June  29   , 2001


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, 2001
        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,  2001
                                   ---------------------------------------------


                                       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, 2001
                                         --------------------------------


<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, 2001


                                TABLE OF CONTENTS


PART I                                                               Page No.
------                                                               --------

   Item 1    Business                                                  K-4
   Item 2    Properties                                                K-8
   Item 3    Legal Proceedings                                         K-20
   Item 4    Submission of Matters to a
             Vote of Security Holders                                  K-20

PART II

   Item 5     Market for the Registrant's Units
              and Related Security Holder Matters                      K-21
   Item 6     Management's Discussion and Analysis of
              Financial Condition and Results of Operations            K-21
   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-25
   Item 10    Management Remuneration                                  K-26
   Item 11    Security Ownership of Certain Beneficial
              Owners and Management                                    K-26
   Item 12    Certain Relationships and Related
              Transactions                                             K-26
   Item 13    Exhibits and Reports on Form 8-K                         K-28

SIGNATURES                                                             K-29
----------


<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 and in another supplement to the Prospectus and in a report on Form
8-K (collectively, the "Acquisition Reports"); such descriptions are
incorporated herein by this reference.


<PAGE>


                                     TABLE A

                             SELECTED LOCAL LIMITED
                                PARTNERSHIP DATA
                                   (Unaudited)

Properties Owned by                                                    Date
Local Limited                                                        Interest
Partnerships                           Location                      Acquired

West Dade                           Miami, FL                        12/31/88
West Dade II                        Miami, FL                        12/31/88
Regency Square (1)                  Dayton, OH                       03/13/89
Westwood Manor                      Flint, MI                        02/21/89
Rolling Hills (1)                   Dayton, OH                       03/13/89
Boulevard Commons II (1)            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 (1)                       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 (1)                       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 (1)                     Venus, TX                        08/22/89
Godley Arms (1)                     Godley, TX                       08/25/89
Pilot Point (1)                     Pilot Point, TX                  08/22/89
Sherwood Arms (1)                   Keene, TX                        08/22/89
South Holyoke                       Holyoke, MA                      08/29/89
Walker Woods                        Dover, DE                        08/30/89
Lakeway Colony (1)                  Lake Dallas, TX                  08/30/89
One Main Place (1)                  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 (1)                        Graham, TX                       10/06/89
Hallet West (1)                     Hallettsville, TX                11/20/89


<PAGE>


Properties Owned by                                                  Date
  Local Limited                                                    Interest
  Partnerships                        Location                     Acquired

Glenbrook (1)                      St. Jo, TX                      10/06/89
Eagles Nest (1)                    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 (1)                      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 (1)                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

*     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 99%
      interest (Willow Lake), 98% interest (Breckenridge), 97% interest
      (Granite), 49% interest (Colony Apartments) and a 48.47% interest (Harbour
      View). Profits and losses arising from sale or refinancing transactions
      are allocated in accordance with the respective Local Limited Partnership
      Agreements.

(1) The Partnership no longer has an interest in this Local Limited Partnership.


<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, L.P., Breckenridge and Willow Lake, each
Local Limited Partnership has as 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, 2001, 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 Senior Housing L.P., Prairieland
Property of Syracuse, L.P., Prairieland Properties of Satanta, L.P., Rossville
Senior Housing, L.P., Longview Apartments, L.P., Smithville Rural Housing A
Limited Partnership, Brownsville Associates, L.P., Briarwood Associates II,
L.P., Billings Family Housing, L.P., Garden Plain Senior Apts., LTD, Wayne
Senior Housing, L.P., Horseshoe Bend Associates I, L.P., Bolivar Senior Housing,
L.P., Housing of Oak Grove, L.P., Westgate Associates I, L.P. and Altheimer
Associates I, L.P., representing 2.46%, have The Lockwood Group as Local General
Partner; (ii) Elver Park Limited Partnership II, Elver Park Limited Partnership
III, Tucson Trails Limited Partnership I and Tucson Trails Limited Partnership
II, representing 6.58%, have Gorman Associates as Local General Partner; (iii)
Riverfront Apartments, L.P. and Susquehanna View, L.P., representing 6.27%, have
NCHP as Local General Partner; (iv) West Dade LTD, A Limited Partnership and
West Dade LTD II, A Limited Partnership, representing 6.83%, have Romat, Inc.
and Arbor, Inc., respectively, both of which have Aristedes Martinez as
principal, as Local General Partner; (v) EDM Housing Associates, LTD and Fox Run
Housing, 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 VIII, L.P. A Limited Partnership, Lexington
Associates I L.P. A Limited Partnership and Fulton Associates I, L.P. A Limited
Partnership, representing 0.79%, have Tommy Harper, Jerry Blurt and Chris
Turskey as Local General Partners; and (vii) Waterfront Limited Partnership and
Shoreline Limited Partnership, 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.

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
48.47%, 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 schedule on the following pages provides 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
Property Name                           Number of Committed at March  Paid through         payable at     Type of Occupancy at March
Property Location                      Apt. Units    31, 2001        March 31, 2001     December 31, 2000  Subsidy*    31, 2001
-----------------------------------------------------------------------------------   -------------------- -------------------------

West Dade LTD, A Limited Partnership
West Dade
<S>                                         <C>      <C>             <C>                 <C>                               <C>
Miami, FL                                   122      $1,513,936      $1,513,936          $4,135,610     Section 8          98%


West Dade LTD II, A Limited Partnership
West Dade II
Miami, FL                                   209       3,039,442       3,039,442           8,097,770     Section 8          97%


Westwood Manor Limited Dividend
    Housing Association L.P.
Westwood Manor
Flint, MI                                   144       1,165,925       1,165,925           3,075,561     Section 8          88%


Rolling Hills Associates L.P. (1)
Rolling Hills
Dayton, OH

Regency Square Limited Partnership (1)
Regency Square
Dayton, OH

Shoreline Limited Partnership
Shoreline
Buffalo, NY                                 142       1,079,318       1,079,318           7,793,107     None               82 %


Waterfront Limited Partnership
Waterfront
Buffalo, NY                                 472       3,597,307       3,597,307          26,960,053     None               74%



