June  29  , 2000


Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC.  20549


        Boston Financial Qualified Housing Tax Credits L.P. III
        Form 10-KSB Annual Report for Year Ended March 31, 2000
        File Number 01-18462


Dear Sir/Madam:

Pursuant to the requirements of section 15(d) of the Securities  Exchange Act of
1934, filed herewith is one copy of subject report.


Very truly yours,


/s/Stephen Guilmette
Stephen Guilmette
Assistant Controller

QH310K-K



<PAGE>


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

                                                    FORM 10-KSB
(Mark One)

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

For the  fiscal  year  ended        March 31,   2000
                             ---------------------------------


                                                         OR

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

For the transition period from                       to

                Commission file number 01-18462

        Boston   Financial   Qualified   Housing   Tax   Credits   L.P. III
             (Exact name of registrant as specified in its charter)

                   Delaware                               04-3032106
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
       incorporation or organization)

   101 Arch Street, Boston, Massachusetts                       02110-1106
    (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code            (617)439-3911
                                                         ----------------------

Securities registered pursuant to Section 12(b) of the Act:
                                                     Name of each exchange on
          Title of each class                            which registered
                 None                                          None

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

                            UNITS OF LIMITED PARTNERSHIP INTEREST
                                      (Title of Class)
                                          100,000

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

                                                     Yes X No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (Subsection  229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ X ]

State the aggregate sales price of partnership units held by nonaffiliates of
the registrant.
                            $99,610,000 as of March 31, 2000


<PAGE>



DOCUMENTS INCORPORATED BY REFERENCE:  LIST THE FOLLOWING DOCUMENTS IF
INCORPORATED BY REFERENCE AND THE PART OF THE FORM 10-KSB INTO WHICH THE
DOCUMENT IS INCORPORATED:  (1) ANY ANNUAL REPORT TO SECURITY HOLDERS;
(2) ANY PROXY OR INFORMATION STATEMENT; AND (3) ANY PROSPECTUS FILED PURSUANT TO
RULE 424(b) OR (c) UNDER THE SECURITIES ACT OF 1933.


                                                              Part of Report on
                                                              Form 10-KSB into
                                                              Which the Document
Documents incorporated by reference                           is Incorporated

Post-effective Amendment No. 1 to the Form S-11
  Registration Statement, File # 33-24175                      Part I, Item 1

Supplement No. 4 to the Prospectus, dated May 9, 1989          Part I, Item 1

Report on Form 8-K dated November 21, 1989                     Part I, Item 1

Acquisition Reports                                            Part I, Item 1

Prospectus - Sections Entitled:

  "Investment Objectives and Policies -
   Principal Investment Policies"                              Part I, Item 1

  "Estimated Use of Proceeds"                                  Part III, Item 12

  "Management Compensation and Fees"                           Part III, Item 12

  "Profits and Losses for Tax Purposes, Tax
   Credits and Cash Distributions"                             Part III, Item 12




<PAGE>


                     BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                                   (a Limited Partnership)

                                ANNUAL REPORT ON FORM 10-KSB
                             FOR THE YEAR ENDED MARCH 31, 2000


                                         TABLE OF CONTENTS


PART I                                                                 Page No.

   Item 1    Business                                                  K-3
   Item 2    Properties                                                K-7
   Item 3    Legal Proceedings                                         K-19
   Item 4    Submission of Matters to a
             Vote of Security Holders                                  K-19

PART II

   Item 5     Market for the Registrant's Units
              and Related Security Holder Matters                      K-19
   Item 6     Management's Discussion and Analysis of
              Financial Condition and Results of Operations            K-20
   Item 7     Financial Statements and Supplementary Data              K-24
   Item 8     Changes in and Disagreements with
              Accountants on Accounting and Financial
              Disclosure                                               K-24

PART III

   Item 9     Directors and Executive Officers
              of the Registrant                                        K-24
   Item 10    Management Remuneration                                  K-25
   Item 11    Security Ownership of Certain Beneficial
              Owners and Management                                    K-26
   Item 12    Certain Relationships and Related
              Transactions                                             K-26


PART IV

  Item 13     Exhibits and Reports on Form 8-K                         K-29

SIGNATURES                                                             K-30


<PAGE>


                                            PART I

Item 1.  Business

Boston Financial Qualified Housing Tax Credits L.P. III (the "Partnership") is a
limited  partnership  formed  on  August  9,  1988  under  the  Uniform  Limited
Partnership  Act of the State of  Delaware.  The  Certificate  and  Agreement of
Limited  Partnership  ("Partnership  Agreement")  authorized  the  sale of up to
100,000  units of Limited  Partnership  Interest  ("Units")  at $1,000 per Unit,
adjusted for certain  discounts.  The  Partnership  raised  $99,610,000  ("Gross
Proceeds"),  net of discounts of  $390,000,  through the sale of 100,000  Units.
Such amounts exclude five unregistered  Units previously  acquired for $5,000 by
the Initial  Limited  Partner,  which is also one of the General  Partners.  The
offering  of Units  terminated  on May 30,  1989.  No  further  sale of Units is
expected.

The  Partnership  is engaged  solely in the business of real estate  investment.
Accordingly,  a  presentation  of  information  about  industry  segments is not
applicable and would not be material to an  understanding  of the  Partnership's
business taken as a whole.

The  Partnership  has invested as a limited  partner in fifty-two  other limited
partnerships  ("Local Limited  Partnerships")  which own and operate residential
apartment  complexes  ("Properties"),  some of which  benefit  from some form of
federal,  state or local  assistance  programs and all of which  qualify for the
low-income  housing tax credits ("Tax  Credits") that were added to the Internal
Revenue  Code by the  Tax  Reform  Act of  1986  (the  "Code").  The  investment
objectives of the Partnership include the following:  (i) to provide current tax
benefits in the form of Tax Credits which qualified  limited partners may use to
offset  their  federal  income tax  liability;  (ii) to preserve and protect the
Partnership's capital; (iii) to provide limited cash distributions from property
operations  which are not  expected  to  constitute  taxable  income  during the
expected  duration of the  Partnership's  operations;  and (iv) to provide  cash
distributions  from  sale  or  refinancing  transactions.  There  cannot  be any
assurance  that the  Partnership  will  attain  any or all of  these  investment
objectives.  A more detailed  discussion of these investment  objectives,  along
with the risks in achieving  them, is contained in the section of the prospectus
entitled  "Investment  Objectives and Policies - Principal  Investment Policies"
which is herein incorporated by this reference.

Table A on the following pages lists the Properties originally acquired by Local
Limited  Partnerships  in which the  Partnership  has  invested.  Item 6 of this
Report contains other significant information with respect to such Local Limited
Partnerships.  As required by applicable  rules, the terms of the acquisition of
Local Limited  Partnership  interests  have been described in supplements to the
Prospectus  and collected in one  post-effective  amendment to the  Registration
Statement,  in another  supplement to the Prospectus and in a report on Form 8-K
listed in Part IV of this Report (collectively, the "Acquisition Reports"); such
descriptions are incorporated herein by this reference.


<PAGE>

<TABLE>
<CAPTION>

                                                      TABLE A

                                              SELECTED LOCAL LIMITED
                                                 PARTNERSHIP DATA
                                                    (Unaudited)

Properties Owned by                                                                                         Date
Local Limited                                                                                              Interest
Partnerships                                                 Location                                      Acquired

<S>                                                       <C>                                              <C>
West Dade                                                 Miami, FL                                        12/31/88
West Dade II                                              Miami, FL                                        12/31/88
Regency Square ***                                        Dayton, OH                                       03/13/89
Westwood Manor                                            Flint, MI                                        02/21/89
Rolling Hills ***                                         Dayton, OH                                       03/13/89
Boulevard Commons II ****                                 Chicago, IL                                      04/04/89
Boulevard Commons IIA                                     Chicago, IL                                      04/04/89
Fox Run Housing                                           Victoria, TX                                     04/07/89
Waterfront                                                Buffalo, NY                                      04/28/89
Shoreline                                                 Buffalo, NY                                      04/28/89
Colony Apartments*                                        Columbia, SC                                     05/19/89
Admiral Court                                             Philadelphia, PA                                 06/07/89
Crestwood**                                               Bridgeport, TX                                   06/05/89
Elmwood                                                   Aurora, CO                                       05/16/89
El Jardin                                                 Davie, FL                                        06/14/89
Ashley Place                                              Orlando, FL                                      06/23/89
Willowick**                                               Gainesville, TX                                  06/30/89
Kirkendall Heights                                        Ellsworth, KS                                    07/19/89
Bentley Hill                                              Syracuse, KS                                     06/30/89
Columbia Townhouses                                       Burlington, IA                                   07/28/89
Quartermill                                               Richmond, VA                                     08/02/89
Ponca Manor                                               Satanta, KS                                      07/28/89
Pearl Place                                               Rossville, KS                                    07/28/89
Crown Point**                                             Venus, TX                                        08/22/89
Godley Arms**                                             Godley, TX                                       08/25/89
Pilot Point**                                             Pilot Point, TX                                  08/22/89
Sherwood Arms**                                           Keene, TX                                        08/22/89
South Holyoke                                             Holyoke, MA                                      08/29/89
Walker Woods                                              Dover, DE                                        08/30/89
Lakeway Colony**                                          Lake Dallas, TX                                  08/30/89
One Main Place**                                          Little Elm, TX                                   08/22/89
Eaglewood                                                 Covington, TN                                    09/06/89
Harbour View*                                             Staten Island, NY                                09/29/89
Georgetown II                                             Georgetown, DE                                   09/28/89
Granite*                                                  Boston, MA                                       09/29/89
Garden Plain                                              Garden Plain, KS                                 08/09/89
Fulton                                                    Fulton, KY                                       10/05/89
Lone Oak**                                                Graham, TX                                       10/06/89
Hallet West**                                             Hallettsville, TX                                11/20/89


<PAGE>


Properties Owned by                                                                                         Date
  Local Limited                                                                                            Interest
  Partnerships                                       Location                                              Acquired

Glenbrook**                                       St. Jo, TX                                               10/06/89
Eagles Nest**                                     Decatur, TN                                              10/06/89
Billings Family                                   Billings, MO                                             08/09/89
Brownsville                                       Brownsville, TN                                          08/09/89
Sunnyhill Villa                                   Wayne, NE                                                08/09/89
Longview                                          Humboldt, KS                                             10/13/89
Horseshoe Bend                                    Horseshoe Bend, AR                                       08/09/89
Briarwood II                                      Lake Havasua, AZ                                         10/04/89
Quail Run**                                       Iowa Park, TX                                            10/06/89
Smithville                                        Smithville, MO                                           08/09/89
Aurora East                                       Denver, CO                                               11/06/89
Elver Park II                                     Madison, WI                                              11/09/89
Elver Park III                                    Madison, WI                                              11/09/89
Tucson Trails I                                   Madison, WI                                              11/22/89
Tucson Trails II                                  Madison, WI                                              11/23/89
Pleasant Plaza                                    Malden, MA                                               12/01/89
241 Pine Street****                               Manchester, NH                                           12/04/89
Heather Oaks                                      Oak Grove, MO                                            11/24/89
Riverfront                                        Sunbury, PA                                              12/26/89
Susquehanna View                                  Camp Hill, PA                                            12/26/89
Breckenridge*                                     Duluth, GA                                               12/19/89
Wood Creek                                        Calcium, NY                                              12/15/89
Willow Lake*                                      Kansas City, MO                                          12/20/89
Ashton Heights                                    Bolivar, MO                                              12/15/89
Fouche Valley                                     Perryville, AR                                           05/01/90
Altheimer                                         Altheimer, AR                                            04/18/90
Kyle Hotel                                        Temple, TX                                               06/12/90
Diversey Square                                   Chicago, IL                                              12/01/90
Poplar Village                                    Cumberland, KY                                           12/30/90
Lexington                                         Lexington, TN                                            12/29/90
</TABLE>

*     The  Partnership's  interest in profits  and losses of each Local  Limited
      Partnership  arising from normal  operations  is 99% with the exception of
      five Local Limited  Partnerships in which the  Partnership  acquired a 98%
      interest  (Willow  Lake),  98%  interest   (Breckenridge),   97%  interest
      (Granite), 49% interest (Colony Apartments) and a 48.96% interest (Harbour
      View).  Profits and losses arising from sale or  refinancing  transactions
      are allocated in accordance with the respective Local Limited  Partnership
      Agreements.

