WNC California Housing Tax Credits III, L.P.

                                   Exceptions
                                   ----------

The financial statements are presented as unaudited in the Form 10-K as of March
31,  2005 and 2004 and for the three years ended March 31, 2005 as the Report of
the Independent  Registered Public Accounting Firm could not be filed within the
prescribed  time period because the issuer was not able to obtain audit opinions
which refer to the auditing standards of the Public Company Accounting Oversight
Board  (United  States)  (PCAOB) of property  partnerships,  in which the issuer
holds  noncontrolling  limited  partner  interests.   The  non-affiliated  local
operating  partnership  general  partners engage the  accountants  auditing each
local operating partnership.

Historically,  the  audits,  and the  reports  thereon,  of the local  operating
partnerships  were  performed in accordance  with  Generally  Accepted  Auditing
Standards (GAAS).

On May 11,  2005 draft  guidance  was issued by the  Public  Company  Accounting
Oversight  Board which was  confirmed  on June 24, 2005 by the AICPA  Center for
Public Company Audit Firms,  that clearly  establishes  the  requirement for the
audit  reports of the  operating  partnerships  of a Public Fund to refer to the
auditing standards of the PCAOB.

The audits of the operating  partnerships  were performed  primarily  during the
months of January,  February and March and refer to Generally  Accepted Auditing
Standards. We have all appropriate originally signed opinions from the operating
partnerships; however, they do not refer to the auditing standards of the Public
Company Accounting Oversight Board.

Our independent  registered public accounting firm has performed an audit of the
registrant  but cannot issue an opinion in accordance  with the standards of the
Public Company  Accounting  Oversight Board (United States).  Therefore,  we are
filing our 10-K as "UNAUDITED" as it is without an audit opinion.


<PAGE>


                       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, 2005

                                       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 or the General Partner").  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, 2005,  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 the Limited  Partners 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  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  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, 2005                          As of December 31, 2004
                                               ---------------------------------   -------------------------------------------------
                                                    Partnership's                                          Estimated
                                                    Total                                                  Aggregate        Mortgage
                                    General         Investment in   Amount of        Number                Low Income    Balances of
Local Limited                       Partner         Local Limited   Investment        of                   Housing     Local Limited
Partnership Name      Location      Name            Partnerships    Paid to Date     Units    Occupancy    Credits(1)   Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>              <C>              <C>              <C>     <C>       <C>            <C>

Almond Garden         Delhi,
Apartment Associates  California    Anthony Donovan  $    391,000     $  391,000       34        97%     $    807,000   $  1,365,000

                                    Daniel C. Logue
Almond View           Stockton,     and Cyrus
Apartments, Ltd.      California    Youssefi            1,639,000      1,639,000       72        99%        3,523,000      1,729,000

Buccaneer             Fernandia
Associates,           Beach,
Limited               Florida       Clifford E. Olsen     365,000        365,000       48       100%          768,000      1,450,000

Candleridge
Apartments of         Perry,
Perry L.P. II         Iowa          Eric A. Sheldahl      126,000        126,000       24       100%          245,000        682,000

                                    S.P. Thomas Company
                                    of Northern
                                    California Inc.
Colonial Village      Roseville,    and
Roseville             Calfornia     Project Go, Inc.    2,811,000      2,811,000       56        98%        5,872,000      1,940,000

                                    Thomas H. Cooksey
Dallas County         Orrville,     and Apartment
Housing, Ltd.         Alabama       Developers, Inc       130,000        130,000       19        89%          287,000        604,000

La Paloma del
Sol Limited           Deming,
Partnership           New Mexico    Dean Greenwalt        254,000        254,000       38        89%          625,000      1,407,000

Memory Lane           Yankton,      Skogen - Peterson,
Limited Partnership   South Dakota  Inc.                  151,000        151,000       18        94%          295,000        670,000

</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>
                                                   As of March 31, 2005                          As of December 31, 2004
                                               ---------------------------------   -------------------------------------------------
                                                    Partnership's                                         Estimated
                                                    Total                                                 Aggregate        Mortgage
                                    General         Investment in   Amount of       Number                Low Income    Balances of
Local Limited                       Partner         Local Limited   Investment        of                  Housing      Local Limited
Partnership Name      Location      Name            Partnerships    Paid to Date     Units    Occupancy   Credits(1)    Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>           <C>              <C>             <C>               <C>        <C>     <C>            <C>

                                    Self-Help
                                    Enterprises,
                                    Inc. and Nueva
Nueva Sierra          Richgrove,    Sierra Vista
Vista Associates      California    Corporation         1,688,000      1,688,000       35        97%       3,516,000       1,624,000

Old Fort                            Alan Deke Noftsker
Limited               Hidalgo,      and ABO
Partnership           Texas         Corporation           249,000        249,000       40        98%         547,000       1,254,000

Orosi Apartments,     Orosi,
Ltd.                  California    Douglas W. Young      461,000        461,000       42        93%         902,000       1,883,000

                                    David J. Micheal
                                    and Professional
Parlier               Parlier,      Apartment
Garden Apts.          California    Management, Inc.      453,000        453,000       41        98%         917,000       1,680,000

Rosewood Apartments   Superior,     Duffy Development
Limited Partnership   Wisconsin     Company, Inc.         185,000        185,000       20        85%         375,000         443,000

Sun Manor, L.P.       Itta Bena,
                      Mississippi   Glenn D. Miller       230,000        230,000       36        94%         464,000       1,040,000

                                    David J. Michael
                                    Bucky Fong, Dean
                      South         Pearson, Coy Elvis
Tahoe Pines           Lake Tahoe    and Dr. Patricia
Apartments            California    Hatton              1,633,000      1,633,000       28       100%       3,171,000       1,624,000

