SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                  For the quarterly period ended September 30, 2001

                                       OR

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

           For the transition period from ____________ to ____________

                         Commission file number: 0-20057



                   WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

             California                          33-00531301
      State or other  jurisdiction  of       (I.R.S.  Employer
        incorporation or organization         Identification No.)


              3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626

                                 (714) 662-5565




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     No    X
----   -------



<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                               INDEX TO FORM 10-Q

              For the Three and Six Months Ended September 30, 2001



PART I. FINANCIAL INFORMATION

         Item 1. Financial Statements

         Balance Sheets
                September 30, 2001 and March 31, 2001................  ........3

         Statements of Operations
                For the three and six months ended September 30, 2001 and 2000.4

         Statement of Partners' Equity (Deficit)
                For the six months ended September 30, 2001....................5

         Statements of Cash Flows
                For the six months ended September 30, 2001 and 2000...........6

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

         Item 2. Management's Discussion and Analysis of Financial
                Condition and Results of Operations...........................12

         Item 3. Quantitative and Qualitative Disclosures about Market Risks..14

PART II. OTHER INFORMATION

         Item 1. Legal Proceedings............................................14

         Item 6. Exhibits and Reports on Form 8-K.............................14

         Signatures ..........................................................15


                                       2
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS
<TABLE>
<CAPTION>



                                                                  September 30, 2001                  March 31, 2001
                                                                -----------------------             -------------------
                                                                     (unaudited)
<S>                                                           <C>                                 <C>
ASSETS

Cash and cash equivalents                                     $                419,352            $            437,863
Investments in limited partnerships, net (Note 2)                            6,862,939                       7,329,890
                                                                -----------------------             -------------------
                                                              $              7,282,291            $          7,767,753
                                                                =======================             ===================
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
 Accrued fees and expenses due to
  General Partner and affiliates (Note 3)                     $                904,333            $            849,164
                                                                -----------------------             -------------------
      Total liabilities                                                        904,333                         849,164
                                                                -----------------------             -------------------
Partners' equity (deficit):
  General partner                                                             (106,351)                       (100,945)
  Limited partners (30,000 units authorized;
     18,000 units issued and outstanding)                                    6,484,309                       7,019,534
                                                                -----------------------             -------------------
        Total partners' equity                                               6,377,958                       6,918,589
                                                                -----------------------             -------------------
                                                              $              7,282,291            $          7,767,753
                                                                =======================             ===================
</TABLE>

                 See accompanying notes to financial statements


                                       3
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

         For the Three and Six Months Ended September 30, 2001 and 2000
                                   (unaudited)

                                                        2001                                       2000
                                       ----------------------------------------    --------------------------------------
                                          Three Months           Six Months          Three Months          Six Months
                                       -------------------    -----------------    -----------------    -----------------

<S>                                  <C>                    <C>                  <C>                  <C>
Interest income                      $              3,276   $            6,939   $            5,220   $           10,484
                                       -------------------    -----------------    -----------------    -----------------
Operating expenses:
  Amortization (Note 2)                            14,718               29,436               15,116               30,232
  Asset management fees (Note 3)                   45,346               90,692               45,346               90,692
  Legal and accounting                             13,569               13,569               10,712               12,565
  Other                                             3,450                4,250                  734                3,358
                                       -------------------    -----------------    -----------------    -----------------
    Total operating expenses                       77,083              137,947               71,908              136,847
                                       -------------------    -----------------    -----------------    -----------------
Loss from operations                              (73,807)            (131,008)             (66,688)            (126,363)
                                       -------------------    -----------------    -----------------    -----------------
Equity in losses of
 limited partnerships (Note 2)                   (222,222)            (409,623)            (218,159)            (436,318)
                                       -------------------    -----------------    -----------------    -----------------
Net loss                             $           (296,029)   $        (540,631)   $        (284,847)   $        (562,681)
                                       ===================    =================    =================    =================
Net loss allocated to:
  General partner                    $             (2,960)   $          (5,406)   $          (2,848)   $          (5,627)
                                       ===================    =================    =================    =================
  Limited partners                   $           (293,069)   $        (535,225)   $        (281,999)   $        (557,054)
                                       ===================    =================    =================    =================

