SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                                   (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, 2004

                                       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: 0-23908


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

             (Exact name of registrant as specified in its charter)

                    California                                    33-0563307
                  (State or other jurisdiction of              (I.R.S. Employer
               incorporation or organization)                Identification No.)

               17782 Sky Park Circle                              92614-6404
               Irvine, CA                                         (Zip Code)
               (Address of principal executive offices)

                                 (714) 662-5565
                               (Telephone number)

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

                                      NONE

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

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)





<PAGE>

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
    ----------    ---------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K 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-K or any amendment to this
Form 10-K.  |X| Indicate by check mark whether the  registrant is an accelerated
filer.
Yes               No      X
    -----------      ---------------

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was last sold, or the average bid and asked price of such common  equity,  as of
the last business day of the registrant's most recently  completed second fiscal
quarter.

                                  INAPPLICABLE


                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K  (e.g.,  Part I, Part II,  etc.)  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.  The listed  documents  should be clearly
described for identification  purposes (e.g.,  annual report to security holders
for fiscal year ended December 24, 1980).

                                      NONE






                                       2
<PAGE>


PART I.

Item 1.  Business

Organization

WNC California  Housing Tax Credits III, L.P. ("CHTC III" or the  "Partnership")
is a  California  limited  partnership  formed  under  the laws of the  State of
California on October 5, 1992.  The  Partnership  was formed to acquire  limited
partnership  interests or membership  interests in other limited partnerships or
limited   liability   companies   ("Local  Limited   Partnerships")   which  own
multi-family  housing complexes that are eligible for Federal low-income housing
and, in certain cases,  California  low-income  housing tax credits ("Low Income
Housing Credits").

The general  partner of the  Partnership  is WNC Tax Credit  Partners  III, L.P.
("TCP  III").  The  general  partner  of  TCP  III  is  WNC &  Associates,  Inc.
("Associates").  The chairman and president of Associates own  substantially all
of the  outstanding  stock of  Associates.  The business of the  Partnership  is
conducted  primarily  through  WNC, as neither TCP III or the  Partnership  have
employees of their own.

Pursuant to a  registration  statement  filed with the  Securities  and Exchange
Commission, on February 17, 1993, the Partnership commenced a public offering of
30,000 Units of Limited Partnership  Interest ("Units") at a price of $1,000 per
Unit.  As of the close of the offering on July 22, 1994, a total of 18,000 Units
representing  $18,000,000 had been sold. Holders of Units are referred to herein
as "Limited Partners."

The Partnership shall continue to be in full force and effect until December 31,
2050 unless terminated prior to that date pursuant to the partnership  agreement
or law.

Description of Business

The  Partnership's  principal  business  objective  is to  provide  its  Limited
Partners with Low Income Housing Credits.  The Partnership's  principal business
therefore  consists of investing as a limited partner or non-managing  member in
Local  Limited  Partnerships  each of which  owns and  operates  a  multi-family
housing  complex  (the  "Housing  Complexes")  which  qualify for the Low Income
Housing Credits.  In general,  under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce  Federal  taxes  otherwise due in each year of a ten-year  period.  In
general,  under Section 17058 of the  California  Revenue and Taxation  Code, an
owner of low-income housing can receive the California Low Income Housing Credit
to be used against  California  taxes  otherwise due in each year of a four-year
period. Each Housing Complex is subject to a fifteen-year compliance period (the
"Compliance  Period"),  and  under  state law may have to be  maintained  as low
income housing for 30 or more years.

In general,  in order to avoid  recapture  of Low Income  Housing  Credits,  the
Partnership  does not  expect  that it will  dispose of its  interests  in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited  Partnership of its Housing Complex prior to the end of the
applicable  Compliance  Period.  Because  of  (i)  the  nature  of  the  Housing
Complexes,  (ii) the  difficulty of predicting  the resale market for low-income
housing  15 or more years in the  future,  and (iii) the  ability of  government
lenders to  disapprove  of transfer,  it is not possible at this time to predict
whether the liquidation of the  Partnership's  assets and the disposition of the
proceeds,  if any, in  accordance  with the  Partnership's  Agreement of Limited
Partnership,  dated October 1992 (the "Partnership Agreement"),  will be able to
be accomplished  promptly at the end of the 15-year  period.  If a Local Limited
Partnership is unable to sell its Housing  Complex,  it is anticipated  that the
local general partner ("Local General  Partner") will either continue to operate
such Housing  Complex or take such other  actions as the Local  General  Partner
believes  to  be  in  the  best  interest  of  the  Local  Limited  Partnership.
Notwithstanding the preceding,  circumstances  beyond the control of the General
Partner or the Local General  Partners may occur during the  Compliance  Period,
which would  require the  Partnership  to approve the  disposition  of a Housing
Complex prior to the end thereof,  possibly resulting in recapture of Low Income
Housing Credits.



                                       3
<PAGE>


As of March 31, 2004,  the  Partnership  had invested in eighteen  Local Limited
Partnerships.  Each of these Local Limited  Partnerships  owns a Housing Complex
that is or was eligible for the Federal Low Income  Housing  Credit and eight of
them were eligible for the California Low Income Housing  Credit.  Certain Local
Limited Partnerships may also benefit from government programs promoting low- or
moderate-income housing.

Certain Risks and Uncertainties

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low Income  Housing  Credit rules are extremely  complicated.  Noncompliance
with these rules  results in the loss of future Low Income  Housing  Credits and
the  fractional  recapture  of Low Income  Housing  Credits  already  taken.  An
individual  Limited  Partner's  ability to use tax credits is  limited.  In most
cases,  the  annual  amount of Low Income  Housing  Credits  that an  individual
Limited Partner can use is limited to the tax liability due on the person's last
$25,000 of taxable  income.  Low Income Housing Credits may be the only material
benefit from the  Partnership  because  Limited  Partners may not get back their
capital.  Any  transactions  between  the  Partnership  and  Associates  and its
affiliates will entail conflicts of interest.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income  Housing  Credits,  and a  fractional  recapture  of prior Low
Income Housing Credits,  would occur. At any time, a foreclosure would result in
a loss of the Partnership's  investment in the Housing Complex.  The Partnership
is a limited partner or non-managing  member of each Local Limited  Partnership.
Accordingly,  the Partnership has very limited rights with respect to management
of the Local  Limited  Partnerships.  The  Partnership  will rely totally on the
Local General Partners.  Neither the Partnership's  investments in Local Limited
Partnerships,  nor  the  Local  Limited  Partnerships'  investments  in  Housing
Complexes,  are 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 interests in Local Limited Partnerships; limitations
on removal of Local  General  Partners;  limitations  on subsidy  programs;  and
possible changes in applicable regulations. Uninsured casualties could result in
loss of property  and Low Income  Housing  Credits and  recapture  of Low Income
Housing Credits  previously  taken. The value of real estate is subject to risks
from fluctuating  economic conditions,  including  employment rates,  inflation,
tax, environmental,  land use and zoning policies,  supply and demand of similar
properties, and neighborhood conditions, among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge  the tax  treatment  of tax items.  The  amount of Low Income  Housing
Credits and tax losses allocable to the Limited Partners could be reduced if the
IRS were  successful  in such a  challenge.  The  alternative  minimum tax could
reduce tax benefits from an investment in the  Partnership.  Changes in tax laws
could also impact the tax benefits from an investment in the Partnership  and/or
the value of the Housing Complexes.

Substantially  all of the Low Income Housing Credits  anticipated to be realized
from the Local Limited Partnerships have been realized. The Partnership does not
anticipate  being  allocated a significant  amount of Low Income Housing Credits
from the Local  Limited  Partnerships  in the  future.  Until the Local  Limited
Partnerships  have completed the 15 year Low Income  Housing  Credit  compliance
period risks exist for potential recapture of prior low Income Housing Credits.


                                       4
<PAGE>

There are limits on the transferability of units, including a prohibition on the
transfer of more than 50% of the Units in a 12-month  period.  No trading market
for the Units exists or is expected to develop.  Limited  Partners may be unable
to sell their Units except at a discount and should consider their Units to be a
long-term investment.  Individual Limited Partners will have no recourse if they
disagree with actions authorized by a vote of the majority of Limited Partners.

Anticipated  future and  existing  cash  resources  are not  sufficient  to meet
existing   contractual  cash  obligations.   Substantially  all  of  the  future
contractual  cash  obligations  of the  Partnership  are  payable to the General
Partner.  Though a substantial portion of the amounts contractually obligated to
the  General  Partner  are  contractually  currently  payable,  the  Partnership
anticipates  that the  General  Partner  will not  require  the payment of these
contractual  obligations  until  capital  reserves  are in excess of the  future
foreseeable  working  capital  requirements  of the  Partnership.  However,  the
Partnership is  contractually  required to pay these  obligations to the General
Partner on a current basis. The Partnership  would be adversely  affected should
the General Partner demand current payment of these contractual  obligations and
or suspend services for this or any other reason.

Exit Strategy

The IRS  compliance  period for  low-income  housing  tax credit  properties  is
generally  15  years  following   construction  or  rehabilitation   completion.
Associates was one of the first in the industry to offer syndicated  investments
in Low Income  Housing  Credits.  The  initial  programs  are  completing  their
compliance periods.

With that in mind, the Partnership is continuing its review of the Partnership's
holdings,  with special emphasis on the more mature  properties  including those
that have satisfied the IRS compliance  requirements.  The review considers many
factors  including  extended use requirements on the property (such as those due
to mortgage restrictions or state compliance  agreements),  the condition of the
property,  and the tax consequences to the Limited Partners from the sale of the
property.

Upon identifying  those  properties with the highest  potential for a successful
sale,  refinancing  or  syndication,  the  Partnership  expects to proceed  with
efforts to liquidate those properties.  The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the Partnership
when it no longer  provides tax  benefits to Limited  Partners.  However,  Local
Limited  Partnership  interests may be disposed at any time by Associates in its
discretion.  To date no  properties  in the  Partnership  have been selected for
disposition.

Item 2.  Properties

Through its investments in Local Limited  Partnerships,  the  Partnership  holds
indirect  ownership  interests in the Housing  Complexes.  The  following  table
reflects  the status of the eighteen  Housing  Complexes as of the dates and for
the periods indicated:




                                       5
<PAGE>


<TABLE>
<CAPTION>
                                                        ----------------------------  ----------------------------------------------
                                                           As of March 31, 2004                   As of December 31, 2003
                                                        ----------------------------  ----------------------------------------------
                                                          Partnership's    Amount of                      Estimated         Mortgage
                                                         Total Investment  Investment                   Aggregate Low    Balances of
   Local Limited                       General Partner   in Local Limited  Paid to     Number          Income Housing  Local Limited
  Partnership Name        Location       Name               Partnership     Date     of Units  Occupancy   Credits (1)  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>                   <C>           <C>           <C>     <C>      <C>         <C>
Almond Garden             Delhi,         Anthony
Apartment                 California     Donovan
Associates                                                     $  391,000    $ 391,000      34      97%     $ 807,000   $  1,371,000

Almond View               Stockton,      Daniel C.
Apartments,               California     Logue and
Ltd.                                     Cyrus Youssefi         1,639,000    1,639,000      72      97%     3,523,000      1,738,000

Buccaneer                 Fernandia      Clifford E.
Associates,               Beach,         Olsen
Limited                   Florida                                 365,000      365,000      48      96%       768,000      1,456,000

Candleridge               Perry,         Eric A.
Apartments of             Iowa           Sheldahl
Perry L.P. II                                                     126,000      126,000      24      83%       245,000        687,000

Colonial                  Roseville,     S.P. Thomas
Village                   Calfornia      Company of
Roseville                                Northern
                                         California
                                         Inc. and
                                         Project Go, Inc.       2,811,000    2,811,000      56      98%     5,872,000      1,977,000

Dallas                    Orrville,      Thomas H. Cooksey
County                    Alabama        and Apartment
Housing, Ltd.                            Developers, Inc.         130,000      130,000      19      89%       287,000        607,000

La Paloma del             Deming,        Dean
Sol Limited               New Mexico     Greenwalt
Partnership                                                       254,000      254,000      38      92%       625,000      1,413,000

Memory Lane               Yankton,       Skogen -
Limited                   South          Peterson,
Partnership               Dakota         Inc.                     151,000      151,000      18     100%       295,000        673,000

Nueva                     Richgrove,     Self-Help
Sierra                    California     Enterprises,
Vista                                    Inc. and Nueva
Associates                               Sierra Vista

</TABLE>


                                        6
<PAGE>


<TABLE>
<CAPTION>
                                                        ----------------------------  ----------------------------------------------
                                                           As of March 31, 2004                   As of December 31, 2003
                                                        ----------------------------  ----------------------------------------------
                                                          Partnership's    Amount of                      Estimated         Mortgage
                                                         Total Investment  Investment                   Aggregate Low    Balances of
   Local Limited                       General Partner   in Local Limited  Paid to     Number          Income Housing  Local Limited
  Partnership Name        Location       Name               Partnership     Date     of Units  Occupancy   Credits (1)  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>                  <C>          <C>              <C>    <C>    <C>            <C>
                                         Corporation            1,688,000    1,688,000      35      91%     3,516,000      1,623,000