**    The  Managing  General  Partner  transferred  all  of  the  assets  of the
      following Local Limited  Partnerships,  subject to their  liabilities,  to
      unaffiliated entities. The transfer of Crown Point, Godley Arms, Glenbrook
      Apartments,  Quail  Run  Apartments,   Sherwood  Arms  Housing,  Lone  Oak
      Apartments,   Hallet  West  Apartments,   Crestwood   Place,   Eagle  Nest
      Apartments,  One Main Place,  Pilot Point  Apartments,  Lakeway Colony and
      Willowick were  effective  February 21, 1996,  February 21, 1996,  June 7,
      1996, July 3, 1996, November 26, 1996, August 6, 1997, September 23, 1997,
      October 28, 1997,  October 28, 1997,  October 28, 1997,  October 28, 1997,
      October 30, 1997 and August 4, 1998, respectively.

***   The titles of Rolling  Hills and Regency  Square were  transferred  to the
      lender. The transfers were effective May 2, 1997.

****  The interests in 241 Pine Street and Boulevard Commons II were transferred
      to an unaffiliated  entity.  The transfers were effective  January 1, 2000
      and January 1, 1999, respectively.


<PAGE>


Although the  Partnership's  investments in Local Limited  Partnerships  are not
subject to seasonal  fluctuations,  the Partnership's  equity in losses of Local
Limited  Partnerships,  to the extent they reflect the  operations of individual
Properties, may vary from quarter to quarter based upon changes in occupancy and
operating expenses as a result of seasonal factors.

With the exception of The Temple Kyle,  Breckenridge and Willow Lake, each Local
Limited  Partnership has its general partners ("Local General  Partners") one or
more  individuals or entities not affiliated with the Partnership or its General
Partners.  In  accordance  with the  partnership  agreements  under  which  such
entities are organized ("Local Limited Partnership Agreements"), the Partnership
depends on the Local General  Partners for the  management of each Local Limited
Partnership. As of March 31, 2000, the following Local Limited Partnerships have
a common Local  General  Partner or affiliated  group of Local General  Partners
accounting for the specified  percentage of the total capital  contributions  in
Local  Limited  Partnerships:   (i)  Ellsworth,  Syracuse,  Satanta,  Rossville,
Longview,  Smithville,  Brownsville,  Briarwood,  Billings, Garden Plain, Wayne,
Horseshoe Bend, Bolivar, Oak Grove, Westgate and Altheimer,  representing 2.46%,
have The Lockwood Group as Local General Partner; (ii) Elver Park II, Elver Park
III,  Tucson  Trails I and Tucson  Trails II,  representing  6.58%,  have Gorman
Associates as Local General Partner; (iii) Riverfront Apartments and Susquehanna
View, representing 6.27%, have NCHP as Local General Partner; (iv) West Dade and
West  Dade  II,   representing   6.83%,  have  Romat,  Inc.  and  Arbor,   Inc.,
respectively,  both of which have  Aristedes  Martinez  as  principal,  as Local
General  Partner;  (v) Elmwood and Fox Run,  representing  4.06%,  have  Delwood
Ventures,   Inc.  and  R.S.F.   Ventures,   Inc.  as  Local  General   Partners,
respectively,  both of which have Raymond  Baker as principal;  (vi)  Eaglewood,
Lexington and Fulton,  representing  0.79%,  have Tommy Harper,  Jerry Blurt and
Chris Turskey as Local General  Partners;  and (vii)  Waterfront  and Shoreline,
representing  7.01%,  have M.B.  Associates as Local General Partner.  The Local
General  Partners of the remaining Local Limited  Partnerships are identified in
the Acquisition Reports, which are incorporated herein by reference.

The Properties owned by Local Limited  Partnerships in which the Partnership has
invested are and will  continue to be subject to  competition  from existing and
future  properties in the same areas.  The continued  success of the Partnership
will  depend  on many  factors,  most of which are  beyond  the  control  of the
Partnership  and cannot be predicted at this time.  Such factors include general
economic  and real estate  market  conditions,  both on a national  basis and in
those areas where the  Properties  are  located,  the  availability  and cost of
borrowed  funds,  real estate tax rates,  operating  expenses,  energy costs and
government  regulations.  In  addition,  other  risks  inherent  in real  estate
investment may influence the ultimate success of the Partnership, including: (i)
possible  reduction  in rental  income  due to an  inability  to  maintain  high
occupancy  levels or adequate  rental levels;  (ii) possible  adverse changes in
general economic  conditions and adverse local  conditions,  such as competitive
overbuilding,  a decrease in employment  rates or adverse changes in real estate
laws,  including  building codes; and (iii) the possible future adoption of rent
control  legislation  which would not permit  increased costs to be passed on to
the tenants in the form of rent increases or which would suppress the ability of
the Local Limited Partnership to generate operating cash flow. Since most of the
Properties benefit from some form of government  assistance,  the Partnership is
subject  to the risks  inherent  in that  area  including  decreased  subsidies,
difficulties  in finding  suitable  tenants and  obtaining  permission  for rent
increases. In addition, any Tax Credits allocated to investors with respect to a
Property are subject to recapture to the extent that the Property or any portion
thereof  ceases to qualify for the Tax Credits.  Other future changes in federal
and  state  income  tax  laws  affecting   real  estate   ownership  or  limited
partnerships  could have a material  and adverse  affect on the  business of the
Partnership.

The  Partnership  is managed by Arch  Street III,  Inc.,  the  Managing  General
Partner of the Partnership. The other General Partner of the Partnership is Arch
Street  III  Limited  Partnership.  The  Partnership,  which  does  not have any
employees,  reimburses Lend Lease Real Estate Investments,  Inc. ("Lend Lease"),
an affiliate of the General Partners, for certain expenses and overhead costs. A
complete  discussion of the management of the Partnership is set forth in Item 9
of this Report.


<PAGE>


Item 2.  Properties

The Partnership  owns limited  partnership  interests in fifty-two local Limited
Partnerships which own and operate  Properties,  some of which benefit from some
form of federal, state or local assistance programs and all of which qualify for
the  Tax  Credits  added  to the  Code  by the  Tax  Reform  Act  of  1986.  The
Partnership's  ownership  interest  in each Local  Limited  Partnership  is 99%,
except for Willow Lake,  Breckenridge,  Granite,  Colony  Apartments and Harbour
View,  where the  Partnership's  ownership  interest is 98%,  98%,  97%, 49% and
48.96%, respectively.

Each of the Local Limited Partnerships has received an allocation of Tax Credits
from its relevant state tax credit agency.  In general,  the Tax Credit runs for
ten years from the date the Property is placed in service.  The required holding
period (the  "Compliance  Period") of the  Properties is fifteen  years.  During
these fifteen  years,  the  Properties  must satisfy rent  restrictions,  tenant
income  limitations  and other  requirements,  as  promulgated  by the  Internal
Revenue Code, in order to maintain  eligibility  for the Tax Credit at all times
during  the  Compliance  Period.  Once a Local  Limited  Partnership  has become
eligible for the Tax Credits,  it may lose such  eligibility and suffer an event
of  recapture  if  its  Property   fails  to  remain  in  compliance   with  the
requirements.

In  addition,  some of the Local  Limited  Partnerships  have  obtained one or a
combination  of different  types of loans such as: i) below market rate interest
loans; ii) loans provided by a redevelopment agency of the town or city in which
the property is located at favorable  terms; and iii) loans which have repayment
terms that are based on a percentage of cash flow.

The schedules on the  following  pages provide  certain key  information  on the
Local Limited Partnership interests acquired by the Partnership.


<PAGE>

<TABLE>
<CAPTION>


                                                           Capital Contributions
Local Limited Partnership                               Total               Total         Mtge. Loans payable
Property Name                          Number of   Committed at March  Paid through March     payable at     Type of   Occupancy at
Property Location                      Apt. Units      31, 2000             31, 2000      December 31, 1999  Subsidy* March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

West Dade LTD, A Limited Partnership
West Dade
<S>                                        <C>      <C>                  <C>               <C>               <C>             <C>
Miami, FL                                  122      $1,513,936           $1,513,936        $4,154,658        Section 8       100%

West Dade LTD II, A Limited Partnership
West Dade II
Miami, FL                                  209       3,039,442            3,039,442         8,220,237        Section 8       100%

Westwood Manor Limited Dividend
    Housing Association L.P.
Westwood Manor
Flint, MI                                  144       1,165,925            1,165,925         3,156,226        Section 8        94%

Rolling Hills Associates L.P. (B)
Rolling Hills
Dayton, OH

Regency Square Limited Partnership (B)
Regency Square
Dayton, OH

Shoreline Limited Partnership
Shoreline
Buffalo, NY                                142       1,079,318            1,079,318        7,429,995          None            79%

Waterfront Limited Partnership
Waterfront
Buffalo, NY                                472       3,597,307            3,597,307       26,550,861          None            70%


<PAGE>





                              Capital Contributions
Local Limited Partnership                              Total                Total           Mtge. Loans
Property Name                          Number of  Committed at March   Paid through March   payable at      Type of   Occupancy at
Property Location                     Apt. Units      31, 2000             31, 2000      December 31, 1999  Subsidy*  March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Fox Run Housing
Fox Run
Victoria, TX                               150       1,605,775            1,605,775        4,179,638      Section 8           93%

Boulevard Commons Limited
    Partnership II (C)
Boulevard Commons II
Chicago, IL

The Colony Apartments, L.P.
    A Limited Partnership
Colony Apartments
Columbia, SC                               300       1,762,500            1,762,500        8,497,396      Section 8           96%

Boulevard Commons Limited
    Partnership IIA
Boulevard Commons IIA
Chicago, IL                                 42       1,179,812            1,179,812        1,486,625      Section 8           41%

Ashley Place, LTD
    A Florida Limited Partnership
Ashley Place
Orlando, FL                                 96       2,002,560            2,002,560        2,889,604          None            96%

Admiral Housing Limited Partnership
Admiral Court
Philadelphia, PA                            46       1,900,000            1,900,000        2,686,503        Section 8         96%



<PAGE>



                              Capital Contributions
Local Limited Partnership                                Total             Total             Mtge. Loans
Property Name                        Number of     Committed at March  Paid through March     payable at      Type    Occupancy at
Property Location                   Apt. Units         31, 2000           31, 2000        December 31, 1999    of     March 31, 2000
                                                                                                             Subsidy*
------------------------------------------------------------------------------------------------------------------------------------

Prarieland Property of Syracuse, L.P.
Bentley Hill
Syracuse, KS                                8           52,150               52,150          239,872          FmHA             100%

El Jardin of Davie, Ltd.
El Jardin
Davie, FL                                 236        2,022,100            2,022,100        6,767,068          Section 8        99%

EDM Housing Associates LTD
    A Limited Partnership
Elmwood Delmar
Aurora, CO                                 95        1,102,025            1,102,025        3,206,293          Section 8        96%

Bridgeport Housing Associates, LTD (A)
Crestwood
Bridgeport, TX

Willowick Housing Associates, LTD (A)
Willowick
Gainesville, FL

Ellsworth Senior Housing, L.P.
Kirkendall Heights
Ellsworth, KS                              12           69,658               69,658          326,881          FmHA             91%

Prairieland Properties of Satanta, L.P.
Ponca Manor
Satanta, KS                                 8           49,915               49,915          222,874          FmHA             100%



<PAGE>



                                                           Capital Contributions
Local Limited Partnership                               Total               Total            Mtge. Loans
Property Name                        Number of   Committed at March   Paid through March     payable at        Type    Occupancy at
Property Location                   Apt. Units        31, 2000             31, 2000      December 31, 1999      of    March 31, 2000
                                                                                                             Subsidy*
-----------------------------------------------------------------------------------------------------------------------------------

Rossville Senior Housing L.P.
Pearl Place
Rossville, KS                              10           58,855               58,855           278,006          FmHA            90%

Columbia Townhouse Associates, L.P.
Columbia Townhouses
Burlington, IA                             56          837,450              837,450           702,952          Section 8       90%

Quartermill Associates, L.P.
    A Virginia Limited Partnership
Quartermill
Richmond, VA                              266        7,705,500            7,705,500         7,076,993          None            97%

One Main Place Housing
    Associates, LTD (A)
One Main Place
Little Elm, TX

Pilot Point Housing Associates, LTD (A)
Pilot Point
Pilot Point, TX

Sherwood Arms Housing
    Associates, LTD (A)
Sherwood Arms
Keene, TX




<PAGE>



                                                           Capital Contributions
Local Limited Partnership                               Total               Total           Mtge. Loans
Property Name                         Number of   Committed at March   Paid through March   payable at      Type of   Occupancy at
Property Location                     Apt. Units       31, 2000             31, 2000     December 31, 1999  Subsidy*  March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Crown Point Housing
    Associates, LTD (A)
A Texas Limited Partnership
Crown Point
Venus, TX

Godley Arms Housing
    Associates, LTD (A)
Godley Arms
Godley, TX

South Holyoke Limited Partnership
South Holyoke
Holyoke, MA                               48         1,119,330            1,119,330         2,596,058          None            98%

