FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

   o ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                   For the fiscal year ended ________________

                                       OR

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

        For the transition period from January 1, 1999 to March 31, 1999

                         Commission file number: 0-23908


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

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

                                 (714) 662-5565

           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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K 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

                                       1

<PAGE>


State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.

                                  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  in  other  limited  partnerships  or  limited  liability
companies ("Local Limited Partnerships") which own multifamily housing complexes
that are  eligible  for  low-income  housing  federal  and,  in  certain  cases,
California income tax credits ("Low Income Housing Credits").

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

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 will own and operate a  multi-family
housing  complex (the "Housing  Complex")  which will qualify for the Low Income
Housing Credit.  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 Low Income Housing Credit to be used
against  California taxes otherwise due in each year of a four-year period.  The
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,  as amended by Supplement No. 1 thru  Supplement No. 9 thereto (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, 1999,  the  Partnership  had invested in eighteen  Local Limited
Partnerships.  Each of these Local Limited  Partnerships  owns a Housing Complex
that is 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.

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

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

As a limited partner or non-managing  member,  the  Partnership's  liability for
obligations of each Local Limited Partnership is limited to its investment.  The
Local General Partners of each Local Limited  Partnership retain  responsibility
for developing,  constructing,  maintaining,  operating and managing the Housing
Complexes.

Item 2.  Properties

Through its investments in Local Limited  Partnerships,  the  Partnership  holds
limited  partnership  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:


                                       4
<PAGE>
<TABLE>
<CAPTION>
                                                    ------------------------------  ------------------------------------------------
                                                         As of March 31, 1999                    As of December 31, 1998
                                                    ------------------------------  ------------------------------------------------

                                                       Partnership's                                       Estimated    Encumbrances
                                                     Total Investment  Amount of                           Low Income    of Local
                                 General Partner     in Local Limited  Investment   Number of    Occu-     Housing       Limited
Partnership Name  Location            Name             Partnerships    Paid to Date   Units      pancy     Credits      Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>            <C>                  <C>            <C>               <C>      <C>     <C>            <C>

Almond Garden     Delhi,         Anthony Donovan       $  391,000    $   391,000       34        94%    $    807,000   $  1,394,000
Apartment         California
Associates

Almond View       Stockton,      Daniel C. Logue and
Apartments,       California     Cyrus Youssefi         1,639,000      1,639,000       72        97%       3,523,000      1,774,000
Ltd.

Buccaneer         Fernandia      Clifford E. Olsen        365,000        365,000       48        94%         768,000      1,482,000
Associates,       Beach, Florida
Limited

Candleridge       Perry, Iowa    Eric A. Sheldahl         126,000        126,000       24       100%         245,000        705,000
Apartments of
Perry L.P. II

Colonial Village  Roseville,     S.P. Thomas Company of
Roseville         Calfornia      Northern California
                                 Inc. and Project Go,
                                 Inc.                   2,811,000      2,811,000       56        86%       5,872,000      2,128,000

Dallas County     Orrville,      Thomas H. Cooksey and
Housing, Ltd.     Alabama        Apartment Developers,
                                 Inc.                     130,000        130,000       19       100%         287,000        617,000

La Paloma del     Deming,        Dean Greenwalt           254,000        254,000       38        94%         625,000      1,438,000
Sol Limited       New Mexico
Partnership

Memory Lane       Yankton,       Skogen - Peterson, Inc   151,000        151,000       18       100%         295,000        688,000
Limited           South Dakota
Partnership

Nueva Sierra      Richgrove,     Self-Help Enterprises,
Vista             California     Inc. and Nueva Sierra
Associates                       Vista Corporation      1,688,000      1,688,000       35        91%       3,516,000      1,805,000

</TABLE>
                                       5


<PAGE>

<TABLE>
<CAPTION>
                                                    ------------------------------  ------------------------------------------------
                                                         As of March 31, 1999                    As of December 31, 1998
                                                    ------------------------------  ------------------------------------------------

                                                       Partnership's                                       Estimated    Encumbrances
                                                     Total Investment  Amount of                           Low Income    of Local
                                 General Partner     in Local Limited  Investment   Number of   Occu-      Housing       Limited
Partnership Name  Location            Name             Partnerships    Paid to Date   Units     pancy      Credits      Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>            <C>                      <C>        <C>               <C>      <C>       <C>           <C>
Old Fort Limited  Hidalgo,       Alan Deke Noftsker and
Partnership       Texas          ABO Corporation             249,000     249,000       40        97%         547,000      1,282,000

Orosi Apartments, Orosi,         Douglas W. Young            461,000     461,000       42       100%         902,000      1,966,000
Ltd.              California

Parlier Garden    Parlier,       David J. Micheal and
Apts.             California     Professional Apartment
                                 Management, Inc.            453,000     453,000       41       100%         917,000      1,715,000

Rosewood          Superior,      Duffy Development
Apartments        Wisconsin      Company, Inc.               185,000     168,000       20        75%         375,000        518,000
Partnership
Limited

Sun Manor, L.P.   Itta Bena,     Glenn D. Miller             230,000     230,000       36        97%         464,000      1,061,000
                  Mississippi

Tahoe Pines       South Lake     David J. Michael, Bucky
Apartments        Tahoe,         Fong, Dean Pearson, Coy
                  California     Elvis and Dr. Patricia
                                 Hatton                    1,633,000   1,633,000       28       100%       3,171,000      1,702,000

Venus             Venus,         W. Joseph Chamy             161,000     161,000       24        96%         318,000        728,000
Retirement        Texas
Village,
Ltd.

Walnut -          Orange,        Walnut - Pixley, Inc.     1,078,000   1,078,000       22       100%       2,309,000      1,742,000
Pixley, L.P.      California

Winters           Winters,       John P. Casper              531,000     531,000       38       100%       1,072,000      1,842,000
Investment        California                              ----------  ----------     ----      -----      ----------     ----------
Group
                                                         $12,536,000 $12,519,000      635        96%     $26,013,000    $24,587,000
                                                          ==========  ==========     ====      =====      ==========     ==========

</TABLE>
                                       6


<PAGE>

<TABLE>
<CAPTION>
                                      ------------------------------------------
                                          For the year ended December 31, 1998
                                      ------------------------------------------
                                                                   Low Income
                                                                 Housing Credits
                                           Rental         Net     Allocated to
Partnership Name                           Income         Loss    Partnership
--------------------------------------------------------------------------------
<S>                                    <C>           <C>                <C>

Almond Garden Apartment Associates     $   155,000   $   (59,000)       99%

Almond View Apartments, Ltd.               185,000      (233,000)       99%

Buccaneer Associates, Limited              200,000       (34,000)       99%

Candleridge Apartments of Perry L.P. II    139,000       (11,000)       99%

Colonial Village Roseville                 380,000      (155,000)       99%

Dallas County Housing, Ltd.                 62,000       (12,000)       99%

La Paloma del Sol Limited Partnership      134,000       (11,000)       99%

Memory Lane Limited Partnership             65,000       (30,000)       99%

Nueva Sierra Vista Associates              141,000      (119,000)       99%

Old Fort Limited Partnership               163,000        (3,000)       99%

Orosi Apartments, Ltd.                     184,000       (24,000)       99%

Parlier Garden Apts.                       191,000       (28,000)       95%

Rosewood Apartments Limited Partnership     71,000        (9,000)       99%

Sun Manor, L.P.                            139,000       (15,000)       99%

Tahoe Pines Apartments                     180,000      (101,000)       99%

Venus Retirement Village, Ltd.              83,000       (24,000)       99%

Walnut - Pixley, L.P.                      136,000       (49,000)       99%

Winters Investment Group                   185,000       (41,000)       99%
                                         ---------      --------
                                      $  2,793,000    $ (958,000)
                                         =========      ========
</TABLE>

                                       7

<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 and Related Stockholder Matters

Item 5a.

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

(b)  At March 31, 1999, there were 942 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.

(d)  No unregistered  securities  were sold by the Partnership  during the three
     months ended March 31, 1999.

Item 5b.

NOT APPLICABLE

Item 6.  Selected Financial Data

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

                               March 31                                     December 31
                        ------------------------  ----------------------------------------------------------------
                              1999         1998         1998         1997         1996          1995         1994
                              ----         ----         ----         ----         ----          ----         ----
                                     (Unaudited)
ASSETS
Cash and cash
<S>                    <C>         <C>           <C>         <C>          <C>           <C>          <C>
  equivalents          $   509,695 $    563,949  $   561,751 $  1,451,071 $  1,498,036  $  1,916,200 $  2,799,487
Cash in escrow                   -            -            -            -            -             -    2,090,570
Investments in
  limited
  partnerships, net      9,164,197   10,137,867    9,415,032   10,400,720   11,447,928    13,032,752   14,368,908
Due from affiliates              -            -            -            -            -             -      216,645
Other assets                     -            -            -        2,242        5,419             -       19,960
                         ---------   ----------    ---------   ----------   ----------    ----------   ----------
                       $ 9,673,892 $ 10,701,816  $ 9,976,783 $ 11,854,033 $ 12,951,383  $ 14,948,952 $ 19,495,570
                         =========   ==========    =========   ==========   ==========    ==========   ==========
LIABILITIES
Payables to limited
  partnerships         $    16,836 $     16,836  $    16,836 $     16,836 $     16,836  $    651,094 $  4,400,927
Due to General
  Partner and
  affiliates               552,257      416,586      561,391      370,223      233,380       240,188            -
Due to limited
  partners                       -            -            -      900,000            -             -            -

PARTNERS' EQUITY         9,104,799   10,268,394    9,398,556   10,566,974   12,701,167    14,057,670   15,094,643
                         ---------   ----------    ---------   ----------   ----------    ----------   ----------
                       $ 9,673,892 $ 10,701,816  $ 9,976,783 $ 11,854,033 $ 12,951,383  $ 14,948,952 $ 19,495,570
                         =========   ==========    =========   ==========   ==========    ==========   ==========

</TABLE>
                                       8
<PAGE>


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

                           For the Three Months                           For the Years Ended
                              Ended March 31                                  December 31
                          -----------------------   ----------------------------------------------------------------
                               1999          1998         1998         1997         1996         1995         1994
                               ----          ----         ----         ----         ----         ----         ----
                                       (Unaudited)
<S>                      <C>           <C>         <C>          <C>          <C>          <C>           <C>
Loss from operations     $  (64,061)   $  (54,043) $  (249,631) $  (205,576) $  (197,723) $  (105,423)  $   28,208
Equity in
  income(loss) from
  limited partnerships     (229,696)     (244,537)    (918,787)  (1,028,617)  (1,132,216)  (1,155,114)    (352,511)
                          ---------     ---------   ----------   ----------   ----------   ----------    ---------
Net income (loss)        $ (293,757)   $ (298,580) $(1,168,418) $(1,234,193) $(1,329,939) $(1,260,537)  $ (324,303)
                          =========     =========   ==========   ==========   ==========   ==========    =========
Net income(loss)
  allocated to:
  General partner        $   (2,938)   $   (2,986) $   (11,684) $   (12,342) $   (13,300) $   (12,605)  $   (3,243)
                          =========     =========   ==========   ==========   ==========   ==========    =========