Old Fort                  Hidalgo,       Alan Deke
Limited                   Texas          Noftsker and ABO
Partnership                              Corporation              249,000      249,000      40      97%       547,000      1,260,000

Orosi Apartments,         Orosi,         Douglas W.
Ltd.                      California     Young                    391,000      391,000      42     100%       741,000      1,900,000

Parlier                   Parlier,       David J. Micheal
Garden                    California     and Professional
Apts.                                    Apartment                453,000      453,000      41      98%       917,000      1,687,000

Rosewood                  Superior,      Management,
Superior,                 Wisconsin      Inc. Duffy
Apartments                               Development
Limited                                  Company,
Partnership                              Inc.                     185,000      185,000      20      95%       375,000        456,000

Sun Manor,                Itta Bena,     Glenn D.
L.P.                      Mississippi    Miller                   230,000      230,000      36     100%       464,000      1,044,000

Tahoe                     South Lake     David J. Michael,
Pines                     Tahoe,         Bucky Fong, Dean
Apartments                California     Pearson, Coy Elvis
                                         and Dr. Patricia
                                         Hatton                 1,633,000    1,633,000      28      89%     3,171,000      1,640,000

Venus Retirement          Venus,         W. Joseph
Village, Ltd.             Texas          Chamy                    161,000      161,000      24      96%       318,000        716,000

Walnut                    Orange,        Walnut
Pixley, L.P.              California     Pixley, Inc.           1,078,000    1,078,000      22     100%     2,309,000      1,656,000

Winters                   Winters,       John P.
Investment                California     Casper
Group                                                             531,000      531,000      38     100%     1,072,000      1,810,000
                                                               ----------- ------------    ----    ----   -----------    -----------

                                                              $12,536,000  $12,536,000     635      96%   $26,013,000    $23,714,000
                                                              ============ ============    ====    ====   ===========    ===========
</TABLE>
(1) Represents  aggregate  total  anticipated  Low Income Housing  Credits to be
received  over the 10 year credit  period if the Housing  Complexes are retained
and rented in compliance  with credit rules for the 15-year  compliance  period.
Substantially  all of the  anticipated  Low  Income  Housing  Credits  have been
received from the Local Limited Partnerships.  Accordingly, the Partnership does
not  anticipate  a  significant  amount  of Low  Income  Housing  Credits  being
allocated to the Limited Partners in the future.

                                       7
<PAGE>


<TABLE>
<CAPTION>

                                          --------------------------------------------------------------------------
                                                            For the year ended December 31, 2003
                                          --------------------------------------------------------------------------
                                                                                                   Low Income
                                                                                                Housing Credits
                                                                                                  Allocated to
             Partnership Name                 Rental Income        Net Income (Loss)              Partnership
 -------------------------------------------------------------------------------------------------------------------
<S>                                               <C>                    <C>                                    <C>
 Almond Garden Apartment Associates               $      219,000         $      (1,000)                         99%

 Almond View Apartments, Ltd.                            244,000              (221,000)                         99%

 Buccaneer Associates, Limited                           235,000               (40,000)                         99%


 Candleridge Apartments of Perry L.P. II                 150,000               (15,000)                         99%

 Colonial Village Roseville                              529,000                     0                          99%

 Dallas County Housing, Ltd.                              77,000               (17,000)                         99%

 La Paloma del Sol Limited Partnership                   163,000               (25,000)                         99%

 Memory Lane Limited Partnership                          80,000               (12,000)                         99%

 Nueva Sierra Vista Associates                           153,000              (129,000)                         99%

 Old Fort Limited Partnership                            178,000               (27,000)                         99%

 Orosi Apartments, Ltd.                                  217,000               (37,000)                         99%

 Parlier Garden Apts.                                    302,000                49,000                          95%

 Rosewood Apartments Limited Partnership                  86,000                (9,000)                         99%

 Sun Manor, L.P.                                         151,000               (42,000)                         99%

 Tahoe Pines Apartments                                  201,000              (112,000)                         99%

 Venus Retirement Village, Ltd.                           90,000              (304,000)                         99%

 Walnut - Pixley, L.P.                                   166,000               (22,000)                         99%

 Winters Investment Group                                253,000               (45,000)                         99%
                                                       ---------            -----------

                                                  $    3,494,000        $   (1,009,000)
                                                       =========            ===========
</TABLE>


                                       8
<PAGE>




Item 3.  Legal Proceedings

NONE.

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

NONE

PART II.

Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
Issuer Purchases of Equity Securities

Item 5a.

(a)  The  Units  are not  traded on a public  exchange  but were sold  through a
     public offering.  It is not anticipated that any public market will develop
     for the  purchase  and  sale of any  Unit and  none  exists.  Units  can be
     assigned  only if certain  requirements  in the  Partnership  Agreement are
     satisfied.

(b)  At March 31,  2004,  there were 888 Limited  Partners  and 17  assignees of
     Units who were not admitted as Limited Partners.

(c)  The Partnership was not designed to provide cash  distributions  to Limited
     Partners in  circumstances  other than  refinancing  or  disposition of its
     investments in Local Limited Partnerships.  Any such distributions would be
     made in accordance with the terms of the Partnership Agreement.

(d)  No securities are authorized for issuance by the  Partnership  under equity
     compensation plans.

(e)  No unregistered  securities  were sold by the  Partnership  during the year
     ended March 31, 2004.

Item 5b. Use of Proceeds

NOT APPLICABLE

Item 5c. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

NONE



                                        9
<PAGE>


<TABLE>
<CAPTION>

Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:

                                                                 March 31
                                     ---------------------------------------------------------------

                                        2004         2003         2002         2001         2000
                                     -----------  -----------   ----------   ----------   ----------

<S>                                <C>          <C>           <C>          <C>          <C>
ASSETS
Cash                               $    310,717 $    371,426  $   413,336  $   437,863  $   480,598
Investments in limited
  partnerships, net                   3,525,413    5,572,016    6,455,167    7,329,890    8,224,971
                                     -----------  -----------   ----------   ----------   ----------

                                   $  3,836,130 $  5,943,442  $ 6,868,503  $ 7,767,753  $ 8,705,569
                                     ===========  ===========   ==========   ==========   ==========

LIABILITIES
Due to limited partnerships        $          - $          -  $         -  $         -  $         -
Due to general partner and
  affiliates                          1,256,656    1,126,324      994,710      849,164      718,279
                                     -----------  -----------   ----------   ----------   ----------

                                      1,256,656    1,126,324      994,710      849,164      718,279

PARTNERS' EQUITY                      2,579,474    4,817,118    5,873,793    6,918,589    7,987,290
                                     -----------  -----------   ----------   ----------   ----------

                                   $  3,836,130 $  5,943,442  $ 6,868,503  $ 7,767,753  $ 8,705,569
                                     ===========  ===========   ==========   ==========   ==========



Selected results of operations, cash flows and other information for the Partnership are as follows:


                                                  For the Years Ended
                                                        March 31
                           -------------------------------------------------------------------

                              2004          2003           2002         2001          2000
                           -----------   -----------     ---------    ----------    ----------


Loss from operations
  (Note 1)                $ (1,860,847)$   (257,349)   $ (245,989) $   (246,997) $   (244,656)
Equity in losses of
  limited partnerships        (383,442)    (799,326)     (798,807)     (821,704)     (872,853)
                           -----------   -----------     ---------    ----------    ----------

Net loss                  $ (2,237,644)$ (1,056,675)   $(1,044,796)$ (1,068,701) $ (1,117,509)
                           ===========   ===========     =========    ==========    ==========

Net loss allocated to:
  General partner         $    (22,376)$    (10,567)   $  (10,448) $    (10,687) $    (11,175)
                           ===========   ===========     =========    ==========    ==========

  Limited partners        $ (2,215,268)$ (1,046,108)   $(1,034,348)$ (1,058,014) $ (1,106,334)
                           ===========   ===========     =========    ==========    ==========

Net loss per limited
  partner unit            $    (123.07)$     (58.12)   $   (57.46) $     (58.78) $     (61.46)
                           ===========   ===========     =========    ==========    ==========
Outstanding weighted
  limited partner units         18,000       18,000        18,000        18,000        18,000
                           ===========   ===========     =========    ==========    ==========
</TABLE>

Note 1 - Loss from  operations  for the year  ended  March 31,  2004  includes a
charge  for  impairment  losses  on  investments  in  limited   partnerships  of
$1,607,047. (See Note 2 to the audited financial statements.)


                                       10
<PAGE>


<TABLE>
<CAPTION>

                                                  For the Years Ended
                                                        March 31
                           -------------------------------------------------------------------

                              2004          2003          2002          2001          2000
                           -----------   -----------    ---------     ----------    ----------


<S>                      <C>           <C>           <C>            <C>          <C>
Net cash provided by
  (used in):
  Operating activities   $    (69,359) $    (66,356) $   (41,575)   $   (55,648) $    (18,170)
  Investing activities          8,650        24,446       17,048         12,913       (10,927)
  Financing activities                            -            -              -             -
                           -----------   -----------    ---------     ----------    ----------

Net decrease in cash          (60,709)      (41,910)     (24,527)       (42,735)      (29,097)

Cash, beginning of
  period                      371,426       413,336      437,863        480,598       509,695
                           -----------   -----------    ---------     ----------    ----------

Cash, end of period      $    310,717  $    371,426   $  413,336    $   437,863   $   480,598
                           ===========   ===========    =========     ==========    ==========

Low Income Housing Credits per Unit were as follows for the years ended December 31:

                                     2003            2002             2001             2000             1999
                                 -------------   --------------   -------------    -------------    -------------

Federal                        $          111  $           113  $          113   $          113   $          113
State                                       -                -               -                -                -
                                 -------------   --------------   -------------    -------------    -------------

Total                          $          111  $           113  $          113   $          113   $          113
                                 =============   ==============   =============    =============    =============
</TABLE>


                                       11
<PAGE>


Item 7. 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-K 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-K and in other reports we filed with the
Securities and Exchange  Commission.  The following discussion should be read in
conjunction  with  the  Financial  Statements  and the  Notes  thereto  included
elsewhere in this filing.

Critical Accounting Policies and Certain Risks and Uncertainties

The  Partnership  believes  that the  following  discussion  addresses  its most
significant  accounting  policies,  which are the most  critical to aid in fully
understanding and evaluating the Partnership's  reported financial results,  and
certain of the Partnership's risks and uncertainties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.

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  Partnerships'  results of operations
and for  any  contributions  made or  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting  of  the  product  of  the  remaining  future
Low-Income  Housing Credits estimated to be allocable to the Partnership and the
estimated  residual value of the Partnership.  If an investment is considered to
be impaired, the partnership reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  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 (Notes 2 and 3).

Equity in losses of the limited  partnerships  for each year ended March 31 have
been  recorded  by the  Partnership  based on nine  months of  reported  results
provided by the Local Limited  Partnerships  for each year ended December 31 and
on  three  months  of  results  estimated  by  management  of  the  Partnership.
Management's  estimate  for the  three-month  period is based on  either  actual
unaudited  results  reported by the Local  Limited  Partnerships  or  historical
trends in the operations of the Local Limited Partnerships.  Equity in losses of
the Local Limited  Partnerships  allocated to the Partnership are not recognized
to the extent that the investment  balance would be adjusted below zero. As soon
as the investment  balance  reaches zero,  amortization  of the related costs of
acquiring the investment are accelerated to the extent of the losses available.


                                       12
<PAGE>

Distributions  received from the Local Limited Partnerships are accounted for as
a  reduction  of  the  investment  balance.  Distributions  received  after  the
investment  has reached  zero are  recognized  as income.  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.

Income Taxes

No provision for income taxes has been  recorded in the financial  statements as
any  liability  and/or  benefits  for income  taxes flows to the partners of the
Partnership and is their obligation and/or benefit.  For income tax purposes the
Partnership reports on a calendar year basis.

Certain Risks and Uncertainties

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low Income  Housing  Credit rules are extremely  complicated.  Noncompliance
with these rules  results in the loss of future Low Income  Housing  Credits and
the fractional  recapture of Low Income Housing  Credits  already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax  liability  due on the  person's  last  $25,000 of taxable
income.  The  Local  Limited  Partnerships  may be  unable  to sell the  Housing
Complexes  at a price  which,  would result in the  Partnership  realizing  cash
distributions or proceeds from the transaction. Accordingly, the Partnership may
be unable to distribute  any cash to its Limited  Partners.  Low Income  Housing
Credits may be the only benefit from an investment in the Partnership.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income Housing  Credits,  a fractional  recapture of prior Low Income
Housing  Credits,  and a loss of the  Partnership's  investment  in the  Housing
Complex would occur. The Partnership is a limited partner or non-managing member
of each Local Limited Partnership.  Accordingly,  the Partnership will have very
limited rights with respect to management of the Local Limited Partnerships. The
Partnership  will  rely  totally  on the Local  General  Partners.  Neither  the
Partnership's  investments in Local Limited Partnerships,  nor the Local Limited
Partnerships'  investments in Housing Complexes, are 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 interests
in Local Limited Partnerships; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
Uninsured  casualties  could result in loss of property  and Low Income  Housing
Credits and recapture of Low Income Housing Credits  previously taken. The value
of real  estate  is  subject  to risks  from  fluctuating  economic  conditions,
including employment rates, inflation,  tax, environmental,  land use and zoning
policies, supply and demand of similar properties,  and neighborhood conditions,
among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge  the tax  treatment  of tax items.  The  amount of Low Income  Housing
Credits and tax losses allocable to the Limited Partners could be reduced if the
IRS were  successful  in such a  challenge.  The  alternative  minimum tax could
reduce tax benefits from an investment in the  Partnership.  Changes in tax laws
could also impact the tax benefits from an investment in the Partnership  and/or
the value of the Housing Complexes.