<PAGE>





                                                      Capital Contributions
Local Limited Partnership                             Total              Total       Mtge. Loans payable
Property Name                           Number of Committed at March  Paid through   at December 31, 2000 Type of Occupancy at March
Property Location                      Apt. Units   31, 2001          March 31, 2001                      Subsidy*   31, 2001
-----------------------------------------------------------------------------------  --------------------- -------------------------

Fox Run Housing
Fox Run
Victoria, TX                                150       1,605,775       1,605,775           4,146,462     Section 8        93%


Boulevard Commons Limited
    Partnership II (1)
Boulevard Commons II
Chicago, IL

The Colony Apartments, L.P.
    A Limited Partnership
Colony Apartments
Columbia, SC                                300       1,762,500       1,762,500           8,440,408     Section 8        95%


Boulevard Commons Limited
    Partnership IIA
Boulevard Commons IIA
Chicago, IL                                  42       1,179,812       1,179,812           1,475,488     Section 8        81%


Ashley Place, LTD
    A Florida Limited Partnership
Ashley Place
Orlando, FL                                  96       2,002,560       2,002,560           2,872,971     None             88%


Admiral Housing Limited Partnership
Admiral Court
Philadelphia, PA                             46       1,900,000       1,900,000           2,088,176     Section 8        91%




<PAGE>



                                                       Capital Contributions
Local Limited Partnership                             Total               Total            Mtge. Loans
Property Name                           Number of Committed at March   Paid through        payable at      Type  Occupancy at March
Property Location                      Apt. Units   31, 2001          March 31, 2001    December 31, 2000   of         31, 2001
                                                                                                          Subsidy*
-----------------------------------------------------------------------------------  --------------------  ------------------------

Prarieland Property of Syracuse, L.P.
Bentley Hill
Syracuse, KS                                  8          52,150          52,150             239,257         FmHA           100%


El Jardin of Davie, Ltd.
El Jardin
Davie, FL                                   236       2,022,100       2,022,100           6,654,336     Section 8          100%


EDM Housing Associates LTD
    A Limited Partnership
Elmwood Delmar
Aurora, CO                                   95       1,102,025       1,102,025           3,177,653     Section 8           97%


Bridgeport Housing Associates, LTD (1)
Crestwood
Bridgeport, TX

Willowick Housing Associates, LTD (1)
Willowick
Gainesville, FL

Ellsworth Senior Housing, L.P.
Kirkendall Heights
Ellsworth, KS                                12          69,658          69,658             325,924       FmHA               92%


Prairieland Properties of Satanta, L.P.
Ponca Manor
Satanta, KS                                   8          49,915          49,915             222,339       FmHA               50%




<PAGE>



                                                     Capital Contributions
Local Limited Partnership                             Total             Total             Mtge. Loans
Property Name                           Number of Committed at March Paid through         payable at      Type  Occupancy at March
Property Location                      Apt. Units   31, 2001        March 31, 2001     December 31, 2000   of         31, 2001
                                                                                                         Subsidy*
-----------------------------------------------------------------------------------   -------------------- ------------------------

Rossville Senior Housing L.P.
Pearl Place
Rossville, KS                                10          58,855          58,855             277,219        FmHA            80%


Columbia Townhouse Associates, L.P.
Columbia Townhouses
Burlington, IA                               56         837,450         837,450             696,993      Section 8         91%


Quartermill Associates, L.P.
    A Virginia Limited Partnership
Quartermill
Richmond, VA                                266       7,705,500       7,705,500           7,034,139       None             94%


One Main Place Housing
    Associates, LTD (1)
One Main Place
Little Elm, TX

Pilot Point Housing Associates, LTD (1)
Pilot Point
Pilot Point, TX

Sherwood Arms Housing
    Associates, LTD (1)
Sherwood Arms
Keene, TX




<PAGE>



                                                     Capital Contributions
Local Limited Partnership                             Total             Total      Mtge. Loans payable
Property Name                           Number of Committed at March Paid through  at December 31, 2000 Type of  Occupancy at
Property Location                      Apt. Units   31, 2001        March 31, 2001                      Subsidy March 31, 2001
---------------------------------------------------------------------------------- ----------------------------------------------

Crown Point Housing
    Associates, LTD (1)
A Texas Limited Partnership
Crown Point
Venus, TX

Godley Arms Housing
    Associates, LTD (1)
Godley Arms
Godley, TX

South Holyoke Limited Partnership
South Holyoke
Holyoke, MA                                  48       1,119,330       1,119,330       2,564,400         None           100%


Harbour View
    A Limited Partnership
Harbour View
Staten Island, NY                           122       1,350,000       1,350,000      11,142,744         None            98%


Walker Woods Partners, L.P.
Walker Woods
Dover, DE                                    51       1,452,380       1,452,380       2,655,442         None            88%


Boston Financial Texas Properties
    Limited Partnership III (1)
Lakeway Colony
Lake Dallas, TX




<PAGE>



                                                     Capital Contributions
Local Limited Partnership                             Total             Total        Mtge. Loans
Property Name                           Number of Committed at March  Paid through    payable at        Type of  Occupancy at March
Property Location                      Apt. Units   31, 2001        March 31, 2001 December 31, 2000    Subsidy*    31, 2001
-----------------------------------------------------------------------------------------------------  --------------------------

Eaglewood VIII, L.P.
    A Limited Partnership
Eaglewood
Covington, TN                                40         255,000         255,000       1,108,912         FmHA              98%


Georgetown Associates II, L.P.
Georgetown II
Georgetown, DE                               50       1,200,000       1,200,000       1,697,367         None              98%


Blue Mountain Associates, L.P.
    A Massachusetts Limited Partnership
Granite V
Boston, MA                                  217       5,774,113       5,774,113       9,470,968         Section 8         98%


Garden Plain Senior Apts., LTD
Garden Plain
Garden Plain, KS                             12          70,030          70,030         301,475         FmHA              92%


Fulton Associates I, L.P.
    A Limited Partnership
Fulton
Fulton, KY                                   24         180,000         180,000         793,867         FmHA             100%


Lone Oak Housing Associates, LTD (1)
Lone Oak
Graham, TX



<PAGE>



                                                     Capital Contributions
Local Limited Partnership                             Total             Total         Mtge. Loans
Property Name                           Number of Committed at March  Paid through     payable at       Type of  Occupancy at March
Property Location                      Apt. Units   31, 2001        March 31, 2001 December 31, 2000   Subsidy*      31, 2001
  ----------------------------------------------------------------------------------------------------- --------------------------