  Limited partners       $ (290,819)   $ (295,594) $(1,156,734)  (1,221,851)  (1,316,639) $(1,247,932)  $ (321,060)
                          =========     =========   ==========   ==========   ==========   ==========    =========
Net income(loss) per
  limited partner unit   $   (16.16)   $   (16.42) $    (64.26) $    (67.88) $    (73.15) $    (69.33)  $   (48.71)
                          =========     =========   ==========   ==========   ==========   ==========    =========
Outstanding weighted
  limited partner            18,000        18,000       18,000       18,000       18,000       18,000        6,591
  units                   =========     =========   ==========   ==========   ==========   ==========    =========

                           For the Three Months                           For the Years Ended
                              Ended March 31                                  December 31
                          ------------------------  ----------------------------------------------------------------
                               1999          1998         1998         1997         1996         1995         1994
                               ----          ----         ----         ----         ----         ----         ----
                                       (Unaudited)
Net cash provided by
  (used in):
  Operating activities  $   (58,079) $      9,678  $     4,243  $    (6,960) $  (143,337) $   437,400 $   (225,005)
  Investing activities        6,023         3,200        6,437      (40,005)    (248,263)  (1,535,687)  (9,018,582)
  Financing activities            -      (900,000)    (900,000)           -      (26,564)     215,000    9,736,196
                          ---------     ---------    ---------    ---------    ---------    ---------    ---------
Net change in cash
  and cash equivalents      (52,056)     (887,122)    (889,320)     (46,965)    (418,164)    (883,287)     492,609

Cash and cash
  equivalents,
  beginning of period       561,751     1,451,071    1,451,071    1,498,036    1,916,200    2,799,487    2,306,878
                          ---------     ---------    ---------    ---------    ---------    ---------    ---------
Cash and cash
  equivalents, end of
  period                $   509,695  $    563,949  $   561,751  $ 1,451,071  $ 1,498,036  $ 1,916,200 $  2,799,487
                          =========     =========    =========   ==========    =========    =========    =========

Low Income  Housing  Credit per Unit was as follows for the years ended December 31:

                               1998            1997             1996            1995             1994
                               ----            ----             ----            ----             ----

 Federal            $           113  $          113   $          113  $           95  $            32
 State                           17              66               85              48               85
                       ------------    ------------     ------------    ------------    -------------
 Total              $           130  $          179   $          198  $          143  $           117
                       ============    ============     ============    ============    =============
</TABLE>

                                       9

<PAGE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operation

Financial Condition

The  Partnership's  assets at March 31, 1999  consisted  of $509,695 in cash and
aggregate  investments in the eighteen Local Limited Partnerships of $9,164,197.
Liabilities at March 31, 1999 primarily  consisted of $548,894 of accrued annual
management fees due to the General Partner.

Results of Operations

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
The  Partnership's  net loss for the  three  months  ended  March  31,  1999 was
$(294,000) reflecting a decrease of $5,000 from the net loss experienced for the
three months ended March 31, 1998.  The decline in net loss is primarily  due to
equity in losses of limited partnerships which declined by $15,000 to $(230,000)
for the three months ended March 31, 1999 from  $(245,000)  for the three months
ended March 31, 1998.  The reduction in equity losses  recognized  was partially
offset by an increase in loss from  operations  of $10,000 to $(64,000)  for the
three  months  ended March 31, 1999 from  $(54,000)  for the three  months ended
March 31, 1998, due to a comparable  increase in operating  expense  allocations
and a decrease in interest income.

Year Ended  December 31, 1998  Compared to Year Ended  December  31,  1997.  The
Partnership's  net loss for 1998 was  $(1,168,000),  reflecting  a  decrease  of
$66,000  from  the net loss  experienced  in 1997.  The  decline  in net loss is
primarily due to equity in losses from limited  partnerships  which  declined to
$(919,000) in 1998 from  $(1,029,000)  in 1997. This decrease was partially as a
result of the Partnership  not  recognizing  certain losses of the Local Limited
Partnerships.  The  investments  in such Local Limited  Partnerships  reached $0
during 1998. Since the  Partnership's  liability with respect to its investments
is limited, losses in excess of investment are not recognized.  of The reduction
in equity losses  recognized  was  partially  offset by an increase in loss from
operations of $44,000 for 1998 and $(250,000), from $(206,000) in 1997, due to a
comparable  increase in operating expense allocations and a decrease in interest
income.

Year Ended  December 31, 1997  Compared to Year Ended  December  31,  1996.  The
Partnership's  net loss for 1997 was  $(1,234,000),  reflecting  a  decrease  of
$96,000  from  the net loss  experienced  in 1996.  The  decline  in net loss is
primarily due to equity in losses from limited  partnerships  which  declined to
$(1,029,000) in 1997 from $(1,132,000) in 1996,  because of improved  operations
of  certain  investments  and that the  investments  in  certain  Local  Limited
Partnerships  reached $0 during 1997.  Losses from operations  were  essentially
unchanged between years.

Cash Flows

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998.
Net cash used  during  the three  months  ended  March 31,  1999 was  $(52,000),
compared  to net cash used  during  the three  months  ended  March 31,  1998 of
$(887,000).  The change was due  primarily to a return of capital to the limited
partners of $50 per unit or  $900,000  during the three  months  ended March 31,
1998,  partially offset by an increase in cash used for operating  activities of
$68,000,  primarily  due to an increase  in cash paid to the General  Partner or
affiliates  of $53,000 for  management  fees and a decrease  in interest  income
received.

Year Ended  December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was $(889,000), compared to net cash used in 1997 of $(47,000). The
change was due primarily to an increase in financing activities, which consisted
of a return of capital to the limited partners of $50 per unit or $900,000.

Year Ended  December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was  $(47,000),  compared to $(418,000) in 1996.The  change was due
primarily to a decrease in investments in Limited partnerships and a decrease in
the payment of management fees.

During the three  months  ended March 31, 1999 and the year ended  December  31,
1998, accrued payables, which consist primarily of related party management fees
due to the General  Partner,  decreased  by $9,000 and  increased  by  $191,000,
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
forseeable working capital requirements of the partnership.

                                       10
<PAGE>

The Partnership  expects its future cash flows,  together with its net available
assets at March 31, 1999,  to be  sufficient  to meet all  currently  forseeable
future cash requirements.

Impact of Year 2000

WNC & Associates, Inc.

Status of Readiness

Information Technology (IT) Systems. The Partnership relies on the IT systems of
WNC, its ultimate  general  partner.  IT systems include  computer  hardware and
software  used to produce  financial  reports and tax return  information.  This
information  is then  used to  generate  reports  to  investors  and  regulatory
agencies, including the Internal Revenue Service and the Securities and Exchange
Commission. The IT systems of WNC are year 2000 compliant.

Non-IT Systems. The Partnership also relies on the non-IT systems of WNC. Non-IT
systems  include  machinery and  equipment  such as  telephones,  voice mail and
electronic  postage  equipment.  Except  for one  telephone  system,  the non-IT
systems of WNC are year 2000  compliant.  The one telephone  system will require
the replacement of one computer and one software application, both of which will
be completed on or before October 1, 1999.

Service  Providers.  WNC also  relies on the IT and  non-IT  systems  of service
providers. Service providers include utility companies,  financial institutions,
telecommunications carriers,  municipalities, and other outside vendors. WNC has
obtained verbal assurances from its material service providers (electrical power
provider,  financial institutions and telecommunications carriers) that their IT
and non-IT systems are year 2000 compliant.  There can be no assurance that this
compliance  information  is  correct.  There also can be no  assurance  that the
systems of other,  less-important  service providers and outside vendors will be
year 2000 compliant.

Costs to Address Year 2000 Issues

The cost to address  year 2000  issues for WNC has been less than  $20,000.  The
cost to replace the telephone  system noted above will be less than $5,000.  The
cost to deal with potential year 2000 issues of other outside  vendors cannot be
estimated at this time.

Risk of Year 2000 Issues

The most  reasonable and likely result from non-year 2000  compliance of systems
of the service  providers  noted above will be the disruption of normal business
operations for WNC. This disruption would, in turn, lead to delays in performing
reporting and fiduciary responsibilities on behalf of the Partnership. The worst
case scenario would be the replacement of a service provider. These delays would
likely  be  temporary  and  would  likely  not  have a  material  effect  on the
Partnership or WNC.

                                       11
<PAGE>

Local Limited Partnerships

Status of Readiness

WNC is in the  process of  obtaining  year 2000  certifications  from each Local
General Partner of each Local Limited  Partnership.  Those  certifications  will
represent  to the  Partnership  that the IT and non-IT  systems  critical to the
operation of the Housing Complexes and investor reporting to the Partnership are
year 2000 compliant. These certifications will also represent to the Partnership
that the IT and non-IT  systems of property  management  companies,  independent
accountants,    electrical   power   providers,   financial   institutions   and
telecommunications  carriers used by the Local Limited Partnership are year 2000
compliant.

There can be no assurance that the representations in the certifications will be
correct.   There  also  can  be  no   assurance   that  the  systems  of  other,
less-important  service  providers  and  outside  vendors,  upon which the Local
Limited Partnerships rely, will be year 2000 compliant.

Costs to Address Year 2000 Issues

There  will be no cost to the  Partnership  as a result of  assessing  year 2000
issues for the Local Limited Partnerships.  The cost to deal with potential year
2000 issues of the Local Limited Partnerships cannot be estimated at this time.

Risk of Year 2000 Issues

There may be Local  General  Partners who indicate  that they or their  property
management  company are not year 2000  compliant and do not have plans to become
year 2000  compliant  before the end of 1999.  There may be other Local  General
Partners who are  unwilling to respond to the  certification  request.  The most
likely result of either non-compliance or failure to respond will be the removal
and  replacement  of the property  management  company  and/or the Local General
Partner with year 2000 compliant operators.