No trading  market  for the Units  exists or is  expected  to  develop.  Limited
Partners  may be unable to sell  their  Units  except at a  discount  and should
consider their Units to be a long-term  investment.  Individual Limited Partners
will have no recourse if they disagree with actions  authorized by a vote of the
majority of Limited Partners.


                                       13
<PAGE>

Substantially  all of the Low Income Housing Credits  anticipated to be realized
from the Local Limited Partnerships have been realized. The Partnership does not
anticipate  being  allocated a significant  amount of Low Income Housing Credits
from the Local  Limited  Partnerships  in the  future.  Until the Local  Limited
Partnerships  have completed the 15 year Low Income  Housing  Credit  compliance
period risks exist for potential recapture of prior low Income Housing Credits.

To date, 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  the  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.

Anticipated  future and  existing  cash  resources  are not  sufficient  to meet
existing   contractual  cash  obligations.   Substantially  all  of  the  future
contractual  cash  obligations  of the  Partnership  are  payable to the General
Partner.  Though a substantial portion of the amounts contractually obligated to
the  General  Partner  are  contractually  currently  payable,  the  Partnership
anticipates  that the  General  Partner  will not  require  the payment of these
contractual  obligations  until  capital  reserves  are in excess of the  future
foreseeable  working  capital  requirements  of the  Partnership.  However,  the
Partnership is  contractually  required to pay these  obligations to the General
Partner on a current basis. The Partnership  would be adversely  affected should
the General Partner demand current payment of these contractual  obligations and
or suspend services for this or any other reason.

Financial Condition

The  Partnership's  assets at March 31, 2004  consisted  of $311,000 in cash and
aggregate  investments in the eighteen Local Limited Partnerships of $3,525,000.
Liabilities  at March 31, 2004  primarily  consisted  of  $1,257,000  of accrued
annual management fees and advances due to the General Partner.

Results of Operations

Year  Ended  March  31,  2004  Compared  to  Year  Ended  March  31,  2003.  The
Partnership's  net loss for the year  ended  March  31,  2004 was  $(2,238,000),
reflecting  an  increase  of $  (1,181,000)  from the net  loss of  $(1,057,000)
experienced  for the year ended  March 31,  2003.  The  increase  in net loss is
principally  due to an impairment  expense of $(1,607,000)  from  investments in
limited partnerships for the year ended March 31, 2004, and a decrease of $3,000
interest  income offset by a decrease of $429,000 in loss from  operations.  The
decrease  in  equity  in  losses  of  limited  partnerships  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 March 31,
2004.  Since the  Partnership's  liability  with respect to its  investments  is
limited, losses in excess of investment are not recognized.

Year  Ended  March  31,  2003  Compared  to  Year  Ended  March  31,  2002.  The
Partnership's  net loss for the year  ended  March  31,  2003 was  $(1,057,000),
reflecting an increase of $12,000 from the net loss of $(1,045,000)  experienced
for the  year  ended  March  31,  2002.  The  increase  in net loss is due to an
increase in loss from  operations  from  $(246,000) for the year ended March 31,
2002 to $(257,000)  for the year ended March 31, 2003. The increase in loss from
operations is due to a decrease in total income of $12,000, from $23,000 for the
year ended March 31, 2002 to $11,000 for the year ended March 31, 2003.

Liquidity and Capital Resources

Year Ended March 31, 2004  Compared to Year Ended March 31, 2003.  Net cash used
during the year ended March 31, 2003 was  $(61,000),  reflecting a net change of
$19,000  compared  to net  cash  used  for the  year  ended  March  31,  2002 of
$(42,000).  The  change  was due  primarily  to a  decrease  of  $16,000 in cash
provided by  distributions  form limited  partnerships,  in  addition,  interest
income decreased by $3,000.


                                       14
<PAGE>

Year Ended March 31, 2003  Compared to Year Ended March 31, 2002.  Net cash used
during the year ended March 31, 2003 was  $(42,000),  reflecting a net change of
$17,000  compared  to net  cash  used  for the  year  ended  March  31,  2002 of
$(25,000).  The change was due  primarily to an increase of $25,000 in cash used
in operating  activities.  The increase in cash used in operating activities was
offset by an increase in  distributions  by $7,000 compared with the amount paid
in the prior year.

During the years ended March 31, 2004, 2003 and 2002,  accrued  payables,  which
consist  primarily of related party  management fees due to the General Partner,
increased by $130,000, $132,000, and $146,000, respectively. 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 March 31, 2004, to be  sufficient  to meet all  currently  foreseeable
future cash  requirements.  This  excludes  amounts  owed to  Associates  by the
Partnership disclosed below.

Future Contractual Cash Obligations

The following table  summarizes our future  contractual  cash  obligations as of
March 31, 2004:
<TABLE>
<CAPTION>

                                   2005       2006        2007        2008        2009      Thereafter     Total

                                 ---------  ----------  ----------  ----------  ----------  -----------   ---------

<S>                            <C>                    <C>         <C>         <C>         <C>           <C>
Asset Management Fees (1)      $ 1,437,204$   181,385 $   181,385 $   181,385 $   181,385 $  7,436,785  $ 9,599,529
Capital Contributions
   Payable to Lower Tier
   Partnerships                                     -           -           -           -
                                 ---------  ----------  ----------  ----------  ----------  -----------   ---------
Total contractual cash
obligations                    $ 1,437,204$   181,385 $   181,385 $   181,385 $   181,385 $  7,436,785  $ 9,599,529
                                 =========  ==========  ==========  ==========  ==========  ===========   =========
</TABLE>

(1)  Asset  Management  Fees  are  payable  annually  until  termination  of the
     Partnership, which is to occur no later than 2050. The estimate of the fees
     payable included herein assumes the retention of the Partnership's interest
     in all Housing Complexes until 2050. Amounts due to the General Partners as
     of March 31,  2004 have  been  included  in the 2005  column.  The  General
     Partner does not anticipate that these fees will be paid until such time as
     capital  reserves are in excess of the future  foreseeable  working capital
     requirements of the Partnership.

For  additional  information  on our Asset  Management  Fees,  see Note 2 to the
financial statements included elsewhere herein.

Off-Balance Sheet Arrangements

The Partnership has no off-balance sheet arrangements.

Exit Strategy

The IRS  compliance  period for  low-income  housing  tax credit  properties  is
generally  15 years from  occupancy  following  construction  or  rehabilitation
completion.  WNC was one of the first in the industry to offer investments using
the tax credit.  Now these very first programs are completing  their  compliance
period.

With that in mind, we are continuing our review of the  Partnership's  holdings,
with special  emphasis on the more mature  properties  including those that have
satisfied the IRS compliance requirements. Our review will consider many factors
including  extended  use  requirements  on the  property  (such as those  due to
mortgage  restrictions  or state  compliance  agreements),  the condition of the
property,  and the tax consequences to the Limited Partners from the sale of the
property.


                                       15
<PAGE>

Upon identifying  those  properties with the highest  potential for a successful
sale, refinancing or syndication, we expect to proceed with efforts to liquidate
those  properties.  Our  objective is to maximize the Limited  Partners'  return
wherever  possible  and,  ultimately,  to wind down  those  funds that no longer
provide  tax  benefits  to  Limited  Partners.  To  date  no  properties  in the
Partnership have been selected.

Impact of New Accounting Pronouncements


New Accounting Pronouncements
-----------------------------

In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of  Variable  Interest  Entities."  FIN 46  provides  guidance on when a company
should include the assets,  liabilities,  and activities of a variable  interest
entity  ("VIE")  in  its  financial  statements  and  when  it  should  disclose
information  about its relationship  with a VIE. A VIE is a legal structure used
to conduct activities or hold assets, which must be consolidated by a company if
it is the primary  beneficiary  because it absorbs the  majority of the entity's
expected losses, the majority of the expected returns, or both.

In  December  2003,  the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions.  The revision results in multiple  effective dates based
on the  nature  as well as the  creation  date of the VIE.  VIEs  created  after
January 31,  2003,  but prior to January 1, 2004,  may be  accounted  for either
based on the original interpretations or the revised  interpretations.  However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.

This  Interpretation  would require  consolidation by the Partnership of certain
Local Limited  Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the  Partnership  was  the  "Primary  Beneficiary".  Minority  interests  may be
recorded for the Local Limited  Partnerships'  ownership  share  attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required,   additional  financial  information   disclosures  of  Local  Limited
Partnerships  may be  required.  The  Partnership  has  assessed  the  potential
consolidation effects of the Interpretation and preliminarily concluded that the
adoption of the Interpretation  will not have a material impact on the financial
statements of the Partnership.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data



                                       16
<PAGE>




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To the Partners
WNC California Housing Tax Credits III, L.P.

     We have audited the  accompanying  balance sheet of WNC California  Housing
Tax Credits III, L.P. (a California Limited  Partnership) (the "Partnership") as
of March 31, 2004 and the related statements of operations, partners' equity and
cash  flows  for  the  year  then  ended.  These  financial  statements  are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these  financial  statements  based on our  audit.  A  significant
portion of the  financial  statements of the limited  partnerships  in which the
Partnership  is a limited  partner were audited by other  auditors whose reports
have been  furnished to us. As discussed in note 2 to the financial  statements,
the Partnership  accounts for its investments in limited  partnerships using the
equity  method.   The  portion  of  the  Partnership's   investment  in  limited
partnerships  audited  by other  auditors  represented  $3,525,413  of the total
assets of the  Partnership  at March 31, 2004 and $359,322 of the  Partnership's
equity in losses of limited  partnerships for the year ended March 31, 2004. Our
opinion,  insofar  as it  relates  to the  amounts  included  in  the  financial
statements for the limited  partnerships  which were audited by others, is based
solely on the reports of the other auditors.

     We  conducted  our audit in  accordance  with the  standards  of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audit and the reports of the other auditors  provide a reasonable  basis for our
opinion.

     In our opinion,  based on our audit and the reports of the other  auditors,
the  financial  statements  referred to above  present  fairly,  in all material
respects, the financial position of WNC California Housing Tax Credits III, L.P.
(a California Limited  Partnership) as of March 31, 2004, and the results of its
operations  and its cash  flows  for the year  then  ended  in  conformity  with
accounting principles generally accepted in the United States of America

     The  Partnership   currently  has  insufficient  working  capital  to  fund
obligations  to an  affiliate  of  the  General  Partner  for  asset  management
services.  As discussed in note 1 to the financial  statements,  the Partnership
would be adversely  affected  should the affiliate of the General Partner of the
Partnership,  WNC and  Associates,  Inc.,  demand  current  payment of  existing
contractual obligations and/or suspend services for this or any other reason.

                                      /s/Reznick Fedder & Silverman

Bethesda, Maryland
June 15, 2004


                                       17
<PAGE>






             Report of Independent Registered Public Accounting Firm


To the Partners
WNC California Housing Tax Credits III, L.P.


We have audited the  accompanying  balance sheet of WNC  California  Housing Tax
Credits III, L.P. (a California Limited  Partnership) (the  "Partnership") as of
March 31, 2003,  and the related  statements  of  operations,  partners'  equity
(deficit)  and cash flows for the years  ended  March 31,  2003 and 2002.  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.  A significant  portion of the  financial  statements of the limited
partnerships in which the Partnership is a limited partner were audited by other
auditors  whose reports have been furnished to us. As discussed in Note 2 to the
financial  statements,  the Partnership  accounts for its investments in limited
partnerships   using  the  equity  method.  The  portion  of  the  Partnership's
investment in limited  partnerships audited by other auditors represented 77% of
the total assets of the  Partnership  at March 31, 2003,  and 77% and 90% of the
Partnership's equity in losses of limited partnerships for the years ended March
31,  2003 and 2002,  respectively.  Our  opinion,  insofar  as it relates to the
amounts included in the financial  statements for the limited partnerships which
were audited by others, is based solely on the reports of the other auditors.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial statement presentation.  We believe that our audits and the reports of
the other auditors provide a reasonable basis for our opinion.

In our opinion,  based on our audits and the reports of the other auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of WNC  California  Housing Tax  Credits  III,  L.P. (A
California  Limited  Partnership)  as of March 31, 2003,  and the results of its
operations  and its cash flows for the years ended  March 31, 2003 and 2002,  in
conformity with accounting principles generally accepted in the United States of
America.