Harbour View
    A Limited Partnership
Harbour View
Staten Island, NY                         122        1,350,000            1,350,000        10,777,440          None            97%

Walker Woods Partners, L.P.
Walker Woods
Dover, DE                                  51        1,452,380            1,452,380         2,628,061          None            94%

Boston Financial Texas Properties
    Limited Partnership III (A)
Lakeway Colony
Lake Dallas, TX




<PAGE>



                                                           Capital Contributions
Local Limited Partnership                                 Total              Total          Mtge. Loans
Property Name                           Number of  Committed at March  Paid through March   payable at       Type of   Occupancy at
Property Location                       Apt. Units      31, 2000            31, 2000      December 31, 1999  Subsidy* March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Eaglewood VIII, L.P.
    A Limited Partnership
Eaglewood
Covington, TN                              40          255,000              255,000       1,111,271          FmHA               100%

Georgetown Associates II, L.P.
Georgetown II
Georgetown, DE                             50        1,200,000            1,200,000       1,711,401          None               98%

Blue Mountain Associates, L.P.
    A Massachusetts Limited Partnership
Granite V
Boston, MA                                217        5,774,113            5,774,113       9,602,081        Section 8            97%

Garden Plain Senior Apts., LTD
Garden Plain
Garden Plain, KS                           12           70,030               70,030         302,192          FmHA               91%

Fulton Associates I, L.P.
    A Limited Partnership
Fulton
Fulton, KY                                 24          180,000              180,000         796,088          FmHA               100%

Lone Oak Housing Associates, LTD (A)
Lone Oak
Graham, TX



<PAGE>



                                                         Capital Contributions
Local Limited Partnership                              Total               Total          Mtge. Loans
Property Name                        Number of   Committed at March  Paid through March    payable at       Type of   Occupancy at
Property Location                   Apt. Units       31, 2000            31, 2000       December 31, 1999  Subsidy*   March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

West Hallettsville Housing
    Associates, LTD(A)
Hallet-West
Hallettsville, TX

Glenbrook Housing Associates, LTD (A)
Glenbrook
St. Jo, TX

Eagles Nest Housing
    Associates, LTD(A)
Eagles Nest
Decatur, TX

Billings Family Housing, L.P.
Cedar Tree
Billings, MO                               12           58,855               58,855        281,728          FmHA                100%

Brownsville Associates, L.P.
Brownsville
Brownsville, TN                            28          161,665              161,665        782,007          FmHA                97%

Wayne Senior Housing, L.P.
Sunnyhill Villa
Wayne, NE                                  15           81,205               81,205        426,664          FmHA                93%

Longview Apartments, L.P.
Longview
Humbolt, KS                                14           91,635               91,635        397,069          FmHA                71%


<PAGE>



                                                           Capital Contributions
Local Limited Partnership                                 Total              Total          Mtge. Loans
Property Name                           Number of   Committed at March  Paid through March   payable at     Type of   Occupancy at
Property Location                       Apt. Units       31, 2000           31, 2000      December 31, 1999 Subsidy*  March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Horseshoe Bend Associates I, L.P.
Horseshoe Bend
Horseshoe Bend, AR                         24          143,785              143,785        645,881          FmHA                88%

Briarwood Associates II, L.P.
Briarwood II
Lake Havasua, AZ                           32          219,030              219,030      1,105,844          FmHA                100%

North Quail Run Housing
    Associates, LTD (A)
Quail Run
Iowa Park, TX

Smithville Rural Housing
    A Limited Partnership
Smithville
Smithville, MO                             24          108,025              108,025        541,449          FmHA                92%

Aurora Properties, LTD.
    A Limited Partnership
Aurora East Apartments
Denver, CO                                125          765,000              765,000      4,071,411        Section 8             98%

Elver Park Limited Partnership II
Elver Park II
Madison, WI                                56        1,246,385            1,246,385      1,668,019          None                100%



<PAGE>



                                                       Capital Contributions
Local Limited Partnership                               Total              Total         Mtge. Loans
Property Name                       Number of    Committed at March  Paid through March  payable at       Type of      Occupancy at
Property Location                   Apt. Units        31, 2000           31, 2000      December 31, 1999  Subsidy*    March 31, 2000
-----------------------------------------------------------------------------------------------------------------------------------

Elver Park Limited Partnership III
Elver Park III
Madison, WI                                48        1,047,470            1,047,470      1,420,773          None                100%

Tuscon Trails Limited Partnership I
Tuscon Trails I
Madison, WI                                48        1,047,470            1,047,470      1,391,193          None                98%

Tuscon Trails Limited Partnership II
Tuscon Trails II
Madison, WI                                48        1,047,470            1,047,470      1,397,756          None                98%

Pleasant Plaza Housing L.P.
Pleasant Plaza
Malden, MA                                125        3,340,138            3,340,138     17,466,812          Section 8           99%

241 Pine Street Associates, L.P. (C)
241 Pine Street
Manchester, NH

Missouri Rural Housing of
    Oak Grove, L.P.
Heather Oaks
Oak Grove, MO                              24          118,828              118,828        560,746          FmHA                88%

Wood Creek Associates
    A New York Limited Partnership
Wood Creek
Calcium, NY                               104        1,850,000            1,850,000      3,096,957          None                75%




<PAGE>



                                                        Capital Contributions
Local Limited Partnership                               Total               Total         Mtge. Loans
Property Name                        Number of    Committed at March  Paid through March  payable at        Type of    Occupancy at
Property Location                    Apt. Units       31, 2000            31, 2000      December 31, 1999   Subsidy*  March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Breckenridge Creste Apartments, L.P.
Breckenridge
Duluth, GA                                164        3,520,000            3,520,000      4,649,015          None                90%

Willow Lake Partners II, L.P.
    A Limited Partnership
Willow Lake
Kansas City, MO                           132        2,130,700            2,130,700      2,673,765          None                95%

Bolivar Senior Housing, L.P.
Ashton Heights
Bolivar, MO                                20           95,360               95,360        465,517          FmHA                100%

Lexington Associates I L.P.
    A Limited Partnership
Lexington Civic                            24           95,000               95,000        813,500          FmHA                100%
Lexington, TN

Riverfront Apartments, L.P.
Riverfront
Sunbury, PA                               200        1,984,908            1,984,908      7,029,400          Section 8           98%

Susquehanna View L.P.
Susquehanna View
Camp Hill, PA                             201        2,194,314            2,194,314      8,853,242          Section 8           100%

Westgate Associates I, L.P.
Fouche Valley
Perryville, AR                             20          131,865              131,865        637,512          FmHA                 80%


<PAGE>



                                                        Capital Contributions
Local Limited Partnership                               Total              Total           Mtge. Loans
Property Name                       Number of    Committed at March   Paid through March   payable at      Type of    Occupancy at
Property Location                   Apt. Units       31, 2000            31, 2000       December 31, 1999  Subsidy*   March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------

Altheimer Associates I, L.P.
Altheimer
Altheimer, AR                              20          130,375              130,375         595,770          FmHA               100%

The Temple-Kyle L.P.
Kyle Hotel
Temple, TX                                 64        1,624,100            1,624,100               0        Section 8            99%

Diversey Square Associates II
Diversey Square II
Chicago, IL                                48        1,031,825            1,031,825        2,558,542       Section 8            100%

Poplar Village, LTD
Poplar Village
Cumberland, KY                             36          283,945              283,945        1,197,577          None              100%
                                       ------    -------------         ------------  ---------------
                                        4,634    $  66,694,434         $ 66,694,434  $   182,325,423
                                       ======    =============         ============  ===============
</TABLE>

*FmHA      This subsidy,  which is authorized  under Section 515 of the Housing
           Act of 1949, can be one or a combination of different  types of
           financing.  For instance,  FmHA may provide: 1) direct  below-market-
           rate  mortgage loans for rural rental housing; 2) mortgage interest
           subsidies which effectively lower the interest rate of the loan to
           1%; 3) a rental  assistance  subsidy to tenants  which allows them to
           pay no more than 30% of their monthly income as rent with the balance
           paid by the federal government; or 4) a combination of any of the
           above.

 Section   8 This subsidy,  which is  authorized  under Section 8 of Title II of
           the Housing and Community  Development Act of 1974,  allows qualified
           low- income  tenants to pay 30% of their monthly  income as rent with
           the balance paid by the federal government.

 (A)        During 1996, 1997 and 1998, the Managing General Partner transferred
            all of the assets of these  Local  Limited  Partnerships  subject to
            their  liabilities.  These  Local  Limited  Partnerships  had  total
            capital contributions and mortgage payable amounts of $1,580,498 and
            $6,516,496, respectively, as of the transfer dates.

 (B)        Effective  May 2,  1997,  the titles of  Rolling  Hills and  Regency
            Square  were   transferred  to  the  lender.   These  Local  Limited
            Partnerships had capital  contributions and mortgage payable amounts
            of $5,655,000 and $6,409,457, respectively as of the transfer date.

(C)        Effective  January 1, 2000 and January 1, 1999, the Managing  General
           Partner  transferred  the  interest in 241 Pine Street and  Boulevard
           Commons II, respectively to an unaffiliated  entity. This Partnership
           had total  capital  contributions  and  mortgage  payable  amounts of
           $1,891,473 and $1,061,156, respectively as of the transfer dates.


<PAGE>


One Local Limited Partnership,  Quarter Mill Associates L.P., invested in by the
Partnership  represents more than 10% of the total capital  contributions  to be
made  to  Local  Limited  Partnerships  by the  Partnership.  Quarter  Mill is a
266-unit apartment complex located in Richmond, Virginia.

Quarter Mill is financed by a  combination  of private and public  sources.  The
first mortgage is at 8.75%  interest,  has a 40-year term and is insured by HUD.
The apartment  project is pledged as collateral for the note. In addition to the
first mortgage,  there is a subordinated  nonrecourse  note that is payable each
year only to the extent of 30% of the  property's  net cash flow,  as defined by
the note agreement.

Duration of leases for  occupancy in the  Properties  described  above is six to
twelve months.  The Managing  General Partner  believes the described herein are
adequately covered by insurance.

Additional  information  required  under  this  item,  as  it  pertains  to  the
Partnership, is contained in Items 1, 6 and 7 of this report.

Item 3.  Legal Proceedings

Pleasant  Plaza,  located in Malden,  Massachusetts,  as well as South  Holyoke,
located in Holyoke,  Massachusetts,  receive a subsidy  under the State  Housing
Assistance  Rental Program  (SHARP),  which is an important part of their annual
income. As originally conceived, the SHARP subsidy was scheduled to decline over
time to match  increases  in net  operating  income.  However,  increases in net
operating income failed to keep pace with the decline in the SHARP subsidy. Many
of the SHARP properties  (including Pleasant Plaza and South Holyoke) structured
workouts that  included  additional  subsidies in the form of Operating  Deficit
Loans (ODL's).  Effective  October 1, 1997, the  Massachusetts  Housing  Finance
Agency  (MHFA),  which  provided the SHARP  subsidies,  withdrew  funding of the
Operating  Deficit Loans.  Properties  unable to make full debt service payments
were declared in default by MHFA. The Managing General Partner joined a group of
SHARP property  owners called the  responsible  SHARP Owners,  Inc. (RSO) and is
negotiating with MHFA and the Local General Partners of Pleasant Plaza and South
Holyoke to find a solution to the problems  that will result from the  withdrawn
subsidies.  Given  existing  operating  deficits  and the  dependence  on  these
subsidies  by Pleasant  Plaza and South  Holyoke  House,  it is likely that both
properties  will default on their mortgage  obligations  in the near future.  On
September 16, 1998, the Partnership joined with the RSO and about 20 other SHARP
property  owners and filed suit against the MHFA (Mass.  Sup. Court Civil Action
#98-4720).  Among other  things,  the suit seeks to enforce the MHFA's  previous
financial commitments to the SHARP properties. The lawsuit is complex and in its
early  stages,  so no  predications  can be made at this time as to the ultimate
outcome.  In the meantime,  the Managing  General Partner intends to continue to
participate  in the RSO's  efforts to negotiate a resolution of this matter with
MHFA.

Except as noted above,  the  Partnership  is not a party to any pending legal or
administrative  proceeding,  and to the  best  of its  knowledge,  no  legal  or
administrative proceeding is threatened or contemplated against it.

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

None.

                                      PART II

Item 5.  Market for the Registrant's Units and Related Security Holder Matters

There is no public  market for the Units,  and it is not expected  that a public
market will develop.  If a Limited Partner  desires to sell Units,  the buyer of
those Units will be required to comply with the minimum  purchase and  retention
requirements and investor suitability standards imposed by applicable federal or
state  securities  laws and the  minimum  purchase  and  retention  requirements
imposed by the  Partnership.  The price to be paid for the Units, as well as the
commissions to be received by any participating broker-dealers,  will be subject
to negotiation by the Limited Partner seeking to sell his Units.  Units will not
be redeemed or repurchased by the Partnership.

