FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

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

                    For the fiscal year ended March 31, 2000

                                       OR

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

             For the transition period from __________ to __________

                         Commission file number: 0-23908


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

California                                                            33-0563307
(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.
Wilfred N. Cooper,  Jr.,  President of Associates,  owns 2.1% 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, 2000,  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, 2000                    As of December 31, 1999
                                                    ------------------------------  ------------------------------------------------

                                                       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       100%    $    807,000   $  1,390,000
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      1,767,000
Ltd.

Buccaneer         Fernandia      Clifford E. Olsen        365,000        365,000       48        98%         768,000      1,477,000
Associates,       Beach, Florida
Limited

Candleridge       Perry, Iowa    Eric A. Sheldahl         126,000        126,000       24       100%         245,000        701,000
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        98%       5,872,000      2,101,000

Dallas County     Orrville,      Thomas H. Cooksey and
Housing, Ltd.     Alabama        Apartment Developers,
                                 Inc.                     130,000        130,000       19       100%         287,000        615,000

La Paloma del     Deming,        W.E.Medlock, Jr. and
Sol Limited       New Mexico     Western States Housing
Partnership                      Corp.                    254,000        254,000       38        92%         625,000      1,434,000

Memory Lane       Yankton,       Skogen - Peterson, Inc   151,000        151,000       18        89%         295,000        685,000
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        97%       3,516,000      1,633,000

</TABLE>
                                       5


<PAGE>

<TABLE>
<CAPTION>
                                                    ------------------------------  ------------------------------------------------
                                                         As of March 31, 2000                    As of December 31, 1999
                                                    ------------------------------  ------------------------------------------------

                                                       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,       W.E.Medlock, Jr. and
Partnership       Texas          Western States Housing
                                 Corp.                       249,000     249,000       40        95%         547,000      1,279,000

Orosi Apartments, Orosi,         Douglas W. Young            461,000     461,000       42        93%         902,000      1,955,000
Ltd.              California

Parlier Garden    Parlier,       David J. Micheal and
Apts.             California     Professional Apartment
                                 Management, Inc.            453,000     453,000       41       100%         917,000      1,710,000

Rosewood          Superior,      Duffy Development
Apartments        Wisconsin      Company, Inc.               185,000     185,000       20        90%         375,000        507,000
Partnership
Limited

Sun Manor, L.P.   Itta Bena,     Glenn D. Miller             230,000     230,000       36       100%         464,000      1,058,000
                  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      1,692,000

Venus             Venus,         W. Joseph Chamy             161,000     161,000       24       100%         318,000        726,000
Retirement        Texas
Village,
Ltd.

Walnut -          Orange,        Orange Housing
Pixley, L.P.      California     Development Corp.         1,078,000   1,078,000       22       100%       2,309,000      1,727,000

Winters           Winters,       John P. Casper              531,000     531,000       38       100%       1,072,000      1,836,000
Investment        California                              ----------  ----------     ----      -----      ----------     ----------
Group
                                                         $12,536,000 $12,536,000      635        97%     $26,013,000    $24,293,000
                                                          ==========  ==========     ====      =====      ==========     ==========

</TABLE>
                                       6


<PAGE>

<TABLE>
<CAPTION>
                                      ------------------------------------------
                                          For the year ended December 31, 1999
                                      ------------------------------------------
                                                                   Low Income
                                                                 Housing Credits
                                           Rental         Net     Allocated to
Partnership Name                           Income         Loss    Partnership
--------------------------------------------------------------------------------
<S>                                    <C>           <C>                <C>
Almond Garden Apartment Associates     $   158,000   $   (52,000)       99%