Despite the efforts to obtain certifications, there can be no assurance that the
Partnership  will be unaffected  by year 2000 issues.  The most  reasonable  and
likely  result from non-year 2000  compliance  will be the  disruption of normal
business  operations  for the  Local  Limited  Partnerships,  including  but not
limited  to the  possible  failure  to  properly  collect  rents and meet  their
obligations in a timely manner.  This disruption  would, in turn, lead to delays
by  the  Local  Limited  Partnerships  in  performing  reporting  and  fiduciary
responsibilities  on behalf of the  Partnership.  The worst-case  scenario would
include the  initiation of  foreclosure  proceedings on the property by mortgage
debt holders. Under these circumstances, WNC or its affiliates will take actions
necessary  to  minimize  the risk of  foreclosure,  including  the  removal  and
replacement of a Local General  Partner by the  Partnership.  These delays would
likely  be  temporary  and  would  likely  not  have a  material  effect  on the
Partnership or WNC.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data

                                       12
<PAGE>

               Report of Independent Certified Public Accountants



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


We have audited the  accompanying  balance sheets of WNC California  Housing Tax
Credits III, L.P. (a California Limited  Partnership) (the  "Partnership") as of
March 31, 1999 and December 31, 1998, and the related  statements of operations,
partners'  equity  (deficit) and cash flows for the three months ended March 31,
1999 and the year ended December 31, 1998.  These  financial  statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these  financial  statements  based on our audits.  A  significant
portion of the  financial  statements of the limited  partnerships  in which the
Partnership  is a limited  partner were audited by other  auditors whose reports
have been  furnished to us. As discussed in Note 2 to the financial  statements,
the Partnership  accounts for its investments in limited  partnerships using the
equity  method.  The  portion  of  the  Partnership's   investments  in  limited
partnerships  audited by other auditors  represented  78% of the total assets of
the Partnership at March 31, 1999 and December 31, 1998. Our opinion, insofar as
it relates to the amounts  included in the financial  statements for the limited
partnerships which were audited by others, is based solely on the reports of the
other auditors.

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

In our  opinion,  based on our audits and the  reports  of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of WNC  California  Housing Tax  Credits  III,  L.P. (a
California Limited  Partnership) as of March 31, 1999 and December 31, 1998, and
the  results of its  operations  and its cash flows for the three  months  ended
March  31,  1999 and the year  ended  December  31,  1998,  in  conformity  with
generally accepted accounting principles.


                                                         BDO SEIDMAN, LLP

Orange County, California
July 12, 1999





                                       13
<PAGE>



                          INDEPENDENT AUDITORS' REPORT



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


We have audited the  accompanying  balance sheet of WNC  California  Housing Tax
Credits III, L.P. (a California Limited  Partnership) (the  "Partnership") as of
December 31, 1997, and the related  statements of operations,  partners'  equity
(deficit)  and cash  flows for each of the years in the  two-year  period  ended
December 31, 1997.  These  financial  statements are the  responsibility  of the
Partnership's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on our  audit.  We did  not  audit  the  financial
statements  of the  limited  partnerships  in which WNC  California  Housing Tax
Credits III, L.P. is a limited partner. These investments,  as discussed in Note
2 to the  financial  statements,  are accounted  for by the equity  method.  The
investments in these limited partnerships represented 88% of the total assets of
WNC California Housing Tax Credits II, L.P. at December 31, 1997.  Substantially
all of the  financial  statements  of the limited  partnerships  were audited by
other auditors whose reports have been furnished to us, and our opinion, insofar
as it relates to the amounts included for those limited  partnerships,  is based
solely on the reports of the other auditors.

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

In our opinion,  based on our audits and the reports of the other auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of WNC  California  Housing Tax  Credits  III,  L.P. (a
California Limited  Partnership) as of December 31, 1997, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 1997, in conformity with generally accepted accounting principles.



                                            CORBIN & WERTZ

Irvine, California
April 6, 1998


                                       14
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                            March 31                         December 31
                                                  ------------------------------    ------------------------------

                                                          1999             1998            1998              1997
                                                          ----             ----            ----              ----
  ASSETS                                                             (Unaudited)

<S>                                             <C>              <C>              <C>              <C>
  Cash and cash equivalents                     $      509,695   $      563,949   $      561,751   $    1,451,071
  Investments in limited partnerships, net
    (Note 2)                                         9,164,197       10,137,867        9,415,032       10,400,720
  Other assets                                               -                -                -            2,242
                                                     ---------       ----------        ---------       ----------
                                                $    9,673,892   $   10,701,816   $    9,976,783   $   11,854,033
                                                     =========       ==========        =========       ==========
  LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

  Liabilities:
    Payables to limited partnerships (Note 4)   $       16,836   $       16,836   $       16,836   $       16,836
    Accrued fees and expenses due to General           552,257          416,586          561,391          370,223
       Partner and affiliates (Note 3)
    Due to limited partners (Note 5)                         -                -                -          900,000
                                                     ---------       ----------        ---------       ----------
           Total liabilities                           569,093          433,422          578,227        1,287,059
                                                     ---------       ----------        ---------       ----------
  Commitments and contingencies

  Partners' equity (deficit):
     General partner                                   (79,083)         (67,447)         (76,145)         (64,461)
     Limited partners (30,000 units
        authorized; 18,000 units issued and
        outstanding)                                 9,183,882       10,335,841        9,474,701       10,631,435
                                                     ---------       ----------        ---------       ----------
           Total partners' equity                    9,104,799       10,268,394        9,398,556       10,566,974
                                                     ---------       ----------        ---------       ----------
                                                $    9,673,892   $   10,701,816   $    9,976,783   $   11,854,033
                                                     =========       ==========        =========       ==========

</TABLE>




                 See accompanying notes to financial statements
                                       15

<PAGE>


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

                            STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>



                                         For the Three Months Ended
                                                  March 31                      For the Years Ended December 31
                                         ----------------------------   -------------------------------------------
                                                1999            1998           1998            1997           1996
                                                ----            ----           ----            ----           ----
                                                          (Unaudited)
<S>                                    <C>             <C>             <C>            <C>             <C>
Interest income                        $       5,154   $       9,889   $     26,577   $      57,279   $     74,947

Operating expenses:
  Amortization (Note 2)                       15,116          15,116         60,464          58,596         57,933
  Asset management fees (Note 3)              46,542          46,542        186,167         186,166        186,422
  Bad debt expense                                 -             500              -               -          8,680
  Other                                        7,557           1,774         29,577          18,093         19,635
                                          ----------      ----------     ----------      ----------     ----------
    Total operating expenses                  69,215          63,932        276,208         262,855        272,670
                                          ----------      ----------     ----------      ----------     ----------

Loss from operations                         (64,061)        (54,043)      (249,631)       (205,576)      (197,723)

Equity in losses of limited
  partnerships (Note 2)                     (229,696)       (244,537)      (918,787)     (1,028,617)    (1,132,216)
                                          ----------      ----------     ----------      ----------     ----------
Net loss                               $    (293,757)  $    (298,580)  $ (1,168,418)  $  (1,234,193)  $ (1,329,939)
                                          ==========      ==========     ==========      ==========     ==========
Net loss allocated to:
   General partner                     $      (2,938)  $      (2,986)  $    (11,684)  $     (12,342)  $    (13,300)
                                          ==========      ==========     ==========      ==========     ==========
   Limited partners                    $    (290,819)  $    (295,594)  $ (1,156,734)  $  (1,221,851)  $ (1,316,639)
                                          ==========      ==========     ==========      ==========     ==========
Net loss per limited partner unit      $      (16.16)  $      (16.42)  $     (64.26)  $      (67.88)  $     (73.15)
                                          ==========      ==========     ==========      ==========     ==========
Outstanding weighted limited
  partner units                               18,000          18,000         18,000          18,000         18,000
                                          ==========      ==========     ==========      ==========     ==========

</TABLE>



                 See accompanying notes to financial statements
                                       16








<PAGE>


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

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                  For The Three Months Ended March 31, 1999 and
              For The Years Ended December 31, 1998, 1997 and 1996

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

Partners' equity (deficit)
  at January 1, 1996            $     (38,553)  $  14,096,223    $  14,057,670

Offering costs                           (266)        (26,298)         (26,564)

Net loss                              (13,300)     (1,316,639)      (1,329,939)
                                    ---------      ----------       ----------
Partners' equity (deficit)
  at December 31, 1996                (52,119)     12,753,286       12,701,167

Return of capital (Note 5)                  -        (900,000)        (900,000)

Net loss                              (12,342)     (1,221,851)      (1,234,193)
                                    ---------      ----------       ----------
Partners' equity (deficit)
  at December 31, 1997                (64,461)     10,631,435       10,566,974

Net loss                              (11,684)     (1,156,734)      (1,168,418)
                                    ---------      ----------       ----------
Partners' equity (deficit)
  at December 31, 1998                (76,145)      9,474,701        9,398,556

Net loss                               (2,938)       (290,819)        (293,757)
                                    ---------      ----------       ----------
Partners' equity (deficit)
  at March 31, 1999             $     (79,083)  $   9,183,882    $   9,104,799
                                    =========      ==========       ==========



                 See accompanying notes to financial statements
                                       17



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

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                        For the Three Months Ended
                                                  March 31                       For the Years Ended December 31
                                         ----------------------------   -------------------------------------------
                                                1999            1998           1998            1997           1996
                                                ----            ----           ----            ----           ----
                                                           Unaudited)
Cash flows from operating activities:
<S>                                    <C>            <C>             <C>            <C>             <C>
  Net loss                             $    (293,757) $     (298,580) $  (1,168,418) $   (1,234,193) $  (1,329,939)
  Adjustments  to reconcile net loss to
    net cash (used in) provided by
    operating activities:
     Amortization                             15,116          15,116         60,464          58,596         57,933
     Bad debt                                      -               -              -               -          8,680
     Equity in loss of limited
       partnerships                          229,696         244,537        918,787       1,028,617      1,132,216
     Change in other assets                        -           2,242          2,242           3,177         (5,419)
     Change in accrued fees and
       expenses due to General
       Partner and affiliates                 (9,134)        46,363         191,168         136,843         (6,808)
                                        ------------   ------------    ------------    ------------   ------------
Net cash provided by (used in)
  operating activities                       (58,079)         9,678           4,243          (6,960)      (143,337)
                                        ------------   ------------    ------------    ------------   ------------
Cash flows from investing activities:
  Investments in limited
    partnerships,  net                             -              -               -               -       (220,733)
  Capitalized  acquisition costs and
    fees                                           -              -               -         (55,994)       (33,906)
  Distributions from limited
    partnerships                               6,023          3,200           6,437          15,989          6,376
                                        ------------   ------------    ------------    ------------   ------------
Net cash provided by (used in)
  investing activities                         6,023          3,200           6,437         (40,005)      (248,263)
                                        ------------   ------------    ------------    ------------   ------------
Cash flows from financing activities
  Return of capital                                -       (900,000)       (900,000)              -              -
  Offering costs                                   -              -              -                -        (26,564)
                                        ------------   ------------    ------------    ------------   ------------
Net cash used in financing
  activities                                       -       (900,000)       (900,000)              -        (26,564)
                                        ------------   ------------    ------------    ------------   ------------
Net decrease in cash and cash
  equivalents                                (52,056)      (887,122)       (889,320)        (46,965)      (418,164)

Cash and cash equivalents, beginning
  of year                                    561,751      1,451,071       1,451,071       1,498,036      1,916,200
                                        ------------   ------------    ------------    ------------   ------------

Cash and cash equivalents, end of      $     509,695  $     563,949   $     561,751  $    1,451,071  $   1,498,036
  year                                  ============   ============    ============    ============   ============

</TABLE>

                 See accompanying notes to financial statements
                                       18
<PAGE>


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

                      STATEMENTS OF CASH FLOWS - CONTINUED


<TABLE>
<CAPTION>

                                         For the Three Months Ended
                                                  March 31                   For the Years Ended December 31
                                        ----------------------------   -------------------------------------------
                                                1999            1998           1998            1997           1996
                                                ----            ----           ----            ----           ----
                                                          (Unaudited)
SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW
  INFORMATION:

<S>                                    <C>            <C>             <C>             <C>            <C>
    Taxes paid                         $           -  $            -  $         800   $         800  $         800
                                         ===========    ============    ===========     ===========    ===========
</TABLE>


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:

    During  1996,  the  Partnership  had  $422,205  of  investments  in  limited
    partnerships   returned  through  tax  credit  adjustments  reflected  as  a
    reduction in the payables to limited partnerships.