Net loss per limited
 partner unit                        $
                                                      (16)   $             (30)   $             (16)   $             (31)
                                       ===================    =================    =================    =================
Outstanding weighted limited
 partner units
                                                   18,000               18,000               18,000               18,000
                                       ===================    =================    =================    =================
</TABLE>


                 See accompanying notes to financial statements


                                       4
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                     STATEMENT OF PARTNERS' EQUITY (DEFICIT)

                   For the Six Months Ended September 30, 2001
                                   (unaudited)
<TABLE>
<CAPTION>



                                                            General                Limited
                                                            Partner               Partners               Total
                                                        -----------------      ----------------     ----------------


<S>                                                   <C>                    <C>                  <C>
Partners' equity (deficit) at March 31, 2001          $        (100,945)     $      7,019,534      $     6,918,589

Net loss                                                         (5,406)             (535,225)            (540,631)
                                                        -----------------      ----------------     ----------------
Partners' equity (deficit) at September 30, 2001      $        (106,351)     $      6,484,309      $     6,377,958
                                                        =================      ================     ================
</TABLE>




                 See accompanying notes to financial statements


                                       5
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS

              For the Six Months Ended September 30, 2001 and 2000
                                   (unaudited)
<TABLE>
<CAPTION>


                                                                              2001                      2000
                                                                        ------------------        ------------------
<S>                                                                   <C>                       <C>
Cash flows from operating activities:
  Net loss                                                            $          (540,631)       $         (562,681)
     Adjustments to reconcile net loss to
       cash used in operating activities:
       Amortization                                                                29,436                    30,232
       Equity in losses of limited partnerships                                   409,623                   436,318
        Change in accrued fees and expenses due to
               General Partner and affiliates                                      55,169                    69,359
                                                                        ------------------        ------------------
Net cash used in operating activities                                             (46,403)                  (26,772)
                                                                        ------------------        ------------------
Cash flows from investing activities:
    Distributions from limited partnerships                                        27,892                     5,438
                                                                        ------------------        ------------------
Net cash provided by investing activities                                          27,892                     5,438

Net decrease in cash and cash equivalents                                         (18,511)                  (21,334)
                                                                        ------------------        ------------------
Cash and cash equivalents, beginning of period                                    437,863                   480,598
                                                                        ------------------        ------------------
Cash and cash equivalents, end of period                              $           419,352       $           459,264
                                                                        ==================        ==================
SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

  Taxes paid                                                          $               800       $               800
                                                                        ==================        ==================
</TABLE>

                 See accompanying notes to financial statements

                                       6
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS

              For the Three and Six Months Ended September 30, 2001
                                   (unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
General
-------
The accompanying  condensed unaudited financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q for quarterly  reports under
Section 13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  Operating results for the
three and six months ended September 30, 2001 are not necessarily  indicative of
the results that may be expected for the fiscal year ending March 31, 2002.  For
further  information,  refer to the financial  statements and footnotes  thereto
included  in the  Partnership's  annual  report on Form 10-K for the fiscal year
ended March 31, 2001.

Organization
------------
WNC California  Housing Tax Credits III, L.P. a California  Limited  Partnership
(the  "Partnership"),  was formed on October 5, 1992 under the laws of the state
of California and began  operations on July 19, 1993. The Partnership was formed
to  invest  primarily  in  other  limited   partnerships   (the  "Local  Limited
Partnerships")  which  own  and  operate  multi-family  housing  complexes  (the
"Housing Complex") that are eligible for low-income  housing credits.  The local
general   partners  (the  "Local  General   Partners")  of  each  Local  Limited
Partnership retain  responsibility  for maintaining,  operating and managing the
Housing Complex.

The  general  partner  is WNC  Tax  Credit  Partners  III,  L.P.  (the  "General
Partner").  WNC &  Associates,  Inc.  ("WNC") is the general  partner of WNC Tax
Credit Partners III, L.P.  Wilfred N. Cooper Sr.,  through the Cooper  Revocable
Trust owns 66.8% of the  outstanding  stock of WNC. John B. Lester,  Jr. was the
original limited partner of the Partnership and owns,  through the Lester Family
Trust, 28.6% of the outstanding stock of WNC. Wilfred N. Cooper,  Jr., President
of  WNC,  owns  2.1%  of the  outstanding  stock  of WNC.  The  business  of the
Partnership  is  conducted   primarily  through  the  General  Partner,  as  the
Partnership has no employees of its own.