                                              /s/ BDO SEIDMAN, LLP

Costa Mesa, California
May 27, 2003






                                       18
<PAGE>


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

                                 BALANCE SHEETS




<TABLE>
<CAPTION>
                                                                                  March 31
                                                                        ------------------------------

                                                                            2004             2003
                                                                        -------------    -------------
<S>                                                                   <C>              <C>
 ASSETS

 Cash                                                                 $      310,717   $      371,426
 Investments in limited partnerships, net
   (Notes 2 and 3)                                                         3,525,413        5,572,016
                                                                        -------------    -------------

                                                                      $    3,836,130   $    5,943,442
                                                                        =============    =============

 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 Liabilities:
    Accrued fees and expenses due to General Partner
       and affiliates (Note 3)                                        $    1,256,656   $    1,126,324
                                                                        -------------    -------------

 Commitments and contingencies

 Partners' equity (deficit):
    General partner                                                         (144,336)        (121,960)
    Limited partners (30,000 units authorized; 18,000 units
       issued and outstanding)                                             2,723,810        4,939,078
                                                                        -------------    -------------

          Total partners' equity                                           2,579,474        4,817,118
                                                                        -------------    -------------

                                                                      $    3,836,130   $    5,943,442
                                                                        =============    =============
</TABLE>

                 See accompanying notes to financial statements
                                       19
<PAGE>


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

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>





                                                                     For the Years Ended
                                                                           March 31
                                                      ---------------------------------------------------

                                                          2004              2003               2002
                                                      --------------    -------------      --------------

<S>                                                 <C>               <C>                <C>
Interest income                                     $         1,658   $        4,474     $        11,282
Other income                                                  4,967            6,325              11,444
                                                      --------------    -------------      --------------

   Total income                                               6,625           10,799              22,726
                                                      --------------    -------------      --------------

Operating expenses:
   Amortization (Notes 2 and 3)                              47,484           59,379              58,868
   Asset management fees (Note 3)                           181,385          181,385             181,385
    Impairment expense (Note 2)                           1,607,047                -                   -
   Other                                                     24,931           27,384              28,462
                                                      --------------    -------------      --------------

    Total operating expenses                              1,860,847          268,148             268,715
                                                      --------------    -------------      --------------

Loss from operations                                     (1,854,222)        (257,349)           (245,989)

Equity in losses of limited
  partnerships (Note 2)                                    (383,422)        (799,326)           (798,807)
                                                      --------------    -------------      --------------

Net loss                                            $    (2,237,644) $    (1,056,675)    $    (1,044,796)
                                                      ==============    =============      ==============

Net loss allocated to:
   General partner                                  $       (22,376) $       (10,567)    $       (10,448)
                                                      ==============    =============      ==============

   Limited partners                                 $    (2,215,268) $    (1,046,108)    $    (1,034,348)
                                                      ==============    =============      ==============

Net loss per limited partner unit                   $       (123.07) $        (58.12)    $        (57.46)
                                                      ==============    =============      ==============

Outstanding weighted limited partner units                   18,000           18,000              18,000
                                                      ==============    =============      ==============
</TABLE>

                 See accompanying notes to financial statements
                                       20
<PAGE>


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

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                For The Years Ended March 31, 2004, 2003 and 2002
<TABLE>
<CAPTION>



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

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

Net loss                                                           (10,448)        (1,034,348)         (1,044,796)
                                                            ---------------    ---------------     ---------------

Partners' equity (deficit) at March 31, 2002                      (111,393)         5,985,186           5,873,793

Net loss                                                           (10,567)        (1,046,108)         (1,056,675)
                                                            ---------------    ---------------     ---------------

Partners' equity (deficit) at March 31, 2003                      (121,960)         4,939,078           4,817,118

Net loss                                                           (22,376)        (2,215,268)         (2,237,644)
                                                            ---------------    ---------------     ---------------

Partners' equity (deficit) at March 31, 2004              $       (144,336) $       2,723,810    $      2,579,474
                                                            ===============    ===============     ===============
</TABLE>

                 See accompanying notes to financial statements
                                       21
<PAGE>


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

                            STATEMENTS OF CASH FLOWS




<TABLE>
<CAPTION>
                                                                                  For the Years Ended
                                                                                        March 31
                                                                     -----------------------------------------------

                                                                        2004            2003              2002
                                                                     ------------   --------------    --------------
<S>                                                                <C>            <C>              <C>
Cash flows from operating activities:
   Net loss                                                        $  (2,237,644) $    (1,056,675) $     (1,044,796)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     Amortization                                                         47,484           59,379            58,868
     Equity in losses of limited
       partnerships                                                      383,422          799,326           798,807
     Impairment of local limited partnerships                          1,607,047                -                 -
     Change in accrued fees and
       expenses due to General
       Partner and affiliates                                            130,332          131,614           145,546
                                                                     ------------   --------------    --------------

Net cash used in
  operating activities                                                   (69,359)         (66,356)          (41,575)
                                                                     ------------   --------------    --------------

Cash flows from investing activities:
   Distributions from limited
     partnerships                                                          8,650           24,446            17,048
                                                                     ------------   --------------    --------------

Net decrease in cash                                                     (60,709)         (41,910)          (24,527)

Cash, beginning of year                                                  371,426          413,336           437,863
                                                                     ------------   --------------    --------------

Cash, end of year                                                  $     310,717  $       371,426   $       413,336
                                                                     ============   ==============    ==============

SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

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

                 See accompanying notes to financial statements
                                       22
<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002




NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------

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  Complexes") that are eligible for low income housing tax 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. ("Associates") is the general partner of WNC
Tax Credit  Partners  III,  L.P. The chairman and  president of  Associates  own
substantially  all of the outstanding  stock of Associates.  The business of the
Partnership is conducted  primarily through  Associates,  as the Partnership and
General Partner have no employees of their own.

The Partnership  shall continue in full force and effect until December 31, 2050
unless  terminated  prior to that date pursuant to the partnership  agreement or
law.

The financial  statements  include only activity relating to the business of the
Partnership,  and do not give  effect to any assets that the  partners  may have
outside of their interests in the Partnership, or to any obligations,  including
income taxes, of the partners.

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  (as
described in Note 3) 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.


                                       23
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2004, 2003 and 2002



NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------------------------

Risks and Uncertainties
-----------------------

An investment in the  Partnership  and the  Partnership's  investments  in Local
Limited  Partnerships  and their Housing  Complexes are subject to risks.  These
risks may impact the tax benefits of an investment in the  Partnership,  and the
amount of proceeds  available for distribution to the Limited Partners,  if any,
on liquidation of the Partnership's investments. Some of those risks include the
following:

The Low Income  Housing  Credit rules are extremely  complicated.  Noncompliance
with these rules  results in the loss of future Low Income  Housing  Credits and
the fractional  recapture of Low Income Housing  Credits  already taken. In most
cases the annual amount of Low Income Housing Credits that an individual can use
is limited to the tax  liability  due on the  person's  last  $25,000 of taxable
income.  The  Local  Limited  Partnerships  may be  unable  to sell the  Housing
Complexes  at a price  which  would  result in the  Partnership  realizing  cash
distributions or proceeds from the transaction. Accordingly, the Partnership may
be unable to distribute  any cash to its Limited  Partners.  Low Income  Housing
Credits may be the only benefit from an investment in the Partnership.

The Partnership has invested in a limited number of Local Limited  Partnerships.
Such  limited  diversity  means that the  results of  operation  of each  single
Housing  Complex  will have a greater  impact on the  Partnership.  With limited
diversity,   poor   performance   of  one  Housing   Complex  could  impair  the
Partnership's ability to satisfy its investment objectives. Each Housing Complex
is subject to mortgage  indebtedness.  If a Local Limited  Partnership failed to
pay its  mortgage,  it  could  lose  its  Housing  Complex  in  foreclosure.  If
foreclosure  were to occur during the first 15 years,  the loss of any remaining
future Low Income Housing  Credits,  a fractional  recapture of prior Low Income
Housing  Credits,  and a loss of the  Partnership's  investment  in the  Housing
Complex would occur. The Partnership is a limited partner or non-managing member
of each Local Limited Partnership.  Accordingly,  the Partnership will have very
limited rights with respect to management of the Local Limited Partnerships. The
Partnership  will  rely  totally  on the Local  General  Partners.  Neither  the
Partnership's  investments in Local Limited Partnerships,  nor the Local Limited
Partnerships'  investments in Housing Complexes, are 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 interests
in Local Limited Partnerships; limitations on removal of Local General Partners;
limitations on subsidy programs; and possible changes in applicable regulations.
Uninsured  casualties  could result in loss of property  and Low Income  Housing
Credits and recapture of Low Income Housing Credits  previously taken. The value
of real  estate  is  subject  to risks  from  fluctuating  economic  conditions,
including employment rates, inflation,  tax, environmental,  land use and zoning
policies, supply and demand of similar properties,  and neighborhood conditions,
among others.

The  ability of Limited  Partners to claim tax losses  from the  Partnership  is
limited.  The IRS may audit the  Partnership or a Local Limited  Partnership and
challenge  the tax  treatment  of tax items.  The  amount of Low Income  Housing
Credits and tax losses allocable to the Limited Partners could be reduced if the
IRS were  successful  in such a  challenge.  The  alternative  minimum tax could
reduce tax benefits from an investment in the  Partnership.  Changes in tax laws
could also impact the tax benefits from an investment in the Partnership  and/or
the value of the Housing Complexes.

Substantially  all of the Low Income Housing Credits  anticipated to be realized
from the Local Limited Partnerships have been realized. The Partnership does not
anticipate  being  allocated a significant  amount of Low Income Housing Credits
from the Local  Limited  Partnerships  in the  future.  Until the Local  Limited
Partnerships  have completed the 15 year Low Income  Housing  Credit  compliance
period risks exist for potential recapture of prior low Income Housing Credits.


                                       24
<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------------------------

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient to meet existing  contractual cash obligations.  Substantially all of
the future  contractual  cash  obligations of the Partnership are payable to the
General  Partner.  Though a  substantial  portion of the  amounts  contractually
obligated  to the  General  Partner are  contractually  currently  payable,  the
Partnership anticipates that the General Partner will not require the payment of
these contractual obligations until capital reserves are in excess of the future
foreseeable  working  capital  requirements  of the  Partnership.  However,  the
Partnership is  contractually  required to pay these  obligations to the General
Partner on a current basis. The Partnership  would be adversely  affected should
the General Partner demand current payment of these contractual  obligations and
or suspend services for this or any other reason.

No trading  market  for the Units  exists or is  expected  to  develop.  Limited
Partners  may be unable to sell  their  Units  except at a  discount  and should
consider their Units to be a long-term  investment.  Individual Limited Partners
will have no recourse if they disagree with actions  authorized by a vote of the
majority of Limited Partners.

Exit Strategy
-------------

The IRS  compliance  period for  low-income  housing  tax credit  properties  is
generally  15 years from  occupancy  following  construction  or  rehabilitation
completion.  WNC was one of the first in the industry to offer investments using
the tax credit.  Now these very first programs are completing  their  compliance
period.

With that in mind,  the  Partnership  is continuing to review the  Partnership's
holdings,  with special emphasis on the more mature  properties  including those
that have satisfied the IRS compliance  requirements.  The Partnership's  review
will consider many factors  including  extended use requirements on the property
(such as those due to mortgage restrictions or state compliance agreements), the
condition of the property, and the tax consequences to the Limited Partners from
the sale of the property.

Upon identifying  those  properties with the highest  potential for a successful
sale,  refinancing  or  syndication,  the  Partnership  expects to proceed  with
efforts  to  liquidate  those  properties.  The  Partnership's  objective  is to
maximize the Limited Partners' return wherever possible and, ultimately, to wind
down those funds that no longer  provide tax  benefits to Limited  Partners.  To
date no properties in the Partnership have been selected.

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  Partnerships'  results of operations
and for any  contributions  made and  distributions  received.  The  Partnership
reviews the  carrying  amount of an  individual  investment  in a Local  Limited
Partnership for possible  impairment whenever events or changes in circumstances
indicate that the carrying  amount of such  investment  may not be  recoverable.
Recoverability  of such investment is measured by the estimated value derived by
management,  generally  consisting  of  the  product  of  the  remaining  future
Low-Income  Housing Credits estimated to be allocable to the Partnership and the
estimated  residual value to the Partnership.  If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited  Partnership.  The  accounting  policies of the Local Limited
Partnerships,  generally,  are  expected  to be  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 Notes 2 and 3).

Equity in losses of limited  partnerships for each year ended March 31 have been
recorded by the Partnership based on nine months of reported results provided by
the  Local Limited Partnerships for each  year ended  December 31  and on  three



                                       25
<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
 -------------------------------------------------------------------------------

months of results  estimated  by  management  of the  Partnership.  Management's
estimate for th three-month  period is based on either actual unaudited  results
reported  by the  Local  Limited  Partn  erships  or  historical  trends  in the
operations  of the Local Limited  Partnerships.  Equity in losses from the Local
Limited  Partnerships  allocated to the  Partnership  are not  recognized to the
extent that the investment  balance would be adjusted below zero. As soon as the
investment balan ce reaches zero, amortization of the related costs of acquiring
the investment are  accelerated to the extent of losses  available (see Note 3).
If the Local  Limited  Partnerships  report  net  income in  future  years,  the
Partnership will resume applying the e quity 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 from the Local Limited Partnerships are accounted for as
a  reduction  of  the  investment  balance.  Distributions  received  after  the
investment balance has reached zero are recognized as income.

Use of Estimates
----------------

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America 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.

Concentration of Credit Risk
----------------------------

At March 31,  2004,  the  Partnership  maintained  a cash  balance  at a certain
financial  institution in excess of the maximum federally  insured amounts.  The
Partnership believes that it is not exposed to any significant risk on cash.

