FORM 10-Q

                       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, 2000

                                       OR

           o 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: 0-23908


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.


California                                                           33-0531301
(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 Quarter Ended September 30, 2000



PART I. FINANCIAL INFORMATION

 Item 1. Financial Statements

 Balance Sheets
          September 30, 2000 and March 31, 2000...............................3

 Statements of Operations
          For the three and six months ended September 30, 2000 and 1999......4

 Statement of Partners' Equity (Deficit)
          For the six months ended September 30, 2000.........................5

 Statements of Cash Flows
          For the six months ended September 30, 2000 and 1999................6

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

 Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations................................13

 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, 2000                 March 31, 2000
                                                                -----------------------            --------------------
                                                                     (Unaudited)
ASSETS
<S>                                                           <C>                                <C>
Cash and cash equivalents                                     $               459,264            $            480,598
Investments in limited partnerships, net (Note 2)                           7,752,983                       8,224,971
                                                                -----------------------            --------------------

                                                              $             8,212,247            $          8,705,569
                                                                =======================            ====================

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
 Accrued fees and expenses due to
  General Partner and affiliates (Note 3)                     $               787,638            $            718,279
                                                                -----------------------            --------------------

      Total liabilities                                                       787,638                         718,279
                                                                -----------------------            --------------------
Partners' equity (deficit):
 General partner                                                              (95,885)                        (90,258)
 Limited partners (30,000 units authorized;
  18,000 units issued and outstanding)                                      7,520,494                       8,077,548
                                                                -----------------------            --------------------

        Total partners' equity                                              7,424,609                       7,987,290
                                                                -----------------------            --------------------

                                                              $             8,212,247            $          8,705,569
                                                                =======================            ====================
</TABLE>

                 See accompanying notes to financial statements
                                        3

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

                            STATEMENTS OF OPERATIONS

         For the Three and Six Months Ended September 30, 2000 and 1999
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                     2000                                  1999
                                       ----------------------------------    ---------------------------------
                                          Three              Six                Three             Six
                                          Months             Months             Months            Months
                                       --------------     --------------     -------------     --------------

<S>                                  <C>                <C>                <C>               <C>
Interest income                      $       5,220      $       10,484     $       5,059     $      10,046
                                       --------------     --------------     -------------     --------------

Operating expenses:
 Amortization                               15,116              30,232            15,116            30,232
 Asset management fees (Note 3)             45,346              90,692            45,346            90,692
 Legal and accounting                       10,712              12,565               971            10,602
 Other                                         734               3,358             6,487             4,867
                                       --------------     --------------     -------------     --------------

    Total operating expenses                71,908             136,847            67,920           136,393
                                       --------------     --------------     -------------     --------------

Loss from operations                        (66,688)          (126,363)          (62,861)          (126,347)

Equity in losses of
 limited partnerships (Note2)              (218,159)          (436,318)         (224,354)          (454,050)
                                       --------------     --------------     -------------     --------------

Net loss                             $     (284,847)    $     (562,681)    $    (287,215)    $     (580,397)
                                       ==============     ==============     =============     ==============

Net loss allocated to:
 General partner                     $       (2,848)    $       (5,627)    $      (2,872)    $       (5,804)
                                       ==============     ==============     =============     ==============

 Limited partners                    $     (281,999)    $     (557,054)    $    (284,343)    $     (574,593)
                                       ==============     ==============     =============     ==============

Net loss per limited
 partner unit                        $          (16)    $          (31)    $         (16)    $          (32)
                                       ==============     ==============     =============     ==============

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

                   For the Six Months Ended September 30, 2000
                                   (Unaudited)
<TABLE>
<CAPTION>


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

<S>                                                  <C>                    <C>                  <C>
Partners' equity (deficit) at March 31, 2000         $          (90,258)    $     8,077,548      $      7,987,290

Net loss                                                         (5,627)           (557,054)              (562,681)
                                                       ------------------     ----------------     -----------------

Partners' equity (deficit) at September 30, 2000     $          (95,885)    $     7,520,494      $      7,424,609
                                                       ==================     ================     =================