    During 1996, the  Partnership  adjusted  offering costs and accrued fees and
    expenses due to General Partner and affiliates by $(26,564).
















                 See accompanying notes to financial statements
                                       19



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

                          NOTES TO FINANCIAL STATEMENTS

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996


NOTE 1 - 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  Complex") that are eligible for low income housing credits.  The local
general   partners  (the  "Local  General   Partners")  of  each  Local  Limited
Partnership retain  responsibility  for maintaining,  operating and managing the
Housing Complex.

The  general  partner  is WNC  Tax  Credit  Partners  III,  L.P.  (the  "General
Partner").  WNC &  Associates,  Inc.  ("WNC") is the general  partner of WNC Tax
Credit Partners III, L.P.  Wilfred N. Cooper Sr.,  through the Cooper  Revocable
Trust owns 66.8% of the  outstanding  stock of WNC. John B. Lester,  Jr. was the
original limited partner of the Partnership and owns,  through the Lester Family
Trust, 28.6% of the outstanding stock of WNC.

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.

Change in Reporting Year End

The  Partnership  has  elected  to change its year end for  financial  reporting
purposes from December 31 to March 31. All  financial  information  reflected in
the financial statements and related footnotes has been adjusted for this change
in year end except for the combined condensed financial  information relating to
the Local Limited Partnerships included in Note 2.

Due to the change in year end, unaudited financial information as of and for the
three months ended March 31, 1998 is included in the  financial  statements  for
comparative  purposes  only.  The  financial  statements as of and for the three
months  ended  March  31,  1998  are  unaudited  but  include  all   adjustments
(consisting  of normal  recurring  adjustments)  which  are,  in the  opinion of
management,  necessary for a fair statement of financial position and results of
operations of the Partnership for the interim period.

                                       20

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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

Risks and Uncertainties

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

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

Method of Accounting For Investments in Limited Partnerships

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

Losses from limited partnerships for the years ended December 31, 1998, 1997 and
1996 have been recorded by the Partnership based on reported results provided by
the Local Limited  Partnerships.  Losses from limited partnerships for the three
months ended March 31, 1999 and 1998 have been  estimated by  management  of the
Partnership. Losses from Local Limited Partnerships allocated to the Partnership
are not recognized to the extent that the  investment  balance would be adjusted
below zero.

                                       21

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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

 Offering Expenses

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

 Use of Estimates

 The preparation of financial  statements in conformity with generally  accepted
 accounting  principles  requires  management to make estimates and  assumptions
 that affect the reported  amounts of assets and  liabilities  and disclosure of
 contingent assets and liabilities at the date of the financial statements,  and
 the  reported  amounts of revenues and expenses  during the  reporting  period.
 Actual results could materially differ from those estimates.

 Cash and Cash Equivalents

 The Partnership  considers highly liquid investments with remaining  maturities
 of three months or less when purchased to be cash equivalents.  As of March 31,
 1999 and December 31, 1998 and 1997, the  Partnership  had cash  equivalents of
 $0, $0 and $942,685, respectively.

 Concentration of Credit Risk

 At March 31,  1999,  the  Partnership  maintained  a cash  balance at a certain
 financial institution in excess of the maximum federally insured amounts.

 Net Loss Per Limited Partner Unit

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

 Reporting Comprehensive Income

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

                                       22


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

 NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS

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

 The  Partnership's  investments in Local Limited  Partnerships  as shown in the
 balance sheets at December 31, 1998 and 1997 are  approximately  $1,602,000 and
 $1,640,000 greater than the Partnership's  equity as shown in the Local Limited
 Partnerships'  financial  statements.  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 and to capital  contributions  payable to
 the limited partnerships which were netted against partner capital in the Local
 Limited Partnership's financial statements (see Note 4).

 Equity in  losses  of the  Local  Limited  Partnerships  is  recognized  in the
 financial  statements until the related investment account is reduced to a zero
 balance.  Losses  incurred after the investment  account is reduced to zero are
 not recognized.  If the Local Limited  Partnerships report net income in future
 years,  the  Partnership  will resume applying the equity method only after its
 share of such net income equals the share of net losses not  recognized  during
 the period(s) the equity method was suspended.

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

 At  March  31,  1999,  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 three month period ended
 March 31, 1999 amounting to approximately $7,306 have not been recognized.  The
 Partnership's share of losses during the years ended December 31, 1998 and 1997
 amounting to  approximately  $29,226 and $15,327,  respectively,  have not been
 recognized.  As of March  31,  1999,  the  aggregate  share of net  losses  not
 recognized by the Partnership amounted to $51,859.

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

                                                            For the Three
                                                            Months Ended              For the Years Ended
                                                              March 31                    December 31
                                                           ----------------    -----------------------------------

                                                                      1999               1998                1997
                                                                      ----               ----                ----

<S>                                                      <C>                 <C>                 <C>
Investments per balance sheet, beginning of period       $       9,415,032   $     10,400,720    $     11,447,928
Capitalized acquisition fees and costs                                   -                  -              55,994
Distributions received                                              (6,023)            (6,437)            (15,989)
Equity in losses of limited partnerships                          (229,696)          (918,787)         (1,028,617)
Amortization of paid acquisition fees and costs                    (15,116)           (60,464)            (58,596)
                                                                 ---------         ----------          ----------

Investments per balance sheet, end of period             $       9,164,197   $      9,415,032    $     10,400,720
                                                                 =========         ==========          ==========

</TABLE>


                                       23
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

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

                        COMBINED CONDENSED BALANCE SHEETS

                                                            1998          1997
                                                            ----          ----
  ASSETS

Buildings and improvements,
  net of accumulated depreciation for 1998
  and 1997 of $5,360,000 and $4,188,000,
  respectively.                                     $ 30,690,000  $ 31,657,000
Land                                                   2,213,000     2,380,000
Other assets                                           1,958,000     1,746,000
                                                      ----------    ----------
                                                    $ 34,861,000  $ 35,783,000
                                                      ==========    ==========
LIABILITIES

Mortgage and construction loans payable             $ 24,587,000  $ 24,528,000
Other liabilities (including due to
  related parties of $792,000 and
  $715,000 as of December 31, 1998
  and 1997, respectively.                              1,453,000     1,495,000
                                                      ----------    ----------
Total liabilities                                     26,040,000    26,023,000
                                                      ----------    ----------
PARTNERS' CAPITAL

WNC California Housing Tax Credits III, L.P            7,813,000     8,761,000
Other partners                                         1,008,000       999,000
                                                      ----------    ----------
                                                       8,821,000     9,760,000
                                                      ----------    ----------
                                                    $ 34,861,000  $ 35,783,000
                                                      ==========    ==========

                                       24
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                    1998                1997               1996
                                    ----                ----               ----
Revenues                    $  2,901,000        $  2,895,000       $  2,786,000

Expenses:
  Operating expenses           1,800,000           1,779,000          1,689,000
  Interest expense               871,000             950,000            968,000
  Depreciation and
    amortization               1,188,000           1,220,000          1,273,000
                              ----------          ----------         ----------
         Total expenses        3,859,000           3,949,000          3,930,000
                              ----------          ----------         ----------

Net loss                    $   (958,000)       $ (1,054,000)      $ (1,144,000)
                              ==========          ==========         ==========
Net loss allocable
  to the Partnership        $   (948,000)       $ (1,044,000)      $ (1,132,000)
                              ==========          ==========         ==========
Net loss recorded
  by the Partnership        $   (919,000)       $ (1,029,000)      $ (1,132,000)
                              ==========          ==========         ==========

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.

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  $270,524,
         $257,025  and  $203,029 as of March 31, 1999 and  December 31, 1998 and
         1997, respectively.

         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 $20,808, $19,191 and $12,723
         as of March 31, 1999 and December 31, 1998 and 1997, respectively.

         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.  Management  fees of $46,542 were incurred during the
         three months ended March 31, 1999 and  $186,167,  $186,166 and $186,422
         were incurred for 1998, 1997 and 1996, respectively,  of which, $53,350
         was paid during the three months  ended March 31, 1999 and $0,  $50,000
         and $200,000 were paid during 1998, 1997 and 1996, respectively.

                                       25
<PAGE>
                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A California Limited Partnership)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

       For The Three Months Ended March 31, 1999 and 1998 (Unaudited) and
              For The Years Ended December 31, 1998, 1997 and 1996

NOTE 3 - RELATED PARTY TRANSACTIONS, continued

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

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

                                        March 31             December 31
                                   ---------------   ---------------------------
                                             1999           1998           1997
                                             ----           ----           ----
Reimbursement for expenses paid
  by the General Partner
  or an affiliate                           3,363          5,690            688

Asset management fee payable          $   548,894    $   555,701    $   369,535
                                        ---------      ---------      ---------
                                      $   552,257    $   561,391    $   370,223
                                        =========      =========      =========

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

NOTE 4 - PAYABLES TO LIMITED PARTNERSHIPS

Payables  to limited  partnerships  represent  amounts  which are due at various
times based on conditions specified in the limited partnership agreements. These
contributions  are  payable  in  installments  and  are  due  upon  the  limited
partnerships  achieving certain operating and development  benchmarks (generally
within two years of the Partnership's initial investment).

NOTE 5 - DUE TO LIMITED PARTNERS

Due to limited partners at December 31, 1997,  represents a return of capital to
Unit holders of $50 per Unit. Such amounts were paid in January 1998.