Venus Retirement      Venus,
Village Ltd.          Texas         W. Joseph Chamy       161,000        161,000       24       100%         318,000         713,000

Walnut-Pixley,        Orange,       Walnut-Pixley,
L.P.                  California    Inc.                1,078,000      1,078,000       22       100%       2,309,000       1,635,000

</TABLE>

                                       7
<PAGE>


<TABLE>
<CAPTION>
                                                  As of March 31, 2005                          As of December 31, 2004
                                               ---------------------------------   -------------------------------------------------
                                                    Partnership's                                         Estimated
                                                    Total                                                 Aggregate        Mortgage
                                    General         Investment in   Amount of       Number                Low Income    Balances of
Local Limited                       Partner         Local Limited   Investment        of                  Housing      Local Limited
Partnership Name      Location      Name            Partnerships    Paid to Date     Units    Occupancy   Credits(1)    Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>            <C>             <C>            <C>              <C>        <C>        <C>            <C>

Winters
Investment            Winters,
Group                 California    John P. Casper        531,000        531,000      38        100%        1,072,000      1,802,000
                                                      -----------     ----------    -----       -----     -----------    -----------
                                                     $ 12,536,000    $12,536,000     635         96%      $26,013,000    $23,545,000
                                                      ===========     ==========    =====       =====     ===========    ===========
</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.

                                       8
<PAGE>


<TABLE>
<CAPTION>

                                          --------------------------------------------------------------------------
                                                            For the year ended December 31, 2004
                                          --------------------------------------------------------------------------
                                                                                                   Low Income
                                                                                                Housing Credits
                                                                                                  Allocated to
             Partnership Name                 Rental Income        Net Income (Loss)              Partnership
 -------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                   <C>                                 <C>

 Almond Garden                                $ 219,000             $  (39,000)                         99%
 Apartment Associates

 Almond View Apartments Ltd.                    240,000               (228,000)                         99%

 Buccaneer Associates, Limited                  241,000                (40,000)                         99%

 Candleridge Apartments of Perry L.P. II        148,000                (15,000)                         99%

 Colonial Village Roseville                     545,000                  1,000                          99%

 Dallas County Housing, Ltd.                     76,000                (22,000)                         99%

 La Paloma del Sol Limited Partnership          182,000                 (5,000)                         99%

 Memory Lane Limited Partnership                 80,000                (22,000)                         99%

 Nueva Sierra Vista Associates                  159,000               (161,000)                         99%

 Old Fort Limited Partnership                   195,000                (29,000)                         99%

 Orosi Apartments, Ltd.                         234,000                (12,000)                         99%

 Parlier Garden Apts.                           303,000                 27,000                          95%

 Rosewood Apartments Limited Partnership         91,000                 (7,000)                         99%

 Sun Manor, L.P.                                150,000                (31,000)                         99%

 Tahoe Pines Apartments                         202,000               (138,000)                         99%

 Venus Retirement Village, Ltd.                  95,000                (30,000)                         99%

 Walnut - Pixley, L.P.                          167,000                (35,000)                         99%

 Winters Investment Group                       279,000                  8,000                          99%
                                            ------------             ----------

                                             $ 3,606,000              $ 778,000
                                            ============             ==========
</TABLE>

                                       9
<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  or  otherwise  transferred  only if certain  requirements  in the
     Partnership Agreement are satisfied.

(b)  At March 31,  2005,  there were 886 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)  Except as may have  otherwise been  previously  reported,  no  unregistered
     securities were sold by the Partnership  during the three years ended March
     31, 2005, 2004 and 2003.

Item 5b. Use of Proceeds

NOT APPLICABLE

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

NONE

                                       10
<PAGE>



Item 6.  Selected Financial Data

Selected balance sheet information for the Partnership is as follows:
<TABLE>
<CAPTION>

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

                                        2005         2004         2003         2002         2001
                                     -----------  -----------   ----------   ----------   ----------
                                     (Unaudited)
<S>                               <C>           <C>          <C>          <C>           <C>

ASSETS
Cash                               $    293,367  $   310,717  $   371,426  $   413,336  $   437,863
Investments in limited
  partnerships, net                   2,173,564    3,525,413    5,572,016    6,455,167    7,329,890
                                     -----------  -----------   ----------   ----------   ----------

                                   $  2,466,931  $ 3,836,130  $ 5,943,442  $ 6,868,503  $ 7,767,753
                                     ===========  ===========   ==========   ==========   ==========

LIABILITIES
Due to general partner and
  affiliates                       $  1,413,074  $ 1,256,656  $ 1,126,324  $   994,710  $   849,164

PARTNERS' EQUITY                      1,053,857    2,579,474    4,817,118    5,873,793    6,918,589
                                     -----------  -----------   ----------   ----------   ----------

                                   $  2,466,931  $ 3,836,130  $ 5,943,442  $ 6,868,503  $ 7,767,753
                                     ===========  ===========   ==========   ==========   ==========
</TABLE>

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

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

                              2005           2004           2003          2002          2001
                           -----------   -----------     ---------    ----------    ----------
                           (Unaudited)
<S>                     <C>           <C>            <C>           <C>           <C>

Loss from operations
  (Note 1)               $ (1,117,595) $ (1,860,847)  $  (257,349)  $  (245,989)  $  (246,997)
Equity in losses of
  limited partnerships       (408,022)     (383,442)     (799,326)     (798,807)     (821,704)
                           -----------   -----------     ---------    ----------    ----------

Net loss                 $ (1,525,617) $ (2,237,644)  $(1,056,675)  $(1,044,796)  $(1,068,701)
                           ===========   ===========    ==========   ===========   ===========