The  Partnership  Agreement  authorized the sale of up to 30,000 units at $1,000
per Unit  ("Units").  The offering of Units concluded in July 1994 at which time
17,990 Units, representing subscriptions in the amount of $17,990,000,  had been
accepted. During 1995, additional 10 units amounting to $10,000 was collected on
subscriptions accepted and previously deemed uncollectible.  The General Partner
has 1% interest in operating profits and losses, taxable income and losses, cash
available  for  distribution  from  the  Partnership  and  tax  credits  of  the
Partnership.  The limited  partners will be allocated the remaining 99% of these
items in proportion to their respective investments.

After the limited  partners  have received  proceeds from a sale or  refinancing
equal to their capital  contributions and their return on investment (as defined
in the  Partnership  Agreement)  and the General  Partner has received  proceeds
equal to its capital  contribution  and a subordinated  disposition fee from the
remainder,  any additional sale or refinancing  proceeds will be distributed 90%
to the limited partners (in proportion to their respective  investments) and 10%
to the General Partner.



                                       7
<PAGE>


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For the Three and Six Months Ended September 30, 2001
                                   (unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Risks and Uncertainties
-----------------------
The Partnership's  investments in Local Limited  Partnerships are subject to the
risks incident to the management and ownership of low-income  housing and to the
management and ownership of multi-unit  residential  real estate.  Some of these
risks  are that the low  income  housing  credit  could be  recaptured  and that
neither the  Partnership's  investments  nor the Housing  Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes  receive  government  financing  or operating  subsidies,  they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests;  limitations on
removal of Local Partners; limitations on subsidy programs; and possible changes
in  applicable  regulations.  The  Housing  Complexes  are or will be subject to
mortgage indebtedness. If a Local Limited Partnership does not make its mortgage
payments,  the lender could foreclose resulting in a loss of the Housing Complex
and  low-income  housing  credits.  As a limited  partner  of the Local  Limited
Partnerships,  the  Partnership  will have very  limited  rights with respect to
management of the Local Limited Partnerships, and will rely totally on the Local
General  Partners of the Local Limited  Partnerships for management of the Local
Limited Partnerships. The value of the Partnership's investments will be subject
to changes in national and local  economic  conditions,  including  unemployment
conditions, which could adversely impact vacancy levels, rental payment defaults
and operating expenses.  This, in turn, could substantially increase the risk of
operating  losses for the Housing  Complexes and the  Partnership.  In addition,
each Local Limited  Partnership  is subject to risks  relating to  environmental
hazards  and  natural  disasters,  which  might  be  uninsurable.   Because  the
Partnership's  operations  will  depend on these and other  factors  beyond  the
control of the General Partner and the Local General  Partners,  there can be no
assurance that the  anticipated  low income housing credits will be available to
Limited Partners.

In addition,  Limited  Partners are subject to risks in that the rules governing
the low income  housing  credit are  complicated,  and the use of credits can be
limited.  The only  material  benefit from an investment in Units may be the low
income housing credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop.  All management decisions will
be made by the General Partner.

Method of Accounting For Investments in Limited Partnerships
------------------------------------------------------------
The Partnership  accounts for its investments in limited  partnerships using the
equity method of  accounting,  whereby the  Partnership  adjusts its  investment
balance for its share of the Local Limited  Partnership's  results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership  in  acquiring  the  investments  are  capitalized  as  part  of the
investment account and are being amortized over 30 years (see Note 2).

Offering Expenses
-----------------
Offering  expenses consist of underwriting  commissions,  legal fees,  printing,
filing and  recordation  fees,  and other costs  incurred  with selling  limited
partnership  interests in the  Partnership.  The General Partner is obligated to
pay all  offering  and  organization  costs in  excess of 15%  (including  sales
commissions) of the total offering proceeds.  Offering expenses are reflected as
a reduction of partners'  capital and amounted to  $2,366,564  at the end of all
periods presented.


                                       8
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For the Three and Six Months Ended September 30, 2001
                                   (unaudited)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
--------------------------------------------------------------
Use of Estimates
----------------
The preparation of financial  statements,  in conformity with generally accepted
accounting  principles,  requires  management to make estimates and assumptions,
that  affect  the  reported  amounts  of assets  and  liabilities,  to  disclose
contingent assets, liabilities, at the date of the financial statements, and the
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could materially differ from those estimates.