NOTE 6 - INCOME TAXES

No provision for income taxes has been  recorded in the financial  statements as
any  liability  for  income  taxes  is the  obligation  of the  partners  of the
Partnership.


                                       26

<PAGE>

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

NOT APPLICABLE

PART III.

Item 10.  Directors and Executive Officers of the Registrant

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

Directors and Executive Officers of WNC & Associates, Inc.

The directors of WNC & Associates,  Inc. are Wilfred N. Cooper,  Sr., who serves
as Chairman of the Board,  John B.  Lester,  Jr.,  David N.  Shafer,  Wilfred N.
Cooper, Jr. and Kay L. Cooper.  The principal  shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.

Wilfred N. Cooper,  Sr., age 68, is the founder,  Chief Executive  Officer and a
Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a
general partner in some of the programs previously sponsored by the Sponsor. Mr.
Cooper has been involved in real estate  investment and  acquisition  activities
since 1968.  Previously,  during 1970 and 1971,  he was founder and principal of
Creative  Equity  Development  Corporation,  a predecessor  of WNC & Associates,
Inc., and of Creative Equity Corporation,  a real estate investment firm. For 12
years  prior  to  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.  Mr. Cooper is a Director of the
National  Association of Home Builders (NAHB) and a National  Trustee for NAHB's
Political Action Committee,  a Director of the National Housing Conference (NHC)
and a  member  of NHC's  Executive  Committee  and a  Director  of the  National
Multi-Housing  Council (NMHC).  Mr. Cooper graduated from Pomona College in 1956
with a Bachelor of Arts degree.

John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the  Acquisition  Committee  of WNC &  Associates,  Inc.,  and a Director of WNC
Capital  Corporation.  Mr. Lester has 27 years of experience in engineering  and
construction  and has been involved in real estate  investment  and  acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates,  Inc., a provider
of engineering and construction  services to the oil refinery and  petrochemical
industries,  which  he  co-founded  in  1973.  Mr.  Lester  graduated  from  the
University of Southern  California in 1956 with a Bachelor of Science  degree in
Mechanical Engineering.

Wilfred N. Cooper,  Jr., age 36, is Executive Vice  President,  a Director and a
member of the  Acquisition  Committee of WNC & Associates,  Inc. He is President
of, and a registered principal with, WNC Capital  Corporation,  a member firm of
the NASD,  and is a Director of WNC  Management,  Inc.  He has been  involved in
investment  and  acquisition  activities  with  respect to real estate  since he
joined  the  Sponsor in 1988.  Prior to this,  he served as  Government  Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report,  a Director of NMHC and an Alternate
Director of NAHB.  He  graduated  from The  American  University  in 1985 with a
Bachelor of Arts degree.

David N. Shafer, age 47, is Senior Vice President, a Director,  General Counsel,
and a member of the  Acquisition  Committee  of WNC &  Associates,  Inc.,  and a
Director and Secretary of WNC  Management,  Inc. Mr. Shafer has been involved in
real estate  investment and acquisition  activities since 1984. Prior to joining
the Sponsor in 1990, he was  practicing  law with a specialty in real estate and
taxation.  Mr. Shafer is a Director and President of the  California  Council of
Affordable  Housing  and a member  of the State Bar of  California.  Mr.  Shafer
graduated  from the  University  of  California  at Santa Barbara in 1978 with a
Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris
Doctor  degree (cum laude) and from the  University  of San Diego in 1986 with a
Master  of Law  degree  in  Taxation.

                                       27
<PAGE>

Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the  Acquisition  Committee  of WNC &  Associates,  Inc.,  and Chief
Financial Officer of WNC Management,  Inc. He has been involved with acquisition
and  investment  activities  with  respect to real estate  since 1985.  Prior to
joining the Sponsor in March 1999, he was the Director of Financial  Services at
TrizecHahn  Centers Inc., a developer  and operator of  commercial  real estate,
from 1995 to 1999,  a Senior  Manager  with E&Y  Kenneth  Leventhal  Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest  Companies,  a commercial and residential real estate developer,
from  1985 to 1988.  Mr.  Dickenson  is a  member  of the  Financial  Accounting
Standards  Committee for the National  Association of Real Estate  Companies and
the  American  Institute  of  Certified  Public  Accountants,  and a Director of
HomeAid  Southern  California,  a charitable  organization  affiliated  with the
building  industry.  He  graduated  from  Texas Tech  University  in 1978 with a
Bachelor of Business  Administration  -  Accounting  degree,  and is a Certified
Public Accountant in California and Texas.

Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the
Acquisition  Committee  of WNC &  Associates,  Inc.  and a  Director  and  Chief
Executive  Officer  of WNC  Management,  Inc.  Mr.  Riha  has been  involved  in
acquisition  and investment  activities  with respect to real estate since 1979.
Prior to joining the  Sponsor 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.

Sy P. Garban,  age 53, is Vice  President - National  Sales of WNC & Associates,
Inc.  and has been  employed by the  Sponsor  since  1989.  Mr.  Garban has been
involved in real estate  investment  activities since 1978. Prior to joining the
Sponsor he served as  Executive  Vice  President  of MRW,  Inc.,  a real  estate
development  and management  firm.  Mr. Garban is a member of the  International
Association of Financial  Planners.  He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland,  age 36, is Vice President - Acquisitions of WNC & Associates,
Inc. He has been involved in real estate acquisitions and investments since 1986
and has been employed with WNC & Associates,  Inc. since 1994. Prior to that, he
served on the  development  team of the Bixby Ranch that  constructed  apartment
units and Class A office space in California and  neighboring  states,  and as a
land  acquisition  coordinator with Lincoln Property Company where he identified
and analyzed multi-family  developments.  Mr. Buckland graduated from California
State  University,  Fullerton  in 1992  with a  Bachelor  of  Science  degree in
Business Finance.

David Turek, age 44, is Vice President - Originations of WNC & Associates,  Inc.
He has been involved with real estate  investment and finance  activities  since
1976 and has been employed by WNC & Associates,  Inc.  since 1996.  From 1995 to
1996,  Mr. Turek served as a consultant  for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties.  From 1990 to 1995, he was involved in the development of
conventional  and tax credit  multi-family  housing.  He is a Director  with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.

Kay L. Cooper,  age 62, is a Director of WNC & Associates,  Inc. Mrs. Cooper was
the founder and sole  proprietor  of Agate 108, a  manufacturer  and retailer of
home  accessory  products,  from 1975 until 1998.  She is the wife of Wilfred N.
Cooper,  Sr.,  the mother of Wilfred  N.  Cooper,  Jr. and the sister of John B.
Lester,  Jr. Ms. Cooper graduated from the University of Southern  California in
1958 with a Bachelor of Science degree.

                                       28

<PAGE>
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 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 $46,542 and
     $186,167 were incurred during the three months ended March 31, 1999 and the
     year ended  December  31,  1998,  respectively.  The  Partnership  paid the
     General  Partner or its affiliates  $53,350 and $0 of those fees during the
     three  months  ended March 31, 1999 and the year ended  December  31, 1998,
     respectively.

(b)  Subordinated  Disposition Fee. A subordinated  disposition fee in an amount
     equal to 1% of the  sale  price  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.

(c)  Operating  Expense.  The Partnership  reimbursed the General Partner or its
     affiliates  for  operating  expenses  of  approximately  $10,000 and $6,000
     during the three  months  ended March 31, 1999 and the year ended  December
     31, 1998, respectively.

(d)  Interest  in  Partnership.   The  General   Partner   receives  1%  of  the
     Partnership's  allocated Low Income  Housing  Credits,  which  approximated
     $24,000 for the General  Partner for the year ended  December 31, 1998. The
     General Partner is also entitled to receive 1% of cash distributions. There
     were no  distributions  of cash to the  General  Partner  during  the three
     months ended March 31, 1999 or the year ended December 31, 1998.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

(a)  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.

(b)  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.

(c)  Changes in Control

     The  management  and control of the  General  Partner may be changed at any
     time in accordance with its 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.

                                       29

<PAGE>


     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 and the General  Partner's
interest in the  Partnership,  as  discussed  in Item 11 and in the notes to the
Partnership's financial statements.



















                                       30
<PAGE>

PART IV.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

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

         Report of Independent Certified Public Accountants
         Independent Auditors' Report
         Balance Sheets, March 31, 1999 and  1998 (Unaudited)  and  December 31,
           1998 and 1997
         Statements of Operations  for the three months ended March 31, 1999 and
           1998 (Unaudited) and for the years ended December 31, 1998,  1997 and
           1996
         Statements  of Partners'  Equity  (Deficit)  for the three months ended
           March 31, 1999 and  for  the  years  ended  December 31,  1998,  1997
           and 1996
         Statements of Cash Flows for the  three months ended March 31, 1999 and
           1998 (Unaudited)  and  for  the  years ended  December 31, 1998, 1997
           and 1996
         Notes to Financial Statements

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

         Report of Independent Certified Public Accountants on  Financial State-
           ment Schedules
         Schedule III - Real Estate Owned by Local Limited Partnerships

(b)      Reports on Form 8-K.

1.       A Form 8-K dated May 13, 1999 was filed on May 14,  1999  reporting the
         Partnership's change in fiscal year  end  to  March  31.  No  financial
         statements were included.

(c)      Exhibits.

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

10.1     Amended and Restated Agreement of Limited Partnership of Colonial Vill-
         age  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 10.1.

10.2     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 10.2.

10.3     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 10.3.

10.4     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.

10.5     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.

                                       31
<PAGE>

10.6     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 10.6.

10.7     Second  Amended and Restated  Agreement of Limited  Partnership of Old
         Fort Limited Partnership filed as exhibit 10.5 to Post-Effective Amend-
         ment No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated
         herein by reference as exhibit 10.7.

10.8     Amended and Restated Agreement of Limited  Partnership  of  Orosi Apart
         ments, 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 10.8.

10.9     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 refer-
         ence as exhibit 10.9.

10.10    Amended and Restated  Agreement of Limited Partnership of Venus Retire-
         ment 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 10.10.

10.11    Second   Amended  and  Restated  Agreement of  Limited   Partnership of
         Walnut-Pixley, L.P.  filed  as  exhibit 10.9  to  Post-Effective Amend-
         ment No. 2 to Form S-11 dated September 17, 1993 is hereby incorporated
         herein by reference as exhibit 10.11.

10.12    Amended and  estated 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 10.12.

10.13    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
         10.13.

10.14    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.

10.15    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 10.15.

10.16    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 10.16.

10.17    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 10.17.

10.18    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.

21.1     Financial Statements of Colonial Village Roseville, for the years ended
         December 31, 1998 and 1997  together with  Independent auditors' report
         thereon;  a significant subsidiary of the partnership.