Net loss allocated to:

  General Partner        $    (15,256) $    (22,376)  $   (10,567)  $   (10,448)  $   (10,687)
                           ===========   ===========    ==========    ==========    ==========

  Limited artners        $ (1,510,361) $ (2,215,268)  $(1,046,108)  $(1,034,348)  $(1,058,014)
                           ===========   ===========   ===========   ===========   ===========


Net loss per limited
  partner unit           $     (83.90) $    (123.07)  $   (58.12)   $    (57.46)  $    (58.78)
                           ===========   ===========    =========     ==========     =========

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

Note 1 - Loss from  operations  for the  years  ended  March  31,  2005 and 2004
includes a charge for impairment  losses on investments in limited  partnerships
of $873,891 and $1,607,047,  respectively.  (See Note 2 to the audited financial
statements.)

                                       11
<PAGE>



<TABLE>
<CAPTION>
                                                  For the Years Ended
                                                        March 31
                           -------------------------------------------------------------------
                              2005          2004          2003          2002          2001
                           -----------   -----------    ---------     ----------    ----------
                           (Unaudited)
<S>                       <C>          <C>           <C>           <C>           <C>

Net cash provided by
  (used in):

  Operating activities    $   (44,726)  $   (69,359)  $   (66,356)  $   (41,575)  $   (55,648)
  Investing activities         27,376         8,650        24,446        17,048        12,913
                           -----------   -----------    ---------     ----------    ----------

Net decrease in cash          (17,350)      (60,709)      (41,910)      (24,527)      (42,735)

Cash, beginning of
  period                      310,717       371,426       413,336       437,863       480,598
                           -----------   -----------    ---------     ----------    ----------

Cash, end of period       $   293,367   $   310,717   $   371,426   $   413,336   $   437,863
                           ===========   ===========    =========     ==========    ==========

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

                                     2004            2003             2002             2001             2000
                                 -------------   --------------   -------------    -------------    -------------
<S>                           <C>             <C>              <C>              <C>              <C>

Federal                        $           83  $           111  $          113   $          113   $          113
State                                       -                -               -                -                -
                                 -------------   --------------   -------------    -------------    -------------

Total                          $           83  $           111  $          113   $          113   $          113
                                 =============   ==============   =============    =============    =============
</TABLE>

                                       12
<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 sum 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 (See Notes 2 and 3 to the audited financial statements).

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. In subsequent annual
financial  statements,  upon receiving the actual annual results reported by the
Local Limited  Partnerships,  management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships.  Equity in losses


                                       13
<PAGE>



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.

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.


                                       14
<PAGE>



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.

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  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  contractual  obligations and or suspend
services for this or any other reason.

Financial Condition

The  Partnership's  assets at March 31, 2005  consisted  of $293,000 in cash and
aggregate  investments in the eighteen Local Limited Partnerships of $2,174,000.
Liabilities  at March 31, 2005  primarily  consisted  of  $1,413,000  of accrued
annual management fees and advances due to the General Partner.

Results of Operations

Year  Ended  March  31,  2005   Compared  to  Year  Ended  March  31,  2004  The
Partnership's  net loss for the year  ended  March  31,  2005 was  $(1,526,000),
reflecting a decrease of $712,000 from the net loss of $(2,238,000)  experienced
for the year ended March 31, 2004. The decrease in net loss is  principally  due
to a decrease in  impairment  expense of $733,000  from  investments  in limited
partnerships  for the year ended March 31, 2005 compared to year ended March 31,
2004, an increase of $3,000 in income, a $5,000 decrease in amortization  offset
by an increase of $(5,000) in other operating  expenses.  Additionally equity in
losses of limited partnerships increased by approximately $(24,000).

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.


                                       15
<PAGE>



Liquidity and Capital Resources

Year Ended March 31, 2005  Compared to Year Ended March 31, 2004.  Net cash used
during the year ended March 31, 2005 was  $(17,000),  reflecting a net change of
$44,000  compared  to net  cash  used  for the  year  ended  March  31,  2004 of
$(61,000).  The change was due  primarily  to a an  increase  of $19,000 in cash
provided by distributions from limited partnerships, in addition to cash used in
operations  decreasing  by $25,000.  The decrease is largely due to accrued fees
and expenses due to General Partner and affiliates  increasing by  approximately
$26,000.

Year Ended March 31, 2004  Compared to Year Ended March 31, 2003.  Net cash used
during the year ended March 31, 2004 was  $(61,000),  reflecting a net change of
$19,000  compared  to net  cash  used  for the  year  ended  March  31,  2003 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.

During the years ended March 31, 2005, 2004 and 2003,  accrued  payables,  which
consist  primarily of related party  management fees due to the General Partner,
increased by $156,000, $130,000, and $132,000, 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, 2005, 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, 2005:
<TABLE>
<CAPTION>

                                    2006       2007        2008        2009        2010      Thereafter     Total

                                 ---------  ----------  ----------  ----------  ----------  -----------   ---------
<S>                            <C>        <C>        <C>        <C>         <C>         <C>          <C>

Asset Management Fees (1)      $ 1,588,589 $  181,385  $  181,385  $  181,385  $  181,385  $ 7,255,400  $9,569,529
Capital Contributions
   Payable to Lower Tier
   Partnerships                         -           -           -           -           -            -           -
                                 ---------  ----------  ----------  ----------  ----------  -----------   ---------
Total contractual cash
obligations                    $ 1,588,589 $  181,385  $  181,385  $  181,385  $  181,385  $ 7,255,400  $9,569,529
                                =========  ==========  ==========  ==========  ==========  ===========   ==========
</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,  2005 have  been  included  in the 2006  column.  The  General
     Partner does not anticipate that these fees will be paid until such time as
     capital reserves are in excess of the aggregate of the existing contractual
     obligations  and the  anticipated  future  foreseeable  obligations  of the
     Partnership.