Almond View Apartments, Ltd.               183,000      (230,000)       99%

Buccaneer Associates, Limited              197,000       (43,000)       99%

Candleridge Apartments of Perry L.P. II    140,000       (12,000)       99%

Colonial Village Roseville                 402,000       (30,000)       99%

Dallas County Housing, Ltd.                 61,000       (19,000)       99%

La Paloma del Sol Limited Partnership      137,000       (22,000)       99%

Memory Lane Limited Partnership             64,000       (36,000)       99%

Nueva Sierra Vista Associates              146,000      (139,000)       99%

Old Fort Limited Partnership               163,000        (17,000)       99%

Orosi Apartments, Ltd.                     183,000       (19,000)       99%

Parlier Garden Apts.                       190,000       (48,000)       95%

Rosewood Apartments Limited Partnership     73,000        (10,000)       99%

Sun Manor, L.P.                            139,000       (27,000)       99%

Tahoe Pines Apartments                     178,000      (122,000)       99%

Venus Retirement Village, Ltd.              83,000       (22,000)       99%

Walnut - Pixley, L.P.                      141,000       (45,000)       99%

Winters Investment Group                   188,000       (46,000)       99%
                                         ---------      --------
                                      $  2,826,000    $ (939,000)
                                         =========      ========
</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, 2000, there were 962 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 year
     ended March 31, 2000.

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
                                     -----------------------   --------------------------------------------------
                                        2000         1999         1998         1997         1996         1995
                                     -----------  -----------  -----------   ----------   ----------   ----------
<S>                                <C>          <C>          <C>          <C>          <C>          <C>
ASSETS
Cash and cash equivalents          $    480,598 $    509,695 $    561,751 $  1,451,071 $  1,498,036 $  1,916,200

Investments in limited
 partnerships, net                    8,224,971    9,164,197    9,415,032   10,400,720   11,447,928   13,032,752
Other assets                                  -            -            -        2,242        5,419            -
                                     -----------  -----------  -----------   ----------   ----------   ----------

                                   $  8,705,569 $  9,673,892 $  9,976,783 $ 11,854,033 $ 12,951,383 $ 14,948,952
                                     ===========  ===========  ===========   ==========   ==========   ==========

LIABILITIES
Payables to limited partnerships   $          - $     16,836 $     16,836 $     16,836 $     16,836 $    651,094

Due to General Partner and
 affiliates                             718,279      552,257      561,391      370,223      233,380      240,188
Due to limited partners                       -            -            -      900,000            -            -

PARTNERS' EQUITY                      7,987,290    9,104,799    9,398,556   10,566,974   12,701,167   14,057,670
                                     -----------  -----------  -----------   ----------   ----------   ----------

                                   $  8,705,569 $  9,673,892 $  9,976,783 $ 11,854,033 $ 12,951,383 $ 14,948,952
                                     ===========  ===========  ===========   ==========   ==========   ==========
</TABLE>
                                       8
<PAGE>
Selected  results  of  operations,  cash  flows  and other  information  for the
Partnership are as follows:
<TABLE>
<CAPTION>
                          For the
                           Year                  For the
                           Ended            Three Months Ended                        For the Years Ended
                          March 31              March 31                                 December 31
                          ----------    -------------------------   ------------------------------------------------------
                            2000           1999          1998          1998          1997          1996          1995
                          ----------    -----------    ----------   -----------   -----------    ----------    ----------
                                                       Unaudited
<S>                    <C>            <C>            <C>          <C>            <C>           <C>            <C>
Loss from operations   $   (244,656)  $    (64,061)  $   (54,043) $   (249,631)  $  (205,576)  $   (197,723)  $  (105,423)

Equity in
 losses of
 limited partnerships      (872,853)      (229,696)     (244,537)     (918,787)   (1,028,617)    (1,132,216)   (1,155,114)
                          ----------    -----------    ----------   -----------   -----------    -----------   -----------

Net loss               $ (1,117,509)  $   (293,757)  $  (298,580) $ (1,168,418)  $(1,234,193)  $ (1,329,939)  $(1,260,537)
                          ==========    ===========    ==========   ===========   ===========    ===========   ===========
Net loss
 allocated to:
 General partner       $    (11,175)  $     (2,938)  $    (2,986) $    (11,684)  $   (12,342)  $    (13,300)  $   (12,605)
                          ==========    ===========    ==========   ===========   ===========    ===========   ===========