Net Loss Per Limited Partner Unit
---------------------------------

Net loss per  limited  partner  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 loss per unit is not required.

Income Taxes
------------

No provision  for income taxes has been recorded in the  accompanying  financial
statements  as any  liability  and/or  benefits  for income  taxes  flows to the
partners of the Partnership and is their obligation  and/or benefit.  For income
tax purposes the Partnership reports on a calendar year basis.

New Accounting Pronouncements
-----------------------------

In January 2003, the FASB issued Interpretation No. 46 ("FIN46"), "Consolidation
of  Variable  Interest  Entities,"  FIN 46  provides  guidance on when a company
should include the assets,  liabilities,  and activities of a variable  interest
entity  ("VIE")  in  its  financial  statements  and  when  it  should  disclose
information  about its relationship  with a VIE. A VIE is a legal structure used
to conduct  activities or hold assets,  which must be  consolidated by a company


                                       26
<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002



NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
-------------------------------------------------------------------------------

if it is the primary beneficiary because it absorbs the majority of the entity's
expected losses, the majority of the expected returns, or both.

In  December  2003,  the FASB issued a revision of FIN 46 ("FIN 46R") to clarify
some of its provisions.  The revision results in multiple  effective dates based
on the  nature  as well as the  creation  date of the VIE.  VIEs  created  after
January 31,  2003,  but prior to January 1, 2004,  may be  accounted  for either
based on the original interpretations or the revised  interpretations.  However,
all VIEs must be accounted for under the revised interpretations as of March 31,
2004, when FIN 46R is effective for the Partnership.

This  Interpretation  would require  consolidation by the Partnership of certain
Local Limited  Partnerships' assets and liabilities and results of operations if
the Partnership determined that the Local Limited Partnership was a VIE and that
the  Partnership  was  the  "Primary  Beneficiary".  Minority  interests  may be
recorded for the Local Limited  Partnerships'  ownership  share  attributable to
other Limited Partners. Where consolidation of Local Limited Partnerships is not
required,   additional  financial  information   disclosures  of  Local  Limited
Partnerships  may be  required.  The  Partnership  has  assessed  the  potential
consolidation effects of the Interpretation and preliminarily concluded that the
adoption of the Interpretation  will not have a material impact on the financial
statements of the Partnerships.

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 Local
General  Partners  of the  Local  Limited  Partnerships  manage  the  day-to-day
operations  of the entities.  Significant  Local  Limited  Partnership  business
decisions require the approval of 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 Local Limited Partnerships.

The  Partnership's  investments  in Local Limited  Partnerships  as shown in the
balance  sheets  at March  31,  2004 and 2003  are  approximately  $100,000  and
$1,138,000, respectively, greater than the Partnership's equity at the preceding
December  31 as shown in the  Local  Limited  Partnerships'  combined  financial
statements  presented  below.  This  difference  is primarily  due to unrecorded
losses,  as discussed below,  acquisition,  selection and other costs related to
the  acquisition  of  the  investments   which  have  been  capitalized  in  the
Partnership's  investment account,  along with impairment losses recorded in the
Partnership's  investment  account.  The Partnership's  investment is also lower
than  the  Partnership's  equity  as shown in the  Local  Limited  Partnerships'
combined  financial  statements  due to the  estimated  losses  recorded  by the
Partnership for the three month period ended March 31.

A loss in value from a Local Limited  Partnership other than a temporary decline
is recorded as an  impairment  loss.  Impairment  is measured by  comparing  the
investment  carrying  amount to the sum of the total amount of the remaining tax
credits  allocated  to  the  fund  and  the  estimated  residual  value  of  the
investment.   Accordingly,  the  Partnership  recorded  an  impairment  loss  of
$1,607,047, during the year ended March 31, 2004.


                                       27
<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
 -------------------------------------------------------

Distributions  from the Local Limited  Partners are accounted for as a reduction
of the  investment  balance.  Distributions  received  after the  investment has
reached zero are recognized as income.

At March 31, 2004 and 2003,  the  investment  accounts in certain  Local Limited
Partnerships  have  reached  a zero  balance.  Consequently,  a  portion  of the
Partnership's  estimate  of its share of losses  for the years  ended  March 31,
2004, 2003 and 2002 amounting to approximately  $724,000,  $173,000 and $46,000,
respectively,  have not been  recognized.  As of March 31, 2004,  the  aggregate
share of net losses not recognized by the Partnership amounted to $1,359,000.

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

                                                                                 For the Years
                                                                                Ended March 31
                                                              ----------------------------------------------------

                                                                   2004               2003              2002
                                                              ---------------    ---------------    --------------

<S>                                                         <C>                <C>                <C>
Investments per balance sheet, beginning of period          $      5,572,016   $      6,455,167   $     7,329,890
Distributions received from limited partnerships                      (8,650)           (24,446)          (17,048)
Equity in losses of limited partnerships                            (383,422)          (799,326)         (798,807)
Impairment of local limited partnerships                          (1,607,047)                 -                 -
Amortization of paid acquisition fees and costs                      (47,484)           (59,379)          (58,868)
                                                              ---------------    ---------------    --------------

Investments per balance sheet, end of period                $      3,525,413   $      5,572,016   $     6,455,167
                                                              ===============    ===============    ==============
</TABLE>


                                       28
<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------

The financial  information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest  subsidies are generally  netted against
interest expense.  Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:

                        COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                    2003                2002
                                                                               ---------------     ---------------
<S>                                                                          <C>                 <C>
  ASSETS

  Buildings and improvements, net of accumulated depreciation as of
   December 31, 2003 and 2002 of  $10,959,000  and $9,862,000,
   respectively.                                                             $     25,136,000    $     26,288,000
  Land                                                                              2,213,000           2,380,000
  Other assets                                                                      2,541,000           2,307,000
                                                                               ---------------     ---------------

                                                                             $    29,890 ,000    $     30,975,000
                                                                               ===============     ===============
LIABILITIES

Mortgage loans payable                                                       $     23,714,000    $     23,193,000
Due to related parties                                                                451,000           1,260,000
Other liabilities                                                                   1,613,000           1,436,000
                                                                               ---------------     ---------------

                                                                                   25,778,000          25,889,000
                                                                               ---------------     ---------------
PARTNERS' EQUITY

WNC California Housing Tax Credits III, L.P.                                        3,425,000           4,434,000
Other partners                                                                        688,000             652,000
                                                                               ---------------     ---------------

                                                                                    4,113,000           5,086,000
                                                                               ---------------     ---------------

                                                                             $     29,890,000    $     30,975,000
                                                                               ===============     ===============
</TABLE>

                                       29

<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                 2003               2002                2001
                                                            ---------------    ---------------     ---------------

<S>                                                       <C>                <C>                 <C>
Revenues                                                  $      3,570,000   $      3,307,000    $      3,140,000
                                                            ---------------    ---------------     ---------------

Expenses:
   Operating expenses                                            2,597,000          2,218,000           2,026,000
   Interest expense                                                872,000            941,000             857,000
   Depreciation and amortization                                 1,110,000          1,110,000           1,133,000
                                                            ---------------    ---------------     ---------------

         Total expenses                                          4,579,000          4,269,000           4,016,000
                                                            ---------------    ---------------     ---------------

Net loss                                                  $     (1,009,000) $        (962,000)   $       (876,000)
                                                            ===============    ===============     ===============

Net loss allocable to the Partnership                     $     (1,001,000) $        (952,000)   $       (845,000)
                                                            ===============    ===============     ===============

Net loss recorded by the Partnership                      $       (383,000) $        (799,000)   $       (799,000)
                                                            ===============    ===============     ===============
</TABLE>

Certain Local Limited  Partnerships  have incurred  operating losses and/or 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
the  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
-----------------------------------

Under the terms of the  Partnership  Agreement,  the Partnership is obligated to
the General Partner or its affiliates for the following items:

          Acquisition  fees of up to 9% of the gross  proceeds  from the sale of
          Units as  compensation  for services  rendered in connection  with the
          acquisition of Local Limited  Partnerships.  At the end of all periods
          presented,  the Partnership  incurred  acquisition fees of $1,620,000.
          Accumulated  amortization of these  capitalized costs was $867,611 and
          $740,914  as  of  March  31,  2004  and  2003,  respectively.  Of  the
          accumulated  amortization  recorded on the balance  sheet at March 31,
          2004,  $233,539,  $149,373  and  $72,995 of the  related  expense  was
          reflected as equity in losses of limited partnerships during the years
          ended  March 31,  2004,  2003 and 2002,  respectively,  to reduce  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.

          Reimbursement of costs incurred by the General Partner or an affiliate
          in connection  with the  acquisition  of Local  Limited  Partnerships.
          These reimbursements have not exceeded 1.5% of the gross proceeds.  As
          of  the  end  of  all  periods  presented,  the  Partnership  incurred
          acquisition costs of $194,019, which have been included in investments
          in limited  partnerships.  Accumulated  amortization  was  $91,746 and
          $76,713  as  of  March  31,  2004  and  2003,  respectively.   Of  the
          accumulated  amortization  recorded on the balance  sheet at March 31,
          2004, $27,978, $17,898 and $3,985 of the related expense was reflected
          as equity in losses of limited  partnerships  during  the years  ended
          March 31, 2004, 2003 and 2002, respectively,  to reduce the respective
          net  acquisition  cost  component  of  investments  in  local  limited
          partnerships to zero for those Local Limited  Partnerships which would
          otherwise be below a zero balance.


                                       30

<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


NOTE 3 - RELATED PARTY TRANSACTIONS, continued
----------------------------------------------

          An annual  management fee equal to 0.5% of the invested  assets of the
          Local  Limited  Partnerships,  including the  Partnership's  allocable
          share of the  mortgages  for the life of the  Partnership.  Management
          fees of $181,385, were incurred during the years ended March 31, 2004,
          2003 and 2002, of which, $50,000, $50,000 and $37,500 were paid during
          the years ended March 31, 2004, 2003 and 2002, respectively.

          A subordinated  disposition  fee in an amount equal to 1% of the sales
          price of real estate sold.  Payment of this fee to the General Partner
          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.  No such fee was
          incurred for the three year period ended March 31, 2004.
<TABLE>
<CAPTION>

The accrued fees and expenses due to General Partner and affiliates consisted of the following at:

                                                                            March 31
                                                                 --------------------------------

                                                                     2004              2003
                                                                 --------------    --------------

<S>                                                            <C>               <C>
Reimbursement for expenses paid by the General
   Partner or its affiliate                                    $           837   $         1,890

Accrued asset management fees                                        1,255,819         1,124,434
                                                                 --------------    --------------

                                                               $     1,256,656   $     1,126,324
                                                                 ==============    ==============
</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 the future foreseeable
working capital requirements of the Partnership.

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------
<TABLE>
<CAPTION>
The following is a summary of the quarterly operations for the years ended March 31:

                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------

               2004
               ----

<S>                                   <C>                 <C>                <C>                 <C>
Income                                $          2,000    $          2,000   $          1,000    $          2,000

Operating expenses                             (65,000)            (74,000)           (64,000)         (1,659,000)

Equity in losses of limited
     partnerships                             (140,000)           (215,000)          (126,000)             98,000

Net loss                                      (203,000)           (287,000)          (189,000)         (1,559,000)

Net Loss available to limited
     partners                                 (201,000)           (284,000)          (187,000)         (1,543,000)

Net Loss per limited partner unit                  (11)                (16)               (10)                (86)
</TABLE>



                                       31
<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2004, 2003 and 2002


NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued
---------------------------------------------------------------
<TABLE>
<CAPTION>

                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------

               2003
               ----

<S>                                   <C>                 <C>                <C>                 <C>
Income                                $          2,000    $          3,000   $          1,000    $          5,000

Operating expenses                             (69,000)            (72,000)           (64,000)            (64,000)

Equity in losses of limited
     partnerships                             (127,000)           (126,000)          (125,000)           (421,000)

Net loss                                      (194,000)           (195,000)          (188,000)           (480,000)

Net Loss available to limited
     partners                                 (192,000)           (192,000)          (186,000)           (476,000)

Net Loss per limited partner unit                  (11)                (11)               (10)                (26)
</TABLE>


                                       32
<PAGE>




<TABLE>
<CAPTION>

Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
          Financial Disclosure

NOT APPLICABLE

Item 9a.  Controls and Procedures

As of the end of the period covered by this report,  the  Partnership's  General
Partner, under the supervision and with the participation of the Chief Executive
Officer and Chief Financial  Officer of Associates  carried out an evaluation of
the effectiveness of the Fund's "disclosure  controls and procedures" as defined
in  Securities  Exchange  Act of 1934  Rule  13a-15  and  15d-15.  Based on that
evaluation,  the Chief Executive  Officer and Principal  Financial  Officer have
concluded  that  as of  the  end of the  period  covered  by  this  report,  the
Partnership's  disclosure controls and procedures were adequate and effective in
timely  alerting  them  to  material  information  relating  to the  Partnership
required to be included in the Partnership's periodic SEC filings.

Changes  in  internal  controls.  There  were no  changes  in the  Partnership's
internal control over financial reporting that occurred during the quarter ended
March 31, 2004 that materially affected,  or are reasonably likely to materially
affect, the Partnership's internal control over financial reporting.

