability of the computer systems of PCM, 
used to service, manage and collect the Portfolios in which the 
Partnership has an interest, to recognize properly and process date 
sensitive information related to the date change from December 31, 1999 
to January 1, 2000.  As the century date change occurs, date-sensitive 
systems may recognize the Year 2000 as 1900, or not at all.  This 
inability to recognize or treat properly the Year 2000 may cause PCM's 
computer systems to process financial and operational information 
incorrectly, which could have a material adverse effect on the 
Partnership's results of operations.  PCM has assessed and begun 
remedial work relating to PCM's computer software programs and business 
processes to provide for PCM's ability to continue to function 
effectively.
	
	In 1997, PCM began the process of identifying, evaluating and 
implementing changes to PCM's computer programs necessary to address 
the Year 2000 issue.  The General Partner is currently addressing the 
Partnership's internal Year 2000 issue by coordinating with PCM in 
connection with PCM's modification of existing programs and conversions 
to new programs.  The General Partner is also in communication with 
financial institutions and other entities with which PCM and the 
Partnership conduct business to help them identify and resolve the year 
2000 issue as it relates to the Partnership's business operations.  An 
assessment of the readiness of those third party institutions and 
entities with which the Partnership does business is ongoing.  While 
PCM and the General Partner are confident that PCM will complete 
assessment and remediation of PCM's computer software, there can be no 
assurance that the necessary modifications and conversions by those 
third party institutions and entities with which PCM and the 
Partnership conduct business will be completed in a timely manner, 
which could have a material adverse effect on the Partnership's results 
of operations.  The total cost to the Partnership associated with the 
required modifications and conversions is not expected to be material 
to the Partnership's results of operations and financial position and 
is being expensed as incurred.
	
<PAGE>



                   Performance Asset Management Fund III, Ltd.,
                       A California Limited Partnership



                        Index to Financial Statements


                For the Years Ended December 31, 1997 and 1996





      Report of Independent Auditors                         F-1


      Financial Statements of Performance Asset Management Fund III, Ltd.,
        A California Limited Partnership:

        Balance Sheets as of December 31, 1997 and 1996      F-2

        Statements of Operations for the years ended
          December 31, 1997 and 1996                         F-3

        Statements of Partners' Capital (Deficit) for the 
          years ended December 31, 1997 and 1996             F-4

        Statements of Cash Flows for the years ended
          December 31, 1997 and 1996                         F-5


      Notes to Financial Statements                          F-6

<PAGE>




                        REPORT OF INDEPENDENT AUDITORS
	                                                                




To the Partners of 
Performance Asset Management Fund III, Ltd.
A California Limited Partnership

We have audited the accompanying balance sheets of Performance Asset Management
Fund III, Ltd., A California Limited Partnership ("Partnership"), as of December
31, 1997 and 1996, and the related statements of operations, partners' capital
(deficit) and cash flows for the years then ended.  These financial statements
are the responsibility of the Partnership's management.  Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  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 Performance Asset Management
Fund III, Ltd., A California Limited Partnership, as of December 31, 1997 and
1996, and the results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles.



/S/ KELLY & COMPANY
Kelly & Company
Newport Beach, California
March 6, 1998


















                                     F - 1
<PAGE>
<TABLE>


                   Performance Asset Management III, Ltd.,
                       A California Limited Partnership
                               Balance Sheets

                          December 31, 1997 and 1996


                                    ASSETS
<CAPTION>

                                                          1997          1996
                                                      ----------    ----------
<S>                                                <C>           <C>
Cash and equivalents                                  $1,109,587      $775,755

Cash held in trust                                     2,141,594     2,656,338

Investments in distressed loan portfolios, net         1,663,174     2,566,546

Due from affiliate                                        56,221        56,039

Other assets                                              64,480        64,477

Organization costs, net                                     -              923
                                                      ----------    ----------
Total assets                                          $5,035,056    $6,120,078 
                                                      ==========    ==========


                       LIABILITIES AND PARTNERS' CAPITAL

Accounts  payable                                         $5,219          $715

Due to affiliates, net                                   464,128       492,800 
                                                      ----------    ----------
Total liabilities                                        469,347       493,515 
                                                      ----------    ----------


General partner's deficit (no units outstanding)        (395,923)     (289,959)
Limited partners' capital (2,000 units authorized;
  1,998 units issued and outstanding at
  December 31, 1997 and 1996)                          4,961,632     5,916,522 
                                                      ----------    ----------
Total partners' capital                                4,565,709     5,626,563
                                                      ----------    ----------
Total liabilities and partners' capital               $5,035,056    $6,120,078 
                                                      ==========    ==========