West Hallettsville Housing
    Associates, LTD (1)
Hallet-West
Hallettsville, TX

Glenbrook Housing Associates, LTD (1)
Glenbrook
St. Jo, TX

Eagles Nest Housing
    Associates, LTD (1)
Eagles Nest
Decatur, TX

Billings Family Housing, L.P.
Cedar Tree
Billings, MO                                 12          58,855          58,855         280,822         FmHA           100%


Brownsville Associates, L.P.
Brownsville
Brownsville, TN                              28         161,665         161,665         779,607         FmHA           100%


Wayne Senior Housing, L.P.
Sunnyhill Villa
Wayne, NE                                    15          81,205          81,205         424,757         FmHA            80%


Longview Apartments, L.P.
Longview
Humbolt, KS                                  14          91,635          91,635         396,035         FmHA           100%



<PAGE>



                                                      Capital Contributions
Local Limited Partnership                              Total             Total         Mtge. Loans
Property Name                           Number of Committed at March    Paid through   payable at       Type of  Occupancy at March
Property Location                      Apt. Units    31, 2001        March 31, 2001 December 31, 2000   Subsidy*   31, 2001
------------------------------------------------------------------------------------------------------ --------------------------

Horseshoe Bend Associates I, L.P.
Horseshoe Bend
Horseshoe Bend, AR                           24         143,785         143,785         643,672         FmHA            88%


Briarwood Associates II, L.P.
Briarwood II
Lake Havasua, AZ                             32         219,030         219,030       1,102,553         FmHA            94%


North Quail Run Housing
    Associates, LTD (1)
Quail Run
Iowa Park, TX

Smithville Rural Housing
    A Limited Partnership
Smithville
Smithville, MO                               24         108,025         108,025         538,991        FmHA             88%


Aurora Properties, LTD.
    A Limited Partnership
Aurora East Apartments
Denver, CO                                  125         765,000         765,000       4,039,459      Section 8          93%


Elver Park Limited Partnership II
Elver Park II
Madison, WI                                  56       1,246,385       1,246,385       1,653,967         None           100%




<PAGE>



                                                      Capital Contributions
Local Limited Partnership                             Total              Total         Mtge. Loans
Property Name                           Number of Committed at March  Paid through     payable at         Type of  Occupancy at
Property Location                      Apt. Units   31, 2001        March 31, 2001 December 31, 2000     Subsidy  March 31, 2001
------------------------------------------------------------------------------------------------------ --------------------------

Elver Park Limited Partnership III
Elver Park III
Madison, WI                                  48       1,047,470       1,047,470       1,400,677           None          98%


Tuscon Trails Limited Partnership I
Tuscon Trails I
Madison, WI                                  48       1,047,470       1,047,470       1,373,369           None          100%


Tuscon Trails Limited Partnership II
Tuscon Trails II
Madison, WI                                  48       1,047,470       1,047,470       1,379,845           None          100%


Pleasant Plaza Housing L.P.
Pleasant Plaza
Malden, MA                                  125       3,340,138       3,340,138      17,890,107         Section 8       100%


241 Pine Street Associates, L.P. (1)
241 Pine Street
Manchester, NH

Missouri Rural Housing of
    Oak Grove, L.P.
Heather Oaks
Oak Grove, MO                                24         118,828         118,828         559,677          FmHA           92%


Wood Creek Associates
    A New York Limited Partnership
Wood Creek
Calcium, NY                                 104       1,850,000       1,850,000       3,006,957          None          100%





<PAGE>



                                                       Capital Contributions
Local Limited Partnership                             Total             Total        Mtge. Loans
Property Name                           Number of Committed at March  Paid through    payable at        Type of   Occupancy at March
Property Location                      Apt. Units   31, 2001        March 31, 2001 December 31, 2000    Subsidy*      31, 2001
-----------------------------------------------------------------------------------------------------  --------------------------

Breckenridge Creste Apartments, L.P.
Breckenridge
Duluth, GA                                  164       3,520,000       3,520,000       4,583,596           None             92%


Willow Lake Partners II, L.P.
    A Limited Partnership
Willow Lake
Kansas City, MO                             132       2,130,700       2,130,700       2,645,367           None             86%


Bolivar Senior Housing, L.P.
Ashton Heights
Bolivar, MO                                  20          95,360          95,360         464,423           FmHA             95%


Lexington Associates I L.P.
    A Limited Partnership
Lexington Civic                              24          95,000          95,000         811,071           FmHA            100%

Lexington, TN

Riverfront Apartments, L.P.
Riverfront
Sunbury, PA                                 200       1,984,908       1,984,908       6,721,584         Section 8          96%


Susquehanna View L.P.
Susquehanna View
Camp Hill, PA                               201       2,194,314       2,194,314       8,745,325         Section 8         100%


Westgate Associates I, L.P.
Fouche Valley
Perryville, AR                               20         131,865         131,865         636,276           FmHA             55%



<PAGE>



                                                        Capital Contributions
Local Limited Partnership                             Total            Total         Mtge. Loans
Property Name                           Number of Committed at March Paid through     payable at       Type of  Occupancy at March
Property Location                      Apt. Units   31, 2001        March 31, 2001 December 31, 2000   Subsidy*    31, 2001
------------------------------------------------------------------------------------------------------ --------------------------

Altheimer Associates I, L.P.
Altheimer
Altheimer, AR                                20         130,375         130,375         594,205          FmHA               100%


The Temple-Kyle L.P.
Kyle Hotel
Temple, TX                                   64       1,624,100       1,624,100       1,388,829         Section 8            94 %


Diversey Square Associates II
Diversey Square II
Chicago, IL                                  48       1,031,825       1,031,825       2,537,352          Section 8          100%


Poplar Village, LTD
Poplar Village
Cumberland, KY                               36         283,945         283,945       1,194,569            None             100%
                                         ------   -------------    ------------   -------------

                                          4,634   $  66,694,434    $ 66,694,434    $183,241,733
                                         ======   =============    ============   ==============
</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.

(1) The Partnership no longer has an interest in this Local Limited Partnership.