PART III.

Item 10. Directors and Executive Officers of the Registrant

(a)   Identification of Directors, (b) Identification of Executive Officers, (c)
      --------------------------------------------------------------------------
      Identification of Certain Significant Employees, (d) Family Relationships,
      --------------------------------------------------------------------------
      and (e) Business Experience
      ---------------------------

The  Partnership has no directors,  executive  officers or employees of its own.
The following biographical information is presented for the directors, executive
officers  and   significant   employees  of  Associates,   which  has  principal
responsibility for the Partnership's affairs.

Associates is a California corporation which was organized in 1971. Its officers
and significant employees are:
<S>                                   <C>
Wilfred N. Cooper, Sr.                Chairman of the Board
Wilfred N. Cooper, Jr.                President and Chief Executive Officer
David N. Shafer, Esq.                 Executive Vice President and Director of Asset Management
Sylvester P. Garban                   Senior Vice President - Institutional Investments
Thomas J. Riha, CPA                   Senior Vice President - Chief Financial Officer
David C. Turek                        Senior Vice President - Originations
Michael J. Gaber                      Senior Vice President - Acquisitions
Diemmy T. Tran                        Vice President - Portfolio Management
</TABLE>

In addition to Wilfred N. Cooper,  Sr., the directors of Associates  are Wilfred
N. Cooper, Jr., David N. Shafer, and Kay L. Cooper. The principal shareholder of
Associates is a trust established by Wilfred N. Cooper, Sr. and Kay L. Cooper.

Wilfred N.  Cooper,  Sr.,  age 73, is the founder  and  Chairman of the Board of
Directors of Associates,  a Director of WNC Capital  Corporation,  and a general
partner in some of the  partnerships  previously  sponsored by  Associates.  Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously,  during 1970 and 1971,  he was  founder and a principal  of Creative
Equity  Development  Corporation,  a predecessor of Associates,  and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International  Corporation,  last serving as its
manager  of  housing  and urban  developments  where he had  responsibility  for
factory-built  housing  evaluation and project  management in urban planning and
development.  He has testified before committees of the U.S. Senate and the U.S.
House  of  Representatives.  Mr.  Cooper  is a Life  Director  of  the  National
Association of Home Builders and a National  Trustee for NAHB's Political Action
Committee,  and the Chairman of NAHB's Multifamily  Council. He is a Director of
the National Housing Conference and a member of NHC's Executive Committee, and a
founder and Director of the California Housing Consortium.  He is the husband of
Kay Cooper and the father of Wilfred N. Cooper,  Jr. Mr. Cooper  graduated  from
Pomona College in 1956 with a Bachelor of Arts degree.


                                       33
<PAGE>

Wilfred  N.  Cooper,  Jr.,  age  41,  is  President,  Chief  Executive  Officer,
Secretary,  a Director and a member of the Acquisition  Committee of Associates.
He is President of, and a registered  principal  with, WNC Capital  Corporation,
and is a Director of WNC  Management,  Inc. He has been  involved in real estate
investment  and  acquisition  activities  since 1988 when he joined  Associates.
Previously, he served as a Government Affairs Assistant with Honda North America
in Washington,  D.C. Mr. Cooper is a member of the Editorial  Advisory Boards of
Affordable  Housing  Finance and LIHC Monthly  Report,  a Steering Member of the
----------------------------     --------------------
Housing Credit Group of the National Association of Home Builders,  an Alternate
Director  of  NAHB,  a  member  of the  Advisory  Board  of the New  York  State
Association for Affordable Housing and a member of the Urban Land Institute.  He
is the son of Wilfred Cooper,  Sr. and Kay Cooper. Mr. Cooper graduated from The
American University in 1985 with a Bachelor of Arts degree.

David N. Shafer,  age 51, is Executive Vice President,  a Director,  Director of
Asset Management and a member of the Acquisition Committee of Associates,  and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been active in the
real estate  industry  since 1984.  Before  joining  Associates  in 1990, he was
engaged as an attorney in the private  practice of law with a specialty  in real
estate and taxation.  Mr.  Shafer is a Director and President of the  California
Council of Affordable Housing, and a member of the State Bar of California.  Mr.
Shafer graduated from the University of California at Santa Barbara in 1978 with
a Bachelor of Arts  degree,  from the New  England  School of Law in 1983 with a
Juris Doctor degree cum laude and from the  University of San Diego in 1986 with
a Master of Law degree in Taxation.

Sylvester  P.  Garban,   age  58,  is  Senior  Vice  President  -  Institutional
Investments  of  Associates.  Mr.  Garban  has  been  involved  in  real  estate
investment  activities since 1978. Before joining  Associates in 1989, he served
as  Executive  Vice  President  with MRW,  Inc., a real estate  development  and
management  firm.  Mr.  Garban  is a  member  of  the  National  Association  of
Affordable Housing Lenders and the Financial Planning Association.  He graduated
from  Michigan  State  University  in 1967 with a Bachelor of Science  degree in
Business Administration.

Thomas J. Riha, age 48, is Senior Vice President - Chief Financial Officer and a
member of the Acquisition Committee of Associates and President, Treasurer and a
Director of WNC Management, Inc. He has been involved in real estate acquisition
and investment  activities  since 1979.  Before joining  Associates in 1994, Mr.
Riha was  employed  by Trust  Realty  Advisor,  a real  estate  acquisition  and
management  company,  last  serving  as Vice  President  -  Operations.  He is a
Director  of the Task  Force on Housing  Credit  Certification  of the  National
Association  of Home Builders.  Mr. Riha  graduated  from the  California  State
University,  Fullerton  in 1977  with a  Bachelor  of Arts  degree  cum laude in
Business  Administration  with a concentration  in Accounting and is a Certified
Public  Accountant  and a member of the American  Institute of Certified  Public
Accountants.

David C. Turek,  age 49, is Senior Vice President - Originations  of Associates.
His  experience  with real estate  investments  and finance has continued  since
1976, and he has been employed by Associates since 1996.  Previously,  from 1995
to 1996,  Mr.  Turek served as a  consultant  for a national tax credit  sponsor
where he was  responsible  for on-site  feasibility  studies  and due  diligence
analyses of tax credit properties. From 1992 to 1995 he served as Executive Vice
President for Levcor, Inc., a multi-family development company, and from 1990 to
1992 he served as Vice President for the Paragon Group where he was  responsible
for tax credit development activities.  He is a Director of the National Housing
and Rehabilitation  Association,  the Rural Rental Housing Association of Texas,
and the Alabama Council of Affordable  Rental Housing.  Mr. Turek graduated from
Southern Methodist University in 1976 with a Bachelor of Business Administration
degree.

Michael J. Gaber,  age 38, is Senior Vice President - Acquisitions  and a member
of the Acquisition Committee of Associates.  Mr. Gaber has been involved in real
estate acquisition,  valuation and investment activities since 1989 and has been
associated  with  Associates  since 1997.  Prior to joining  Associates,  he was
involved in the valuation and  classification of major assets,  restructuring of
debt and analysis of real estate taxes with H.F.  Ahmanson & Company,  parent of
Home  Savings  of  America.  Mr.  Gaber  graduated  from  the  California  State
University,  Fullerton  in 1991 with a Bachelor  of Science  degree in  Business
Administration - Finance.


                                       34
<PAGE>

Diemmy T. Tran, age 38, is Vice President - Portfolio  Management of Associates.
She is responsible for overseeing  portfolio  management and investor  reporting
for  all  WNC  funds,  and  for  monitoring   investment  returns  for  all  WNC
institutional  funds. Ms. Tran has been involved in real estate asset management
and finance  activities for 12 years.  Prior to joining  Associates in 1998, Ms.
Tran served as senior asset manager for a national Tax Credit  sponsor and as an
asset specialist for the Resolution Trust  Corporation where she was responsible
for the disposition  and management of commercial  loan and REO portfolios.  Ms.
Tran is  licensed  as a  California  real  estate  broker.  She  graduated  from
California  State  University,  Northridge  in 1989 with a  Bachelor  of Science
degree in finance and a minor in real estate.

Kay L. Cooper,  age 67, is a Director of  Associates.  Mrs.  Cooper was the sole
proprietor of Agate 108, a manufacturer and retailer of home accessory products,
from 1975 until its sale in 1998. She is the wife of Wilfred Cooper, Sr. and the
mother of Wilfred  Cooper,  Jr. Ms.  Cooper  graduated  from the  University  of
Southern California in 1958 with a Bachelor of Science degree.

(f)  Involvement in Certain Legal Proceedings
     ----------------------------------------

     Inapplicable.

(g)  Promoters and Control Persons
     -----------------------------

     Inapplicable.

(h)  Audit  Committee  Financial  Expert,  and (I)  Identification  of the Audit
     ---------------------------------------------------------------------------
     Committee
     ---------

     Neither the Partnership nor Associates has an audit committee.

(i)  Changes to Nominating Procedures
     --------------------------------

     Inapplicable

(j)  Code of Ethics
     --------------

     WNC & Associates  has adopted a Code of Ethics  which  applies to the Chief
     Executive Officer and Chief Financial Officer of WNC & Associates. The Code
     of Ethics will be provided  without  charge to any person who  requests it.
     Such requests  should be directed to: Investor  Relations at  (714)662-5565
     extension 118.


Item 11.  Executive Compensation

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 accrues 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 $181,385, were
     incurred  during each of the years ended March 31, 2004, 2003 and 2002. The
     Partnership  paid the General Partner or its affiliates,  $50,000,  $50,000
     and $37,500 of those fees during the years ended March 31,  2004,  2003 and
     2002, respectively.

(b)  Subordinated  Disposition Fee. A subordinated  disposition fee in an amount
     equal to 1% of the sale price may be received in  connection  with the sale
     or disposition of a Housing Complex or Local Limited Partnership  Interest.
     Subordinated  disposition  fees will be subordinated to the prior return of
     the Limited  Partners'  capital  contributions and payment of the Return on
     Investment to the Limited Partners. "Return on Investment" means an annual,
     cumulative but not compounded,  "return" to the Limited Partners (including
     Low  Income  Housing   Credits)  as  a  class  on  their  adjusted  capital
     contributions  commencing  for each Limited  Partner on the last day of the
     calendar quarter during which the Limited Partner's capital contribution is
     received by the  Partnership,  calculated at the following  rates:  (i) 16%
     through  December 31, 2003, and (ii) 6% for the balance of the Partnerships
     term. No disposition fees have been paid.


                                       35
<PAGE>

(c)  Operating  Expense.  The Partnership  reimbursed the General Partner or its
     affiliates for operating  expenses of  approximately  $24,000,  $26,000 and
     $20,000,   during  the  years  ended  March  31,   2004,   2003  and  2002,
     respectively.

(d)  Interest  in  Partnership.   The  General   Partner   receives  1%  of  the
     Partnership's  allocated Low Income  Housing  Credits,  which  approximated
     $20,000,  $20,000 and  $20,000  for the  General  Partner for the tax years
     ended December 31, 2003, 2002 and 2001,  respectively.  The General Partner
     is also entitled to receive a percentage of cash distributions.  There were
     no  distributions  of cash to the  General  Partner  during the years ended
     March 31, 2004, 2003 and 2002.




                                       36
<PAGE>


Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

(a)  Securities Authorized for Issuance Under Equity Compensation Plans
     ------------------------------------------------------------------

     The  Partnership  has no  compensation  plans under which  interests in the
     Partnership are authorized for issuance.

(b)  Security Ownership of Certain Beneficial Owners
     -----------------------------------------------

     No person is known to the General Partner to own  beneficially in excess of
     5% of the outstanding Units.

(c)  Security Ownership of Management
     --------------------------------

     Neither the General  Partner,  its  affiliates,  nor any of the officers or
     directors  of  the  General  Partner  or its  affiliates  own  directly  or
     beneficially any Units in the Partnership.

(d)  Changes in Control
     ------------------

     The  management  and control of the General  Partner and of Associates  and
     their  affiliates  may be  changed  at any time in  accordance  with  their
     respective organizational documents, without the consent or approval of the
     Limited Partners.  In addition,  the Partnership Agreement provides for the
     admission  of one or more  additional  and  successor  General  Partners in
     certain circumstances.

     First,   with  the   consent   of  any  other   General   Partners   and  a
     majority-in-interest  of the  Limited  Partners,  any  General  Partner may
     designate  one or  more  persons  to be  successor  or  additional  General
     Partners. In addition,  any General Partner may, without the consent of any
     other General Partner or the Limited Partners,  (i) substitute in its stead
     as General  Partner  any  entity  which has,  by merger,  consolidation  or
     otherwise,  acquired  substantially  all  of its  assets,  stock  or  other
     evidence of equity interest and continued its business, or (ii) cause to be
     admitted to the Partnership an additional General Partner or Partners if it
     deems such  admission to be necessary or desirable so that the  Partnership
     will be classified a partnership for Federal income tax purposes.  Finally,
     a  majority-in-interest  of the Limited Partners may at any time remove the
     General Partner of the Partnership and elect a successor General Partner.

Item 13.  Certain Relationships and Related Transactions

The General Partner manages all of the Partnership's  affairs.  The transactions
with  the  General  Partner  are  primarily  in the  form  of  fees  paid by the
Partnership for services rendered to the Partnership,  reimbursement of expenses
and the General Partner's  interest in the Partnership,  as discussed in Item 11
and in the notes to the Partnership's financial statements.