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

                                     F - 2
</TABLE>
<PAGE>
<TABLE>

                   Performance Asset Management III, Ltd.,
                       A California Limited Partnership
                           Statements of Operations

                For the Years Ended December 31, 1997 and 1996

<CAPTION>

                                                          1997          1996
                                                      ----------    ----------
<S>                                               <C>            <C>
Portfolio collections                                   $908,816    $4,725,191

Less: portfolio basis recovery                           908,816     3,840,276 
                                                      ----------    ----------
     Net investment income                                     0       884,915
                                                      ----------    ----------


Cost of operations:

   Collection expense                                     45,241        73,542 

   Management fee expense                                 51,757        51,425

   Provision for Portfolio Losses                         20,033           -

   Professional fees                                     195,199       254,453 

   Amortization                                              923         1,155 

   General and administrative expense                      7,683        11,782 
                                                      ----------    ----------
     Total operating expenses                            320,836       392,357 
                                                      ----------    ----------
Income (loss) from operations                           (320,836)      492,558 

Other income:
   Interest                                              149,098       190,605 

   Other income                                               84          -
                                                      ----------    ----------
Net income (loss)                                      ($171,654)     $683,163 
                                                      ==========    ==========


Net income (loss) allocable to general partner          ($17,164)      $68,315
                                                      ==========    ==========

Net income (loss) allocable to limited partners        ($154,490)     $614,848
                                                      ==========    ==========

Net income (loss) per limited partnership unit           ($77.32)      $307.73
                                                      ==========    ==========


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

                                     F - 3
</TABLE>
<PAGE>
<TABLE>


                   Performance Asset Management III, Ltd.,
                       A California Limited Partnership
                  Statements of Partners' Capital (Deficit)

                For the Years Ended December 31, 1997 and 1996




<CAPTION>
                                          General       Limited
                                          Partner       Partners       Total
                                         ---------     ----------   ----------
<S>                                 <C>            <C>           <C>
Balance, December 31, 1995               ($322,499)    $5,597,599   $5,275,100 

  Distributions                            (35,775)      (295,925)    (331,700)

  Net income                                68,315        614,848      683,163
                                         ---------     ----------    ---------
Balance, December 31, 1996                (289,959)     5,916,522    5,626,563 

  Distributions                            (88,800)      (800,400)    (889,200)

  Net income                               (17,164)      (154,490)    (171,654)
                                         ---------     ----------    ---------
Balance, December 31, 1997               ($395,923)    $4,961,632   $4,565,709 
                                         =========     ==========    =========



























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


                                     F - 4
</TABLE>
<PAGE>
<TABLE>

                   Performance Asset Management III, Ltd.,
                       A California Limited Partnership                    
                           Statements of Cash Flows                           
							
                For the Years Ended December 31, 1997 and 1996       


<CAPTION>
                                                          1997          1996
                                                      ----------    ----------
<S>                                               <C>             <C>
Cash flows from operating activities:							
  Net income (loss)                                    ($171,654)     $683,163
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:                        
     Amortization                                            923         1,155
     Decrease (increase) in assets:                     
      Other assets                                            (3)      101,338
      Due from affiliates                                   (182)      (56,039)
      Provision for portfolio losses                      20,033
     Increase (decrease) in liabilities:                     
      Accounts payable                                     4,504        (1,808)
      Due to affiliates                                  (28,672)       59,858
                                                      ----------    ----------
Net cash (used in) operating activities                 (175,051)      787,667
                                                      ----------    ----------
Cash flows provided by (used in) investing activities:                        
  Recovery of portfolio basis                            908,816     3,840,276 
  Receivable from West Capital                              -          927,540 
  Cash held in trust                                     514,744    (1,893,699)
  Purchase of investments in distressed loan portfolios  (25,477)   (2,764,469)
                                                      ----------    ----------
Net cash provided by investing activities              1,398,083       109,648
                                                      ----------    ----------
Cash flows (used in) financing activities:                        
  Distributions to partners                             (889,200)     (331,700)
                                                      ----------    ----------
Net cash used in financing activities                   (889,200)     (331,700)
                                                      ----------    ----------
Net increase in cash                                     333,832       565,615 
Cash at beginning of period                              775,755       210,140
                                                      ----------    ----------
Cash at end of period                                 $1,109,587      $775,755 
                                                      ==========    ==========


               Supplemental Disclosure of Cash Flow Information

Cash paid during the year for:

     Franchise taxes                                        $800          $800  
							
							
							