<PAGE>


One Local Limited Partnership, Quarter Mill Associates L.P., invested in by the
Partnership represents more than 10% of the total capital contributions 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 Property described above is generally
six to twelve months. The Managing General Partner believes the Properties
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

As previously reported, Pleasant Plaza, located in Malden, Massachusetts, and
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 ODL's. Properties unable to make full debt service payments were
declared in default by MHFA. The Managing General Partner, separate from its
responsibilities to Pleasant Plaza or South Holyoke, joined a group of SHARP
property owners called the Responsible SHARP Owners, Inc. (RSO) and is
negotiating with MHFA to find a solution to the problems that will result from
the withdrawal of these subsidies. Given existing operating deficits and
Pleasant Plaza and South Holyoke's dependence on these subsidies, both
Properties are in default on their mortgage obligations. On September 16, 1998,
the Partnership also 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.


<PAGE>



                                     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 18, 2001, there were 5,867 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, 2001 and 2000.

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 an increase in cash and cash equivalents of $193,248 for the
year ended March 31, 2001. This increase is attributable to maturities of
marketable securities and cash distributions received from Local Limited
Partnerships. These increases are partially offset by purchases of marketable
securities and cash used for operations.

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 increased the Reserve level to
3.75%. Professional fees relating to various property issues totaling
approximately $2,085,000 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 $843,000 (net of paydowns) to purchase the mortgage of a
Local Limited Partnership. To date, the Partnership has used approximately
$2,026,000 of operating funds to replenish Reserves. At March 31, 2001,
approximately $442,000 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 $1,972,000 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, 2001, 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, 2001 or 2000. It is
not expected that cash available for distribution, if any, will be significant
during the 2001 calendar year. Based on the results of 2000 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

2001 versus 2000

The Partnership's results of operations for the year ended March 31, 2001
resulted in a net loss of $3,181,781 as compared to a net loss of $6,671,150 for
the same period in 2000. The decrease in net loss is primarily due to a decrease
in provision for valuation of investment in Local Limited Partnerships and a
decrease in loss on liquidation of interests in Local Limited Partnerships in
2001 versus 2000.  The provision for valuation of investment in Local Limited
Partnerships for the year ended March 31, 2000 resulted from reserves being set
up for investments in and advances to certain Local Limited Partnerships during
the year ended March 31, 2000. The decrease in loss on liquidation of interests
in Local Limited Partnerships is due to the liquidation of interests in two
Local Limited Partnerships during the year ended March 31, 2001. The decrease is
partially offset by an increase in general and administrative expenses.  The
increase in general and administrative expenses is primarily due to increased
charges from an affiliate of the General Partner for operational and
administrative expenses necessary for the operation of the Partnership.  The
increased charges pertained to higher levels of staffing and salary levels at
the affiliate in addition to changes in the affiliate's allocation of
operational and administrative expenses to more accurately reflect the actual
cost of services provided to the Partnership.

Low-income housing tax credits

The 2000 and 1999 Tax Credits per Unit for individuals were $34.92 and $92.39,
respectively. The 2000 and 1999 Tax Credits per Unit for corporations were
$38.08 and $97.35, respectively. The Tax Credits per Limited Partnership
stabilized in 1991. The credits have begun to decrease significantly as several
Properties are reaching the end of the ten year credit period. However, because
the Tax Credit compliance periods generally extend significantly beyond the Tax
Credit periods, the Partnership intends to hold its Local Limited Partnership
investment 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

The Partnership's investment portfolio consists of limited partnership interests
in 52 Local Limited Partnerships, each of which own and operate a multi-family
apartment complex. A majority of the Properties have stabilized operations and
operate above break-even. A few Properties generate cash flow deficits that the
Local General Partners of those Properties fund through project expense loans,
subordinated loans or operating escrows. However, some Properties have
persistent operating difficulties that could either: i) have an adverse impact
on the Partnership's liquidity; ii) result in their foreclosure; or iii) result
in the Managing General Partner deeming it appropriate for the Partnership to
dispose of its interest in the Local Limited Partnership. Also, the Managing
General Partner, in the normal course of the Partnership's business, may desire
to dispose of certain Local Limited Partnerships. The following Property
discussions focus only on such Properties. Boulevard Commons IIA, located in
Chicago, Illinois, continues to generate an operating deficit. Expense levels at
the Property are high due to increasing maintenance, capital needs, security
issues and high turnover. The Managing General Partner developed a plan with the
Local General Partner to transfer ownership of the Local Limited Partnership to
the Local General Partner. The plan includes provisions to minimize the risk of
recapture. The Partnership redeemed 49.5% of its interest in Boulevard Commons
IIA in both 1999 and 2000. The Managing General Partner plans to redeem the
Partnership's remaining 1% interest in 2001.

Over the past year, operations at Breckenridge Creste, located in Duluth,
Georgia, which historically has operated at a deficit, slightly improved while
significant capital improvements were made to the Property. Despite the recent
improvement in operations, the Managing General Partner had concerns regarding
the long-term viability of the Property and believed it was in the best interest
of the Partnership to dispose of its interest. Effective December 31, 2000, the
Managing General Partner, on behalf of the Partnership, entered into an
agreement to transfer the Partnership's interest in the Local Limited
Partnership to an unaffiliated entity. The agreement includes provisions to
minimize the risk of recapture. The Partnership has the right to fully dispose
of its interest in the Local Limited Partner by January 1, 2003.

As previously reported, Harbour View, located in Staten Island, New York,
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
buyer. The Managing General Partner and Local General Partner diligently
attempted to reach a workout with the new lender but were unsuccessful.
Effective April 24, 2001, the lender took possession of the Property. This
transaction will result in recapture of credits and the allocation of taxable
income to the Partnership during the 2001 tax year.

As previously reported, Pleasant Plaza, located in Malden, Massachusetts, and
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 ODL's. Properties unable to make full debt service payments were
declared in default by MHFA. The Managing General Partner, separate from its
responsibilities to Pleasant Plaza or South Holyoke, joined a group of SHARP
property owners called the Responsible SHARP Owners, Inc. (RSO) and is
negotiating with MHFA to find a solution to the problems that will result from
the withdrawal of these subsidies. Given existing operating deficits and
Pleasant Plaza and South Holyoke's dependence on these subsidies, both
Properties are in default on their mortgage obligations. On September 16, 1998,
the Partnership also 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.