Item 14.  Principal Accountant Fees and Services

The following is a summary of fees paid to the Fund's  independent  auditors for
the years ended March 31:
                                             2004                2003
                                        ---------------     ---------------

Audit Fees                            $         15,501              17,335
Audit-related Fees                                   -                   -
Tax Fees                                         1,625               1,500
All Other Fees                                       -                   -
                                        ---------------     ---------------
TOTAL                                 $         17,126              18,835
                                        ===============     ===============


The  Partnership  has no Audit  Committee.  All audit  service and any permitted
non-audit services performed by the Fund's independent  auditors are preapproved
by the General Partner.

                                       37
<PAGE>


PART IV.

Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1)    Financial statements included in Part II hereof:
          ------------------------------------------------

          Report of  Independent  Registered  Public  Accounting  Firm - Reznick
            Fedder & Silverman
          Report of Independent Registered Public Accounting Firm - BDO Seidman,
            LLP
          Balance Sheets as of March 31, 2004 and 2003
          Statements of Operations for the years ended March 31, 2004,  2003 and
            2002
          Statements of Partners' Equity (Deficit) for the years ended March 31,
            2004, 2003 and 2002
          Statements of Cash Flows for the years ended March 31, 2004,  2003 and
            2002
          Notes to Financial Statements

(a)(2)    Financial statement schedules included in Part IV hereof:
          ---------------------------------------------------------

          Report of Independent Registered Public Accounting Firm on Financial
           Statement Schedules -Reznick Fedder and Silverman
          Report of Independent  Registered  Public Accounting Firm on Financial
            Statement Schedules - BDO Seidman, LLP
          Schedule III - Real Estate Owned by Local Limited Partnerships

(b)       Reports on Form 8-K.
          --------------------

          NONE

(c)       Exhibits.
          ---------

3.1       Agreement of Limited  Partnership  dated  October 5, 1992 was filed as
          Exhibit  28.1 to Form 10-K for the year  ended  December  31,  1994 is
          hereby incorporated herein as Exhibit 3.1.

31.1      Certification  of the  Principal  Executive  Officer  pursuant to Rule
          13a-14  and  15d-14,  as  adopted  pursuant  to  section  302  of  the
          Sarbanes-Oxley Act of 2002. (filed herewith)

31.2      Certification  of the  Principal  Financial  Officer  pursuant to Rule
          13a-14  and  15d-14,  as  adopted  pursuant  to  section  302  of  the
          Sarbanes-Oxley Act of 2002. (filed herewith)

32.1      Section  1350  Certification  of the Chief  Executive  Officer  (filed
          herewith)

32.2      Section  1350  Certification  of the Chief  Financial  Officer  (filed
          herewith)

99.1      Amended and  Restated  Agreement  of Limited  Partnership  of Colonial
          Village  Roseville  (1) filed as exhibit 10.1 to Form 8-K/A  Amendment
          No. 1 to Current Report dated December 27, 1993 is hereby incorporated
          herein by reference as exhibit 99.1.

99.2      Amended and Restated Agreement of Limited Partnership of Almond Garden
          Apartment Associates filed as exhibit 10.2 to Form 8-K/A Amendment No.
          1 to Current  Report dated  December  27, 1993 is hereby  incorporated
          herein by reference as exhibit 99.2.

99.3      Amended  and  Restated  Agreement  of Limited  Partnership  of Winters
          Investment  Group filed as exhibit 10.3 to Form 8-K/A  Amendment No. 1
          to Current  Report  dated  December  27,  1993 is hereby  incorporated
          herein by reference as exhibit 99.3.

99.4      Third Amended and Restate Articles of Limited Partnership of Buccaneer
          Associates,  Limited filed as exhibit 10.2 to Post-Effective Amendment
          No. 2 to Form S-11 dated  September  17,  1993 is hereby  incorporated
          herein by reference as exhibit 10.4.


                                       38
<PAGE>

99.5      Amended and Restated Agreement and Certificate of Limited  Partnership
          of Dallas County Housing, Ltd. filed as exhibit 10.3 to Post-Effective
          Amendment  No. 2 to Form  S-11  dated  September  17,  1993 is  hereby
          incorporated herein by reference as exhibit 10.5.

99.6      Amended and Restated Agreement of Limited Partnership of La Paloma Del
          Sol  Phase  II  Limited   Partnership   filed  as   exhibit   10.4  to
          Post-Effective  Amendment No. 2 to Form S-11 dated  September 17, 1993
          is hereby incorporated herein by reference as exhibit 99.6.

99.7      Second  Amended and Restated  Agreement of Limited  Partnership of Old
          Fort  Limited  Partnership  filed as  exhibit  10.5 to  Post-Effective
          Amendment  No. 2 to Form  S-11  dated  September  17,  1993 is  hereby
          incorporated herein by reference as exhibit 99.7.

99.8      Amended  and  Restated  Agreement  of  Limited  Partnership  of  Orosi
          Apartments, Ltd. filed as exhibit 10.6 to Post-Effective Amendment No.
          2 to Form S-11 dated September 17, 1993 is hereby  incorporated herein
          by reference as exhibit 99.8.

99.9      Amended and Restated  Agreement of Limited  Partnership  of Sun Manor,
          L.P. filed as exhibit 10.7 to  Post-Effective  Amendment No. 2 to Form
          S-11  dated  September  17,  1993 is  hereby  incorporated  herein  by
          reference as exhibit 99.9.

99.10     Amended  and  Restated  Agreement  of  Limited  Partnership  of  Venus
          Retirement  Village,  Ltd.  filed as  exhibit  10.8 to  Post-Effective
          Amendment  No. 2 to Form  S-11  dated  September  17,  1993 is  hereby
          incorporated herein by reference as exhibit 99.10.

99.11     Second  Amended  and  Restated  Agreement  of Limited  Partnership  of
          Walnut-Pixley,  L.P. filed as exhibit 10.9 to Post-Effective Amendment
          No. 2 to Form S-11 dated  September  17,  1993 is hereby  incorporated
          herein by reference as exhibit 99.11.

99.12     Amended and Restated  Agreement of Limited  Partnership of Almond View
          Apartments, Ltd. filed as exhibit 10.11 to Form 10K dated December 31,
          1993 is hereby incorporated herein by reference as exhibit 99.12.

99.13     Amended and Restated  Agreement of Limited  Partnership of Candleridge
          Apartments  of Perry,  L.P. II filed as exhibit 10.1 to Form 8-K dated
          May 26, 1994 is hereby  incorporated  herein by  reference  as exhibit
          99.13.

99.14     Second  Amended  and  Restated  Agreement  of Limited  Partnership  of
          Parlier  Garden Apts.  filed as exhibit 10.2 to Form 8-K dated May 26,
          1994 is hereby incorporated herein by reference as exhibit 10.14.

99.15     Agreement  of  Limited  Partnership  of  Rosewood  Apartments  Limited
          Partnership  filed as exhibit  10.3 to Form 8-K dated May 26,  1994 is
          hereby incorporated herein by reference as exhibit 99.15.

99.16     Agreement  of  Limited  Partnership  of Limited  Partnership  of Nueva
          Sierra Vista  Associates filed as exhibit 10.4 to Form 8-K/A Amendment
          No. 1 to  Current  Report  dated May 26,  1994 is hereby  incorporated
          herein by reference as exhibit 99.16.

99.17     Amended and Restated  Agreement of Limited  Partnership of Memory Lane
          Limited  Partnership  filed as exhibit  10.1 to Form 8-K dated July 7,
          1994 is hereby incorporated herein by reference as exhibit 99.17.

99.18     Second Amended and Restated Agreement of Limited  Partnership of Tahoe
          Pines Apartments filed as exhibit 10.1 to Form 8-K dated July 27, 1994
          is hereby incorporated herein by reference as exhibit 10.18.

99.19     Financial  Statements  of Colonial  Village  Roseville,  for the years
          ended  December 3, 2003 and 2002 together with  Independent  Auditors'
          Report thereon; a significant subsidiary of the Partnership.


(d)       Financial  statement  schedules  follow,  as set  forth in  subsection
          ---------------------------------------
          (a)(2) hereof.



                                       39
<PAGE>






     REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM ON  FINANCIAL
                               STATEMENT SCHEDULES


To the Partners
WNC California Housing Tax Credits III, L.P.


     The audit  referred to in our report  dated June 15,  2004  relating to the
2004  financial  statements of WNC  California  Housing Tax Credits III, L.P. (a
California Limited Partnership) (the "Partnership"), which are contained in Item
8 of this Form 10-K, included the audit of the accompanying  financial statement
schedule "Real Estate Owned by Local Limited  Partnerships March 31, 2004." This
financial   statement  schedule  is  the  responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion  on this  financial
statement schedule based upon our audit.

     In our opinion,  based on our audit and the reports of the other  auditors,
such financial  statement  schedule  referred to above presents  fairly,  in all
material respects, the information set forth therein.


                                                /s/Reznick Fedder & Silverman

Bethesda, Maryland
June 15, 2004




                                       40
<PAGE>






Report of Independent  Registered Public Accounting Firm on Financial  Statement
                                   Schedules




To the Partners
WNC California Housing Tax Credits III, L.P.


The audits  referred to in our report dated May 27,  2003,  relating to the 2003
and 2002 financial  statements of WNC  California  Housing Tax Credits III, L.P.
(the  "Partnership"),  which is contained in Item 8 of this Form 10-K,  included
the audit of the  accompanying  financial  statement  schedules.  The  financial
statement schedules are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial  statement  schedules
based upon our audits.

In our opinion,  such  financial  statement  schedules  present  fairly,  in all
material respects, the financial information set forth therein.



                                              /s/  BDO SEIDMAN, LLP


Costa Mesa, California
May 27, 2003









                                       41
<PAGE>










WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2004
<TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2004                          As of December 31, 2003
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>             <C>           <C>             <C>            <C>         <C>
Almond Garden                   Delhi,
Apartment Associates            California      $   391,000     $  391,000    $   1,371,000   $  1,773,000   $ 631,000   $ 1,142,000

Almond View                     Stockton,
Apartments, Ltd.                California        1,639,000      1,639,000        1,738,000      3,524,000   1,183,000     2,341,000

Buccaneer Associates,           Fernandia
Limited                         Beach, Florida      365,000        365,000        1,456,000      2,218,000     568,000     1,650,000

Candleridge Apartments          Perry,
of Perry L.P. II                Iowa                126,000        126,000          687,000        916,000     306,000       610,000

Colonial Village                Roseville,
Roseville                       California        2,811,000      2,811,000        1,977,000      5,302,000   1,728,000     3,574,000

Dallas County                   Orrville,
Housing, Ltd.                   Alabama             130,000        130,000          607,000        796,000     229,000       567,000

La Paloma del Sol               Deming, New
Limited Partnership             Mexico              254,000        254,000        1,413,000      1,839,000     463,000     1,376,000

Memory Lane                     Yankton,
Limited Partnership             South Dakota        151,000        151,000          673,000        874,000     429,000       445,000

Nueva Sierra                    Richgrove,
Vista Associates                California        1,688,000      1,688,000        1,623,000      3,253,000     691,000     2,562,000

Old Fort Highway                Hidalgo,
Limited Partnership             Texas               249,000        249,000        1,260,000      1,717,000     449,000     1,268,000

</TABLE>


                                       42
<PAGE>



WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2004
<TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2004                          As of December 31, 2003
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>             <C>             <C>             <C>          <C>          <C>
Orosi Apartments,               Orosi,
Ltd.                            California          461,000        461,000        1,900,000      2,461,000      464,000    1,997,000

Parlier Garden                  Parlier,
Apts.                           California          453,000        453,000        1,687,000      2,207,000      530,000    1,677,000

Rosewood Apartments             Superior,
Limited Partnership             Wisconsin           185,000        185,000          456,000        768,000      196,000      572,000

Sun Manor,                      Itta Bena,
L.P.                            Mississippi         230,000        230,000        1,044,000      1,349,000      460,000      889,000

Tahoe                           South Lake
Pines                           Tahoe,
Apartments                      California        1,633,000      1,633,000        1,640,000      3,301,000    1,125,000    2,176,000

Venus Retirement                Venus,
Village, Ltd.                   Texas               161,000        161,000          716,000        650,000      319,000      331,000

Walnut - Pixley,                Orange,
L.P.                            California        1,078,000      1,078,000        1,656,000      2,768,000      687,000    2,081,000

Winters Investment              Winters,
Group                           California          531,000        531,000        1,810,000      2,592,000      501,000    2,091,000
                                              --------------  ------------    --------------  ------------  ----------- ------------

                                              $  12,536,000   $ 12,536,000    $  23,714,000   $ 38,308,000 $ 10,959,000 $ 27,349,000
                                              ==============  ============    ==============  ============ ============ ============
</TABLE>


                                       43
<PAGE>



WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2004
 <TABLE>
<CAPTION>
                              --------------------------------------------------------------------------------------
                                                      For the year ended December 31, 2003
                              --------------------------------------------------------------------------------------
                                                    Net Income     Year Investment                Estimated Useful
      Partnership Name          Rental Income         (Loss)          Acquired         Status       Life (Years)
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>                    <C>      <C>               <C>
Almond Garden
Apartment Associates                  $    219,000  $    (1,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               244,000     (221,000)           1994     Completed         27.5