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


                                     F - 5
</TABLE>
<PAGE>
Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements

1.  Organization and Summary of Significant Accounting Policies
                                                                   
  Organization and Description of Business

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

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

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

  Cash and Equivalents

    The Partnership defines cash equivalents as all highly liquid investments
    with an original maturity of three months or less. The Partnership main-
    tains cash balances at one bank in accounts which exceeded federally
    insured limits by approximately $1,009,000 and $675,000 at December 31,
    1997 and 1996, respectively.  The Partnership uses a cash management system
    whereby idle cash balances are transferred daily into a master account and
    invested in high quality, short-term securities that do not enjoy the bene-
    fit of the federal insurance.  The Partnership's management believes that
    these cash balances are not subject to any significant credit risk due to
    the nature of the investments and the strength of the bank and has not
    experienced any past losses with cash and equivalent investments.

    The Partnership received interest income from these investments of $149,098
    and $190,605 in 1997 and 1996, respectively.

  Cash Held in Trust

    The General Partner anticipates that the Partnership and PAM, PAM II, IV,
    and V, may, in the future, be reorganized and merged into one corporation
    (Potential Merger Participant PAM Funds).  In an effort to accomplish that
    reorganization and merger, the General Partner, on behalf of the
    Partnership and the other Potential Merger Participant PAM Funds, entered
    into an agreement on December 12, 1995 with the State of California
    Department of Corporations, pursuant to the provisions of which the
    Performance Asset Management Fund Trust ("Trust") was created. These funds

                                        F - 6
<PAGE>


Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements

1.  Organization and Summary of Significant Accounting Policies, Continued
                                                                   
  Cash Held in Trust, Continued

    held in trust are subject to the terms of the Trust Agreement.  The Trust
    was the recipient of a portion of the funds resulting from the settlement
    of certain then pending litigation between the Partnership and its
    affiliates and West Capital Financial Services Corp. ("WCFSC") and its
    affiliates.  The trust fund balance until Trust termination must exceed
    $5,000,000 among all Potential Merger Participant PAM Funds.  The Trust
    will terminate and the trustee will distribute all of the remaining funds
    held by the trustee on August 18, 1998 if reorganization and merger is not
    completed by such date.  The Partnership's share of the Trust's funds at
    December 31, 1997 and 1996 was $2,141,594 and $2,656,338.

  Investment in Distressed Loan Portfolios and Revenue Recognition

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

  Organization Costs, Net

    Organization costs include legal and other professional fees incurred
    related  to the initial organization of the Partnership.  These costs have
    been capitalized and amortized using the straight-line method over five
    years ending in 1997.  Accumulated amortization at December 31, 1997 and
    1996, totaled $5,786 and $4,863, respectively.

  Professional Expenses

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




                                     F - 7
<PAGE>


Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements


1.  Organization and Summary of Significant Accounting Policies, Continued

  Income Taxes

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

  Estimates

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

  Financial Statement Classification

    Certain amounts within the 1996 financial statements have been reclassified
    in order to conform with the 1997 financial statement presentation.

2.  Investments in Distressed Loan Portfolios, Net
                                                                    
    Investments in distressed loan portfolios consist primarily of charged-off
    credit card accounts and consumer loan balances, such as auto and personal
    lines of credit, originated by independent third-party financial institu-
    tions located throughout the United States.  In addition, the Partnership
    acquired portfolios of defaulted consumer debts which were rewritten under
    terms different from  the original obligation.  The fair value of these
    investments was determined by discounting the estimated future cash collec-
    tions on such investments during the estimated portfolio holding period
    using a discount rate commensurate with the risks involved.

    The discount rate converts the individual portfolio's expected future cash
    flows to a calculated present value.  The Partnership utilized an industry
    specific discount rate from Ibbotsen's Cost of Capital Yearbook 1998 which
    considered information for the 1997 year.  The Partnership utilized the cost
    of capital rate experienced in 1997 by personal finance companies.  The
    personal finance companies' data was selected as it most closely reflected
    comparable economic risk levels and the type of business operations
    encountered.  The weighted average cost of capital for personal fiance
    companies was between 8.08 and 10.95 for 1997 and 7.31 and 9.4 for 1996.
    The Partnership used rates within these ranges.