For  additional  information  on our asset  management  fees,  see Note 3 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.

                                       16
<PAGE>



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.

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 46(R)'')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 46(R) is  effective  for the  Partnership.  This  Interpretation
requires consolidation by the Partnership of certain Local Limited Partnerships'
assets and liabilities  and results of operations if the Partnership  determines
that the Local  Limited  Partnership  is a VIE and that the  Partnership  is the
''Primary  Beneficiary.'' For consolidation  purposes, minority interests may be
recorded for the Local Limited  Partnerships'  ownership  share  attributable to
other Limited Partners.

With the adoption of FIN 46(R),  the  Partnership has assessed the Local Limited
Partnerships  based upon the three  criteria in  paragraphs  5a, b, and c of FIN
46(R) and has  concluded  that each of the Local Limited  Partnerships  is not a
VIE.  Therefore  the  adoption  of FIN  46(R)  had no  impact  on the  financial
condition or results of operations for the Partnership.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
(SFAS 154), "Accounting Changes and Error Corrections" which provides guidance
on the  accounting  for and  reporting of accounting  changes and  correction of
errors.  This  statement  changes the  requirements  for the  accounting for and
reporting  of a change in  accounting  principle  and  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include  specific  transition  provisions.   This  statement  is  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. The  Partnership  does not anticipate a material effect
upon the adoption of this statement.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data

                                       17


<PAGE>

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

                                 BALANCE SHEETS

        Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

<TABLE>
<CAPTION>

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

                                                                            2005             2004
                                                                        -------------    -------------
<S>                                                                  <C>              <C>

 ASSETS

 Cash                                                                 $      293,367   $      310,717
 Investments in limited partnerships, net
   (Notes 2 and 3)                                                         2,173,564        3,525,413
                                                                        -------------    -------------

                                                                      $    2,466,931   $    3,836,130
                                                                        =============    =============

 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 Liabilities:
    Accrued fees and expenses due to General Partner
       and affiliates (Note 3)                                        $    1,413,074   $    1,256,656
                                                                        -------------    -------------

 Commitments and contingencies

 Partners' equity (deficit):
    General partner                                                         (159,592)        (144,336)
    Limited partners (30,000 units authorized; 18,000 units
       issued and outstanding)                                             1,213,449        2,723,810
                                                                        -------------    -------------

          Total partners' equity                                           1,053,857        2,579,474
                                                                        -------------    -------------

                                                                      $    2,466,931   $    3,836,130
                                                                        =============    =============
</TABLE>

                 See accompanying notes to financial statements
                                       18
<PAGE>



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

                            STATEMENTS OF OPERATIONS

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

<TABLE>
<CAPTION>

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

                                                          2005              2004               2003
                                                      --------------    -------------      --------------
<S>                                                <C>               <C>                <C>

Interest income                                     $           952   $        1,658     $         4,474
Other income                                                  8,644            4,967               6,325
                                                      --------------    -------------      --------------

   Total income                                               9,596            6,625              10,799
                                                      --------------    -------------      --------------

Operating expenses:
   Amortization (Notes 2 and 3)                              42,560           47,484              59,379
   Asset management fees (Note 3)                           181,385          181,385             181,385
   Impairment loss (Note 2)                                873,891        1,607,047                   -
   Other                                                     29,355           24,931              27,384
                                                      --------------    -------------      --------------

    Total operating expenses                              1,127,191        1,860,847             268,148
                                                      --------------    -------------      --------------

Loss from operations                                     (1,117,595)      (1,854,222)           (257,349)

Equity in losses of limited
  partnerships (Note 2)                                    (408,022)        (383,422)           (799,326)
                                                      --------------    -------------      --------------

Net loss                                            $    (1,525,617)  $   (2,237,644)    $    (1,056,675)
                                                      ==============    =============      ==============

Net loss allocated to:
   General partner                                  $       (15,256)  $      (22,376)    $       (10,567)
                                                      ==============    =============      ==============

   Limited partners                                 $    (1,510,361)  $   (2,215,268)    $    (1,046,108)
                                                      ==============    =============      ==============

Net loss per limited partner unit                   $        (83.90)  $      (123.07)    $        (58.12)
                                                      ==============    =============      ==============

Outstanding weighted limited partner units                   18,000           18,000              18,000
                                                      ==============    =============      ==============
</TABLE>
                 See accompanying notes to financial statements
                                       19
<PAGE>



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

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

<TABLE>
<CAPTION>
                                                               General            Limited
                                                               Partner            Partners             Total
                                                            ---------------    ---------------     ---------------
<S>                                                      <C>               <C>                 <C>

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

Net loss                                                          (15,256)       (1,510,361)          (1,525,617)
                                                           ---------------    ---------------     ---------------

Partners' equity (deficit) at March 31, 2005              $      (159,592)  $     1,213,449     $      1,053,857
                                                           ===============    ===============     ===============
</TABLE>

                 See accompanying notes to financial statements
                                       20
<PAGE>



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

                            STATEMENTS OF CASH FLOWS

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

<TABLE>
<CAPTION>


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

                                                                        2005            2004              2003
                                                                     ------------   --------------    --------------
<S>                                                               <C>             <C>              <C>