Pleasant Plaza was included in a "Dilution Pool" composed of approximately 20 of
the 77 SHARP properties. MHFA made an offering to Wall Street that consisted
primarily of an effort to sell the tax losses generated by the 20 partnerships,
assuming restructured mortgages. As a result, a new limited partner was admitted
to the Local Limited Partnership, which owns Pleasant Plaza and the
Partnership's interest in the Local Limited Partnership was diluted to 4%. The
Partnership has the right to put its remaining interest in the Local Limited
Partnership to the Local General Partner one year from the effective date of
admission of the new limited partner, or November 2001.

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. The Managing General Partner visited the Properties in October
2000 and found them in reasonably good condition. The Managing General Partner
will continue to closely monitor Property operations.

As previously reported, the Partnership redeemed its interest in 241 Pine
Street, located in Manchester, New Hampshire, effective January 1, 2000. The
redemption of the Partnership's interest caused investors to have minimal
taxable gain or loss for the 2000 tax year, depending upon the basis of the
Property.

Operations at Willow Lake, located in Kansas City, Missouri, have improved over
the past year. Several years ago the Property entered into a loan workout
agreement that allowed the Property to defer the payment of some of the interest
on the loan. The loan workout agreement expired on May 31, 2001, and the lender
is seeking full repayment of the deferred interest in the amount of
approximately $230,000. The Property is unable to make the payment required
under the loan workout agreement and is attempting to negotiate with the lender
a mutually acceptable solution to the issue.

During 1994, the Local General Partner at the Admiral Court located in
Philadelphia, Pennsylvania transferred its interest in the Local Limited
Partnership. The IRS subsequently conducted a compliance audit at the property
and is taking the position that the Property is subject to tax credit recapture
due to potential non-compliance issues. The Managing General Partner disagree
with the IRS and is working to resolve the matter. However, in the opinion of
the Managing General Partner, there is a substantial risk that the Admiral Court
Partnership will suffer significant tax credit recapture or tax credit
disallowance. However, it is not possible to quantify the risk at this time.

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. Real estate experts
analyze the investments 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 a significant impairment in carrying value exists, 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, 2001 and 2000.

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.

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.
-------------------------------------------------------------------------------

<PAGE>



                                    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. 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                 Principal, Head of Housing and Community Investment
Michael H. Gladstone         Principal, Member, Legal
Lauren M. Guillette          Principal, Member, Legal

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 45, Principal, Head of Housing and Community Investment Group
- Ms. Netzer is responsible for tax credit investment programs to institutional
clients. She joined Lend Lease as a result of the Boston Financial acquisition,
starting with Boston Financial in 1987 and leading Boston Financial's new
business initiatives and managing the firm's Asset Management division. Prior to
joining Boston Financial, Ms. Netzer served as Deputy Budget Director for the
Commonwealth of Massachusetts where she was responsible for the Commonwealth's
health care and public pension program's budgets. Ms. Netzer also served as
Assistant Controller at Yale University, was a former member of Watertown Zoning
Board of Appeals, the Officer of Affordable Housing Tax Credit Coalition and a
frequent speaker on affordable housing and tax credit industry issues. Ms.
Netzer is a graduate of Harvard University (BA) and Harvard's Kennedy School of
Government (MPP).

Michael H. Gladstone,  age 44, Principal,  Member, Legal - Mr. Gladstone is
responsible for legal work in the areas of affordable and conventional  housing
and investment  products and services.  He joined Lend Lease as a result of the
Boston Financial  acquisition,  starting with Boston Financial in 1985 as the
firm's General Counsel.  Prior to joining  Boston Financial,  Mr.  Gladstone was
associated  with the law firm of Herrick & Smith and served on the advisory
board of the  Housing  and  Development  Reporter.  Mr.  Gladstone  lectured  at
Harvard  University  on affordable  housing  matters  and is a member of the
National  Realty  Committee,  Cornell  Real  Estate  Council, National
Association of Real Estate  Investment  Managers and  Massachusetts  Bar. Mr.
Gladstone is a graduate of Emory University (BA) and Cornell University
(J.D. & MBA).

Lauren M. Guillette, age 36, Principal, Member, Legal - Ms. Guillette is
responsible for legal work in the areas of affordable and conventional housing
and investment products and services. She joined Lend Lease as a result of the
Boston Financial acquisition, starting with Boston Financial in 1996 as the
firm's Assistant General Counsel. Prior to joining Boston Financial, Ms.
Guillette was associated with the law firm of Peabody & Brown where she
practiced real estate syndication and securities law. Ms. Guillette is a
graduate of McGill University (BA) and Suffolk University (J.D.).

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, 2001, 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, 2001. 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
and Breckenridge.

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, 2001 is presented as follows:


<PAGE>


Organizational fees and expenses

In accordance with the Partnership Agreement, affiliates of the General Partners
were 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,
2001.

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, 2001.

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, 2001, all deferred acquisition
fees have been paid. $112,500 of Deferred Acquisition Fees were paid in the year
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 $7,484 (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, 2001 are as follows:

                                                      2001           2000
                                                 -------------- --------------

     Asset Management Fees                       $   385,161       $   382,512

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, 2001 are as follows:

                                                      2001             2000
                                                  -----------       -----------
     Salaries and benefits expense
      reimbursements                             $   603,834       $   142,324





<PAGE>


Property Management Fees

Affiliates of the Managing General Partners are management agents for three
Local Limited Partnerships during the year ended December 31, 2000 and four
Local Limited Partnerships during the year ended December 31, 1999. Fees charged
in each of the two years ended December 31, 2000 are as follows:

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

     Property Management Fees                   $   103,412       $   150,066

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, 2001.

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, 2001 is presented in Note 5 to the Financial Statements.

Item 13.  Exhibits and Reports on Form 8-K

(a)    Documents filed as a part of this Report

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

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.

(b)      Reports on Form 8-K:
       No Reports on Form 8-K were filed during the year ended March 31, 2001.