Cash and Cash Equivalents
-------------------------
The Partnership considers highly liquid investments with remaining maturities of
three months or less when purchased to be cash equivalents.  The Partnership had
no cash equivalents at the end of all periods presented.

Concentration of Credit Risk
----------------------------
At September 30, 2001,  the  Partnership  maintained a cash balance at a certain
financial institution in excess of the maximum federally insured amounts.

Net Loss Per Limited Partner Unit
---------------------------------
Net loss per limited  partnership  unit is  calculated  pursuant to Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share. Net loss per unit
includes no dilution  and is computed  by  dividing  loss  available  to limited
partners by the weighted average number of units outstanding  during the period.
Calculation of diluted net income per unit is not required.

Reporting Comprehensive Income
------------------------------
In June 1997,  the FASB  issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 130, Reporting  Comprehensive  Income.  This statement  establishes
standards for reporting the components of comprehensive income and requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be included in a financial statement that is
displayed with the same prominence as other financial statements.  Comprehensive
income  includes net income as well as certain items that are reported  directly
within a separate  component  of  partners'  equity and bypass net  income.  The
Partnership  adopted the  provisions of this  statement in 1998. For the periods
presented,  the Partnership has no elements of other  comprehensive  income,  as
defined by SFAS No. 130.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
--------------------------------------------
As of the periods  presented,  the Partnership had acquired limited  partnership
interests in eighteen Local Limited Partnerships, each of which owns one Housing
Complex  consisting  of an  aggregate of 635  apartment  units.  The  respective
general  partners  of the  Local  Limited  Partnerships  manage  the  day-to-day
operations of the entities.  Significant  Local Limited  Partnership's  business
decisions require approval from the Partnership.  The Partnership,  as a limited
partner,  is  generally  entitled  to 99%,  as  specified  in the Local  Limited
Partnership agreements,  of the operating profits and losses, taxable income and
losses and tax credits of the Limited Partnerships.

Equity  in  losses  of the  Local  Limited  Partnerships  is  recognized  in the
financial  statements until the related  investment account is reduced to a zero
balance. Losses incurred after the investment account is reduced to zero are

                                       9
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For the Three and Six Months Ended September 30, 2001
                                   (unaudited)


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
not recognized.  If the Local Limited  Partnerships  report net income in future
years,  the  Partnership  will resume  applying the equity method only after its
share of such net income  equals the share of net losses not  recognized  during
the period(s) the equity method was suspended.

Distributions  received by limited  partners are accounted for as a reduction of
the investment balance.  Distributions received after the investment has reached
zero would be recognized as income.

The following is a summary of the equity method  activity of the  investments in
Local Limited Partnerships for the periods presented.
<TABLE>
<CAPTION>

                                                                         For the Six                 For the Year
                                                                         Months Ended                   Ended
                                                                      September 30, 2001            March 31, 2001
                                                                      -------------------         -------------------

<S>                                                                 <C>                         <C>
  Investments per balance sheet, beginning of period                $         7,329,890         $         8,224,971

  Distributions received                                                        (27,892)                    (12,913)
  Equity in losses of limited partnerships                                     (409,623)                   (821,704)
  Amortization of paid acquisition fees and costs                               (29,436)                    (60,464)
                                                                      -------------------         -------------------
  Investments per balance sheet, end of period                      $         6,862,939         $         7,329,890
                                                                      ===================         ===================
</TABLE>

Selected  financial  information for the six months ended September 30, 2001 and
2000 from the unaudited combined condensed  financial  statements of the limited
partnerships in which the Partnership has invested as follows:
<TABLE>
<CAPTION>


                             COMBINED CONDENSED STATEMENTS OF OPERATIONS
                                                              2001                      2000
                                                      ----------------------     --------------------