Cash flows from operating activities:
   Net loss                                                        $  (1,525,617)  $   (2,237,644)  $    (1,056,675)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     Amortization                                                         42,560           47,484            59,379
     Equity in losses of limited
       partnerships                                                      408,022          383,422           799,326
     Impairment of local limited partnerships                          873,891        1,607,047                 -
     Change in accrued fees and
       expenses due to General
       Partner and affiliates                                            156,418          130,332           131,614
                                                                     ------------   --------------    --------------

Net cash used in
  operating activities                                                   (44,726)         (69,359)          (66,356)
                                                                     ------------   --------------    --------------

Cash flows from investing activities:
   Distributions from limited
     partnerships                                                         27,376            8,650            24,446
                                                                     ------------   --------------    --------------

Net decrease in cash                                                     (17,350)         (60,709)          (41,910)

Cash, beginning of year                                                  310,717          371,426           413,336
                                                                     ------------   --------------    --------------

Cash, end of year                                                  $     293,367   $      310,717   $       371,426
                                                                     ============   ==============    ==============

SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

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

                 See accompanying notes to financial statements
                                       21
<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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.


                                       22
<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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.


                                       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, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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

Anticipated  future and  existing  cash  resources  of the  Partnership  are not
sufficient   to  pay  existing   liabilities   of  the   Partnership.   However,
substantially all of the existing  liabilities of the Partnership are payable to
the General  Partner and/or its  affiliates.  Though the amounts  payable to the
General Partner and/or its affiliates are contractually  currently payable,  the
Partnership  anticipates that the General Partner and/or its affiliates will not
require the payment of these contractual  obligations until capital reserves are
in excess of the aggregate of then  existing  contractual  obligations  and then
anticipated future foreseeable  obligations of the Partnership.  The Partnership
would be adversely  affected  should the General  Partner  and/or its affiliates
demand current  payment of the existing  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 sum 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


                                       24
<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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

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. In subsequent annual
financial  statements,  upon receiving the actual annual results reported by the
Local Limited  Partnerships,  management reverses its prior estimate and records
the actual results reported by 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  balance  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 equity method
only  after its share of such net  income  equals  the share of net  losses  not
recognized during the period(s) the equity method was suspended.

Distributions  received 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
----------------------------

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 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-46(R)'')  to
clarify some of its provisions.


                                       25
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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

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
46(R) is effective for the Partnership.

This Interpretation  requires  consolidation by the Partnership of certain Local
Limited  Partnerships'  assets and  liabilities and results of operations if the
Partnership  determines that the Local Limited Partnership is a VIE and that the
Partnership is the ''Primary Beneficiary.'' For consolidation purposes, minority
interests may be recorded for the Local Limited  Partnerships'  ownership  share
attributable to other Limited Partners.

With the adoption of FIN 46(R),  the  Partnership has assessed the Local Limited
Partnerships  based upon the three  criteria in  paragraphs  5a, b, and c of FIN
46(R) and has  concluded  that each of the Local Limited  Partnerships  is not a
VIE.  Therefore  the  adoption  of FIN  46(R)  had no  impact  on the  financial
condition or results of operations for the Partnership.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
(SFAS 154),  "Accounting Changes and Error Corrections'' which provides guidance
on the  accounting  for and  reporting of accounting  changes and  correction of
errors.  This  statement  changes the  requirements  for the  accounting for and
reporting  of a change in  accounting  principle  and  applies to all  voluntary
changes in  accounting  principle.  It also  applies to changes  required  by an
accounting pronouncement in the unusual instance that the pronouncement does not
include  specific  transition  provisions.   This  statement  is  effective  for
accounting  changes and  corrections  of errors made in fiscal  years  beginning
after December 15, 2005. The  Partnership  does not anticipate a material effect
upon the adoption of this statement.

Revenue Recognition
-------------------

The  Partnership  is entitled to receive  reporting  fees from the Local Limited
Partnerships.  The  intent  of  the  reporting  fees  is  to  offset  (in  part)
administrative costs incurred by the Partnership in corresponding with the Local
Limited  Partnerships.  Due to the  uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.

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.


                                       26
<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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

The  Partnership's  investments  in Local Limited  Partnerships  as shown in the
balance  sheets  at March  31,  2005 and 2004  are  approximately  $487,000  and
$100,000,  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 $873,891
and $1,607,047, during the years ended March 31, 2005 and 2004, respectively.

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, 2005 and 2004,  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,
2005, 2004 and 2003 amounting to approximately $316,000, $630,000, and $173,000,
respectively,  have not been  recognized.  As of March 31, 2005,  the  aggregate
share of net losses not recognized by the Partnership amounted to $1,296,000.

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

                                                                   2005               2004              2003
                                                              ---------------    ---------------    --------------
<S>                                                        <C>                 <C>              <C>

Investments per balance sheet, beginning of period          $      3,525,413    $    5,572,016   $     6,455,167
Distributions received from limited partnerships                     (27,376)           (8,650)          (24,446)
Equity in losses of limited partnerships                            (408,022)         (383,422)         (799,326)
Impairment of local limited partnerships                            (873,891)       (1,607,047)                -
Amortization of paid acquisition fees and costs                      (42,560)          (47,484)          (59,379)
                                                              ---------------    ---------------    --------------

Investments per balance sheet, end of period                $      2,173,564   $     3,525,413   $     5,572,016
                                                              ===============    ===============    ==============
</TABLE>


                                       27
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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:
<TABLE>
<CAPTION>

                                        COMBINED CONDENSED BALANCE SHEETS

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

  Buildings and improvements, net of accumulated depreciation as of
   December 31, 2004 and 2003 of $12,067,000 and $10,959,000,
   respectively.                                                             $     24,179,000    $     25,136,000
  Land                                                                              2,233,000           2,213,000
  Other assets                                                                      2,704,000           2,541,000
                                                                               ---------------     ---------------