The  Partnership  Agreement  does not impose on the  Partnership  or its General
Partners any  obligation to obtain  periodic  appraisals of assets or to provide
Limited Partners with any estimates of the current value of Units.

As of  June  15,  2000,  there  were  5,876  record  holders  of  Units  of  the
Partnership.

Cash distributions, when made, are paid annually.  No cash distribution was paid
in the years ended March 31, 2000 and 1999.

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

Certain matters  discussed herein constitute  forward-looking  statements within
the  meaning  of the  Private  Securities  Litigation  Reform  Act of 1995.  The
Partnership  intends such  forward-looking  statements to be covered by the safe
harbor  provisions  for  forward-looking  statements,  and  are  including  this
statement for purposes of complying with these safe harbor provisions.  Although
the Partnership believes the forward-looking  statements are based on reasonable
assumptions,  the Partnership can give no assurance that their expectations will
be attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors,  including,  without limitation,  general economic and real
estate conditions and interest rates.

Liquidity and Capital Resources

The Partnership had a decrease in cash and cash  equivalents of $166,200 for the
year ended  March 31,  2000.  This  decrease is  attributable  to  purchases  of
marketable  securities,  advances to  affiliates,  investment in a Local Limited
Partnership and cash used for operations.  These decreases are partially  offset
by proceeds from sales of marketable  securities,  cash  distributions  received
from  Local  Limited   Partnerships  and  repayment  of  notes  receivable  from
affiliate.

The Managing  General Partner  initially  designated 3% of the Gross Proceeds as
Reserves.  The Reserves were  established to be used for working  capital of the
Partnership  and  contingencies  related  to  the  ownership  of  Local  Limited
Partnership  interests.  The Managing  General  Partner may increase or decrease
such Reserves from time to time, as it deems appropriate.  During the year ended
March 31, 1993,  the Managing  General  Partner  decided to increase the Reserve
level to  3.75%.  Funds  approximating  $196,000  have been  withdrawn  from the
Reserves to pay legal and other costs. Additionally,  professional fees relating
to various property issues totaling approximately $1,800,000 have been paid from
Reserves.  To date,  Reserve funds in the amount of approximately  $434,000 have
also been used to make additional  capital  contributions to three Local Limited
Partnerships,  and the  Partnership  has  paid  approximately  $950,000  (net of
paydowns) to purchase the mortgage of a Local Limited Partnership.  To date, the
Partnership  has used  approximately  $2,120,000 of operating funds to replenish
Reserves.  At March 31, 2000,  approximately  $480,000 of cash, cash equivalents
and marketable securities have been designated as Reserves. Reserves may be used
to fund Partnership  operating  deficits,  if the Managing General Partner deems
funding  appropriate.  If Reserves are not  adequate to cover the  Partnership's
operations, the Partnership will seek other financing sources including, but not
limited to, the  deferral of Asset  Management  Fees paid to an affiliate of the
Managing General Partner or working with Local Limited  Partnerships to increase
cash distributions.

In the  event a Local  Limited  Partnership  encounters  operating  difficulties
requiring  additional funds, the Partnership might deem it in its best interests
to provide  such funds,  voluntarily,  in order to protect its  investment.  The
Partnership has advanced approximately  $2,010,000 to Local Limited Partnerships
to fund operating deficits.

Since the  Partnership  invests as a limited  partner,  the  Partnership  has no
contractual  duty to  provide  additional  funds to Local  Limited  Partnerships
beyond its specified investment. Thus, at March 31, 2000, the Partnership had no
contractual or other obligation to any Local Limited  Partnership  which had not
been paid or provided for.



Cash Distributions

No cash distributions were made in the years ended March 31, 2000 or 1999. It is
not expected that cash available for  distribution,  if any, will be significant
during the 2000  calendar  year.  Based on the results of 1999  operations,  the
Local Limited Partnerships are not expected to distribute significant amounts of
cash to the  Partnership  because such  amounts will be needed to fund  Property
operating costs. In addition,  many of the Properties  benefit from some type of
federal or state subsidy and, as a consequence,  are subject to  restrictions on
cash distributions.

Results of Operations

2000 versus 1999

For the year ended March 31, 2000, Partnership operations resulted in a net loss
of  $6,671,150  as compared to a net loss of  $5,441,237  for the same period in
1999.  The  increase  in net loss is  primarily  attributable  to an increase in
provision for valuation of  investment in Local Limited  Partnership  related to
the reserve of Boulevard  Commons IIA, an increase in provision for valuation of
investments   in  Local  Limited   Partnerships   caused  by  the  write-off  of
uncollectable  advances made to Local Limited Partnerships,  a decrease in other
revenue,  an increase  in loss on  liquidation  of  interests  in Local  Limited
Partnerships due to the transfer of 241 Pine Street and Boulevard Commons II and
a decrease in equity in losses of Local  Limited  Partnerships.  The decrease in
equity in losses of Local Limited  Partnerships  is due to an increase in losses
not  recognized  by  the  Partnership  for  Local  Limited   Partnerships  whose
cumulative  equity in  losses  and  cumulative  distributions  exceed  its total
investment in those partnerships.

Low-Income Housing Tax Credits

The 1999 and 1998 Tax Credits per Unit for individuals  were $92.39 and $125.55,
respectively.  The  1999 and 1998 Tax  Credits  per Unit for  corporations  were
$97.35 and  $131.03,  respectively.  The  credits,  which have  stabilized,  are
expected  to remain  stable for the next  year,  and then they are  expected  to
decrease  as certain  properties  reach the end of the ten year  credit  period.
However,  because the  compliance  periods extend  significantly  beyond the tax
credit  periods,  the  Partnership is expected to retain most of its interest in
the Local Limited Partnerships for the foreseeable future.

The Tax Credits per Unit for corporate investors will be slightly higher for the
remaining years of the credit period than that for individual  investors because
certain of the  Properties  took  advantage  of 1990  federal  legislation  that
allowed the  acceleration  of future tax credits to  individuals in the tax year
ended  December 31, 1990.  For those  Properties  that elected to accelerate the
individual credit, the accelerated portion is being amortized over the remainder
of the credit period,  thereby causing a reduction of this and future year's tax
credits  passed  through by those  Properties.  In total,  both  individual  and
corporate investors will be allocated equal amounts of Tax Credits.

Property Discussions

Boulevard Commons II and IIA, which are located in Chicago,  Illinois,  and have
the same  Local  General  Partner  have been  experiencing  operating  deficits.
Expenses have increased due to increasing  maintenance,  capital needs, security
issues and high turnover at the property.  The Managing General Partner has been
in  negotiations  with the Local  General  Partner  to  develop a plan that will
ultimately transfer ownership of the property to the Local General Partner.  The
plan includes provisions to minimize the risk of recapture. Effective January 1,
1999, the Partnership  redeemed its remaining  interest in Boulevard Commons II.
The redemption of the Partnership's interest avoided a possible recapture event.
However, the redemption did cause investors to have minimal taxable gain or loss
for the 1999 tax year, depending upon the tax basis of the property.

As we previously reported, the Managing General Partner has been in negotiations
with the Local General  Partner of Boulevard  Commons IIA to develop a plan that
will ultimately  transfer ownership of the property to the Local General Partner
and minimize the risk of recapture.  During 1999, the Managing  General  Partner
consummated  the transfer of 49.5% of the  Partnership's  capital and profits in
the properties to the Local General  Partner.  The Managing  General Partner has
the right to transfer the  Partnership's  remaining  interest in the property to
the Local General  Partner any time after one year has elapsed.  The Partnership
will  retain its full  share of tax  credits  until  such time as the  remaining
interest is put to the Local  General  Partner.  In addition,  the Local General
Partner has the right to call the remaining interest after the tax credit period
has expired.

Breckenridge  Creste,  located in Duluth,  Georgia,  is  experiencing  operating
deficits as a result of  occupancy  turnovers.  However,  as of March 31,  2000,
occupancy  was 90%.  The  Managing  General  Partner  is working  with  property
management to review completion of needed capital improvements and to review the
revised marketing strategy. In addition, the Managing General Partner is working
closely with the Local  General  Partner to develop a plan that will  ultimately
transfer ownership of the property. The plan includes provisions to minimize the
risk of recapture.  During the year ended March 31, 2000, the Partnership  fully
reserved its investment in Breckenridge Crest because it was determined that its
investment had a net realizable value of zero.

Columbia  Townhouses,   located  in  Burlington,  Iowa,  has  been  experiencing
operating deficits due to consistent increases in vacancy. As of March 31, 2000,
occupancy was 90%. The Local General  Partner,  the Managing General Partner and
management  agent have been working  together to review the marketing,  security
and long-term strategy for this property. In addition, the Local General Partner
is in  negotiations  with the lender about the  possibility of  refinancing  the
mortgage.  Effective  September 1999, the City of Burlington  acquired,  through
eminent domain, one of the buildings  comprising  Columbia  Townhomes.  The city
acquired  the  building  for the  purpose of allowing  access to a  contemplated
Walgreens  development.  For tax purposes, the taking of one building by eminent
domain  resulted in both  Section  1231 Gain and  cancellation  of  indebtedness
income for the 1999 tax year. In addition,  there was a tax credit  recapture of
approximately $1.40 per unit for the 1999 tax year. The Managing General Partner
continues to work with the Local General Partner in monitoring this property and
the outcome of the refinancing.  For financial statement  purposes,  $806,414 of
equity in income was recognized for this property in 1999.

241 Pine Street,  located in  Manchester,  New  Hampshire  has been  experencing
operating  deficits.  The Managing General Partner has been in negotiations with
the Local  General  Partner  to  develop a plan  that will  ultimately  transfer
ownership of the property to the Local  General  Partner.  Effective  January 1,
2000,  the  Partnership  transferred  its  interest  in  241  Pine  Street.  The
redemption of the  Partnership's  interest will cause  investors to have minimal
taxable  gain or loss for the 2000 tax  year,  depending  upon the  basis of the
property.

As previously  reported,  Harbour View,  located in Staten Island, New York, had
defaulted on its HUD-insured loan. Subsequently, the lender assigned the loan to
HUD. In  December  1996,  the  mortgage  was sold at auction to an  unaffiliated
institutional  buyer.  The Managing  General  Partner and Local General  Partner
continue  to  participate  in  workout  discussions  with  the new  lender.  The
Partnership's  ability to retain its interest in the property will depend on the
ability of the Local General Partner and  Partnership  affiliates to negotiate a
satisfactory workout agreement with the new lender. However, if the negotiations
are not  successful,  it is possible  that the  Partnership  will not be able to
retain its interest in the property through 2000. A foreclosure  would result in
recapture of credits for  investors,  the  allocation  of taxable  income to the
Partnership and loss of future benefits associated with this property. Occupancy
for this property as of March 31, 2000, was 97%.

As previously reported, a refinancing  application was submitted for Kyle Hotel,
located in Temple,  Texas,  in December  1997.  The  potential  lender  needs to
approve  several issues before the  application  will be approved.  The Managing
General  Partner is still  monitoring the progress of the  application  approval
process.

Pleasant  Plaza,  located in Malden,  Massachusetts,  as well as South  Holyoke,
located in Holyoke,  Massachusetts,  receive a subsidy  under the State  Housing
Assistance  Rental Program  (SHARP),  which is an important part of their annual
income. As originally conceived, the SHARP subsidy was scheduled to decline over
time to match  increases  in net  operating  income.  However,  increases in net
operating income failed to keep pace with the decline in the SHARP subsidy. Many
of the SHARP properties  (including Pleasant Plaza and South Holyoke) structured
workouts that  included  additional  subsidies in the form of Operating  Deficit
Loans (ODL's).  Effective  October 1, 1997, the  Massachusetts  Housing  Finance
Agency  (MHFA),  which  provided the SHARP  subsidies,  withdrew  funding of the
Operating  Deficit Loans.  Properties  unable to make full debt service payments
were declared in default by MHFA. The Managing General Partner joined a group of
SHARP property  owners called the  responsible  SHARP Owners,  Inc. (RSO) and is
negotiating with MHFA and the Local General Partners of Pleasant Plaza and South
Holyoke to find a solution to the problems  that will result from the  withdrawn
subsidies.  Given  existing  operating  deficits  and the  dependence  on  these
subsidies  by Pleasant  Plaza and South  Holyoke  House,  it is likely that both
properties  will default on their mortgage  obligations  in the near future.  On
September 16, 1998, the Partnership joined with the RSO and about 20 other SHARP
property  owners and filed suit against the MHFA (Mass.  Sup. Court Civil Action
#98-4720).  Among other  things,  the suit seeks to enforce the MHFA's  previous
financial commitments to the SHARP properties. The lawsuit is complex and in its
early  stages,  so no  predications  can be made at this time as to the ultimate
outcome.  In the meantime,  the Managing  General Partner intends to continue to
participate  in the RSO's  efforts to negotiate a resolution of this matter with
MHFA.