<S>                                                 <C>                        <C>
  Revenue                                           $            1,520,000     $          1,471,000
                                                      ----------------------     -------------------
  Expenses:
     Operating expenses                                            946,000                1,037,000
     Interest expense                                              433,000                  286,000
     Depreciation and amortization                                 577,000                  613,000
                                                      ----------------------     --------------------
  Total expenses                                                 1,956,000                1,936,000
                                                      ----------------------     --------------------
  Net loss                                          $             (436,000)    $           (465,000)
                                                      ======================     ====================
  Net loss allocable to the Partnership             $             (431,000)    $           (460,000)
                                                      ======================     ====================
  Net loss recorded by the Partnership              $             (410,000)    $           (436,000)
                                                      ======================     ====================
</TABLE>

                                       10

<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

              For the Three and Six Months Ended September 30, 2001
                                   (unaudited)


NOTE 2 - INVESTMENT IN LIMITED PARTNERSHIP, continued
-----------------------------------------------------
Certain Local Limited  Partnerships have incurred  significant  operating losses
and  have  working  capital  deficiencies.  In the  event  these  Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  and/or  the  Local  General  Partner  may be
required to sustain operations of such Local Limited Partnerships. If additional
capital  contributions  are not made when they are required,  the  Partnership's
investment in certain of such Local Limited Partnerships could be impaired,  and
the loss and recapture of the related tax credits could occur.

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------
The Partnership has no officers,  employees,  or directors.  However,  under the
terms of the  Partnership  Agreement the Partnership is obligated to the General
Partner or its  affiliates  during the current or future years for the following
fees:

(a)  Annual Asset  Management  Fee. An annual asset  management fee in an amount
     equal  to 0.5% of the  Invested  Assets  of the  Partnership,  as  defined.
     "Invested  Assets" means the sum of the  Partnership's  Investment in Local
     Limited Partnership Interests and the Partnership's  allocable share of the
     amount of the  mortgage  loans on and other  debts  related to, the Housing
     Complexes  owned by such Local Limited  Partnerships.  Fees of $90,692 were
     incurred  during each of the six months ended  September 30, 2001 and 2000.
     The Partnership paid the General Partner or its affiliates $35,834 of those
     fees during the six months ended  September 30, 2001 and $20,833 during the
     six months ended September 30, 2000.

(b)  Subordinated  Disposition Fee. A subordinated  disposition fee in an amount
     equal to 1% of the sales price of real estate sold.  Payment of this fee is
     subordinated to the limited  partners  receiving a preferred  return of 16%
     through  December 31, 2003 and 6% thereafter (as defined in the Partnership
     Agreement)  and is payable  only if the General  Partner or its  affiliates
     render services in the sales effort.


The accrued fees and expenses due to General  Partner and affiliates  consist of
the following:
<TABLE>
<CAPTION>

                                                                  September 30, 2001            March 31, 2001
                                                                 ----------------------      ----------------------
<S>                                                           <C>                         <C>
Reimbursement for expenses paid by
      the General Partners and affiliates                     $                    311    $                      -
Asset management fee payable                                                   904,022                     849,164
                                                                 ----------------------      ----------------------
                                                              $                904,333    $                849,164
                                                                 ======================      ======================
</TABLE>


The General  Partner does not anticipate that these accrued fees will be paid in
full  until such time as capital  reserves  are in excess of future  foreseeable
working capital requirements of the Partnership.

NOTE 4 - INCOME TAXES
---------------------
No provision for income taxes has been recorded in the financial statements,  as
any  liability  for  income  taxes  is the  obligation  of the  partners  of the
Partnership.


                                       11
<PAGE>



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

Forward Looking Statements

With  the  exception  of  the  discussion  regarding   historical   information,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-Q contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties and other factors,  which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events, which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  our  future  cash  flows and  ability  to  obtain  sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical  results are not necessarily  indicative of the operating results for
any future period.

Subsequent  written and oral forward  looking  statements  attributable to us or
persons  acting on our behalf  are  expressly  qualified  in their  entirety  by
cautionary  statements  in this Form 10-Q and in other reports we filed with the
Securities and Exchange  Commission.  The following discussion should be read in
conjunction  with the  condensed  Financial  Statements  and the  Notes  thereto
included elsewhere in this filing.

The following discussion and analysis compares the results of operations for the
three and six months ended  September  30, 2001 and 2000,  and should be read in
conjunction  with the condensed  financial  statements  and  accompanying  notes
included within this report.