<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/Jenny Netzer                          Date:    June  28    , 2001
           ---------------------------------------           -------------------
           Jenny Netzer
           Principal, Head of Housing and
           Community Investment



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/Jenny Netzer                             Date:    June  29 , 2001
           ---------------------------------------              ----------------
           Jenny Netzer
           Director


     By:   /s/Michael H. Gladstone                     Date:   June  29 , 2001
           -----------------------------                       ----------------
           Michael H. Gladstone
           Director



<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, 2001

                                      Index


                                                                    Page No.

Report of Independent Accountants
    For the years ended March 31, 2001 and 2000                        F-2

Financial Statements

     Balance Sheet - March 31, 2001                                    F-3

     Statements of Operations - For the years ended
       March 31, 2001 and 2000                                         F-4

     Statements of Changes in Partners' Equity
       (Deficiency) - For the years ended March 31, 2001 and 2000      F-5

     Statements of Cash Flows - For the years ended
       March 31, 2001 and 2000                                         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:


In our opinion, based upon 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") as of March 31, 2001, and the results
of its operations and its cash flows for each of the two years in the period
ended March 31, 2001 in conformity with accounting principles generally accepted
in the United States of America. 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. The Partnership
accounts for its investment in Local Limited Partnerships, as discussed in Note
2 of the notes to the financial statements, using the equity method of
accounting. We did not audit the financial statements of the Local Limited
Partnerships, investments in which the Partnership's investment in Local Limited
Partnerships is stated at $10,759,229 at March 31, 2001, and the Partnership's
equity in earnings (losses) of Local Limited Partnerships is stated at
$(2,275,388) and $(2,556,821) for the years ended March 31, 2001 and 2000,
respectively. The financial statements of these Local Limited Partnerships were
audited by other auditors whose reports thereon have been furnished to us, and
our opinion expressed herein, insofar as it relates to amounts included for
Local Limited Partnerships, is based solely upon the reports of other auditors.
We conducted our audits of the Partnership's financial statements in accordance
with auditing standards generally accepted in the United States of America 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
the other auditors provide a reasonable basis for our opinion.



/s/PricewaterhouseCoopers LLP
June 27, 2001
Boston, Massachusetts


<PAGE>


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



                                  BALANCE SHEET
                                 March 31, 2001



Assets

Cash and cash equivalents                                       $     366,041
Marketable securities, at fair value (Note 3)                         677,156
Investments in Local Limited Partnerships, net (Note 4)            10,759,229
Interest receivable                                                    12,581
Note receivable, affiliate (Note 7)                                 1,388,829
Interest receivable, affiliate (Note 7)                                68,920
                                                                -------------
     Total Assets                                               $  13,272,756
                                                                ==============

Liabilities and Partners' Equity

Accounts payable to affiliates (Note 5)                         $   3,360,093
Accrued expenses                                                      340,288
Note payable, affiliate (Note 5)                                      514,968
                                                                -------------
     Total Liabilities                                              4,215,349
                                                                -------------

General, Initial and Investor Limited Partners' Equity              9,049,733
Net unrealized gains on marketable securities                           7,674
                                                                -------------
     Total Partners' Equity                                         9,057,407
                                                                -------------
     Total Liabilities and Partners' Equity                     $  13,272,756
                                                                =============

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, 2001 and 2000


<TABLE>
<CAPTION>
                                                                                 2001           2000
                                                                            ------------     -----------
Revenue:
<S>                                                                         <C>              <C>
   Investment                                                               $     49,751     $    36,967
   Recovery of bad debt                                                           39,366          27,002
   Other                                                                         320,394         148,809
                                                                            ------------     -----------
     Total Revenue                                                               409,511         212,778
                                                                            ------------     -----------

Expenses:
   Asset management fees, affiliate  (Note 5)                                    385,161         382,512
   General and administrative (includes reimbursements
     to affiliates of $603,834 and $142,324, respectively) (Note 5)              850,881         365,743
   Provision for valuation of investments in
     Local Limited Partnerships                                                        -       2,661,103
   Interest                                                                        6,000           6,000
   Amortization                                                                   73,862         125,801
                                                                            ------------     -----------
     Total Expenses                                                            1,315,904       3,541,159
                                                                            ------------     -----------

Loss before equity in losses of Local Limited
   Partnerships and loss on liquidation of interests
   in Local Limited Partnerships                                                (906,393)     (3,328,381)

Equity in losses of Local Limited
   Partnerships (Note 4)                                                      (2,275,388)     (2,556,821)

Loss on liquidation of interests
   in Local Limited Partnerships (Note 6)                                              -        (785,948)
                                                                            ------------    ------------

Net Loss                                                                    $ (3,181,781)   $ (6,671,150)
                                                                            ============    ============

Net Loss Allocated:
   General Partners                                                         $    (31,818)   $    (66,711)
   Limited Partners                                                           (3,149,963)     (6,604,439)
                                                                            ------------    ------------
                                                                            $ (3,181,781)   $ (6,671,150)
                                                                            ============    ============

Net Loss per Limited Partnership Unit (100,000 Units)                       $     (31.50)   $     (66.04)
                                                                            ============    ============
</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, 2001 and 2000

<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, 1999                 $  (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
                                          -----------     --------   -------------   -----------  -------------

Comprehensive Income (Loss):
   Change in unrealized losses
     on marketable securities
     available for sale                             -            -               -         8,673          8,673
   Net Loss                                   (31,818)           -      (3,149,963)            -     (3,181,781)
                                          -----------     --------   -------------   -----------  -------------
Comprehensive Income (Loss)                   (31,818)           -      (3,149,963)        8,673     (3,173,108)
                                          -----------     --------   -------------   -----------  -------------

Balance at March 31, 2001                 $  (785,347)    $  5,000   $   9,830,080   $     7,674  $   9,057,407
                                          ===========     ========   =============   ===========  =============
</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, 2001 and 2000