Buccaneer Associates, Limited              235,000      (39,000)           1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    150,000      (15,000)           1994     Completed         27.5

Colonial Village Roseville                 529,000            0            1993     Completed         27.5

Dallas County Housing, Ltd.                 77,000      (17,000)           1993     Completed           40

La Paloma del Sol Limited
Partnership                                163,000      (25,000)           1993     Completed           40

Memory Lane Limited Partnership
                                            80,000      (12,000)           1994     Completed           25

Nueva Sierra Vista Associates              153,000     (129,000)           1994     Completed           40

Old Fort Limited Partnership               178,000      (27,000)           1993     Completed           40

Orosi Apartments, Ltd.                     217,000      (37,000)           1993     Completed           50

Parlier Garden Apts.                       302,000       49,000            1994     Completed           40

Rosewood Apartments Limited
Partnership                                 86,000       (9,000)           1994     Completed           40

Sun Manor, L.P.                            151,000      (42,000)           1993     Completed         27.5

Tahoe Pines Apartments                     201,000     (112,000)           1994     Completed         27.5

Venus Retirement Village, Ltd.              90,000     (304,000)           1993     Completed           25

Walnut - Pixley, L.P.                      166,000      (22,000)           1993     Completed           40

Winters Investment Group                   253,000      (45,000)           1994     Completed           50
                                      ------------  ------------

                                      $  3,494,000  $(1,009,000)
                                      ============  ============
</TABLE>


                                       44
<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2003
<TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2003                          As of December 31, 2002
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>             <C>           <C>             <C>            <C>         <C>
Almond Garden                   Delhi,
Apartment Associates            California      $   391,000     $  391,000    $   1,376,000   $  1,764,000   $ 570,000   $ 1,194,000

Almond View                     Stockton,
Apartments, Ltd.                California        1,639,000      1,639,000        1,746,000      3,527,000   1,059,000     2,468,000

Buccaneer Associates,           Fernandia
Limited                         Beach, Florida      365,000        365,000        1,462,000      2,218,000     514,000     1,704,000

Candleridge Apartments          Perry,
of Perry L.P. II                Iowa                126,000        126,000          691,000        908,000     269,000       639,000

Colonial Village                Roseville,
Roseville                       California        2,811,000      2,811,000        2,012,000      5,301,000   1,551,000     3,750,000

Dallas County                   Orrville,
Housing, Ltd.                   Alabama             130,000        130,000          609,000        792,000     205,000       587,000

La Paloma del Sol               Deming, New
Limited Partnership             Mexico              254,000        254,000        1,419,000      1,830,000     415,000     1,415,000

Memory Lane                     Yankton,
Limited Partnership             South Dakota        151,000        151,000          676,000        874,000     402,000       472,000

Nueva Sierra                    Richgrove,
Vista Associates                California        1,688,000      1,688,000        1,626,000      3,252,000     611,000     2,641,000

Old Fort Highway                Hidalgo,
Limited Partnership             Texas               249,000        249,000        1,265,000      1,713,000     403,000     1,310,000

</TABLE>


                                       45

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2003
 <TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2003                          As of December 31, 2002
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>             <C>             <C>             <C>          <C>          <C>
Orosi Apartments,               Orosi,
Ltd.                            California          461,000        461,000        1,915,000      2,460,000      411,000    2,049,000

Parlier Garden                  Parlier,
Apts.                           California          453,000        453,000        1,693,000      2,198,000      479,000    1,719,000

Rosewood Apartments             Superior,
Limited Partnership             Wisconsin           185,000        185,000          470,000        767,000      176,000      591,000

Sun Manor,                      Itta Bena,
L.P.                            Mississippi         230,000        230,000        1,048,000      1,345,000      410,000      935,000

Tahoe                           South Lake
Pines                           Tahoe,
Apartments                      California        1,633,000      1,633,000        1,655,000      3,292,000    1,010,000    2,282,000

Venus Retirement                Venus,
Village, Ltd.                   Texas               161,000        161,000          719,000        928,000      219,000      637,000

Walnut - Pixley,                Orange,
L.P.                            California        1,078,000      1,078,000          933,000      2,768,000      632,000    2,136,000

Winters Investment              Winters,
Group                           California          531,000        531,000        1,818,000      2,593,000      454,000    2,139,000
                                              --------------  ------------    --------------  ------------  ----------- ------------

                                              $  12,536,000   $ 12,536,000    $  23,193,000   $ 38,530,000 $  9,862,000 $ 28,668,000
                                              ==============  ============    ==============  ============ ============ ============
</TABLE>


                                       46
<PAGE>



WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2003
<TABLE>
<CAPTION>
                              --------------------------------------------------------------------------------------
                                                      For the year ended December 31, 2003
                              --------------------------------------------------------------------------------------
                                                    Net Income     Year Investment                Estimated Useful
      Partnership Name          Rental Income         (Loss)          Acquired         Status       Life (Years)
--------------------------------------------------------------------------------------------------------------------
<S>                                    <C>            <C>                  <C>      <C>               <C>
Almond Garden
Apartment Associates                  $    167,000   $  (41,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               229,000     (238,000)           1994     Completed         27.5

Buccaneer Associates, Limited              231,000      (41,000)           1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    157,000      (12,000)           1994     Completed         27.5

Colonial Village Roseville                 463,000      (57,000)           1993     Completed         27.5

Dallas County Housing, Ltd.                 81,000       (9,000)           1993     Completed           40

La Paloma del Sol Limited
Partnership                                157,000      (32,000)           1993     Completed           40

Memory Lane Limited Partnership
                                            80,000       (3,000)           1994     Completed           25

Nueva Sierra Vista Associates              154,000     (146,000)           1994     Completed           40

Old Fort Limited Partnership               168,000      (40,000)           1993     Completed           40

Orosi Apartments, Ltd.                     198,000      (32,000)           1993     Completed           50

Parlier Garden Apts.                       228,000      (24,000)           1994     Completed           40

Rosewood Apartments Limited
Partnership                                 88,000        5,000            1994     Completed           40

Sun Manor, L.P.                            144,000      (27,000)           1993     Completed         27.5

Tahoe Pines Apartments                     187,000     (178,000)           1994     Completed         27.5

Venus Retirement Village, Ltd.              90,000      (21,000)           1993     Completed           25

Walnut - Pixley, L.P.                      161,000      (25,000)           1993     Completed           40

Winters Investment Group                   218,000      (41,000)           1994     Completed           50
                                      ------------   -----------

                                      $  3,201,000   $ (962,000)
                                      ============   ===========
</TABLE>



                                       47
<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
 <TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2002                          As of December 31, 2001
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>             <C>           <C>             <C>            <C>         <C>
Almond Garden                   Delhi,
Apartment Associates            California      $   391,000     $  391,000    $   1,381,000   $  1,757,000   $ 510,000   $ 1,247,000

Almond View                     Stockton,
Apartments, Ltd.                California        1,639,000      1,639,000        1,754,000      3,526,000     934,000     2,592,000

Buccaneer Associates,           Fernandia
Limited                         Beach, Florida      365,000        365,000        1,468,000      2,218,000     460,000     1,758,000

Candleridge Apartments          Perry,
of Perry L.P. II                Iowa                126,000        126,000          695,000        901,000     234,000       667,000

Colonial Village                Roseville,
Roseville                       California        2,811,000      2,811,000        2,044,000      5,299,000   1,366,000     3,933,000

Dallas County                   Orrville,
Housing, Ltd.                   Alabama             130,000        130,000          612,000        789,000     182,000       607,000

La Paloma del Sol               Deming, New
Limited Partnership             Mexico              254,000        254,000        1,424,000      1,789,000     367,000     1,422,000

Memory Lane                     Yankton,
Limited Partnership             South Dakota        151,000        151,000          680,000        874,000     375,000       499,000

Nueva Sierra                    Richgrove,
Vista Associates                California        1,688,000      1,688,000        1,629,000      3,252,000     531,000     2,721,000

Old Fort Highway                Hidalgo,
Limited Partnership             Texas               249,000        249,000        1,270,000      1,699,000     357,000     1,342,000
</TABLE>


                                       48
<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
 <TABLE>
<CAPTION>
                                                -------------------------------  ---------------------------------------------------
                                                   As of March 31, 2002                          As of December 31, 2001
                                                ------------------------------------------------------------------------------------
                                                                                   Mortgage
                                             Total Investment      Amount of      Balances of
                                             in Local Limited    Investment Paid Local Limited   Property and  Accumulated  Net Book
      Partnership Name          Location         Partnerships        to Date      Partnerships    Equipment    Depreciation   Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>             <C>             <C>             <C>          <C>          <C>
Orosi Apartments,               Orosi,
Ltd.                            California          461,000        461,000        1,929,000      2,450,000      363,000    2,087,000

Parlier Garden                  Parlier,
Apts.                           California          453,000        453,000        1,699,000      2,195,000      427,000    1,768,000

Rosewood Apartments             Superior,
Limited Partnership             Wisconsin           185,000        185,000          482,000        767,000      157,000      610,000

Sun Manor,                      Itta Bena,
L.P.                            Mississippi         230,000        230,000        1,051,000      1,344,000      361,000      983,000

Tahoe                           South Lake
Pines                           Tahoe,
Apartments                      California        1,633,000      1,633,000        1,668,000      3,292,000      895,000    2,397,000

Venus Retirement                Venus,
Village, Ltd.                   Texas               161,000        161,000          721,000        928,000      262,000      666,000

Walnut - Pixley,                Orange,
L.P.                            California        1,078,000      1,078,000        1,693,000      2,768,000      577,000    2,191,000

Winters Investment              Winters,
Group                           California          531,000        531,000        1,824,000      2,592,000      406,000    2,186,000
                                              --------------  ------------    --------------  ------------  ----------- ------------

                                              $  12,536,000   $ 12,536,000    $  24,024,000   $ 38,440,000 $  8,764,000 $ 29,676,000
                                              ==============  ============    ==============  ============ ============ ============
</TABLE>


                                       49
<PAGE>



WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2002
<TABLE>
<CAPTION>
                              --------------------------------------------------------------------------------------
                                                      For the year ended December 31, 2003
                              --------------------------------------------------------------------------------------
                                                    Net Income     Year Investment                Estimated Useful
      Partnership Name          Rental Income         (Loss)          Acquired         Status       Life (Years)
--------------------------------------------------------------------------------------------------------------------
<S>                                   <C>             <C>                  <C>      <C>               <C>
Almond Garden
Apartment Associates                  $    162,000    $ (50,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               209,000     (230,000)           1994     Completed         27.5

Buccaneer Associates, Limited              222,000      (46,000)           1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    151,000      (11,000)           1994     Completed         27.5

Colonial Village Roseville                 450,000      (49,000)           1993     Completed         27.5

Dallas County Housing, Ltd.                 68,000      (17,000)           1993     Completed           40

La Paloma del Sol Limited
Partnership                                129,000      (38,000)           1993     Completed           40

Memory Lane Limited Partnership
                                            72,000      (20,000)           1994     Completed           25

Nueva Sierra Vista Associates              142,000     (101,000)           1994     Completed           40

Old Fort Limited Partnership               151,000      (40,000)           1993     Completed           40

Orosi Apartments, Ltd.                     193,000      (16,000)           1993     Completed           50

Parlier Garden Apts.                       202,000      (21,000)           1994     Completed           40

Rosewood Apartments Limited
Partnership                                 80,000       (4,000)           1994     Completed           40

Sun Manor, L.P.                            143,000      (26,000)           1993     Completed         27.5

Tahoe Pines Apartments                     182,000     (118,000)           1994     Completed         27.5

Venus Retirement Village, Ltd.              87,000      (18,000)           1993     Completed           25

Walnut - Pixley, L.P.                      150,000      (42,000)           1993     Completed           40

Winters Investment Group                   197,000      (29,000)           1994     Completed           50
                                      ------------    ----------

                                      $ 2,990,000     $(876,000)
                                      ============    ==========

</TABLE>


                                       50
<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.

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

By:      WNC & Associates, Inc.,
         General Partner

         By:      /s/ Wilfred N. Cooper, Jr.
                  --------------------------
                  Wilfred N. Cooper, Jr.,
                  President of WNC & Associates, Inc.

Date:  September 24, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


By:      /s/ Wilfred N. Cooper, Jr.
         --------------------------
         Wilfred N. Cooper, Jr.,
         Chief Executive Officer, President and Director of
         WNC & Associates, Inc. (principal executive officer)

Date:    September 24, 2004


By:      /s/ Thomas J. Riha
         ----------------------
         Thomas J. Riha,
         Senior  Vice-President - Chief Financial  Officer of WNC & Associates,
         Inc. (principal financial officer and principal accounting officer)

Date:    September 24, 2004


By:      /s/ Wilfred N. Cooper, Sr.
         --------------------------
         Wilfred N. Cooper, Sr.,
         Chairman of the Board of WNC & Associates, Inc.

Date:    September 24, 2004

By:      /s/ David N. Shafer
         -------------------
         David N Shafer,
         Director of WNC & Associates, Inc.

Date:    September 24, 2004





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