    At December 31, 1997 and 1996, investments in distressed loan portfolios
    consisted of the following:


                                     F - 8
<PAGE>
Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements

2.  Investments in Distressed Loan Portfolios, Net, Continued
                                                                    
                                                           1997
                                                --------------------------
                                                 Carrying          Fair
                                                  Amount           Value
                                                ----------      ----------
       Credit card accounts                     $1,662,543      $2,924,343
       Consumer loans                                  631             631
                                                ----------      ----------
                                                $1,663,174      $2,924,974
                                                ==========      ==========  

                                                           1996
                                                --------------------------
                                                 Carrying          Fair
                                                  Amount           Value
                                                ----------      ----------
       Credit card accounts                     $2,566,058      $4,254,288
       Consumer loans                                  488           1,236
                                                ----------      ----------
                                                $2,566,546      $4,255,524
                                                ==========      ==========     

    At December 31, 1997, the allowance for possible losses on investments
    (the "allowance") in specific destressed loan portfolios consisted of
    the following:

                                                   1997
                                 -----------------------------------------
                                 Investment   Allowance for       Carrying
                                  Balance     Portfolio Losses     Amount
                                 ----------   ----------------   ----------
      Credit card accounts       $1,683,207      $20,033         $1,663,174
                                 ----------   ----------------   ----------
                                 $1,683,207      $20,033         $1,663,174
                                 ==========   ================   ==========

    The Partnership continuously evaluates the collectibility of distressed
    loan balances by reviewing the cash flows from the individual portfolios
    as well as their respective market values.  The Partnership adjusts the
    allowance of those portfolios for which the cash flows or market values of
    the portfolios are less than the current net book value.  The Partnership
    has recorded an allowance for possible losses on investments in specific
    distressed loan portfolios of $20,033 at December 31, 1997.  No allowance
    was required at December 31, 1996.

3.  Related Party Transactions
                                        
    The Partnership has entered into several fee and cost reimbursement
    arrangements with affiliated corporations most of which are provided for
    and documented in the limited partnership agreement and the offering
    prospectus.  With the exception of PCM, all of the entities are controlled
    by the General Partner and/or its sole shareholder.  In the case of PCM,
    there is one minority shareholder who holds one and one-half per cent of
    the outstanding stock. The affiliated corporations and other affiliated
    entities are identified below:

                                     F - 9
<PAGE>

Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements

3.  Related Party Transactions, Continued
                                                         
    Affiliated Corporations:

    Performance Development, Inc. ("PDI")
    Performance Capital Management ("PCM")
    Vision Capital Service Corp.("Vision")
    Spectrum Capital Management, Inc. ("Spectrum")

    Other Affiliated Entities

    Performance Asset Management Fund, Ltd. and  
    Performance Asset Management Funds II, IV, V and VI, Ltd. ("PAM Funds")

    PDI was formed as a California corporation in June 1990 to engage in various
    aspects of the investment banking industry.  PDI is also the General Partner
    for the PAM Funds and various other California limited partnerships.  PDI,
    in accordance with the limited partnership agreement and offering
    prospectus, is reimbursed for legal, accounting, and other costs relating
    to the limited partnership.  In addition, the Partnership pays PDI an annual
    management fee of 2.0% of the net asset value of the Partnership portfolio
    assets during the operating phase of the Partnership in accordance with the
    provisions of the limited partnership agreement.  As the General Partner in
    the Partnership, PDI is also entitled to a portion of periodic distributions
    to partners, in accordance with the provisions of the limited partnership
    agreement.

    PDI's management fees incurred and recorded by the Partnership totaled
    $51,757 and $51,425 for the years ended December 31, 1997 and 1996, respec-
    tively.  The Partnership also made general partner capital distributions to
    PDI of $88,800 and $35,775 for the years ended December 31, 1997 and 1996,
    respectively.  At December 31, 1997 and 1996, the Partnership had amounts
    owed to PDI recorded as amounts due to affiliates of $382,162 and $492,364,
    respectively.

    PCM was formed as a California corporation in February 1993, and since its
    formation has performed services for the Partnership and the PAM Funds
    relative to locating, evaluating, negotiating, acquiring, servicing, and
    collecting investments in distressed loan portfolios.  PCM  acquires
    distressed loan portfolios from third-parties and sells the portfolios
    to the Partnership for amounts determined by the General Partner to be
    reasonable, customary, and competitive in light of the size, type and
    character of the acquired portfolios and consistent with the limited
    partnership agreement.  The Partnership also enters into agreements with
    PCM to collect and service the acquired portfolios.  The agreements
    generally provide that all proceeds generated from the collection of
    portfolio assets will be shared by the parties in proportion to their
    respective distribution interests, generally 55% to 65% for the Partnership
    and 35% to 45% for PCM.  The Partnership also reimburses PCM for certain
    costs incurred in the collection of portfolio assets.