                                                                             $     29,116,000    $    29,890 ,000
                                                                               ===============     ===============
LIABILITIES

Mortgage loans payable                                                       $     23,545,000    $     23,714,000
Due to related parties                                                                496,000             451,000
Other liabilities                                                                   1,795,000           1,613,000
                                                                               ---------------     ---------------

                                                                                   25,836,000          25,778,000
                                                                               ---------------     ---------------
PARTNERS' EQUITY

WNC California Housing Tax Credits III, L.P.                                        2,661,000           3,425,000
Other partners                                                                        619,000             687,000
                                                                               ---------------     ---------------

                                                                                    3,280,000           4,112,000
                                                                               ---------------     ---------------

                                                                             $     29,116,000    $     29,890,000
                                                                               ===============     ===============
</TABLE>

                                       28
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
<TABLE>
<CAPTION>

                                              COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                 2004               2003                2002
                                                            ---------------    ---------------     ---------------
<S>                                                      <C>                <C>                 <C>

Revenues                                                  $      3,688,000   $      3,570,000    $      3,307,000
                                                            ---------------    ---------------     ---------------

Expenses:
   Operating expenses                                            2,478,000          2,597,000           2,218,000
   Interest expense                                                868,000            872,000             941,000
   Depreciation and amortization                                 1,120,000          1,110,000           1,110,000
                                                            ---------------    ---------------     ---------------

         Total expenses                                          4,466,000          4,579,000           4,269,000
                                                            ---------------    ---------------     ---------------

Net loss                                                  $       (788,000)  $     (1,009,000)   $       (962,000)
                                                            ===============    ===============     ===============

Net loss allocable to the Partnership                     $       (741,000)  $     (1,001,000)   $       (952,000)
                                                            ===============    ===============     ===============

Net loss recorded by the Partnership                      $       (408,000)  $       (383,000)   $       (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 $1,368,674 and $867,611 as of
     March 31,  2005 and 2004,  respectively.  Of the  accumulated  amortization
     recorded on the balance  sheet at March 31, 2005,  $98,698,  $233,539,  and
     $149,373  of the  related  expense  was  reflected  as  equity in losses of
     limited partnerships during the years ended March 31, 2005, 2004, and 2003,
     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 $194,019 and $91,746 as of March 31, 2005 and
     2004, respectively. Of the accumulated amortization recorded on the balance
     sheet at March 31, 2005, $0,  $27,978,  and $17,898 of the related  expense
     was reflected as equity in losses of limited  partnerships during the years
     ended March 31, 2005, 2004 and 2003, 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.


                                       29
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

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,  2005,  2004 and 2003,  of
     which, $30,000, $50,000, and $50,000 were paid during the years ended March
     31, 2005, 2004 and 2003, respectively.

     The  Partnership  reimburses  the  General  Partner or its  affiliates  for
     operating expenses incurred in behalf of the Partnership. Operating expense
     reimbursements  were  approximately  $24,000 during each of the years ended
     March 31, 2005 and 2004.

     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, 2005.

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

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

                                                                     2005              2004
                                                                 --------------    --------------
<S>                                                           <C>               <C>

Reimbursement for expenses paid by the General
   Partner or its affiliate                                    $         5,870   $           837

Accrued asset management fees                                        1,407,204         1,255,819
                                                                 --------------    --------------

                                                               $     1,413,074   $     1,256,656
                                                                 ==============    ==============
</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.

                                       30
<PAGE>



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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                For The Years Ended March 31, 2005, 2004 and 2003

       Unaudited - These financial statements are being filed without an
         opinion from our independent registered public accounting firm.

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------

The following is a summary of the quarterly operations for the years ended March
31:
<TABLE>
<CAPTION>

                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------
<S>                                  <C>                   <C>                <C>                <C>

               2005

Income                                $          5,000      $           -      $          -       $       5,000

Operating expenses                             (60,000)           (63,000)          (71,000)           (933,000)

Equity in losses of
     limited partnerships                      (76,000)           (76,000)         (162,000)            (94,000)

Net loss                                      (131,000)          (139,000)         (233,000)         (1,023,000)

Net Loss available to limited
     partners                                 (130,000)          (138,000)         (230,000)         (1,012,000)

Net Loss per limited partner unit                   (7)                (8)              (13)                (56)


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

               2004

Income                                $          2,000      $       2,000      $      1,000      $        2,000

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

Equity in income (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>



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, 2005 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:

Wilfred N. Cooper, Sr.         Chairman of the Board
Wilfred N. Cooper, Jr.         President and Chief Executive Officer
David N. Shafer, Esq.          Executive Vice President
Sylvester P. Garban            Senior Vice President - Institutional Investments
Thomas J. Riha, CPA            Senior Vice President - Chief Financial Officer
Michael J. Gaber               Senior Vice President - Acquisitions
Edward W. Peters               President of WNC Management, Inc.

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,  a National  Trustee for NAHB's  Political  Action
Committee,  and a past Chairman of NAHB's Multifamily  Council. He is a Director
of the National Housing Conference and a member of NHC's Board of Governors, 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.

                                       32
<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 and a Director of, and a registered  principal with, WNC Capital
Corporation, and is a Director and Vice President 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,  a  member  of the Tax  Policy  Council  for the
National Trust for Historic Preservation,  a member of the Advisory Board of the
New York State  Association for Affordable  Housing,  a member of the Urban Land
Institute and a member of TEC  International.  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 52, is Executive Vice President, a Director and a member of
the  Acquisition  Committee of  Associates,  and a Director,  Vice President 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 past 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   and  a  registered   principal  with  WNC  Capital
Corporation.  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 49, is Senior Vice President - Chief Financial Officer and a
member of the  Acquisition  Committee  and the  Commercial  Real Estate Group of
Associates and Vice 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. 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.