</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, 2000 and 1999
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                                2000                      1999
                                                                        -----------------         ------------------
<S>                                                                   <C>                       <C>
Cash flows from operating activities:
 Net loss                                                             $        (562,681)        $         (580,397)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Amortization                                                                 30,232                     30,232
    Equity in losses of limited partnerships                                    436,318                    454,050
    Change in accrued fees and expenses due to
     General Partner and affiliates                                              69,359                     88,604
                                                                        -----------------         ------------------

Net cash used in operating activities                                           (26,772)                    (7,511)
                                                                        -----------------         ------------------

Cash flows from investing activities:
 Distributions from limited partnerships                                          5,438                      4,335
                                                                        -----------------         ------------------

Net cash provided by investing activities                                         5,438                      4,335
                                                                        -----------------         ------------------

Net decrease in cash and cash equivalents                                       (21,334)                    (3,176)
                                                                        -----------------         ------------------

Cash and cash equivalents, beginning of period                                  480,598                    509,695
                                                                        -----------------         ------------------
Cash and cash equivalents, end of period                              $         459,264         $          506,519
                                                                        =================         ==================

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

                               September 30, 2000
                                   (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying condensed consolidated 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, 2000 are not
necessarily  indicative  of the results that may be expected for the fiscal year
ending  March  31,  2001.  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, 2000.

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, an additional 10 units amounting to $10,000 was collected
on  subscriptions  accepted and  previously  deemed  uncollectible.  The General
Partner has a 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

                               September 30, 2000
                                   (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.

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

                               September 30, 2000
                                   (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  and  disclosure  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 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, 2000,  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
compoents 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  components  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 element 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  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 not


                                       9
<PAGE>

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

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                               September 30, 2000
                                   (unaudited)

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued


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.

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,             March 31,
                                                                   2000                    2000
                                                             ------------------      ----------------

<S>                                                        <C>                     <C>
   Investments per balance sheet, beginning of period      $        8,224,971      $      9,164,197
   Distributions received                                              (5,438)
                                                                                             (5,909)
   Equity in losses of limited partnerships                          (436,318)             (872,853)
   Amortization of paid acquisition fees and costs                    (30,232)              (60,464)
                                                             ------------------      ----------------

   Investments per balance sheet, end of period            $        7,752,983      $      8,224,971
                                                             ==================      ================
</TABLE>

Selected  financial  information  for the six months ended September 30 from the
unaudited combined financial statements of the limited partnerships in which the
Partnership has invested as follows:

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

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

<S>                                                 <C>                        <C>
   Revenue                                          $            1,471,000     $          1,490,000

   Expenses:
    Operating expenses                                           1,037,000                  900,000
    Interest expense                                               286,000                  474,000
    Depreciation and amortization                                  613,000                  594,000
                                                      ----------------------     --------------------

   Total expenses                                                1,936,000                1,968,000
                                                      ----------------------     --------------------

   Net loss                                         $             (465,000)    $          (478,000)
                                                      ======================     ====================

   Net loss allocable to the Partnership            $             (460,000)    $          (473,200)
                                                      ======================     ====================

   Net loss recorded by the Partnership             $             (436,000)    $          (454,000)
                                                      ======================     ====================

</TABLE>
                                       10
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                               September 30, 2000
                                   (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  Partners  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.

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, 2000 and 1999.
     The Partnership paid the General Partner or its affiliates $20,833 of those
     fees during the six months ended  September  30, 2000 and $0 during the six
     months ended September 30, 1999.

(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, 2000            March 31, 2000
                                                                 ----------------------      ----------------------
<S>                                                           <C>                         <C>
Asset management fee payable                                  $                787,638    $                717,779
Reimbursement  for expenses paid by the General Partner or
 an affiliate                                                                        -                         500
                                                                 ----------------------      ----------------------

                                                              $                787,638    $                718,279
                                                                 ======================      ======================
</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.

                                       11
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                               September 30, 2000
                                   (unaudited)

NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS

Payable to limited  partnerships at September 30, 2000 represents  amounts which
are due at various times based on conditions  specified in the respective  local
limited partnership agreements.  These contributions are payable in installments
and are due upon the  local  limited  partnership  achieving  certain  operating
benchmarks  (  generally   within  two  years  of  the   Partnership's   initial
investment).