Waterfront and Shoreline,  both located in Buffalo,  New York,  continue to have
operating deficits as a result of a soft rental market, deferred maintenance and
security  issues.  Shoreline  was approved  for the 1998 New Approach  Anti-Drug
Grant.  The Grant was issued in February  1999 and will be used to support  drug
prevention,  educational  programs and increased  security on the  property.  In
addition,  the  Management  Agent has  applied for  consideration  for a Project
Improvement  Program  (PIP) and applied for a Safe  Neighborhood  Grant for both
Waterfront and Shoreline.  At this point,  deficits continue to be funded by the
Management Agent. The viability of the properties  depends upon funding deficits
until receipt of the grants. Both properties currently carry cash flow mortgages
with New York State.  The Managing  General  Partner is working closely with the
Local General Partner to develop a plan that will address these concerns.

Willow Lake,  located in Kansas, is experiencing  operating  difficulties due to
soft rental market  conditions.  As previously  reported,  the Managing  General
Partner negotiated a nine year extension to the original workout agreement.  The
nine-year  extension  will expire on May 31,  2001.  In  addition,  the Managing
General Partner is working with the Local General Partner to negotiate permanent
debt service relief, increase rents and monitor property expenses.

The Partnership has implemented  policies and practices for assessing  potential
impairment of its investments in Local Limited Partnerships. The investments are
analyzed by real estate experts to determine if impairment  indicators exist. If
so,  the  carrying  value is  compared  to the  undiscounted  future  cash flows
expected to be derived from the asset.  If there is a significant  impairment in
carrying  value,  a  provision  to write  down the asset to fair  value  will be
recorded in the Partnership's financial statements.

Inflation and Other Economic Factors

Inflation had no material  impact on the  Partnership's  operations or financial
condition for the years ended March 31, 2000 and 1999.

As some  Properties  benefit  from  some  form  of  government  assistance,  the
Partnership is subject to the risks  inherent in that area  including  decreased
subsidies, difficulties in finding suitable tenants and obtaining permission for
rent increases. In addition, the Tax Credits allocated to investors with respect
to a Property  are  subject to  recapture  to the extent  that a Property or any
portion thereof ceases to qualify for Tax Credits.

Some of the Properties listed in this report are located in areas suffering from
poor economic  conditions.  Such conditions  could have an adverse effect on the
rent or occupancy levels at such Properties.  Nevertheless, the Managing General
Partner  believes that the  generally  high demand for below market rate housing
will tend to negate such  factors.  However,  no assurance  can be given in this
regard.





Other Development

Lend Lease Real Estate Investments, Inc. ("Lend  Lease"), the U.S. subsidiary of
Lend Lease  Corporation  and the leading U.S.  institutional  real estate
advisor, as ranked by assets under management, acquired The Boston Financial
Group Limited Partnership ("Boston Financial") on November 3, 1999.

Headquartered  in New York and  Atlanta,  Lend Lease  Corporation  has  regional
offices in 12 cities  nationwide.  The company ranks as the leading U.S. manager
of tax-exempt assets invested in real estate. Lend Lease is a subsidiary of Lend
Lease  Corporation,  an international  real estate and financial  services group
listed on the  Australian  Stock  Exchange.  Worldwide,  Lend Lease  Corporation
operates from more than 30 cities on five  continents:  North  America,  Europe,
Asia,  Australia and South America. In addition to real estate investments,  the
Lend  Lease  Group  operates  in the  areas  of  property  development,  project
management and construction, and capital services (infrastructure).

Item 7.  Financial Statements and Supplementary Data

Information  required under this Item is submitted as a separate section of this
Report. See Index on page F-1 hereof.

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

None.

                                        PART III

Item 9.  Directors and Executive Officers of the Registrant

The Managing  General  Partner of the  Partnership  is Arch Street III,  Inc., a
Massachusetts  corporation (the "Managing  General Partner" or "Arch Street III,
Inc."), an affiliate of Lend Lease Estate Investments,  Inc. ("Lend Lease"). The
Managing General Partner was incorporated in August 1988.  Randolph G. Hawthorne
is the Chief  Operating  Officer of the  Managing  General  Partner  and had the
primary responsibility for evaluating, selecting and negotiating investments for
the  Partnership.  The  Investment  Committee  of the Managing  General  Partner
approved all investments.  The names and positions of the principal officers and
the directors of the Managing General Partner are set forth below.

     Name                                           Position

Jenny Netzer                           President, Managing Director
Michael H. Gladstone                   Vice President, Managing Director
Randolph G. Hawthorne                  Vice President, Managing Director
Paul F. Coughlan                       Vice President
William E. Haynsworth                  Vice President

The  other  General  Partner  of the  Partnership  is Arch  Street  III  Limited
Partnership,  a Massachusetts  limited partnership ("Arch Street III L.P.") that
was  organized  in August 1988.  The General  Partner of Arch Street III L.P. is
Arch Street III, Inc.

The Managing General Partner provides day-to-day  management of the Partnership.
Compensation is discussed in Item 10 of this report. Such day-to-day  management
does not include the management of the Properties.

The business experience of each of the persons listed above is described  below.
There is no family  relationship  between any of the persons listed in this
section.

Jenny  Netzer,  age 44,  Principal,  Head of Housing and  Community  Investing -
Responsible for tax credit investment programs to institutional clients.  Joined
Lend Lease through its 1999 acquisition of Boston Financial, started with Boston
Financial in 1987.  Previously,  led Boston Financial's new business initiatives
and managed firm's Asset Management division, responsible for performance of 750
properties and providing  service to 35,000  investors.  Prior to joining Boston
Financial,  served as Deputy Budget Director for Commonwealth of  Massachusetts,
responsible for Commonwealth's health care and public pension program's budgets,
served as Assistant Controller at Yale University and former member of Watertown
Zoning Board of Appeals Officer of Affordable  Housing Tax Credit  Coalition and
frequent  speaker on  affordable  housing  and tax credit  industry  issues,  BA
Harvard  University;  Master's  in Public  Policy  Harvard's  Kennedy  School of
Government.

Michael H. Gladstone,  age 43, Principal,  Legal - Responsible for legal work in
the areas of affordable and  conventional  housing and  investment  products and
services.  Joined Lend Lease through its 1999  acquisition of Boston  Financial,
started with Boston Financial in 1985;  served as firm's General Counsel.  Prior
to joining Boston Financial, associated with law firm of Herrick & Smith, served
on  advisory  board of Housing  and  Development  Reporter.  Lectured at Harvard
University on affordable housing matters, Member, The National Realty Committee,
Cornell Real Estate  Council,  National  Association  of Real Estate  Investment
Managers  and  Massachusetts  Bar,  BA  Emory  University;   JD  &  MBA  Cornell
University.

Randolph G.  Hawthorne,  age 50,  Principal,  Housing and Community  Investing -
Responsible for structuring and acquiring real estate  investments.  Joined Lend
Lease  through its 1999  acquisition  of Boston  Financial,  started with Boston
Financial in 1973.  Previously,  served as Boston  Financial's  Treasurer,  Past
Chairman of the Board of the National  Multi Housing  Council,  having served on
the board since 1989, Past President of the National Housing and  Rehabilitation
Association,  Member, Multifamily Council of the Urban Land Institute,  Frequent
speaker at industry conferences.  Serves on the Editorial Advisory Boards of the
Tax Credit  Advisor  and  Multi-Housing  News,  BS  Massachusetts  Institute  of
Technology; MBA Harvard Graduate School of Business. Board of Directors National
Housing Conference. Graduated MIT 1971, HBS 1973.

Paul  F.  Coughlan,  age  56,  Principal,  Housing  and  Community  Investing  -
Responsible  for marketing and sales of  institutional  tax credit  investments.
Joined Lend Lease through its 1999 acquisition of Boston Financial, started with
Boston  Financial  in 1975.  Previously,  served  as sales  manager  for  Boston
Financial's retail tax credit fund, AB Brown University.

William E.  Haynsworth,  age 60,  Principal,  Housing and Community  Investing -
Responsible for the  structuring of real estate  investments and the acquisition
of property interests.  Joined Lend Lease through its 1999 acquisition of Boston
Financial,  started  with  Boston  Financial  in 1977.  Prior to joining  Boston
Financial,  Acting Executive  Director and General Counsel of the  Massachusetts
Housing Finance Agency. Served as Director of Non-Residential Development of the
Boston  Redevelopment  Authority and Associate of Goodwin,  Proctor & Hoar, Past
President and current  Chairman of the Board of Directors of Affordable  Housing
Tax Credit Coalition, BA Dartmouth College; LLB and LLM Harvard Law School.

Item 10.  Management Remuneration

Neither the  directors  nor officers of Arch Street III,  Inc.,  the partners of
Arch Street III L.P. nor any other  individual with  significant  involvement in
the business of the  Partnership  receives any current or proposed  remuneration
from the Partnership.





Item 11.  Security Ownership of Certain Beneficial Owners and Management

As of March 31, 2000, the following is the only entity  known to the Partnership
to be the  beneficial  owner of more than 5% of the total number of Units
outstanding:
                                                Amount
Title of         Name and Address of         Beneficially             Percent
 Class             Beneficial Owner              Owned               of Class

Limited           AMP, Incorporated          10,000 Units               10%
Partner             P.O. Box 3608
                   Harrisburg, PA

The equity  securities  registered by the Partnership under Section 12(g) of the
Act  consist of 100,000  Units,  all of which have been sold to the public as of
March 31, 2000.  Holders of Units are permitted to vote on matters affecting the
Partnership only in certain unusual  circumstances and do not generally have the
right to vote on the operation or management of the Partnership.

Arch Street III L.P. owns five (unregistered) Units not included in the 100,000
units sold to the public.

Except as described in the preceding  paragraph,  neither Arch Street III, Inc.,
Arch Street III L.P., Lend Lease nor any of their executive officers, directors,
partners  or  affiliates  is the  beneficial  owner  of any  Units.  None of the
foregoing persons possesses a right to acquire beneficial ownership of Units.

The Partnership does not know of any existing  arrangement that might at a later
date result in a change in control of the Partnership.

Item 12.  Certain Relationships and Related Transactions

The  Partnership  was  required to pay  certain  fees to and  reimburse  certain
expenses of the Managing  General  Partner or its affiliates in connection  with
the  organization of the Partnership and the offering of Units.  The Partnership
was also required to pay certain fees to and reimburse  certain  expenses of the
Managing General Partner or its affiliates in connection with the administration
of the  Partnership  and its acquisition and disposition of investments in Local
Limited Partnerships.  In addition, the General Partners are entitled to certain
Partnership distributions under the terms of the Partnership Agreement. Also, an
affiliate  of the General  Partners  will receive up to $10,000 from the sale or
refinancing proceeds of each Local Limited Partnership, if it is still a limited
partner at the time of such  transaction.  All such fees and  distributions  are
more fully  described  in the sections  entitled  "Estimated  Use of  Proceeds",
"Management Compensation and Fees" and "Profits and Losses for Tax Purposes, Tax
Credits  and  Cash   Distributions"   of  the  Prospectus.   Such  sections  are
incorporated  herein by  reference.  In  addition,  an affiliate of the Managing
General Partner serves as property  management  agent for Willow Lake, The Kyle,
Breckenridge and Westwood Manor.

The Partnership is permitted to enter into transactions  involving affiliates of
the Managing General Partner,  subject to certain limitations established in the
Partnership Agreement.

Information  regarding the fees paid and expense  reimbursements made in the two
years ended March 31, 2000 is presented below.

Organizational fees and expenses

In accordance with the Partnership Agreement, affiliates of the General Partners
were to be  reimbursed  by the  Partnership  for  organizational,  offering  and
selling expenses advanced on behalf of the Partnership by its affiliates and for
salaries  and direct  expenses  of certain  employees  of the  Managing  General
Partner and its affiliates in connection with the  registration and organization
of  the  Partnership.   Such  expenses  include  printing  expenses  and  legal,
accounting,  escrow agent and depository  fees and expenses.  Such expenses also
include a non-accountable  expense allowance for marketing  expenses equal to 1%
of gross offering  proceeds.  $11,832,395 of organization  fees and expenses and
selling expenses  incurred on behalf of the Partnership were paid and reimbursed
to an affiliate of the Managing General Partner. Total organization and offering
expenses did not exceed 5.5% of the gross offering proceeds.
There were no  organization  fees and  offering  expenses  paid in the two years
ended March 31, 2000.