    For the years ended December 31, 1997 and 1996, the Partnership was charged
    $45,241 and $73,542, respectively, by PCM for collection expenses which


                                     F - 10
<PAGE>
Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements

3.  Related Party Transactions, Continued

    included but were not limited to collection letters that were sent out to
    the debtors, debtor tracers utilized in an attempt to locate portfolio
    debtors, and administration costs incurred when setting up each debtor
    profile in the PCM information database.

    For the years ended December 31, 1997 and 1996, PCM sold to the Partner-
    ship one portfolio and three portfolios, respectively, and recorded
    acquisition fees for these portfolios of $6,744 and $686,459, respectively.
    These acquisition fees have been included in the carrying value of the
    related Partnership investments.

    The Partnership had three portfolio sales for $54,711 in the year ended
    December 31, 1997, and three portfolio sales for $112,820 in the year
    ended December 31, 1996.  PCM effects the sale of the portfolios for the
    Partnership to non-related third parties and retains 15% of the proceeds as
    a commission.

    At December 31, 1997, the Partnership had a net amount of 24,713 owed to
    PCM included in amounts due to affiliates.  At December 31, 1996, the
    Partnership had a net amount of $56,039 due from PCM included in amounts
    due from affiliates.

    Vision was formed in January 1997 to serve as an employment service bureau
    to PCM, PDI and the PAM Funds.  All employees, while directly employed by
    Vision, work for the benefit of PCM, PDI and the  PAM Funds.  The Partner-
    ship pays PDI a fee equal to the actual wages paid to Vision. In 1996 the
    services performed by Vision were performed by Spectrum under a similar
    reimbursement arrangement.  At December 31, 1997 and 1996, employee
    service fees were $13,019 and $56,184, respectively.

4.  Settlement with West Capital Financial Services Corp.
                                                                                
    On April 8, 1994, the General Partner, on behalf of the Partnership and the
    other Potential Merger Participant PAM Funds, entered into a Stock Acquisi-
    tion Agreement ("Stock Agreement") with WCFSC, for the purpose of acquiring
    50% of the then issued and outstanding no par common shares of WCFSC.  The
    Stock Agreement provided that the Partnership and the other Potential Merger
    Participant PAM Funds would receive credits for approximately $1,881,950 due
    them from WCFSC.  The Partnership and the other Potential Merger Participant
    PAM Funds would then remit cash in the amount of $1,970,000 that was payable
    during the five month period subsequent to the agreement date of the
    transaction.

    Certain differences of opinion developed between the General Partner and
    WCFSC regarding the terms and conditions of the Stock Agreement.  As a
    result, the General Partner, for the benefit of the Partnership and the
    other Potential Merger Participant PAM Funds, commenced litigation against
    WCFSC and certain of its affiliates ("WCFSC Dispute").

    On February 8, 1996, the parties to the WCFSC Dispute entered into a
    Settlement Agreement and Mutual General Release ("Settlement Agreement")
    for the purpose of settling and resolving any and all disputes existing
    between the various parties to the WCSFC Dispute. The Settlement Agreement
    resulted in the dismissal of the WCFSC Dispute, release by all parties of
    all claims against other involved parties, including those claims relating

                                     F - 11
<PAGE>
Performance Asset Management Fund III, Ltd.
A California Limited Partnership
Notes to Financial Statements

4.  Settlement with West Capital Financial Services Corp., Continued
                                                                                
    to the Stock Agreement, and the assignment and transfer by the Partnership
    and the other Potential Merger Participant Pam Funds to WCFSC of certain
    distressed loan portfolios.

    The Settlement Agreement required that WCFSC pay to the Partnership and its
    affiliates $16,194,850 in exchange for the general release as well as the
    transfer to WCFSC by the Partnership and the other Potential Merger Parti-
    cipant PAM Funds of certain interests in certain distressed loan portfolios,
    and the transfer of various other assets and rights.  In addition, the
    Settlement Agreement required the establishment of a defense fund of
    $250,000 from the proceeds which has been available to pay legal fees and
    costs incurred by WCFSC to defend any and all actions which may be brought
    by limited partners of the Partnership and the PAM Funds.  To date no such
    actions have been brought and no funds have been expended.  The defense fund
    terminates in July 1999.  Any remaining funds and earned interest will be
    distributed to the Partnership and the other Potential Merger Participant
    PAM Funds.  The Partnership's portion of the defense fund is included in
    other assets.