NOTE 5 - 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.







                                       12

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

This  Quarterly  Report  contains  forward-looking   statements  concerning  the
Partnership's anticipated future revenues and earnings,  adequacy of future cash
flow and related matters. These forward-looking  statements include, but are not
limited to, statements containing the words "expect",  "believe", "will", "may",
"should", "project", "estimate", and like expressions, and the negative thereof.
These statements are subject to risks and uncertainties  that could cause actual
results to differ materially from the statements, including competition, as well
as those  risks  described  in the  Partnership's  SEC  reports,  including  the
Partnership's  Form 10-K filed  pursuant to the  Securities  and Exchange Act of
1934 on June 29, 2000.

The following discussion and analysis compares the results of operations for the
three and six months ended  September  30, 2000 and 1999,  and should be read in
conjunction   with  the  condensed   consolidated   financial   statements   and
accompanying notes included within this report.

Financial Condition

The Partnership's  assets at September 30, 2000 consisted  primarily of $459,000
in cash and aggregate  investments in the eighteen Local Limited Partnerships of
$7,753,000. Liabilities at September 30, 2000 primarily consisted of $788,000 of
accrued asset management fees due to the General Partner.

Results of Operations

Three Months Ended  September 30, 2000 Compared to Three Months Ended  September
30, 1999. The  Partnership's  net loss for the three months ended  September 30,
2000 was $(285,000),  reflecting a decrease of $2,000 from the  $(287,000)of net
loss  experienced  for the three months ended September 30, 1999. The decline in
net loss is  primarily  due to equity in losses of  limited  partnerships  which
declined by $6,000 to $(218,000)  for the three months ended  September 30, 2000
from $(224,000) for the three months ended September 30, 1999. This decrease was
a result of the Partnership not recognizing  certain losses of the Local Limited
Partnerships.  The investments in such Local Limited Partnerships had reached $0
at September 30, 2000.  Since the  Partnership's  liability  with respect to its
investments is limited, losses in excess of investment are not recognized. Along
with the  decrease  in equity in losses of  limited  partnerships,  there was an
increase in loss from  operations of $4,000 for the three months ended September
30, 2000 to $(67,000)  from  $(63,000) for the three months ended  September 30,
1999, due to a comparable increase in operating expense allocations.

Six Months Ended  September 30, 2000 Compared to Six Months Ended  September 30,
1999. The Partnership's net loss for the six months ended September 30, 2000 was
$(562,000),  reflecting  a decrease of $18,000  from  $(580,000)of  the net loss
experienced for the six months ended September 30, 1999. The decline in net loss
is primarily due to equity in losses of limited  partnerships  which declined by
$18,000  to  $(436,000)  for  the six  months  ended  September  30,  2000  from
$(454,000)  for the six months ended  September  30, 1999.  This  decrease was a
result of the Partnership  not  recognizing  certain losses of the Local Limited
Partnerships.  The investments in such Local Limited Partnerships had reached $0
at September 30, 2000.  Since the  Partnership's  liability  with respect to its
investments is limited, losses in excess of investment are not recognized.

Cash Flows

Six Months Ended  September 30, 2000 Compared to Six Months Ended  September 30,
1999. Net cash used during the six months ended September 30, 2000 was $(21,000)
compared to a net decrease in cash for the six months ended  September  30, 1999
of $(3,000). The change was due primarily to an increase in operating costs paid
of $20,000 offset by an increase in distributions  from limited  partnerships of
$1,000.

                                       13

<PAGE>

During the six months ended September 30, 2000 and 1999, accrued payables, which
consist primarily of asset management fees due to the General Partner, increased
by $70,000 and $91,000,  respectively.  The General  Partner does not anticipate
that these accrued fees will be paid 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, 2000, to be sufficient to meet all currently foreseeable
future cash requirements.


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:   December 1, 2000





By:  /s/ Michael L. Dickenson

Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.

Date: December 1, 2000




                                       15