Michael J. Gaber,  age 38, is Senior Vice President - Acquisitions  and a member
of the Acquisition  Committee and the Commercial Real Estate Group of Associates
and a Vice President of WNC Management, Inc. 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.

Edward W. Peters, age 52, is President of WNC Management,  Inc. He has more than
12 years of  experience in all facets of property  management.  Prior to joining
WNC in 2003,  Mr.  Peters  served as Vice  President  and  Director  of Property
Management  at Design  Center  Housing  Services,  Inc.  and as Director at John
Stewart Company. He is a licensed real estate broker in the State of California,
a  certified  occupancy   specialist  (COS),  and  holds  two  national  housing
compliance  certificates:  the housing credit compliance professional (HCCP) and
the national credit compliance  professional-executive  (NCP-e). Mr. Peters is a
Director of the Affordable  Housing  Management  Association  and graduated from
Rutgers University in 1990 with a Master of Science degree in social work and in
1983 from Antioch University with a Master of Science degree in education.


                                       33
<PAGE>



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.

 (j) Changes to Nominating Procedures
     --------------------------------

     Inapplicable

 (k) 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, 2005, 2004 and 2003. The
     Partnership paid the General Partner or its affiliates,  $30,000,  $50,000,
     and $50,000 of those fees during the years ended March 31,  2005,  2004 and
     2003, 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.


                                       34
<PAGE>



(c)  Operating  Expense.  The Partnership  reimbursed the General Partner or its
     affiliates for operating expenses of approximately  $24,000,  $24,000,  and
     $26,000,   during  the  years  ended  March  31,   2005,   2004  and  2003,
     respectively.

(d)  Interest  in  Partnership.   The  General   Partner   receives  1%  of  the
     Partnership's  allocated Low Income  Housing  Credits,  which  approximated
     $15,000,  $20,000,  and $20,000  for the General  Partner for the tax years
     ended December 31, 2004, 2003 and 2002,  respectively.  The General Partner
     is also entitled to receive a percentage of  partnership  income or losses,
     and of  cash  distributions.  There  were no  distributions  of cash to the
     General Partner during the years ended March 31, 2005, 2004 and 2003.

                                       35
<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  Partnership's  independent
auditors for the years ended March 31:
<TABLE>
<CAPTION>

                                             2005                2004
                                        ---------------     ---------------
<S>                                  <C>                 <C>

Audit Fees                            $         18,025    $         15,501
Audit-related Fees                                   -                   -
Tax Fees                                         3,000               1,625
All Other Fees                                       -                   -
                                        ---------------     ---------------
TOTAL                                 $         21,025    $         17,126
                                        ===============     ===============
</TABLE>

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


                                       36
<PAGE>



PART IV.

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

(a)(1)   List of financial statements included in Part II hereof:
         --------------------------------------------------------

         Unaudited Balance Sheets as of March 31, 2005 and 2004
         Unaudited Statements of Operations for the years ended March 31, 2005,
           2004 and 2003
         Unaudited Statements of Partners' Equity (Deficit) for the years ended
           March 31, 2005, 2004 and 2003
         Unaudited Statements of Cash Flows for the years ended March 31, 2005,
           2004 and 2003
         Unaudited Notes to Financial Statements

(a)(2)   List of financial statement schedules included in Part IV hereof:
         -----------------------------------------------------------------

         Unaudited Schedule III - Real Estate Owned by Local Limited
           Partnerships

(9)(3)   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 by reference as Exhibit 3.1.

31.1     Certification  of the Chief 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 Chief 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.


                                       37
<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 31, 2003 and 2002 together with  Independent
         Auditors' Report thereon; a significant subsidiary of the Partnership.


                                       38

<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2005
<TABLE>
<CAPTION>

                                    --------------------------------    ------------------------------------------------------------
                                            As of March 31, 2005                          As of December 31, 2004
                                    --------------------------------    ------------------------------------------------------------
                                                                         Mortgage
                                    Total Investment   Amount of         Balances of      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid to Date      Partnerships     Equipment     Depreciation       Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>             <C>                 <C>              <C>               <C>            <C>

Almond Garden          Delhi,
Apartment Associates   California   $    391,000    $   391,000         $ 1,365,000    $   1,779,000      $ 695,000     $ 1,084,000

Almond View            Stockton,
Apartments, Ltd.       California      1,639,000      1,639,000           1,729,000        3,524,000      1,307,000       2,217,000

Buccaneer Associates,  Fernandia
Limited                Beach, Florida    365,000        365,000           1,450,000        2,218,000        622,000       1,596,000

Candleridge Apartments
of Perry L.P. II       Perry, Iowa       126,000        126,000             682,000          924,000        344,000         580,000

Colonial Village       Roseville,
Roseville              California      2,811,000      2,811,000           1,940,000        5,354,000      1,906,000       3,448,000

Dallas County          Orrville,
Housing, Ltd.          Alabama           130,000        130,000             604,000          799,000        252,000         547,000

La Paloma del Sol      Deming,
Limited Partnership    New Mexico        254,000        254,000           1,407,000        1,827,000        511,000       1,316,000

Memory Lane            Yankton,
Limited Partnership    South Dakota      151,000        151,000             670,000          913,000        457,000         456,000

Nueva Sierra           Richgrove,
Vista Associates       California      1,688,000      1,688,000           1,624,000        3,252,000        771,000       2,481,000

Old Fort Highway       Hidalgo,
Limited Partnership    Texas             249,000        249,000           1,254,000        1,724,000        496,000       1,228,000