    The proceeds from the Settlement Agreement were allocated to the Partner-
    ship and its affiliates, including the other Potentia Merger Participant
    PAM Funds, by the General Partner in accordance with the respective
    interests of the Partnership and those affiliates.  Accordingly, the
    Partnership was allocated $5,727,315 of the total settlement proceeds
    (see Note 1 - Cash Held in Trust).

    The Settlement Agreement was approved by 87.63% of the limited partners of
    the Partnership; only 0.02% of the limited partners of the Partnership
    disapproved; and 12.35% of the limited partners of the Partnership provided
    no responses.  A general release in favor of WCFSC was executed by 91.12%
    of all the limited partners in the Partnership and the other Potential
    Merger Participant Pam Funds.

5.  Partners' Capital
                         
    In July 1997 the distributions to partners were suspended in anticipation
    of the reorganization (See Note 1 - Cash Held in Trust).  For the years
    ended December 31, 1997 and 1996, the Partnership had 1,998 partnership
    units outstanding of the 2,000 partnership units authorized.

    The net income or loss per partnership unit was calculated by dividing the
    total limited partner net income/(loss) by the number of limited
    partnership units issued and outstanding as of December 31, 1997 and 1996.
    The General Partner did not own any partnership units as of December 31,
    1997 and 1996.

6.  Disclosures about Fair Value of Financial Instruments
                                                                                
    The carrying amounts reported on the Balance Sheet for cash and cash
    equivalents approximate fair value due to the short-maturity of these
    instruments.

    The carrying values of due to affiliates and due from affiliates approx-
    imate fair value.

    The fair value of investment in distressed loan portfolios is addressed in
    Note 2 - Investments in Distressed Loan Portfolios.

                                     F - 12
<PAGE>

Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements


7.	Year 2000 Disclosure
                               

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

8.  New Pronouncements
                               
    Management has reviewed the following new pronouncements issued in 1997 by
    the Financial Accounting Standards Board ("FASB"): SFAS 128, Earnings Per
    Share; SFAS 129, Disclosure of Information about Capital Structure; SFAS
    130, Reporting on Comprehensive Income; SFAS 131, Disclosures about Segments
    of an Enterprise and Related Information; and the Accounting Standards
    Executive Committee's release SOP 96-1, Environmental Redemption
    Liabilities.  Management believes these pronouncements do not apply or
    will not have a material impact to the Partnership.

9.  Net Investment Income

    The following schedule summarizes portfolio sales and collections of debt
    on portfolios held by the Partnership.  Related portfolio basis recoveries
    and net investment income are also presented (see Note 1 for revenue
    recognition policy).
                                                        1997
                                     ------------------------------------------
                                               Sales to     Collection
                                     WCFSC    Third Parties  of debt     Total
                                    -------   ------------- ----------  -------
       Portfolio Collections           -         $54,711     $854,105  $908,816
       Portfolio Basis Recovery        -          54,711      854,105   908,816
                                    -------   ------------- ----------  -------
       Net investment income           -             -            -         -
                                    =======   ============= ==========  =======

<PAGE>


Performance Asset Management Fund III, Ltd.
A California Limited Partnership

Notes to Financial Statements


9.  Net Investment Income, Continued


                                                        1996
                                     ------------------------------------------
                                               Sales to     Collection
                                     WCFSC    Third Parties  of debt     Total
                                   ---------  ------------- ----------  -------
       Portfolio Collections      $4,391,375    $112,820     $220,996 $4,725,191
       Portfolio Basis Recovery    3,511,087     112,820      216,369  3,840,276
                                    --------  ------------- ---------- ---------
       Net investment income        $880,288         -         $4,627   $884,915
                                    ========  ============= ==========  ========

                                     F - 14
<PAGE>



	
Item 8. Changes in and Disagreements with Accountants on Accounting and 
Financial Disclosure.

	None.
	
                               PART III.

Item 9. Directors, Executive Officers, Promoters and Control Persons.

	The directors and principal executive officers of the General 
Partner is as specified on the following table:
	
       Name                           Age                Position
		
  Vincent E. Galewick                  38       President, Secretary, and 
                                                 Sole Director
	
  Michael A. Cushing                   38       Chief Financial Officer
	

     Vincent E. Galewick is the President, Secretary, sole director
and sole shareholder of the General Partner.  Mr. Galewick has been the 
sole director of the General Partner since the formation of the 
Partnership.  Mr. Galewick has acted in this capacity for the General 
Partner since the formation of the General Partner in 1990.
	
	As the President and original shareholder of the General Partner, 
Mr. Galewick has been instrumental in the selection, negotiation, and 
acquisition of approximately 150 Portfolios with original obligations 
exceeding $2.1 billion.  Those Portfolios are owned and managed by the 
Partnership and the PAM Funds.
	