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

                                       32
<PAGE>


              Report of Independent Certified Public Accountants on
                         Financial Statement Schedules





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


The audits  referred to in our report dated July 12, 1999,  relating to the 1999
and 1998 financial  statements of WNC  California  Housing Tax Credits III, L.P.
(the  "Partnership"),  which is contained in Item 8 of this Form 10-K,  included
the audit of the  accompanying  financial  statement  schedules.  The  financial
statement schedules are the responsibility of the Partnership's management.  Our
responsibility is to express an opinion on these financial  statement  schedules
based upon our audits.

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



                                               BDO SEIDMAN, LLP


Orange County, California
July 12, 1999















                                       33


<PAGE>


WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999

<TABLE>
<CAPTION>

                                         -----------------------------------  ------------------------------------------------------
                                                     March 31, 1999                             As of December 31, 1998
                                         -----------------------------------  ------------------------------------------------------
                                           Total Investment     Amount of     Encumbrances of                                Net
                                           in Local Limited  Investment Paid  Local Limited   Property and  Accumulated      Book
Partnership Name            Location       Partnerships          to Date      Partnerships     Equipment    Depreciation     Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>              <C>            <C>            <C>            <C>            <C>
Almond Garden Apartment     Delhi,
Associates                  California     $     391,000    $   391,000    $  1,394,000   $  1,756,000   $    318,000   $  1,438,000

Almond View Apartments,     Stockton,
Ltd.                        California         1,639,000      1,639,000       1,774,000      3,525,000        552,000      2,973,000

Buccaneer Associates,       Fernandia
Limited                     Beach, Florida       365,000        365,000       1,482,000      2,218,000        298,000      1,920,000

Candleridge Apartments      Perry, Iowa          126,000        126,000         705,000        878,000        136,000        742,000
of Perry L.P. II

Colonial Village            Roseville,
Roseville                   Calfornia          2,811,000      2,811,000       2,128,000      5,285,000        791,000      4,494,000

Dallas County               Orrville,
Housing, Ltd.               Alabama              130,000        130,000         617,000        760,000        116,000        644,000

La Paloma del Sol           Deming, New
Limited Partnership         Mexico               254,000        254,000       1,438,000      1,762,000        228,000      1,534,000

Memory Lane Limited         Yankton,
Partnership                 South Dakota         151,000        151,000         688,000        874,000        257,000        617,000

Nueva Sierra Vista          Richgrove,
Associates                  California         1,688,000      1,688,000       1,805,000      3,253,000        293,000      2,960,000

Old Fort Highway            Hidalgo, Texas       249,000        249,000       1,282,000      1,646,000        223,000      1,423,000
Limited Partnership


</TABLE>
                                       34
<PAGE>


WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                          ----------------------------------  ------------------------------------------------------
                                                   March 31, 1999                               As of December 31, 1998
                                          ----------------------------------  ------------------------------------------------------
                                           Total Investment     Amount of     Encumbrances of                                Net
                                           in Local Limited  Investment Paid  Local Limited   Property and  Accumulated      Book
Partnership Name            Location       Partnerships          to Date      Partnerships     Equipment    Depreciation     Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>              <C>            <C>            <C>            <C>            <C>

Orosi Apartments, Ltd.      Orosi,
                            California         461,000        461,000         1,966,000      2,437,000        220,000      2,217,000

Parlier Garden Apts.        Parlier,
                            California         453,000        453,000         1,715,000      2,187,000        265,000      1,922,000

Rosewood Apartments         Superior,
Limited Partnership         Wisconsin          185,000        168,000           518,000        767,000         96,000        671,000

Sun Manor, L.P.             Itta Bena,
                            Mississippi        230,000        230,000         1,061,000      1,338,000        217,000      1,121,000

Tahoe Pines Apartments      South Lake
                            Tahoe,
                            California       1,633,000      1,633,000         1,702,000      3,290,000        515,000      2,775,000

Venus Retirement            Venus, Texas       161,000        161,000           728,000        929,000        174,000        755,000
Village, Ltd.

Walnut - Pixley, L.P.       Orange,
                            California       1,078,000      1,078,000         1,742,000      2,766,000        401,000      2,365,000

Winters Investment          Winters,
Group                       California         531,000        531,000         1,842,000      2,592,000        260,000      2,332,000
                                            ----------     ----------        ----------     ----------      ---------     ----------
                                         $  12,536,000  $  12,519,000    $   24,587,000  $  38,263,000  $   5,360,000  $  32,903,000
                                            ==========     ==========        ==========     ==========      =========     ==========
</TABLE>

                                       35


<PAGE>

WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                          ---------------------------------------------------------------------------
                                                             For the year ended December 31, 1998
                                          ---------------------------------------------------------------------------
                                                                          Year                       Estimated Useful
Partnership Name                        Rental Income   Net Loss   Investment Acquired    Status     Life (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>                   <C>             <C>               <C>
Almond Garden Apartment
Associates                            $    155,000  $   (59,000)          1994            Completed         27.5

Almond View Apartments, Ltd.               185,000     (233,000)          1994            Completed         27.5

Buccaneer Associates, Limited              200,000      (34,000)          1994            Completed           40

Candleridge Apartments of Perry
L.P. II                                    139,000      (11,000)          1994            Completed         27.5

Colonial Village Roseville                 380,000     (155,000)          1993            Completed         27.5

Dallas County Housing, Ltd.                 62,000      (12,000)          1993            Completed           40

La Paloma del Sol Limited
Partnership                                134,000      (11,000)          1993            Completed           40

Memory Lane Limited Partnership             65,000      (30,000)          1994            Completed           25

Nueva Sierra Vista Associates              141,000     (119,000)          1994            Completed           40

Old Fort Limited Partnership               163,000       (3,000)          1993            Completed           40

Orosi Apartments, Ltd.                     184,000      (24,000)          1993            Completed           50

Parlier Garden Apts.                       191,000      (28,000)          1994            Completed           40

Rosewood Apartments Limited
Partnership                                 71,000       (9,000)          1994            Completed           40

Sun Manor, L.P.                            139,000      (15,000)          1993            Completed         27.5

Tahoe Pines Apartments                     180,000     (101,000)          1994            Completed         27.5

Venus Retirement Village, Ltd.              83,000      (24,000)          1993            Completed           25

Walnut - Pixley, L.P.                      136,000      (49,000)          1993            Completed           40

Winters Investment Group                   185,000      (41,000)          1994            Completed           50
                                         ---------    ---------
                                      $  2,793,000  $  (958,000)
                                         =========    =========
</TABLE>
                                       36


<PAGE>



WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>

                                           -----------------------------------------------------------------------------------------
                                                                                As of December 31, 1998
                                           -----------------------------------------------------------------------------------------
                                           Total Investment     Amount of     Encumbrances of                                Net
                                           in Local Limited  Investment Paid  Local Limited   Property and  Accumulated      Book
Partnership Name            Location       Partnerships          to Date      Partnerships     Equipment    Depreciation     Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>              <C>            <C>            <C>            <C>            <C>
Almond Garden Apartment     Delhi,
Associates                  California     $     391,000    $   391,000    $  1,394,000   $  1,756,000   $    318,000   $  1,438,000

Almond View Apartments,     Stockton,
Ltd.                        California         1,639,000      1,639,000       1,774,000      3,525,000        552,000      2,973,000

Buccaneer Associates,       Fernandia
Limited                     Beach, Florida       365,000        365,000       1,482,000      2,218,000        298,000      1,920,000

Candleridge Apartments      Perry, Iowa          126,000        126,000         705,000        878,000        136,000        742,000
of Perry L.P. II

Colonial Village            Roseville,
Roseville                   Calfornia          2,811,000      2,811,000       2,128,000      5,285,000        791,000      4,494,000

Dallas County               Orrville,
Housing, Ltd.               Alabama              130,000        130,000         617,000        760,000        116,000        644,000

La Paloma del Sol           Deming, New
Limited Partnership         Mexico               254,000        254,000       1,438,000      1,762,000        228,000      1,534,000

Memory Lane Limited         Yankton,
Partnership                 South Dakota         151,000        151,000         688,000        874,000        257,000        617,000

Nueva Sierra Vista          Richgrove,
Associates                  California         1,688,000      1,688,000       1,805,000      3,253,000        293,000      2,960,000

Old Fort Highway            Hidalgo, Texas       249,000        249,000       1,282,000      1,646,000        223,000      1,423,000
Limited Partnership


</TABLE>

                                       37
<PAGE>

WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
                                          ------------------------------------------------------------------------------------------
                                                                                As of December 31, 1998
                                          ------------------------------------------------------------------------------------------
                                           Total Investment     Amount of     Encumbrances of                                Net
                                           in Local Limited  Investment Paid  Local Limited   Property and  Accumulated      Book
Partnership Name            Location       Partnerships          to Date      Partnerships     Equipment    Depreciation     Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>            <C>              <C>            <C>            <C>            <C>            <C>

Orosi Apartments, Ltd.      Orosi,
                            California         461,000        461,000         1,966,000      2,437,000        220,000      2,217,000

Parlier Garden Apts.        Parlier,
                            California         453,000        453,000         1,715,000      2,187,000        265,000      1,922,000

Rosewood Apartments         Superior,
Limited Partnership         Wisconsin          185,000        168,000           518,000        767,000         96,000        671,000

Sun Manor, L.P.             Itta Bena,
                            Mississippi        230,000        230,000         1,061,000      1,338,000        217,000      1,121,000

Tahoe Pines Apartments      South Lake
                            Tahoe,
                            California       1,633,000      1,633,000         1,702,000      3,290,000        515,000      2,775,000

Venus Retirement            Venus, Texas       161,000        161,000           728,000        929,000        174,000        755,000
Village, Ltd.