</TABLE>
                                       39
<PAGE>



WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2005
<TABLE>
<CAPTION>

                                    --------------------------------    ------------------------------------------------------------
                                            As of March 31, 2005                          As of December 31, 2004
                                    --------------------------------    ------------------------------------------------------------
                                                                         Mortgage
                                    Total Investment   Amount of         Balances of      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid to Date      Partnerships     Equipment     Depreciation       Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>          <C>               <C>               <C>             <C>               <C>           <C>

Orosi Apartments,      Orosi,
Ltd.                   California   $    461,000      $ 461,000         $  1,883,000    $  2,485,000      $ 516,000     $ 1,969,000

Parlier Garden Apts.   Parlier,
                       California        453,000        453,000            1,680,000       2,208,000        584,000       1,624,000

Rosewood Apartments    Superior,
Limited Partnership    Wisconsin         185,000        185,000              443,000         767,000        215,000         552,000

                       Itta Bena,
Sun Manor, L.P.        Mississippi       230,000        230,000            1,040,000       1,352,000        510,000         842,000

                       South Lake
Tahoe Pines            Tahoe,
Apartments             California      1,633,000      1,633,000            1,624,000       3,323,000      1,240,000       2,083,000

Venus Retirement
Village, Ltd           Venus, Texas      161,000        161,000              713,000         650,000        350,000         300,000

Walnut - Pixley, L.P.  Orange,
                       California      1,078,000      1,078,000            1,635,000       2,768,000        742,000       2,026,000

Winters Investment     Winters,
Group                  California        531,000        531,000            1,802,000       2,592,000        549,000       2,043,000
                                    ------------   ------------         -------------   ------------     -----------   ------------
                                    $ 12,536,000   $ 12,536,000         $  23,545,000   $ 38,459,000   $ 12,067,000   $  26,392,000
                                    ============   ============         =============   ============    ============   ============
</TABLE>

                                       40
<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2005
<TABLE>
<CAPTION>

                                   ------------------------------------------------------------------------
                                                    For the year ended December 31, 2004
                                   ------------------------------------------------------------------------
                                                                          Year                    Estimated
                                                      Net Income       Investment               Useful Life
 Partnership Name                    Rental Income    (Loss)            Acquired      Status        (Years)
-----------------------------------------------------------------------------------------------------------
<S>                                     <C>          <C>                  <C>      <C>               <C>

Almond Garden Apartment Associates       $ 219,000    $  (39,000)          1994     Completed         27.5

Almond View Apartments, Ltd.               240,000      (228,000)          1994     Completed         27.5

Buccaneer Associates, Limited              241,000       (40,000)          1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    148,000       (15,000)          1994     Completed         27.5

Colonial Village Roseville                 545,000         1,000           1993     Completed         27.5

Dallas County Housing, Ltd.                 76,000      ( 22,000)          1993     Completed           40

La Paloma del Sol Limited
Partnership                                182,000        (5,000)          1993     Completed           40

Memory Lane Limited Partnership
                                            80,000       (22,000)          1994     Completed           25

Nueva Sierra Vista Associates              159,000      (161,000)          1994     Completed           40

Old Fort Limited Partnership               195,000       (29,000)          1993     Completed           40

Orosi Apartments, Ltd.                     234,000       (12,000)          1993     Completed           50

Parlier Garden Apts.                       303,000        27,000           1994     Completed           40

Rosewood Apartments Limited
Partnership                                 91,000        (7,000)          1994     Completed           40

Sun Manor, L.P.                            150,000       (31,000)          1993     Completed         27.5

Tahoe Pines Apartments                     202,000      (138,000)          1994     Completed         27.5

Venus Retirement Village, Ltd.              95,000       (30,000)          1993     Completed           25

Walnut - Pixley, L.P.                      167,000       (35,000)          1993     Completed           40

Winters Investment Group                   279,000         8,000           1994     Completed           50
                                         ---------      ---------

                                       $ 3,606,000    $ (778,000)
                                       ===========    ===========
</TABLE>

                                       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      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid 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
of Perry L.P. II       Perry, 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,
Limited Partnership    New 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      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid 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 Apts.   Parlier,
                       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, L.P.        Itta Bena,
                       Mississippi       230,000        230,000            1,044,000       1,349,000         460,000        889,000

Tahoe Pines            South Lake
Apartments             Tahoe,
                       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, L.P.  Orange,
                       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
                                   ------------------------------------------------------------------------
                                                                          Year                    Estimated
                                                      Net Income       Investment               Useful Life
 Partnership Name                    Rental Income    (Loss)            Acquired      Status        (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               -            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      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid 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
of Perry L.P. II       Perry, Iowa       126,000        126,000             691,000         908,000        269,000          639,000

Colonial Village       Roseville,
Roseville              Calfornia       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,
Limited Partnership    New 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      Property                         Net
                                    in Local Limited   Investment        Local Limited      and          Accumulated       Book
Partnership Name       Location     Partnerships       Paid 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 Apts.   Parlier,
                       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, L.P.        Itta Bena,
                       Mississippi       230,000        230,000           1,048,000       1,345,000        410,000          935,000

Tahoe Pines            South Lake
Apartments             Tahoe,
                       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        291,000          637,000

Walnut - Pixley, L.P.  Orange,
                       California      1,078,000      1,078,000             993,000       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, 2002
                                   ------------------------------------------------------------------------
                                                                          Year                    Estimated
                                                      Net Income       Investment               Useful Life
 Partnership Name                    Rental Income    (Loss)            Acquired      Status        (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>



                                   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: November 8, 2005

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:  November 8, 2005



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:  November 8, 2005



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

Date:  November 8, 2005



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

Date:  November 8, 2005

                                      48