 Limited partners      $ (1,106,334)  $   (290,819)  $  (295,594) $ (1,156,734)  $(1,221,851)  $ (1,316,639)  $(1,247,932)
                          ==========    ===========    ==========   ===========   ===========    ===========   ===========
Net loss per limited
 partnership unit      $     (61.46)  $     (16.16)  $    (16.42) $     (64.26)  $    (67.88)  $     (73.15)  $    (69.33)
                          ==========    ===========    ==========   ===========   ===========    ===========   ===========
Outstanding weighted
 limited partner
 units                       18,000         18,000        18,000        18,000        18,000         18,000        18,000
                          ==========    ===========    ==========   ===========   ===========    ===========   ===========

                          For the
                           Year                  For the
                           Ended            Three Months Ended                        For the Years Ended
                          March 31              March 31                                 December 31
                          -----------   -------------------------   -----------------------------------------------------
                            2000           1999          1998          1998          1997          1996          1995
                          ----------    -----------    ----------   -----------   -----------    ----------    ----------
                                                       Unaudited
Net cash provided by
 (used in):
 Operating activities  $    (18,170)  $    (58,079)  $     9,678  $      4,243   $    (6,960)  $   (143,337)    $ 437,400
 Investing activities       (10,927)         6,023         3,200         6,437       (40,005)      (248,263)   (1,535,687)
 Financing activities             -              -      (900,000)     (900,000)            -        (26,564)      215,000
                          ----------    -----------    ----------   -----------   -----------    -----------   ----------
Net change in cash
 and cash equivalents       (29,097)       (52,056)     (887,122)     (889,320)      (46,965)      (418,164)     (883,287)

Cash and cash
 equivalents,
 beginning of period        509,695        561,751     1,451,071     1,451,071     1,498,036      1,916,200     2,799,487
                          ----------    -----------    ----------   -----------   -----------    -----------   ----------
Cash and cash
 equivalents, end of
 period                $    480,598   $    509,695   $   563,949  $    561,751   $ 1,451,071   $  1,498,036     1,916,200
                          ==========    ===========    ==========   ===========   ===========    ===========   ==========

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

                             1999            1998             1997            1996             1995
                         -------------   --------------   -------------   -------------    -------------
 Federal               $          113  $           113  $          113  $          113   $           95
 State                              -               17              66              85               48
                         -------------   --------------   -------------   -------------    -------------
 Total                 $          113  $           130  $          179  $          198   $          143
                         =============   ==============   =============   =============    =============
</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, 2000  consisted  of $480,598 in cash and
aggregate  investments in the eighteen Local Limited Partnerships of $8,224,971.
Liabilities at March 31, 2000 primarily  consisted of $717,779 of accrued annual
management fees due to the General Partner.

Results of Operations

Year  Ended  March 31,  2000  Compared  to Year Ended  December  31,  1998.  The
Partnership's  net loss for the year  ended  March  31,  2000 was  $(1,118,000),
reflecting  a decrease  of $50,000  from the net loss  experienced  for the year
ended  December 31, 1998.  The decline in net loss is primarily due to equity in
losses from limited partnerships which declined by $46,000 to $(873,000) for the
year ended March 31, 2000 from  $(919,000) for the year ended December 31, 1998.
This decrease was a result of the Partnership not recognizing  certain losses of
the  Local  Limited   Partnerships.   The  investments  in  such  Local  Limited
Partnerships had reached $0 at March 31, 2000. Since the Partnership's liability
with respect to its  investments is limited,  losses in excess of investment are
not recognized.

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.  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.

Cash Flows

Year Ended March 31, 2000  Compared to Year Ended  December 31,  1998.  Net cash
used during the year ended March 31,  2000 was  $(29,000),  compared to net cash
used for the year ended  December  31,  1998 of  $(889,000).  The change was due
primarily  to a return of capital  to the  limited  partners  of $50 per unit or
$900,000  during  the year  ended  December  31,  1998,  partially  offset by an
increase  in cash used for  investing  activities  of  $17,000,  a  decrease  in
interest  income  received of $7,000 and an increase in cash paid to the General
Partner for annual management fees of $13,000.