Acquisition fees and expenses

In accordance with the Partnership Agreement, the Partnership is required to pay
acquisition fees to and reimburse  acquisition  expenses of the Managing General
Partner or its affiliates for selecting,  evaluating,  structuring,  negotiating
and  closing  the  Partnership's  investments  in  Local  Limited  Partnerships.
Acquisition  fees  totaled  7.5% of the  gross  offering  proceeds.  Acquisition
expenses,  which include such  expenses as legal fees and  expenses,  travel and
communications expenses,  costs of appraisals,  accounting fees and expenses did
not  exceed  2% of  the  gross  offering  proceeds.  Acquisition  fees  totaling
$7,500,000  for the  closing  of the  Partnership's  Local  Limited  Partnership
Investments  have been paid to an  affiliate of the  Managing  General  Partner.
Acquisition  expenses totaling $1,587,834 were incurred and have been reimbursed
to an affiliate of the Managing General Partner.  There were no acquisition fees
or expenses paid in the two years ended March 31, 2000.

In  accordance  with the  Partnership  Agreement,  15% of the  acquisition  fees
payable  to an  affiliate  of the  Managing  General  Partner  is the  "Deferred
Acquisition  Fees". The Deferred  Acquisition Fees were deposited in an interest
bearing  account and were paid annually,  with interest,  at the rate of 10% per
year  over  10  years.  Installments  began  on the  second  anniversary  of the
Prospectus,  November 23, 1990. As of March 31, 2000,  all deferred  acquisition
fees have been paid. $112,500 of Deferred  Acquisition Fees were paid in each of
the two years ended March 31, 2000.

Asset Management Fees

In  accordance  with the  Partnership  Agreement,  an  affiliate of the Managing
General  Partner  is paid an annual  fee for  services  in  connection  with the
administration  of the  affairs  of the  Partnership.  The  affiliate  currently
receives  $7,241 (as adjusted by the CPI factor) per Local  Limited  Partnership
annually as the Asset  Management Fee. Asset Management Fees incurred in each of
the two years ended March 31, 2000 are as follows:

                                                   2000              1999
                                              --------------      ---------

     Asset Management Fees                   $   382,512         $   385,702

Salaries and benefits expense reimbursements

An affiliate of the Managing  General  Partner is reimbursed for the cost of the
Partnership's  salaries and benefits expenses. The reimbursements are based upon
the size and complexity of the Partnership's operations.  Reimbursements paid or
payable in each of the two years ended March 31, 2000 are as follows:

                                                   2000             1999
                                                 -----------       -------
     Salaries and benefits expense
      reimbursements                           $   142,324       $   140,069

Property Management Fees

Affiliates of the Managing General Partners are management agents for four Local
Limited  Partnerships.  Fees charged in each of the two years ended December 31,
1999 are as follows:

                                                    1999             1998
                                                 -----------       -------

     Property Management Fees                  $   150,066       $   154,952

Cash distributions paid to the General Partners

In  accordance  with the  Partnership  Agreement,  the  General  Partners of the
Partnership,  Arch Street  III,  Inc.  and Arch Street III Limited  Partnership,
receive 1% of cash  distributions  paid to partners.  No cash distributions were
paid to the General Partners in the two years ended March 31, 2000.

Additional  information  concerning  cash  distributions  and other fees paid or
payable to the Managing General Partner and its affiliates and the reimbursement
of expenses paid or payable to Lend Lease and its affiliates for the years ended
March 31, 2000 is presented in Note 5 to the Financial Statements.



<PAGE>



                                PART IV

Item 13.  Exhibits and Reports on Form 8-K

(a) (1) and (a) (2) Documents filed as a part of this Report.

In  response  to this  portion  of Item 13,  the  financial  statements  and the
auditors'  report relating  thereto are submitted as a separate  section of this
Report. See Index to the Financial Statements on page F-1 hereof.

The reports of auditors of the Local Limited Partnerships relating to the audits
of the financial statements of such Local Limited Partnerships appear in Exhibit
28.1 of this report.

All other financial statement schedules and exhibits for which provision is made
in  the  applicable  accounting  regulations  of  the  Securities  and  Exchange
Commission are not required under related  instructions or are  inapplicable and
therefore have been omitted.

(a)(3)     See Exhibit Index contained herein.

(a)(3)(b)  Reports on Form 8-K:
           No  reports on Form 8-K were  filed  during the year ended  March 31,
2000.

(a)(3)(c)  Exhibits


Number and Description in Accordance with
Item 601 of Regulation S-K

     18.    Letter on Change in Accounting Principle

     27.   Financial Data Schedule

     28.   Additional Exhibits

           (a)  28.1 Reports of Other Independent Auditors


(a)(3)(d)       None




<PAGE>


                                         SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

      BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III

      By:  Arch Street III, Inc.
           its Managing General Partner


     By:   /s/Randolph G. Hawthorne                  Date:    June 29 , 2000
           ------------------------------                     --------------
           Randolph G. Hawthorne,
           Managing Director, Vice President and
           Chief Operating Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been  signed by the  following  persons  on behalf of the  Managing  General
Partner of the Partnership and in the capacities and on the dates indicated:



     By:    /s/Randolph G. Hawthorne                Date:    June  29  , 2000
           ------------------------------                    ----------------

           Randolph G. Hawthorne,
           Managing Director, Vice President and
           Chief Operating Officer




     By:   /s/Michael H. Gladstone                  Date:   June   29,   2000
           ---------------------------------                ------------------
           Michael H. Gladstone
           Managing Director, Vice President

<PAGE>
Item 8.  Financial Statements and Supplementary Data


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                          Annual Report on Form 10-KSB
                        For the Year Ended March 31, 2000

                                      Index


                                                                     Page No.
                                                                  ------------

Report of Independent Accountants
    For the years ended March 31, 2000 and 1999                        F-2

Financial Statements

     Balance Sheet - March 31, 2000                                    F-3

     Statements of Operations - For the Years Ended
       March 31, 2000 and 1999                                         F-4

     Statements of Changes in Partners' Equity
       (Deficiency) - For the Years Ended March 31, 2000 and 1999      F-5

     Statements of Cash Flows - For the Years Ended
       March 31, 2000 and 1999                                         F-6

     Notes to the Financial Statements                                 F-7






<PAGE>






                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. III
(A Limited Partnership):

In our  opinion,  based on our audits and the  reports  of other  auditors,  the
financial  statements  listed in the accompanying  index present fairly,  in all
material respects,  the financial position of Boston Financial Qualified Housing
Tax Credits  L.P. III (the  "Partnership")  at March 31, 2000 and the results of
its operations and its cash flows for each of the two years in the period ended
March 31, 2000, in conformity with accounting  principles generally accepted in
the United States.  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 did not audit the financial
statements of certain local limited partnerships for which $49,183,552 of
cumulative equity in losses are included in the balance  sheet as of March 31,
2000 and for which net losses of $2,217,700 and $5,052,573,  are included in the
accompanying financial statements  for the years  ended March 31, 2000 and 1999,
respectively.  Those statements were audited by other  auditors  whose  reports
thereon have been furnished to us, and our opinion expressed herein,  insofar as
it relates to the amounts  included  for the Local  Limited  Partnerships,  is
based solely on the reports  of the other  auditors.  We  conducted  our  audits
of these financial statements in  accordance with auditing  standards  generally
accepted in the United  States,  which  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,
assessing  the accounting  principles  used and significant  estimates made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits and the reports of other auditors provide a  reasonable
basis for the opinions expressed above.

As  discussed in Note 2 to the  financial  statements,  in 2000 the  Partnership
changed the basis of  presentation  of its financial  statements from a combined
basis to a stand-alone  basis. The 1999 financial  statements have been restated
to show the effects of this change in reporting entity.





/S/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
June 22, 2000
Boston, Massachusetts


<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                                  BALANCE SHEET
                                 March 31, 2000

<TABLE>
<CAPTION>


Assets

<S>                                                                                              <C>
Cash and cash equivalents                                                                        $     172,793
Marketable securities, at fair value (Note 3)                                                          403,235
Investments in Local Limited Partnerships, net (Note 4)                                             13,498,237
Interest receivable                                                                                      7,350
Note receivable (Note 7)                                                                             1,345,345
                                                                                                 -------------
     Total Assets                                                                                $  15,426,960
                                                                                                 =============

Liabilities and Partners' Equity

Accounts payable to affiliates (Note 5)                                                          $   2,371,098
Accounts payable and accrued expenses                                                                  310,379
Note payable, affiliate (Note 5)                                                                       514,968
                                                                                                 -------------
     Total Liabilities                                                                               3,196,445

General, Initial and Investor Limited Partners' Equity                                              12,231,514
Net unrealized losses on marketable securities                                                            (999)
     Total Partners' Equity                                                                         12,230,515
                                                                                                 -------------
     Total Liabilities and Partners' Equity                                                      $  15,426,960
                                                                                                 =============
</TABLE>

The accompanying notes are an integral part of these financial statements.
<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                            STATEMENTS OF OPERATIONS
                   For the Years Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                                                                 1999
                                                                                 2000        (Restated)
Revenue:
<S>                                                                         <C>              <C>
   Investment                                                               $     36,967     $    35,638
   Recovery of bad debt                                                           27,002          30,148
   Other                                                                         148,809         493,048
                                                                            ------------     -----------
     Total Revenue                                                               212,778         558,834
                                                                            ------------     -----------

Expenses:
   Asset management fees, related party (Note 5)                                 382,512         385,702
   General and administrative (includes reimbursements
    to affiliates of $142,324 and $140,069, respectively) (Note 5)               365,743         361,002
   Provision for valuation of investments in
     Local Limited Partnerships                                                2,661,103         165,810
   Interest                                                                        6,000           6,000
   Amortization                                                                  125,801         143,259
                                                                            ------------     -----------
     Total Expenses                                                            3,541,159       1,061,773
                                                                            ------------     -----------

Loss before equity in losses of Local Limited Partnerships and gain (loss) on
   liquidation of interests in Local Limited
   Partnerships                                                               (3,328,381)       (502,939)

Equity in losses of Local Limited
   Partnerships (Note 4)                                                      (2,556,821)     (5,091,128)

Gain (loss) on liquidation of interests
   in Local Limited Partnerships (Note 6)                                       (785,948)        152,830
                                                                            ------------    ------------


Net Loss                                                                    $ (6,671,150)   $ (5,441,237)
                                                                            ============    ============

Net Loss Allocated:
   General Partners                                                         $    (66,711)   $    (54,412)
   Limited Partners                                                           (6,604,439)     (5,386,825)
                                                                            ------------    ------------
                                                                            $ (6,671,150)   $ (5,441,237)
                                                                            ============    ============

Net Loss per Limited Partnership Unit (100,000 Units)                       $     (66.04)   $    (53.87)
                                                                            ============    ===========

</TABLE>

The accompanying notes are an integral part of these financial statements.