<TABLE>
<CAPTION>


                                                                                 2001           2000
                                                                            ------------    ------------
Cash flows from operating activities:
<S>                                                                         <C>             <C>
   Net Loss                                                                 $ (3,181,781)   $ (6,671,150)
   Adjustments to reconcile net loss to net
     cash used for operating activities:
     Equity in losses of Local Limited Partnerships                            2,275,388       2,556,821
     Provision for valuation of investments in Local Limited
       Partnerships                                                              (39,366)      2,634,101
     Loss on liquidation of interests in Local
       Limited Partnerships                                                            -         785,948
     Amortization                                                                 73,862         125,801
     Cash distributions included in net loss                                     (91,692)        (46,800)
     Gain on sales and maturities of marketable securities, net                   (2,215)           (202)
     Other non-cash item                                                         (71,856)              -
     Increase (decrease) in cash arising from changes
       in operating assets and liabilities:
       Interest receivable                                                        (6,047)         (1,043)
       Interest receivable, affiliate                                            (68,104)          2,317
       Prepaid expenses                                                                -           2,240
       Accounts payable to affiliates                                            988,995         393,342
       Accrued expenses                                                           29,909          55,591
                                                                            ------------    ------------
Net cash used for operating activities                                           (92,907)       (163,034)
                                                                            ------------    ------------

Cash flows from investing activities:
   Investment in Local Limited Partnership                                             -         (85,000)
   Repayment of advances to (advances to) Local
     Limited Partnerships                                                         39,366        (547,969)
   Purchases of marketable securities                                           (868,033)       (279,748)
   Proceeds from sales and maturities of
     marketable securities                                                       605,000         597,267
   Cash distributions received from Local
     Limited Partnerships                                                        481,450         268,591
   Decrease in deferred acquisition fee escrow                                         -         112,500
   Payment of deferred acquisition fees                                                -        (112,500)
   Repayment of notes receivable from affiliate                                   28,372          43,693
                                                                            ------------    ------------
Net cash provided by (used for) investing activities                             286,155          (3,166)
                                                                            ------------    ------------

Net increase (decrease) in cash and
   cash equivalents                                                              193,248        (166,200)

Cash and cash equivalents, beginning                                             172,793         338,993
                                                                            ------------    ------------

Cash and cash equivalents, ending                                           $    366,041    $    172,793
                                                                            ============    ============

Supplemental Disclosure of cash flow information:
   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 originally
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, 2001, the Managing General Partner has designated approximately
$442,000 of cash, cash equivalents and marketable securities as such Reserve.

2.       Significant Accounting Policies

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.

Investments in Local Limited Partnerships

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

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

                  Notes to the Financial Statements (continued)


2.   Significant Accounting Policies (continued)
     ------------------------------------------

Investments in Local Limited Partnerships (continued)
----------------------------------------------------

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 and distributions received will be included in income.

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 until a Local Limited Partnership's respective
investment balance has been reduced to zero.

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, 2000 and 1999.

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.

The Partnership has implemented policies and practices for assessing potential
impairment of its investments in Local Limited Partnerships. Real estate experts
analyze the investments 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 a significant impairment in carrying value exists, a
provision to write down the asset to fair value will be recorded in the
Partnership's financial statements.

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.

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

                  Notes to the Financial Statements (continued)


2.  Significant Accounting Policies (continued)
    ------------------------------------------

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                                $   669,482    $     7,674       $      -     $   677,156
                                               -----------    -----------       --------     -----------

Marketable Securities
   at March 31, 2001                           $   669,482    $     7,674       $      -     $   677,156
                                               ===========    ===========       ========     ===========
</TABLE>


The contractual maturities at March 31, 2001 are as follows:
                                                                   Fair
                                                    Cost           Value

Due in less than one year                       $   470,567     $   476,688
Due in one to five years                            198,915         200,468
                                                -----------     -----------
                                                $   669,482     $   677,156
                                                ===========     ============

Actual maturities for asset backed securities may differ from contractual
maturities because some borrowers have the right to call or prepay obligations.
There were no proceeds from sales of marketable securities during the year ended
March 31, 2001. Proceeds from the sales of marketable securities were
approximately $25,000 during the year ended March 31, 2000. Proceeds from the
maturities of marketable securities were approximately $605,000, and $572,000
during the years ended March 31, 2001 and 2000, respectively. Included in
investment income are gross gains of $2,215 and $229 that were realized on the
sales during the years ended March 31, 2001 and 2000, respectively, and gross
losses of $27 that were realized on the sales during the year ended March 31,
2000.


<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

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. Upon
dissolution of the Local Limited Partnerships proceeds will be distributed
according to each respective partnership agreement.

The following is a summary of investments in Local Limited Partnerships at March
31, 2001:
<TABLE>
<CAPTION>

Capital contributions and advances paid to Local Limited Partnerships and
   purchase price paid to withdrawing partners
<S>                                                                                              <C>
   of Local Limited Partnerships                                                                 $  68,082,666

Cumulative equity in losses of Local Limited Partnerships
   (excluding cumulative unrecognized losses of $58,772,174)                                       (54,116,845)

Cumulative cash distributions received from
   Local Limited Partnerships                                                                       (3,370,970)
                                                                                                 -------------

Investments in Local Limited Partnerships before adjustment                                         10,594,851

Excess of investment cost over the underlying net assets acquired:

   Acquisition fees and expenses                                                                     6,220,170

   Accumulated amortization of acquisition fees and expenses                                        (1,705,032)
                                                                                                 -------------

Investments in Local Limited Partnerships before reserve for valuation                              15,109,989

Reserve for valuation of investments in Local Limited Partnerships                                  (4,350,760)
                                                                                                 -------------
Investments in Local Limited Partnerships                                                        $  10,759,229
                                                                                                 =============
</TABLE>

The Partnership has provided a reserve for valuation for its investments in
Local Limited Partnerships because there is evidence of non-temporary declines
in the recoverable amount of the investments.