Financial Condition

The Partnership's  assets at September 30, 2001 consisted  primarily of $419,000
in cash and aggregate  investments in the eighteen Local Limited Partnerships of
$6,863,000. Liabilities at September 30, 2001 primarily consisted of $904,000 of
accrued asset management fees due to the General Partner.

Results of Operations

Three Months Ended  September 30, 2001 Compared to Three Months Ended  September
30, 2000. The  Partnership's  net loss for the three months ended  September 30,
2001 was  $(296,000),  reflecting an increase of $11,000 from the  $(285,000) of
net loss for the three months ended  September 30, 2000. The incline in net loss
is primarily due to an increase in loss from  operations by $7,000 for the three
months ended September 30, 2001 to $(74,000) from $(67,000) for the three months
ended September 30, 2000, due to a comparable increase in legal, accounting, and
other operating  expense.  The increase in net loss was also primarily due to an
increase in equity in losses of limited partnerships of $4,000 to $(222,000) for
the three months ended  September 30, 2001 from  $(218,000) for the three months
ended  September  30,  2000.  The  increase  in  equity  in  losses  of  limited
partnerships  is due to the  reduction of the  respective  net  acquisition  fee
component of investments in Local Limited  Partnerships  to zero for those Local
Limited  Partnerships  which  would  otherwise  be  below a zero  balance.  This
increase was offset by the  Partnership  not  recognizing  certain losses of the
Local Limited  Partnerships.  The investments in such Local Limited Partnerships
had reached $0 at September 30, 2001.  Since the  Partnership's  liability  with
respect to its  investments  is limited,  losses in excess of investment are not
recognized.



                                       12
<PAGE>



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

Six Months Ended  September 30, 2001 Compared to Six Months Ended  September 30,
2000. The Partnership's net loss for the six months ended September 30, 2001 was
$(541,000), reflecting a decrease of $22,000 from the $(563,000) of net loss for
the six months ended  September  30, 2000.  The decline in net loss is primarily
due to equity in losses of limited  partnerships,  which  declined by $26,000 to
$(410,000) for the six months ended  September 30, 2001 from  $(436,000) for the
six months ended  September 30, 2000. This decrease in equity in losses of Local
Limited Partnerships is due to the Partnership not recognizing certain losses of
the  Local  Limited   Partnerships.   The  investments  in  such  Local  Limited
Partnerships  had reached $0 at  September  30,  2001.  Since the  Partnership's
liability  with  respect  to its  investments  is  limited,  losses in excess of
investment are not recognized.  This decrease was offset by the reduction of the
respective  net  acquisition  fee  component  of  investments  in Local  Limited
Partnerships to zero for those Local Limited  Partnerships which would otherwise
be below a zero balance.

Cash Flows

Six Months Ended  September 30, 2001 Compared to Six Months Ended  September 30,
2000.  Net cash  decrease  during the six months  ended  September  30, 2001 was
$(19,000) compared to a net cash decrease for the six months ended September 30,
2000 of  $(21,000).  The  change of $2,000  was due  primarily  an  increase  in
distributions  from  limited  partnerships  of  $21,000,  which is  offset by an
increase in operating costs of $19,000.

During the six months ended September 30, 2001 accrued  payables,  which consist
primarily  of  asset  management  fees to the  General  Partner  or  affiliates,
increased by $55,000. The General Partner does not anticipate that these accrued
fees will be paid in full until such time as capital  reserves  are in excess of
future foreseeable working capital requirements of the partnership.

The Partnership  expects its future cash flows,  together with its net available
assets at September 30, 2001, to be sufficient to meet all currently foreseeable
future cash requirements.


                                       13
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures About Market Risks

         NONE

Part II. Other Information

Item 1.  Legal Proceedings

         NONE

Item 6.  Exhibits and Reports on Form 8-K

         NONE


                                       14
<PAGE>



Pursuant  to the  requirements  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.

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

By:  WNC California Tax Credit Partners III General Partner

By:  WNC & Associates, Inc.         General Partner





By: /s/  Wilfred N. Cooper, Jr.
    ---------------------------

Wilfred N. Cooper, Jr., President
Chief Operating Officer of WNC & Associates, Inc.

Date:   November 9, 2001





By:  /s/ Thomas J. Riha
     -------------------

Thomas J. Riha, Vice-President
Chief Financial Officer of WNC & Associates, Inc.

Date:   November 9, 2001