<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

             STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIENCY)
                   For the Years Ended March 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                                                         Net
                                                           Initial     Investor      Unrealized
                                             General       Limited      Limited         Gains
                                            Partners      Partners     Partners       (Losses)         Total

<S>                                       <C>             <C>        <C>             <C>          <C>
Balance at March 31, 1998 (restated)      $ (632,406)     $  5,000   $  24,971,307   $       764  $  24,344,665
                                          ----------      --------   -------------   -----------  -------------

Comprehensive Loss:
   Change in unrealized gains
     on marketable securities
     available for sale                             -            -               -          (527)          (527)
   Net Loss                                   (54,412)           -      (5,386,825)            -     (5,441,237)
                                          -----------     --------   -------------   -----------  -------------
Comprehensive Loss                            (54,412)           -      (5,386,825)         (527)    (5,441,764)
                                          -----------     --------   -------------   -----------  -------------

Balance at March 31, 1999 (restated)         (686,818)       5,000      19,584,482           237     18,902,901
                                          -----------     --------   -------------   -----------  -------------

Comprehensive Loss:
   Change in unrealized gains
     on marketable securities
     available for sale                             -            -               -        (1,236)        (1,236)
   Net Loss                                   (66,711)           -      (6,604,439)            -     (6,671,150)
                                          -----------     --------   -------------   -----------  -------------
Comprehensive Loss                            (66,711)           -      (6,604,439)       (1,236)    (6,672,386)
                                          -----------     --------   -------------   -----------  -------------

Balance at March 31, 2000                 $  (753,529)    $  5,000   $  12,980,043   $      (999) $  12,230,515
                                          ===========     ========   =============   ===========  =============
</TABLE>


The accompanying notes are an integral part of these financial statements.
<PAGE>


             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                   For the Years Ended March 31, 2000 and 1999

<TABLE>
<CAPTION>

                                                                                                 1999
                                                                                 2000        (Restated)
Cash flows from operating activities:
<S>                                                                         <C>             <C>
   Net Loss                                                                 $ (6,671,150)   $ (5,441,237)
   Adjustments to reconcile net loss to net
     cash provided by (used for) operating activities:
     Equity in losses of Local Limited Partnerships                            2,556,821       5,091,128
     (Gain) loss on liquidation of interests in Local
       Limited Partnerships                                                      785,948        (152,830)
     Provision for valuation of investment in Local Limited Partnership        2,634,101         135,662
     Cash distribution income included in cash distributions received
       from Local Limited Partnerships                                           (46,800)        (68,949)
     Amortization                                                                125,801         143,259
     Gain on sales and maturities of
       marketable securities                                                        (202)           (386)
     Increase (decrease) in cash arising from changes
       in operating assets and liabilities:
       Interest receivable                                                         1,274           4,674
       Prepaid expenses                                                            2,240             591
       Accounts payable to affiliates                                            393,342         389,282
       Accounts payable and accrued expenses                                      55,591          32,778
                                                                            ------------    ------------
Net cash provided by (used for) operating activities                            (163,034)        133,972
                                                                            ------------    ------------

Cash flows from investing activities:
   Investment in Local Limited Partnership                                       (85,000)              -
   Advances to Local Limited Partnerships                                       (547,969)       (156,482)
   Purchases of marketable securities                                           (279,748)     (1,094,449)
   Proceeds from sales and maturities of
     marketable securities                                                       597,267         647,907
   Cash distributions received from Local
     Limited Partnerships                                                        268,591         578,263
   Decrease in deferred acquisition fee escrow                                   112,500         112,500
   Payment of deferred acquisition fees                                         (112,500)       (112,500)
   Repayment of notes receivable from affiliate                                   43,693          17,213
                                                                            ------------    ------------
Net cash used for investing activities                                            (3,166)         (7,548)
                                                                            ------------    ------------

Net increase (decrease) in cash and
   cash equivalents                                                             (166,200)        126,424

Cash and cash equivalents, beginning of year                                     338,993         212,569
                                                                            ------------    ------------

Cash and cash equivalents, end of year                                      $    172,793    $    338,993
                                                                            ============    ============

Supplemental Disclosure:
   Cash paid for interest                                                   $      6,000    $      6,000
                                                                            ============    ============


</TABLE>

 The accompanying notes are an integral part of these financial statements.


<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)


                        NOTES TO THE FINANCIAL STATEMENTS


1.   Organization

Boston Financial  Qualified Housing Tax Credits L.P. III (the "Partnership") was
formed on August 9, 1988 under the laws of the State of Delaware for the primary
purpose  of  investing,  as a limited  partner,  in other  limited  partnerships
("Local  Limited  Partnerships"),  most  of  which  own  and  operate  apartment
complexes,  most of which  benefit  from  some form of  federal,  state or local
assistance program and each of which qualify for low-income housing tax credits.
The  Partnership's  objectives  are to: (i) provide  current tax benefits in the
form of tax credits  which  qualified  investors may use to offset their federal
income tax liability;  ii) preserve and protect the Partnership's  capital; iii)
provide limited cash distributions  which are not expected to constitute taxable
income during  Partnership  operations;  and iv) provide cash distributions from
sale or refinancing  transactions.  The General  Partners of the Partnership are
Arch Street III, Inc., which serves as the Managing  General  Partner,  and Arch
Street III L.P., which also serves as the Initial Limited  Partner.  Both of the
General  Partners are  affiliates  of Lend Lease Real Estate  Investments,  Inc.
("Lend Lease"). The fiscal year of the Partnership ends on March 31.

The Certificate and Agreement of Limited Partnership  ("Partnership  Agreement")
authorized  the sale of up to  100,000  units of  Limited  Partnership  Interest
("Units") at $1,000 per Unit,  adjusted for certain  discounts.  The Partnership
raised $99,610,000 ("Gross Proceeds"), net of discounts of $390,000, through the
sale of 100,000 Units. Such amounts exclude five  unregistered  Units previously
acquired  for $5,000 by the Initial  Limited  Partner,  which is also one of the
General  Partners.  The offering of Units terminated on May 30, 1989. No further
sale of Units is expected.

Generally,  profits,  losses,  tax  credits  and cash flow from  operations  are
allocated  99% to the  Limited  Partners  and 1% to the  General  Partners.  Net
proceeds  from a sale  or  refinancing  will  be  allocated  95% to the  Limited
Partners and 5% to the General Partners, after certain priority payments.

Under  the  terms  of  the  Partnership  Agreement,  the  Partnership  initially
designated  3% of the Gross  Proceeds  from the sale of Units as a  Reserve  for
working  capital of the Partnership  and  contingencies  related to ownership of
Local Limited Partnership  interests.  During the year ended March 31, 1993, the
Managing  General  Partner  decided to increase the reserve  level to 3.75%.  At
March 31,  2000,  the  Managing  General  Partner has  designated  approximately
$480,000 of cash, cash equivalents and marketable securities as such Reserve.

2.   Significant Accounting Policies

Basis of Presentation

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting  because the  Partnership  does not have control
over  the  major   operating  and  financial   policies  of  the  Local  Limited
Partnerships  in which it invests.  Under the equity  method,  the investment is
carried at cost,  adjusted for the Partnership's  share of income or loss of the
Local Limited  Partnerships,  additional  investments in and cash  distributions
from the  Local  Limited  Partnerships.  Equity  in  income or loss of the Local
Limited   Partnerships  is  included  in  the  Partnership's   operations.   The
Partnership  has  no  obligation  to  fund  liabilities  of  the  Local  Limited
Partnerships  beyond its investment and therefore a Local Limited  Partnership's
investment  will not be carried below zero. To the extent that equity losses are
incurred when a Local Limited  Partnership's  respective  investment balance has
been reduced to zero,  the losses will be  suspended  to be used against  future
income.  Distributions received from Local Limited Partnerships whose respective
investment value has been reduced to zero are included in income.


<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


2.   Significant Accounting Policies (continued)

Basis of Presentation (continued)

Excess investment costs over the underlying net assets acquired have arisen from
acquisition   fees  paid  and  expenses   reimbursed  to  an  affiliate  of  the
Partnership.   These  fees  and  expenses  are  included  in  the  Partnership's
Investment  in  Local  Limited   Partnerships  and  are  being  amortized  on  a
straight-line basis over 35 years.

The Managing  General Partner has elected to report results of the Local Limited
Partnerships on a 90-day lag basis because the Local Limited Partnerships report
their results on a calendar year basis.  Accordingly,  the financial information
of the Local Limited Partnerships that is included in the accompanying financial
statements is as of December 31, 1999 and 1998.

The general partners of 241 Pine Street  Associates,  L.P., Willow Lake Partners
II, L.P., The Temple-Kyle  L.P.,  Breckenridge  Creste  Apartments,  L.P. and 13
Local Limited  Partnerships  in Texas (the "Combined  Entities") and the General
Partner of the  Partnership  are  affiliated  entities.  In prior  periods,  the
Partnership  combined  its  financial  statements  with  those  of the  Combined
Entities.  During 2000, the General Partner  concluded that the  presentation of
the financial  position and results of operations of the  Partnership,  with the
Combined  Entities  accounted  for using the equity  method,  resulted in a more
meaningful  presentation.  All prior period  financial data has been restated to
show the effects of this change in reporting entity.

The Partnership recognizes a decline in the carrying value of its investments in
Local Limited Partnerships when there is evidence of a non-temporary  decline in
the  recoverable  amount of the investment.  There is the  possibility  that the
estimates relating to reserves for non-temporary  declines in the carrying value
of  investments  in Local Limited  Partnerships  may be subject to material near
term adjustments.

The  Partnership,  as a limited  partner in the Local Limited  Partnerships,  is
subject to risks  inherent in the  ownership  of  property  which are beyond its
control,  such as  fluctuations  in  occupancy  rates  and  operating  expenses,
variations in rental schedules,  proper  maintenance of facilities and continued
eligibility  of tax  credits.  If the cost of  operating a property  exceeds the
rental income earned  thereon,  the Partnership may deem it in its best interest
to voluntarily provide funds in order to protect its investment.


Cash Equivalents

Cash equivalents  consist of short-term money market instruments with maturities
when purchased of ninety days or less.

Marketable Securities

Marketable securities consist primarily of U.S. Treasury instruments and various
asset-backed  investment vehicles.  The Partnership's  marketable securities are
classified  as  "Available  for Sale"  securities  and reported at fair value as
reported by the brokerage  firm at which the securities are held. All marketable
securities  have fixed  maturities.  Realized gains and losses from the sales of
securities are based on the specific identification method. Unrealized gains and
losses are  excluded  from  earnings  and  reported as a separate  component  of
partners' equity.



<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


2.  Significant Accounting Policies (continued)

Use of Estimates

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

Fair Value of Financial Instruments

Statements  of  Financial   Accounting  Standards  No.  107  ("SFAS  No.  107"),
Disclosures About Fair Value of Financial  Instruments,  requires disclosure for
the fair value of most on- and off-balance sheet financial instruments for which
it is  practicable  to estimate  that value.  The scope of SFAS No. 107 excludes
certain financial  instruments,  such as trade receivables and payables when the
carrying value  approximates the fair value and investments  accounted for under
the equity method, and all nonfinancial  assets,  such as real property.  Unless
otherwise described, the fair values of the Partnership's assets and liabilities
which  qualify as financial  instruments  under SFAS No. 107  approximate  their
carrying amounts in the accompanying balance sheets.

Income Taxes

No provision  for income taxes has been made as the  liability for such taxes is
the obligation of the partners of the Partnership.

Reclassifications

Certain  reclassifications  have been made to prior year financial statements to
conform to the current year presentation.

3.   Marketable Securities
<TABLE>
<CAPTION>

A summary of marketable securities is as follows:
                                                                 Gross             Gross
                                                              Unrealized        Unrealized      Fair
                                                  Cost           Gains            Losses        Value
Debt securities issued by
   the US Treasury and other
   US government corporations
<S>                                            <C>            <C>               <C>          <C>
   and agencies                                $   404,234    $        66       $ (1,065)    $   403,235
                                               -----------    -----------       --------     -----------

Marketable Securities
   at March 31, 2000                           $   404,234    $        66       $ (1,065)    $   403,235
                                               ===========    ===========       ========     ===========

</TABLE>


<PAGE>

             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


3.   Marketable Securities (continued)
<TABLE>
<CAPTION>

The contractual maturities at March 31, 2000 are as follows:
                                                                                                Fair
                                                                                 Cost           Value
<S>                                                                          <C>             <C>
Due in less than one year                                                    $   304,736     $   304,641
Due in one to five years                                                          99,498          98,594
                                                                             -----------     -----------
                                                                             $   404,234     $   403,235
                                                                             ===========     ===========
</TABLE>

Actual  maturities  for asset  backed  securities  may differ  from  contractual
maturities because some borrowers have the right to call or prepay  obligations.
Proceeds  from the sales of marketable  securities  were  approximately  $25,000
during the fiscal  year ended  March 31,  2000;  during the year ended March 31,
1999 there were no proceeds from sales of marketable  securities.  Proceeds from
the  maturities  of  marketable  securities  were  approximately  $572,000,  and
$648,000 during the years ended March 31, 2000 and 1999, respectively.  Included
in investment  income are gross gains of $229 and $421,  and gross losses of $27
and $35 that were  realized  on the sales  during the years ended March 31, 2000
and 1999, respectively.

4.    Investments in Local Limited Partnerships

The  Partnership  uses the equity method to account for its limited  partnership
interests  in  fifty-two  Local  Limited  Partnerships  which  own  and  operate
multi-family  housing  complexes,  most of which  are  government-assisted.  The
Partnership,  as Investor  Limited Partner pursuant to the various Local Limited
Partnership   Agreements  which  contain  certain   operating  and  distribution
restrictions,  has acquired a 99% interest in the profits,  losses,  tax credits
and cash flows from operations of each of the Local Limited Partnerships, except
for Granite,  Colony  Apartments,  Harbour View,  Willow Lake and  Breckenridge,
where the  Partnership's  ownership  interest is 97%, 49%, 48.96%,  98% and 98%,
respectively.  Upon dissolution,  proceeds will be distributed according to each
respective partnership agreement.