	In January 1989, Mr. Galewick became affiliated with Income 
Network Company, working as a Registered Principal.  Income Network 
Company is a member Broker/Dealer of the National Association of 
Securities Dealers, Inc. and has been such a member since March 14, 
1988.  In March of 1992, Mr. Galewick purchased all of the common stock 
of Income Network Company.  Income Network Company is an Affiliate of 
the General Partner and specializes in direct participation programs.  
Mr. Galewick continues as a Registered Principal of Income Network 
Company and hold Series 6, 22, 24, 39, and 63 securities licenses.  In 
addition, Mr. Galewick is currently the President, Secretary, and sole 
director of PCM.
	
	Michael Cushing is the Chief Financial Officer of the General 
Partner and PCM.  Mr. Cushing graduated from the University of 
California at Santa Barbara with a Bachelor of Arts in Business 
Economics.  Mr. Cushing became licensed as a Certified Public 
Accountant in the State of California while employed by the accounting 
firm of Coopers and Lybrand.
			
	Mr. Cushing has served in various capacities with the General 
Partner and its Affiliates, including acquisition consultant, director 
of operations and Chief Financial Officer for the General Partner and 
certain of its Affiliates since March 1992.
	
	From January of 1989 to November of 1991, Mr. Cushing served as 
Vice President of Real Estate and corporate Secretary for the general 
partner of Bay Plaza Partnership, a master developer of a planned 1.4 
million square foot, $240 million downtown redevelopment project for 
the city of St. Petersburg, Florida.
		
Item 10. Executive Compensation.

	Specified below, in tabular form, is the aggregate annual 
remuneration of each of the 3 highest paid persons who are officers or 
directors of the General Partner as a group during the Partnership's 
most recent fiscal year.

  Name of individual or          Capacities in which 
   Identity of Group          Remuneration was Received     Remuneration

         None**                         None                    None

	**The officers and directors of the General Partner receive no 
direct compensation from the Partnership.  The officers and directors 
of the General Partner are part of the human resources provided to the 
General Partner by Vision.  As a result, the officers and directors of 
the General Partner receive their remuneration from Vision and from its 
predecessor, SCM.  In fiscal 1997, Vincent E. Galewick and Michael A. Cushing
received a total of $7,086 from Vision and its predecessor which was charged
to the Partnership.

Item 11.  Security Ownership of Certain Beneficial Owners and 
          Management.

	No person or groups are beneficial owners of 5% or more of the 
total Units.

	
Security Ownership of Management.

	The directors and principal executive officers of the General 
Partner do not hold any Units.  Vincent E. Galewick is the President, 
Secretary, sole director and sole shareholder of the General Partner.  
As specified above, Mr. Galewick is also the President, Secretary, 
Chief Financial Officer, sole director, and sole shareholder of Income 
Network Company, an Affiliate of the General Partner which served as 
the Placement Manager for the offer and sale of the Units.  Mr. 
Galewick is also the President, Secretary, sole director of PCM, which, 
as specified above, is an Affiliate of the General Partner and provides 
certain due diligence, Portfolio servicing and acquisition services for 
the Partnership.  Mr. Galewick is also the President, Secretary, sole 
director, and sole shareholder of Vision, which, as specified above, is 
an Affiliate of the General Partner which provides human resources to 
the General Partner and its Affiliates, including PCM.
	
Changes in Control.

	The General Partner is not aware of any arrangements which may 
result in  changes in control  as that term is defined by the 
provisions of Item 403(c) of Regulation S-B, other than a proposal, 
currently under consideration by the General Partner, pursuant to which 
the PAM Funds and the Partnership would merge with and into PAMCO.  The 
result of the proposed merger would be that a series of interrelated 
changes to the current organizational form of PAMCO would be 
implemented, including (a) merging the Partnership and the PAM Funds 
with and into PAMCO, as a result of which PAMCO would be the sole 
surviving entity; (b) terminating the PAM Funds and the Partnership and 
(c) converting the Limited Partners  interests in the Partnership into 
common shares issued by PAMCO.
		
	The merger proposal has been approved by the Board of Directors 
of the General Partner; provided, however, the merger proposal has not 
been submitted to the shareholders of the General Partner for approval.  
The merger proposal but may not be approved by the Limited Partners of 
the PAM Funds or the Partnership.

Item 12. Certain Relationships and Related Transactions.

Compensation to the General Partner and Affiliates.