Walnut - Pixley, L.P.       Orange,
                            California       1,078,000      1,078,000         1,742,000      2,766,000        401,000      2,365,000

Winters Investment          Winters,
Group                       California         531,000        531,000         1,842,000      2,592,000        260,000      2,332,000
                                            ----------     ----------        ----------     ----------      ---------     ----------
                                         $  12,536,000  $  12,519,000    $   24,587,000  $  38,263,000  $   5,360,000  $  32,903,000
                                            ==========     ==========        ==========     ==========      =========     ==========
</TABLE>

                                       38

<PAGE>


WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
December 31, 1998
<TABLE>
<CAPTION>
                                          ---------------------------------------------------------------------------
                                                             For the year ended December 31, 1998
                                          ---------------------------------------------------------------------------
                                                                          Year                       Estimated Useful
Partnership Name                        Rental Income   Net Loss   Investment Acquired    Status     Life (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>                   <C>             <C>               <C>
Almond Garden Apartment
Associates                            $    155,000  $   (59,000)          1994            Completed         27.5

Almond View Apartments, Ltd.               185,000     (233,000)          1994            Completed         27.5

Buccaneer Associates, Limited              200,000      (34,000)          1994            Completed           40

Candleridge Apartments of Perry
L.P. II                                    139,000      (11,000)          1994            Completed         27.5

Colonial Village Roseville                 380,000     (155,000)          1993            Completed         27.5

Dallas County Housing, Ltd.                 62,000      (12,000)          1993            Completed           40

La Paloma del Sol Limited
Partnership                                134,000      (11,000)          1993            Completed           40

Memory Lane Limited Partnership             65,000      (30,000)          1994            Completed           25

Nueva Sierra Vista Associates              141,000     (119,000)          1994            Completed           40

Old Fort Limited Partnership               163,000       (3,000)          1993            Completed           40

Orosi Apartments, Ltd.                     184,000      (24,000)          1993            Completed           50

Parlier Garden Apts.                       191,000      (28,000)          1994            Completed           40

Rosewood Apartments Limited
Partnership                                 71,000       (9,000)          1994            Completed           40

Sun Manor, L.P.                            139,000      (15,000)          1993            Completed         27.5

Tahoe Pines Apartments                     180,000     (101,000)          1994            Completed         27.5

Venus Retirement Village, Ltd.              83,000      (24,000)          1993            Completed           25

Walnut - Pixley, L.P.                      136,000      (49,000)          1993            Completed           40

Winters Investment Group                   185,000      (41,000)          1994            Completed           50
                                         ---------    ---------
                                      $  2,793,000  $  (958,000)
                                         =========    =========
</TABLE>

                                       39


<PAGE>


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 California Tax Credit Partners III, L.P.
     General Partner of the Registrant

By:  WNC & Associates, Inc.
     General Partner of WNC California Tax Credit Partners III, L.P.

By:  /s/ John B. Lester, Jr.
John B. Lester, Jr., President of WNC & Associates, Inc.

Date: July 27, 1999


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

Date: July 27, 1999


By:  /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., General Partner

Date: July 27, 1999

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, Sr.
Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc.

Date: July 27, 1999


By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.

Date July 27, 1999


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

Date: July 27, 1999

                                       40

<PAGE>


Exhibit
Number      Exhibit Description

EX-21.1     Financial Statements of  Colonial  Village Roseville,  for the years
            ended December 31, 1998 and 1997 together with Independent auditors'
            report thereon; a significant subsidiary of the partnership.




















                                       41

<PAGE>


                           Colonial Village Roseville

                                Table of Contents

                                                             Page

Independent Auditors' Report                                  43

Financial Statements

        Balance Sheets                                        44
        Statements of Operations                              46
        Statements of Changes in Partners Capital             50
        Statements of Cash Flows                              51
        Notes to Financial Statements                         53











                                       42
<PAGE>


                          INDEPENDENT AUDITOR'S REPORT



To the Partners
Colonial Village Roseville
(A California Limited Partnership)
Rocklin, California




I have audited the accompanying  balance sheets of Colonial Village Roseville (A
California  Limited  Partnership),  as of December  31,  1998 and 1997,  and the
related  statements of income,  partners'  equity,  and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing  standards.
Those standards  require that I plan and perform the audits to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Colonial  Village  Roseville (A
California  Limited  Partnership)  as of  December  31,  1998 and 1997,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with generally accepted accounting principles.


                               /s/ Bernard E. Rea, CPA


Stockton, California
March 31, 1999












                                       43

<PAGE>
                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 1998 and 1997

                     ASSETS                           1998                1997
                                                     -----               ----


CURRENT ASSETS
  Cash                                        $     10,495        $     20,644
  Rents receivable                                       -                 773
  Other receivables                                      -                   -
  Prepaid expense                                    2,909               2,662
                                                 ---------           ---------
              Total current assets                  13,404              24,079
                                                 ---------           ---------
RESTRICTED DEPOSITS AND FUNDED RESERVES
  Tenants' security deposits                  $     19,429        $     18,935
  Replacement reserve escrow                        57,400              47,046
                                                 ---------           ---------
                                              $     76,829        $     65,981
                                                 ---------           ---------
PROPERTY AND EQUIPMENT, AT COST
  Land                                        $    315,303        $    315,303
  Building                                       4,802,723           4,795,583
  Equipment                                        166,914             166,914
                                                 ---------           ---------
                                              $  5,284,940        $  5,277,800
  Less accumulated depreciation                    791,063             595,478
                                                 ---------           ---------
                                              $  4,493,877        $  4,682,322
                                                 ---------           ---------
OTHER ASSETS
  Deferred charges, less accumulated
    amortization of $18,449 and $13,236       $    114,973        $    120,186
                                                 ---------           ---------
                                              $    114,973        $    120,186
                                                 ---------           ---------
                                              $  4,699,083        $  4,892,568
                                                 =========           =========




                       See Notes to Financial Statements.
                                       44


<PAGE>
                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 1998 and 1997


            LIABILITIES AND PARTNERS' EQUITY          1998              1997
                                                      ----              ----

CURRENT LIABILITIES
  Current maturities of long-term debt        $     25,309      $     23,446
  Accounts payable                                  11,462             8,572
  Accrued expense                                      800               800
  Accrued property taxes                                 -                 -
  Developer fees payable                            24,500                 -
  Advances from general partner, without
    interest, due date, or collateral                8,251                 -
  Accrued interest                                  13,604            13,753
                                                 ---------         ---------
                Total current liabilities     $     83,926      $     46,571
                                                 ---------         ---------

DEPOSIT AND PREPAYMENT LIABILITIES
  Tenants' security deposits                  $     19,239      $     21,614
  Prepaid rents                                         -                280
                                                 ---------         ---------
                                              $     19,239      $     21,894
                                                 ---------         ---------

LONG-TERM DEBT
  Mortgage payable, less current maturities   $  2,103,030      $  2,128,339
  Developer fees payable                           407,053           455,053
                                                 ---------         ---------
                                              $  2,510,083      $  2,583,392
                                                 ---------         ---------
COMMITMENT

PARTNERS' EQUITY                              $  2,085,835      $  2,240,711
                                                 ---------         ---------

                                              $  4,699,083      $  4,892,568
                                                 =========         =========




                       See Notes to Financial Statements.
                                       45
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 1998 and 1997


                                                            1998            1997
                                                            ----            ----
RENTAL INCOME
  Apartments                                        $    380,368    $    386,950
  Tenant assistance payments                                   -               -
  Furniture and equipment                                      -               -
  Commercial                                                   -               -
  Parking spaces                                               -               -
  Subsidy income                                               -               -
  Miscellaneous                                                -               -
                                                        --------        --------
         Net rental revenue                         $    380,368    $    386,950
                                                        --------        --------

FINANCIAL REVENUE
  Interest Income - project operations              $      1,990    $        556
  Income from investments - replacement reserve            1,020             916
  Income from investments - operating reserve                138             337
  Income from investments - miscellaneous                      -               -
                                                        --------        --------
      Sub-total financial revenue                   $      3,148    $      1,809
                                                        --------        --------
OTHER REVENUE
  Laundry and vending                               $      6,260    $      7,140
  NSF and late charges                                     1,050           1,950
  Damage and cleaning fees                                 6,335           5,732
  Forfeited tenant security deposits                           -               -
  Other revenue                                            1,384           1,496
                                                        --------        --------
      Sub-total other revenue                       $     15,029    $     16,318
                                                        --------        --------

                    Total revenues                  $    398,545    $    405,077
                                                        --------        --------






                       See Notes to Financial Statements.
                                       46

<PAGE>
                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 1998 and 1997



                                                        1998                1997
                                                       -----               ----

OPERATING EXPENSES

  Renting expenses
    Advertising                                 $      7,111        $     14,294
    Miscellaneous renting expenses                     2,798               2,440
                                                     -------             -------
        Sub-total renting expenses              $      9,909        $     16,734
                                                     -------             -------
  Administrative expenses
    Office salaries                             $        792        $        196
    Office supplies                                    4,835               2,629
    Office rent                                            -                   -
    Management fee                                    17,729              19,414
    Manager's salary                                  27,121              20,050
    Manager rent free unit                                 -               6,400
    Legal expense                                        242               1,558
    Audit expense                                      4,168               3,978
    Bookkeeping / accounting services                      -                   -
    Telephone and answering service                    2,771               2,562
    Bad debts                                            628               1,426
    Miscellaneous administrative expenses              6,896               3,076
                                                     -------             -------
        Sub-total administrative expenses       $     65,182        $     61,289
                                                     -------             -------
  Utilities expense
    Fuel oil / coal                             $          -        $          -
    Electricity                                        6,377               5,488
    Water                                              9,668               9,144
    Gas                                                2,359               1,933
    Sewer                                             15,636              15,500
                                                     -------             -------
        Sub-total utilities expense             $     34,040        $     32,065
                                                     -------             -------










                       See Notes to Financial Statements.
                                       47

<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 1998 and 1997




                                                           1998            1997
                                                           ----            ----

   Operating and maintenance expense
     Janitor and cleaning payroll                  $          -     $        33
     Janitor and cleaning supplies                        2,594             206
     Janitor and cleaning contract                        2,638           3,033
     Exterminating payroll / contract                     1,480             909
     Exterminating supplies                                   -               -
     Garbage and trash removal                            8,174          11,037
     Security payroll / contract                              -               -
     Grounds payroll                                        222             248
     Grounds supplies                                       603             339
     Grounds contract                                     5,903           6,800
     Repairs payroll                                     18,758          15,358
     Repairs material                                     4,472           3,990
     Repairs contract                                     8,074           4,820
     Elevator maintenance / contract                          -               -
     Heating / cooling repairs and maintenance            1,021             407
     Swim pool maintenance / contract                         -               -
     Snow removal                                             -               -
     Decorating payroll / contract                        1,670           1,580
     Decorating supplies                                  1,552             214
     Vehicle and maintenance equipment o & r                153             112
     Miscellaneous operating and maint. expenses          8,037               -
                                                       --------        --------
         Sub-total operating & maint. expense      $     65,351     $    49,086
                                                       --------        --------
   Taxes and insurance
     Real estate taxes                             $        500     $       862
     Payroll taxes                                        4,710           3,220
     Miscellaneous taxes, licenses, and permits             800             800
     Property and liability insurance                     3,632           3,737
     Fidelity bond insurance                                  -               -
     Workman's compensation                               1,886           2,999
     Health insurance and other employee benefits         2,533           1,628
     Other insurance                                          -               -
                                                       --------        --------
         Sub-total taxes & insurance               $     14,061     $    13,246
                                                       --------        --------


               Total operating expenses            $    188,543     $   172,420
                                                       --------        --------