The following is a summary of Investments in Local Limited Partnerships at March
31, 2000:

<TABLE>
<CAPTION>


Capital  contributions  and  advances  paid to Local  Limited  Partnerships  and
   purchase price paid to withdrawing partners
<S>                                                                               <C>
   of Local Limited Partnerships                                                  $  68,111,077

Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $52,059,725)                        (51,933,149)

Cumulative cash distributions received from
   Local Limited Partnerships                                                        (2,889,520)

Investments in Local Limited Partnerships before adjustment                          13,288,408

Excess of investment cost over the underlying net assets acquired:

   Acquisition fees and expenses                                                      6,220,170

   Accumulated amortization of acquisition fees and expenses                         (1,631,170)
                                                                                  -------------

Investments in Local Limited Partnerships                                            17,877,408

Reserve for valuation of investments in
   Local Limited Partnerships                                                        (4,379,171)
                                                                                  $  13,498,237

</TABLE>

<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


4.   Investments in Local Limited Partnerships (continued)

Summarized  financial  information  as of December 31, 1999 and 1998 (due to the
Partnership's policy of reporting the financial information of its Local Limited
Partnership  interests on a 90 day lag basis) of all Local Limited  Partnerships
in which the Partnership has invested is as follows:

Summarized Balance Sheets - as of December 31,
<TABLE>
<CAPTION>
                                                                                               1998
                                                                           1999             (Restated)
Assets:
<S>                                                                    <C>                <C>
   Investment property, net                                            $  145,617,505     $   153,678,734
   Other assets, net                                                       12,608,323          13,869,096
   Current assets                                                           8,241,042           5,989,968
                                                                       --------------     ---------------
       Total assets                                                    $  166,466,870     $   173,537,798
                                                                       ==============     ===============

Liabilities and Partners' Equity:
   Mortgages payable, net of current portion                           $  179,734,723     $   164,246,214
   Other liabilities                                                       20,247,921          18,863,957
   Current liabilities (includes current
     portion of mortgages payable)                                          7,738,031          23,695,744
                                                                       --------------     ---------------
       Total liabilities                                                  207,720,675         206,805,915
                                                                       --------------     ---------------

Partners' Equity:
   Partnership's deficiency                                               (41,704,113)        (33,777,377)
   Other partners' equity (deficiency)                                        450,308             509,260
                                                                       --------------     ---------------
       Total partners' deficiency                                         (41,253,805)        (33,268,117)
                                                                       --------------     ---------------
         Total liabilities and partners' deficiency                 $     166,466,870      $  173,537,798
                                                                    =================      ==============

Summarized Income Statements - For
the year ended December 31,
                                                                                                 1998
                                                                           1999             (Restated)

Rental and other income                                                $  32,934,213      $   32,545,316
                                                                       -------------      --------------

Expenses:
   Operating expenses                                                     18,574,722          18,378,470
   Interest expense                                                       14,023,088          14,466,301
   Depreciation and amortization                                           7,531,771           7,841,261
   Provision for valuation of real estate                                    853,176          18,133,029
                                                                       -------------      --------------
     Total expenses                                                       40,982,757          58,819,061
                                                                       -------------      --------------

Net Loss                                                               $  (8,048,544)     $  (26,273,745)
                                                                       =============      ==============

Partnership's share of Net Loss                                        $  (7,508,507)     $  (25,568,964)
                                                                       =============      ==============
Other partners' share of Net Loss                                      $    (540,037)     $     (704,781)
                                                                       =============      ==============
</TABLE>


<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


4.   Investments in Local Limited Partnerships (continued)

For the years ended March 31, 2000 and 1999, the  Partnership has not recognized
$5,445,087 and $21,073,132 respectively, of equity in losses relating to certain
Local  Limited   Partnerships   in  which   cumulative   equity  in  losses  and
distributions   exceeded   its  total   investments   in  these  Local   Limited
Partnerships.  The  Partnership  recognized  $493,401 and $595,296 of previously
unrecognized losses in the years ended March 31, 2000 and 1999, respectively.

The Partnership's  deficiency as reflected by the Local Limited  Partnerships of
$41,704,113  differs  from  the  Partnership's   Investments  in  Local  Limited
Partnerships before adjustment of $13,288,408  primarily because the Partnership
has not  recognized  $52,059,725  of equity  losses  relating  to Local  Limited
Partnerships  whose cumulative equity in losses exceeded their total investments
and the  Partnership  has  included  advances  of  approximately  $1,417,000  in
investments in Local Limited  Partnerships  which are included in liabilities in
the balance sheet of the Local Limited Partnerships.

5.   Transactions with Affiliates

In  accordance  with the  Partnership  Agreement,  15% of the  acquisition  fees
payable  to an  affiliate  of the  Managing  General  Partner  is  the  Deferred
Acquisition  Fees. The Deferred  Acquisition  Fees were deposited in an interest
bearing  account and were paid annually,  with interest,  at the rate of 10% per
year  over  10  years.  Installments  began  on the  second  anniversary  of the
Prospectus,  November 23, 1990. As of March 31, 2000,  all deferred  acquisition
fees have been paid.

An affiliate of the  Managing  General  Partner  currently  receives  $7,241 (as
adjusted by the CPI factor) per Local Limited Partnership  annually as the Asset
Management Fee for administering the affairs of the Partnership. Included in the
Statements of Operations are Asset  Management Fees of $382,512 and $385,702 for
the years ended March 31, 2000 and 1999, respectively. Payables to affiliates of
the  Managing  General  Partner  relating  to the  aforementioned  fees  equaled
$2,332,960 at March 31, 2000.

An affiliate of the Managing  General  Partner is reimbursed for the cost of the
Partnership's   salaries  and  benefits   expenses.   Included  in  general  and
administrative  expenses for the years ended March 31, 2000 and 1999 is $142,324
and  $140,069,  respectively,  that  the  Partnership  has  paid or will  pay as
reimbursement for salaries and benefits.

Affiliates of the Managing General Partner are management  agents for four Local
Limited  Partnerships.  Included in operating  expenses in the summarized income
statements  in Note 4 to the  Financial  Statements  is $150,066 and $154,952 of
fees earned by these  affiliates for the years ended December 31, 1999 and 1998,
respectively.

An affiliate of the Managing General Partner advanced the Partnership amounts to
cover  operating  deficits  and,  in return,  a  non-interest  bearing  note was
executed.  As of March 31, 2000, $514,968 is due to an affiliate of the Managing
General Partner for this note.

This  affiliate of the Managing  General  Partner has made a commitment to defer
collection of past or future Asset Management  Fees,  reimbursement of operating
expenses and to defer  collection of the $514,968 note described  above,  to the
extent necessary to cover operating deficits of the Partnership.


<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


6.   Liquidation of Interests in Local Limited Partnerships

For financial  reporting  purposes,  a loss on liquidation of interests in Local
Limited  Partnerships of $592,065 and $193,883 were recognized in the year ended
March 31,  2000 as a result of the  transfer  of 241 Pine  Street and  Boulevard
Commons II, respectively.

For financial  reporting purposes,  a loss on liquidation of interests in Local
Limited  Partnerships of $4,882 was recognized in the year ended March 31, 1999
as a result of the transfer of Willowick.

As previously discussed, the titles to both Regency and Rolling Hills in Dayton,
Ohio were  transferred  to the lender on May 2, 1997 after  prolonged  operating
difficulties  resulting from low occupancy,  capital  rehabilitation needs and a
depressed  local  economy.  For the year ended March 31, 1999,  the  Partnership
recognized  $157,712 of a gain on  liquidation  of  interests  in Local  Limited
Partnerships   relating  to  the  transfer  of  these  properties  because  cash
distributions of this amount were received from these Local Limited Partnerships
in 1999.

7.    Note Receivable

The  Partnership  has a note receivable from The Temple Kyle. The note is due in
monthly  installments of $17,600,  including interest at prime plus 1.00 percent
(an  effective  rate of 9.50 and 8.85  percent in 1999 and 1998,  respectively),
through its maturity  date on June 1, 2005.  The note is  collateralized  by all
properties of the Local Limited Partnership.

Minimum  principal  payments on the note  receivable to maturity as of March 31,
2000, are as follows:

                           2000                      $      97,726
                           2001                            151,420
                           2002                            162,363
                           2003                            174,103
                           2004                            186,690
                           2005 and after                  573,043
                                                     -------------
                               Total                 $   1,345,345
                                                     =============


<PAGE>
             BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. III
                             (A Limited Partnership)

                  NOTES TO THE FINANCIAL STATEMENTS (continued)


8.   Federal Income Taxes

The following schedule  reconciles the reported financial statement loss for the
fiscal  years  ended  March 31,  2000 and 1999 to the loss  reported on the Form
1065,  U.S.  Partnership  Return of Income for the years ended December 31, 1999
and 1998:
<TABLE>
<CAPTION>
                                                                                                    1999
                                                                              2000           (Restated)

<S>                                                                      <C>                <C>
Net Loss per financial statements                                        $  (6,671,150)     $  (5,441,237)
   Related party expenses not currently deductible
     for tax purposes                                                        1,700,961            379,660
   Amortization of acquisition fees and expenses
     not deductible for tax purposes                                           125,801            143,259
   Adjustment to reflect March 31 fiscal year
     end to December 31 tax year end                                           113,382            330,738
   Equity in losses of Local Limited
     Partnerships for financial reporting purposes
     in excess of equity in losses for tax purposes                             36,309         16,228,268
   Adjustment for equity in losses of Local
     Limited Partnerships not recognized for
     financial reporting purposes                                           (4,998,486)       (20,546,785)
   Cash distribution included in loss for financial
     reporting purposes                                                       (117,751)           (82,101)
   Write-off of investment in Local Limited Partnership
     for financial reporting purposes in excess of
     write-off for tax purposes                                                789,200           (157,665)
   Provision for valuation of investment in Local
     Limited Partnership not deductible for tax purposes                     1,327,528                  -
                                                                         -------------      -------------
Net Loss per tax return                                                  $  (7,694,206)     $  (9,145,863)
                                                                         =============      =============
</TABLE>

The  differences in the assets and  liabilities of the Partnership for financial
reporting  purposes and tax reporting purposes for the year ended March 31, 2000
are as follows:
<TABLE>
<CAPTION>

                                                          Financial              Tax
                                                          Reporting           Reporting
                                                          Purposes            Purposes            Differences

<S>                                                    <C>                 <C>                 <C>
   Investments in Local Limited Partnerships           $ 13,498,237        $ (18,414,819)      $   31,913,056
                                                       ============        =============       ==============
   Other assets                                        $  1,928,723        $  15,173,316       $  (13,244,593)
                                                       ============        =============       ==============
   Liabilities                                         $  3,196,445        $     820,310       $    2,376,135
                                                       ============        =============       ==============
</TABLE>

The  differences in the assets and  liabilities of the Partnership for financial
reporting  purposes are primarily  attributable to: i) the cumulative  equity in
losses  from  Local  Limited   Partnerships   for  tax  reporting   purposes  is
approximately   $38,205,000  greater  than  for  financial  reporting  purposes,
including approximately $52,060,000 of losses the Partnership has not recognized
relating to thirty-three  Local Limited  Partnerships whose cumulative equity in
losses  exceeded their total  investments;  ii) the  Partnership  has provided a
provision  for  valuation  of  approximately  $4,380,000  against  five  of  its
investments in Local Limited Partnerships for financial reporting purposes; iii)
the  cumulative  amortization  of  acquisition  fees and expenses for  financial
reporting  purposes is  approximately  $1,637,000;  and iv)  organizational  and
offering costs of  approximately  $11,832,000 that have been capitalized for tax
reporting  purposes  are  charged to  Limited  Partners'  equity  for  financial
reporting purposes.


<PAGE>










June 29, 2000

Boston Financial Qualified Housing Tax Credits L.P. III
101 Arch Street
Boston, MA 02110-1106

To the Partners of
Boston Financial Qualified Housing Tax Credits L.P. III:

We are  providing  this letter to you for  inclusion  as an exhibit to your Form
10-K filing pursuant to Item 601 of Regulation S-K.

We have audited the financial  statements included in Boston Financial Qualified
Housing Tax Credits L.P.  III's (the  "Partnership")  Annual Report on Form 10-K
for the year ended March 31, 2000 and issued our report  thereon  dated June 22,
2000. Note 2 to the financial  statements describes a change in reporting entity
from a combined  basis  presentation  to a stand-alone  basis  presentation.  It
should  be  understood  that  the  preferability  of one  acceptable  method  of
presenting  entities under common control over another has not been addressed in
any authoritative accounting literature, and in expressing our concurrence below
we have  relied on  management's  determination  that this  change in  reporting
entity is preferable.  Based on our reading of  management's  stated reasons and
justification  for this  change in  reporting  entity in the Form 10-K,  and our
discussions  with  management as to their judgment  about the relevant  business
planning and legal  factors  relating to the change,  we concur with  management
that such change represents, in the Partnership's circumstances, the adoption of
a preferable accounting principle in conformity with Accounting Principles Board
Opinion No. 20.


Very truly yours,


/S/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
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