	Other than as specified herein, no compensation is paid to the 
General Partner, although the General Partner and certain of its 
Affiliates are reimbursed for certain expenses that the General Partner 
and those Affiliates have advanced on behalf of the Partnership.  These 
compensation arrangements have been established by the General Partner 
and are not the result of arm's length negotiations.
	
Management Fee to General Partner.

	The General Partner receives an annual and ongoing fee for the 
management of the affairs of the Partnership equal to 2-1/2% of the net 
asset value of the Partnership's assets, which is defined as the total 
of the (i) lower of the (a) market value, as determined by the General 
Partner on an annual basis, or (b) cost to the Partnership of non-
performing assets and (ii) principal balances of performing assets.  
The management fee is earned by the General Partner on an annual basis 
and is paid to the General Partner pro rata on a monthly basis.  During 
the years ended December 31, 1997 and 1996, the Partnership incurred 
fees owed to the General Partner of $51,757 and $51,425, respectively.
	

Reimbursement of Expenses.

	The General Partner has been reimbursed for reasonable and 
necessary expenses paid or incurred by the General Partner regarding 
the operation of the Partnership, including legal and accounting fees 
and costs and fees of consultants, collection agencies, and other 
related services.
	
General Partner's Interest in Partnership Items.

	The General Partner has and shall continue to have a present and 
continuing 10% interest in all partnership allocations of net income 
and loss, credits, deductions, and distributions until the Limited 
Partners have received cash distributions from the Partnership in an 
amount equal to 100% of their contributions to the capital of the 
Partnership ("Capital Contributions").  Then the General Partner shall 
receive 30% of all allocations.  If the Limited Partners have received 
cash distributions from the partnership in an amount equal to 100% of 
their Capital Contributions by the time the partnership is liquidated, 
the General Partner shall receive 30% of any distributions upon 
liquidation.  Otherwise, the General Partner shall receive 10% of such 
distributions until the Limited Partners have received cash equal to 
100% of their Capital Contributions.  During the years ended December 
31, 1997 and 1996, the Partnership recorded distributions to the 
General Partner of $88,800 and $35,775, respectively.
	
Compensation to Performance Capital Management, Inc.

	PCM was formed in February of 1993 to perform services related to 
locating, evaluating, negotiating, acquiring, servicing, and collecting 
Portfolios.  PCM acquires Portfolios from third-party financial 
institutions and sells the Portfolios to the Partnership and the PAM 
Funds at cost plus an acquisition fee of approximately 20% to 37% as 
provided in the related purchase agreements.  The Partnership also 
enters into joint venture agreements with PCM to collect and service 
the Portfolios.  The joint venture agreements generally provide that 
the venturers share all proceeds generated from the collection of the 
Portfolios in proportion to their respective percentage interests, 
generally 55% to 65% for the Partnership and 35% to 45% for PCM.  The 
Partnership also reimburses PCM for certain costs associated with the 
collection of the Portfolios.
	
	The Partnership had three Portfolio sales for $54,711 in the year 
ended December 31, 1997 and three Portfolio sales for $112,820 in the 
year ended December 31, 1996.  PCM effects the sale of the Portfolios 
for the Partnership to non-related third parties and retains 15% of the 
proceeds as a commission.
	
	For the years ended December 31, 1997 and 1996, the Partnership 
purchased one Portfolio and three Portfolios from PCM, respectively, 
and recorded acquisition fees for these portfolios of $6,744 and 
$686,459, respectively.  Also, for the years ended December 31, 1997 
and 1996, the Partnership recorded collection costs payable to PCM of 
$45,241 and $73,542 respectively.

Item 13.	Exhibits.

    Exhibit Number                     Exhibit

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

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

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



<PAGE>

                               SIGNATURES
				

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


 Dated: March 31, 1998           Performance Asset Management Fund III, Ltd.,
                                 A California Limited Partnership (Registrant)

                                 By: /S/Performance Development, Inc., 
                                     a California corporation
                                    -------------------------------
                                      Its: General Partner      

                                 By: /S/Vincent E. Galewick
                                    -------------------------------
                                      Its:    President  

In accordance with the Exchange Act, this report has been signed by the 
following persons on behalf of the registrant and in the capacities and 
on the dates indicated.

  Dated: March 31, 1998      Performance Asset Management Fund III, Ltd.,
                            A California Limited Partnership (Registrant)

                                 By: /S/Performance Development, Inc.,
                                     a California corporation
                                    -------------------------------
                                      Its: General Partner      

                                 By: /S/Vincent E. Galewick
                                    -------------------------------
                                      Its: Sole Director