                       See Notes to Financial Statements.
                                       48


<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 1998 and 1997


                                                 1998             1997
                                                 -----            ----

OTHER EXPENSES
  Interest expense - mortgage                   $    164,080     $    165,816
  Interest expense - notes                                 -                -
  Miscellaneous financial expense                          -                -
  Depreciation and amortization                      200,798          208,818
  Non project expenses                                     -                -
                                                   ---------        ---------
      Sub-total other expenses                  $    364,878     $    374,634
                                                   ---------        ---------

                Total expenses                  $    553,421     $    547,054
                                                   ---------        ---------

                Net income (loss)               $   (154,876)    $   (141,977)
                                                   =========        =========


















                       See Notes to Financial Statements.
                                       49


<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' EQUITY
                     Years Ended December 31, 1998 and 1997


                                                  General            Limited
                                    Total         Partner            Partner
                                    -----         -------            -------
Partners' equity
  December 31, 1996          $  2,333,643    $     (4,777)      $  2,338,420

Partners' capital
  contributions                    54,045          54,045                - -

Partners' capital
  distributions                    (5,000)            - -             (5,000)

Net income (loss)                (141,977)         (1,420)          (140,557)
                                ---------       ---------          ---------

Partners' equity
  December 31, 1997          $  2,240,711    $     47,848       $  2,192,863

Partners' capital
  contributions                         -               -                  -

Partners' capital
  distributions                         -               -                  -

Net income (loss)                (154,876)         (1,549)          (153,327)
                                ---------       ---------          ---------

Partners' equity
  December 31, 1998          $  2,085,835    $     46,299       $  2,039,536
                                =========       =========          =========



Percentage at
  December 31, 1998                  100%              1%                99%
                                =========       =========          =========











                       See Notes to Financial Statements.
                                       50


<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 1998 and 1997

                                                           1998           1997
                                                           ----           ----
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                $   (154,876)   $  (141,977)
  Adjustments to reconcile net income
    (loss) to net cash provided by
    (used in) operating activities:
       Depreciation and amortization                    200,798        208,818
       Change in assets and liabilities:
       Decrease (increase) in:
         Prepaid expenses                                  (247)           163
         Tenants' security deposits                        (494)          (439)
         Rents receivable                                   773           (573)
         Other receivables                                    -            199
       Increase (decrease) in:
         Accounts payable                                 2,890          8,572
         Accrued expenses                                     -         (1,464)
         Accrued interest                                  (149)          (139)
         Accrued property taxes                               -        (54,045)
         Prepaid rents                                     (280)           237
         Tenants' security deposits                      (2,375)           535
                                                      ---------       --------
             Net cash provided by (used in)
               operating activities                $     46,040    $    19,887
                                                      ---------       --------

CASH FLOWS FROM INVESTING ACTIVITIES
  Funding of replacement reserve escrow            $    (10,354)   $   (17,715)
  Withdrawals from replacement reserve escrow                 -              -
  Acquisition of property and equipment                  (7,140)             -
                                                      ---------       --------
             Net cash provided by (used in)
               investing activities                $    (17,494)   $   (17,715)
                                                      ---------       --------

CASH FLOWS FROM FINANCING ACTIVITIES
  Partner contributions                            $          -    $    54,045
  Partner distributions                                       -         (5,000)
  Advances from general partner                           8,251              -
  Payment of development fees payable                   (23,500)       (46,871)
  Principal payments on long-term debt                  (23,446)       (21,721)
                                                      ---------       --------
             Net cash provided by (used in)
               financing activities                $    (38,695)   $   (19,547)
                                                      ---------       --------




                       See Notes to Financial Statements.
                                       51
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                     Years Ended December 31, 1998 and 1997




                                                        1998              1997
                                                        ----              ----


       Increase (decrease) in cash and
         cash equivalents                            (10,149)          (17,375)

Cash and cash equivalents
  Beginning                                           20,644            38,019
                                                  ----------        ----------

  Ending                                        $     10,495      $     20,644
                                                  ==========        ==========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
    Cash paid during the year for interest      $    164,229      $    165,955
                                                  ==========        ==========

























                       See Notes to Financial Statements.
                                       52

<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      A summary of the Partnership's significant accounting policies consistent-
      ly applied  in  the  preparation  of  the  accompanying  financial  state-
      ments follows.

      CAPITALIZATION AND DEPRECIATION

      Land,  buildings and  improvements  are recorded at cost.  Depreciation of
      buildings  and  equipment  is  computed  principally  using  the  Modified
      Accelerated  Cost Recovery  System which  approximates  straight-line  for
      buildings and  double-declining  balance for equipment  over the following
      estimated useful lives:
                                                                 Years
                                                                 -----

                      Buildings                                  27.5
                      Equipment                                     7

      Improvements  are  capitalized,  while  expenditures  for  maintenance and
      repairs are charged to expense as incurred.  Upon disposal of  depreciable
      property,  the  appropriate  property  accounts are reduced by the related
      costs and  accumulated  depreciation.  The resulting  gains and losses are
      reflected in the statement of operations.

      CASH AND CASH EQUIVALENTS

      For purposes of reporting the  statements of cash flows,  the  Partnership
      includes  all  cash   accounts   which  are  not  subject  to   withdrawal
      restrictions  or  penalties,   and  all  highly  liquid  debt  instruments
      purchased  with a  maturity  of  three  months  or less as cash  and  cash
      equivalents on the accompanying balance sheet.

      AMORTIZATION

      Deferred  charges are amortized over the following  estimated useful lives
      using the straight-line method:
                                                                 Years
                                                                 -----
                      Deferred debt expense                         30
                      Tax credit monitoring fee                     15
      INCOME TAXES

      No  provision  or benefit  for  income  taxes has been  included  in these
      financial  statements  since taxable income or loss passes through to, and
      is reportable by, the partners individually.

                                       53

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      ESTIMATES

      The  preparation  of financial  statements  in conformity  with  generally
      accepted  accounting  principles requires management to make estimates and
      assumptions that affect certain reported amounts and disclosures.

      PERSONAL ASSETS AND LIABILITIES

      In accordance with the generally accepted method of presenting partnership
      financial statements, the financial statements do not include the personal
      assets and  liabilities of the partners,  including  their  obligation for
      income  taxes  on  their  distributive  shares  of the net  income  of the
      Partnership, nor any provision for income tax expense.


NOTE 2 - ORGANIZATION

      Colonial Village Roseville is a California  Limited  Partnership which was
      formed in April 1993, to develop,  construct,  own, maintain and operate a
      56-unit  multi-family  apartment  complex  and is  located  in the city of
      Roseville,  California.  The Partnership  Agreement and the loan agreement
      with  the  California   Community   Reinvestment   Corporation  (CCRC),  a
      California   nonprofit  public  benefit   corporation  governs  the  major
      activities of the  Partnership.  Under the agreements,  the Partnership is
      required to provide low cost housing to very  low-income  or  lower-income
      households.

      The Partnership has one general partners, Project Go Inc., a 501(c)(3) tax
      exempt,  non-profit  community  service  organization  and  one  investing
      limited partner,  WNC Housing Tax Credits III, L.P., a California  limited
      partnership.  Partnership  transactions with the partners are described in
      other notes to these financial statements.


NOTE 3 - DEFERRED CHARGES

      Deferred  charges  as of  December  31,  1998 and  1997,  consists  of the
      following:


                                                   1998                1997
                                                   ----                ----

      Deferred debt expense             $       110,462     $       110,462
      Tax credit monitoring fee                  22,960              22,960
                                        ---------------     ---------------
                                        $       133,422     $       133,422
      Less accumulated amortization              18,449              13,236
                                        ---------------     ---------------

                                        $       114,973     $       120,186
                                        ===============     ===============

                                       54
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS




NOTE 4 - RESTRICTED DEPOSITS AND FUNDED RESERVES

      In accordance with the Partnership  Agreement and the Rider to Multifamily
      Instrument   with  CCRC,  the   Partnership  is  required  to  maintain  a
      replacement  reserve  account.  The  replacement  reserve account is to be
      funded annually in the amount of $16,800.


NOTE 5 - LONG-TERM DEBT

      Long-Term  debt  consisted of a permanent loan with CCRC in face amount of
      $2,200,000.

      Under  the  terms of the  30-year  Promissory  Note  with  CCRC,  the loan
      provides  for an initial  interest  rate of 7.67% and monthly  payments of
      $15,639.62  commencing on September 1, 1995, and continuing through August
      2025.  The  interest  rate and  monthly  payment  will be adjusted at year
      eleven (11) and year twenty-one (21), at which time the interest rate will
      be adjusted  based on the Current Index plus 2.75% and the payment will be
      adjusted and determined by the amount of the monthly payment that would be
      sufficient  to repay the note  within  360 months of the  initial  payment
      date.  As Of December 31, 1998,  the current  interest  rate,  and minimum
      monthly payment due is 7.67% and $15,639.62, respectively.

      The  apartment  complex is pledged as  collateral  for the mortgage and is
      secured by deeds of trust,  assignment of rents,  security  agreements and
      fixture filings against the property.

      Aggregate  maturities  of  Long-term  debt for the next five  years are as
      follows:

         December 31,     1999                    $      25,309
                          2000                           27,320
                          2001                           29,491
                          2002                           31,834
                          2003                           34,364
                          Thereafter                  1,980,021
                                                     ----------

         TOTAL                                    $   2,128,339
                                                     ==========


NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

      DEVELOPER FEES

      In accordance with the Partnership  Agreement,  the Partnership  agreed to
      pay the  general  partner  a  development  fee of  $648,000  for  services
      rendered  to  the   Partnership   for  overseeing  the   development   and
      construction of the project.  However, during 1995, $3,526, of this amount
      was waived by the  general  partner  in  accordance  with the  limitations
      imposed by the California Tax Credit Allocation Committee.

      Payment of the development fee is to be paid from future  operational cash
      flows.

      The developer fee has been capitalized into the basis of the building.

                                       55
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS




NOTE 7 - COMMITMENT

      The  Partnership  entered into a Regulatory  Agreement with the Tax Credit
      Allocation Committee (TCAC), established under Section 50185 of the Health
      and Safety  Code of the State of  California.  Under this  Agreement,  the
      Partnership shall maintain the project as a Qualified  Low-income  Housing
      Project for a period of 55 consecutive  taxable years beginning with 1995,
      the  first  taxable  year of the  Credit  Period.  In  exchange  for  this
      agreement,  TCAC has  authorized an allocation  relating to the low-income
      housing credit under the provisions of Section 42 of the Internal  Revenue
      Code.


NOTE 8 - CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

      The Partnership's sole asset is Colonial Village Roseville Apartments. The
      Partnership's operations are  concentrated  in the multifamily real estate
      market.















                                       56