<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, 2000 and 1999 (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:
<TABLE>
<CAPTION>

Summarized Balance Sheets - as of December 31,
                                                                                  2000                1999
                                                                           ---------------     ---------------
Assets:
<S>                                                                        <C>                 <C>
   Investment property, net                                                $   138,053,035     $   145,617,505
   Other assets, net                                                            20,284,852          20,849,365
                                                                           ---------------     ---------------
       Total assets                                                        $   158,337,887     $   166,466,870
                                                                           ===============     ===============

Liabilities and Partners' Equity:
   Mortgages notes payable                                                 $   183,241,733     $   182,325,423
   Other liabilities                                                            25,936,773          25,395,252
                                                                           ---------------     ---------------
       Total liabilities                                                       209,178,506         207,720,675
                                                                           ---------------     ---------------

Partners' Equity:
   Partnership's deficiency                                                    (51,556,740)        (41,704,113)
   Other partners' equity                                                          716,121             450,308
                                                                           ---------------     ---------------
       Total partners' deficiency                                              (50,840,619)        (41,253,805)
                                                                           ---------------     ---------------
         Total liabilities and partners' deficiency                      $     158,337,887   $     166,466,870
                                                                          =================   =================

Summarized Income Statements - For
the year ended December 31,
                                                                                  2000                1999
                                                                           ---------------     ---------------

Rental and other income                                                    $    32,425,990     $    32,934,213
                                                                           ---------------     ---------------

Expenses:
   Operating expenses                                                           21,175,241          18,574,722
Interest expense                                                                14,352,714          14,023,088
   Depreciation and amortization                                                 7,301,555           7,531,771
Provision for valuation of real estate                                                   -             853,176
                                                                           ---------------     ---------------
     Total expenses                                                             42,829,510          40,982,757
                                                                           ---------------     ---------------

Net Loss                                                                   $   (10,403,520)    $    (8,048,544)
                                                                           ===============     ===============

Partnership's share of Net Loss (2000 includes adjustment from prior year) $    (8,896,145)    $    (7,508,507)
                                                                           ===============     ===============
Other partners' share of Net Loss                                          $    (1,509,586)    $      (540,037)
                                                                           ===============     ===============
</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, 2001 and 2000, the Partnership has not recognized
$6,620,757 and $5,445,087 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 of previously unrecognized
losses in the year ended March 31, 2000.

The Partnership's deficiency as reflected by the Local Limited Partnerships of
($51,556,740) differs from the Partnership's investments in Local Limited
Partnerships before adjustment of $10,594,851 primarily because the Partnership
has not recognized approximately $58,772,000 of losses relating to Local Limited
Partnerships whose cumulative equity in losses exceeded their total investments
and the Partnership has included advances of approximately $1,388,000 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 $7,484 (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 $385,161 and $382,512 for
the years ended March 31, 2001 and 2000, respectively. Payables to affiliates of
the Managing General Partner relating to the aforementioned fees equaled
$2,718,121 at March 31, 2001.

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, 2001 and 2000 is $603,834
and $142,324, respectively, that the Partnership will pay as reimbursement for
salaries and benefits. As of March 31, 2001, $641,972 is payable to an affiliate
of the Managing General Partner for salaries and benefits.

During the year ended December 31, 2000, an affiliate of the Managing General
Partner managed three Properties in which the Partnership invested. Included in
operating expenses in the summarized income statements in Note 4 to the
financial statements is $103,412 of fees earned by the affiliate for the year
then ended.

During the year ended December 31, 1999, affiliates of the Managing General
Partner managed four Properties in which the Partnership invested. Included in
operating expenses in the summarized income statements in Note 4 to the
Financial Statements is $150,066 of fees earned by these affiliates for the year
then ended.

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, 2001, $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.

7.       Note Receivable

The Partnership has a note receivable from The Temple Kyle, Local Limited
Partnership in which the fund has invested. The note is due in monthly
installments of $10,833 including interest at prime plus 1.00 percent (an
effective rate of 10.50 and 9.50 percent in 2001 and 2000, respectively),
through its maturity date on June 1, 2005. The note is collateralized by the
Property owned by the Local Limited Partnership.

Minimum principal payments on the note receivable to maturity as of March 31,
2001, are as follows:

                           2001                      $      88,405
                           2002                             84,983
                           2003                             93,881
                           2004                            103,712
                           2005 and after                1,017,848
                                                     -------------
                               Total                 $   1,388,829
                                                     =============


<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 net loss for
the fiscal years ended March 31, 2001 and 2000 to the net loss reported on the
Form 1065, U.S. Partnership Return of Income for the years ended December 31,
2000 and 1999:
<TABLE>
<CAPTION>

                                                                                     2001              2000
                                                                                -------------    -------------

<S>                                                                             <C>              <C>
Net Loss per financial statements                                               $  (3,181,781)   $  (6,671,150)

Adjustment for equity in losses of Local Limited Partnerships
   for tax purposes in excess of equity in losses for financial
   reporting purposes                                                              (2,282,943)         (10,491)

Equity in losses of Local Limited Partnerships not recognized
   for financial reporting purposes                                                (6,620,757)      (4,951,686)

Adjustment to reflect March 31 fiscal year end to December 31
   tax year end                                                                      (148,287)          91,250

Provision for valuation of investments in Local Limited Partnerships for
   financial reporting purposes in excess of bad debt recovery for
   tax purposes                                                                       (28,381)       2,667,969

Loss on liquidation of interests in Local Limited Partnerships for financial
   reporting purposes in excess of liquidation for tax purposes                       141,718          789,200

Amortization not deductible for tax purposes                                           73,862          125,801

Related party expenses for financial reporting (tax) purposes in excess
   of related party expenses for tax (financial reporting) purposes                (2,233,803)         382,652

Cash distributions included in net loss for financial reporting purposes               39,378         (117,751)
                                                                                -------------    -------------

Net Loss per tax return                                                         $ (14,240,994)   $  (7,694,206)
                                                                                =============    =============
</TABLE>

The differences in the assets and liabilities of the Partnership for financial
reporting purposes and tax reporting purposes as of March 31, 2001 are as
follows:
<TABLE>
<CAPTION>

                                                          Financial              Tax
                                                          Reporting           Reporting
                                                          Purposes            Purposes            Differences
                                                       ------------        -------------       --------------

<S>                                                    <C>                 <C>                 <C>
   Investments in Local Limited Partnerships           $ 10,759,229        $ (29,875,442)      $   40,634,671
                                                       ============        =============       ==============
   Other assets                                        $  2,513,527        $  15,491,780       $  (12,978,253)
                                                       ============        =============       ==============
   Liabilities                                         $  4,215,349        $   3,919,145       $      296,204
                                                       ============        =============       ==============
</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 $45,864,000 greater than for financial reporting purposes,
including approximately $58,772,000 of losses the Partnership has not recognized
relating to Local Limited Partnerships whose cumulative equity in losses
exceeded their total investments; ii) the Partnership has provided a provision
for valuation of approximately $4,351,000 against 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 $1,705,000; 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>