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.

                                       10
<PAGE>
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.

During the year ended March 31, 2000 and the three  months ended March 31, 1999,
accrued  payables,  which consist primarily of related party management fees due
to  the  General  Partner,  increased  by  $166,000  and  decreased  by  $9,000,
respectively.  The General  Partner does not anticipate  that these accrued fees
will be paid in full until such time as capital reserves are in excess of future
foreseeable working capital requirements of the partnership.

The Partnership  expects its future cash flows,  together with its net available
assets at March 31, 2000, to be  sufficient  to meet all  currently  foreseeable
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. The non-IT systems of WNC are year 2000 compliant.

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.  To date,  WNC has not  encountered
significant year 2000 issues or business disruptions from its service providers.

Costs to Address Year 2000 Issues

The cost to address year 2000 issues for WNC has been less than $25,000.

Risk of Year 2000 Issues

Although WNC has  encountered no significant  year 2000 issues to date, the most
reasonable  and likely result from  non-year  2000  compliance of systems of the
service  providers  noted  above  would be the  disruption  of  normal  business
operations for WNC. This disruption could, 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.

Local Limited Partnerships

Status of Readiness

To date, WNC and the  Partnership  have  encountered  no  significant  year 2000
issues with respect to the Local Limited Partnerships.

                                       11
<PAGE>

Costs to Address Year 2000 Issues

There has been and will be no cost to the  Partnership  as a result of assessing
year 2000 issues for the Local  Limited  Partnerships.  Although no  significant
year 2000 issues have been  encountered to date, 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

Although no significant  year 2000 issues have been  encountered to date,  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, 2000 and 1999,  and December 31, 1998,  and the related  statements of
operations,  partners'  equity (deficit) and cash flows for the year ended March
31, 2000,  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 77%, 78% and 78% of the total assets of the Partnership at March 31,
2000 and 1999 and December 31, 1998,  respectively.  Our opinion,  insofar as it
relates to the amounts  included  in the  financial  statements  for the limited
partnerships which were audited by others, is based solely on the reports of the
other auditors.

We  conducted  our  audits  in  accordance  with  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, 2000 and 1999, and December 31,
1998,  and the results of its  operations  and its cash flows for the year ended
March 31,  2000,  the three  months  ended  March  31,  1999 and the year  ended
December 31, 1998, in conformity with generally accepted accounting principles.



                                        /s/  BDO SEIDMAN, LLP
                                        BDO SEIDMAN, LLP

Orange County, California
May 5, 2000


                                       13


<PAGE>



                          INDEPENDENT AUDITORS' REPORT



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


We have audited the  accompanying  statements of  operations,  partners'  equity
(deficit)  and cash flows of WNC  California  Housing Tax Credits  III,  L.P. (a
California Limited  Partnership) (the "Partnership") for the year 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 III,  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 audit 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 audit and the  reports  of the  other  auditors  provide a
reasonable basis for our opinion.

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



                                       /s/ CORBIN & WERTZ
                                       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
                                                                  -------------------------------   ---------------

                                                                      2000             1999              1998
                                                                  --------------   --------------   ---------------
<S>                                                           <C>              <C>              <C>
ASSETS
Cash and cash equivalents                                     $       480,598  $       509,695  $        561,751
Investments in limited partnerships, net
 (Note 2)                                                           8,224,971        9,164,197         9,415,032
                                                                --------------   --------------   ---------------

                                                              $     8,705,569  $     9,673,892  $      9,976,783
                                                                ==============   ==============   ===============
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
 Payables to limited partnerships (Note 4)                    $             -  $        16,836  $         16,836
 Accrued fees and expenses due to General Partner and
  affiliates (Note 3)                                                 718,279          552,257           561,391
                                                                --------------   --------------   ---------------

         Total liabilities                                            718,279          569,093           578,227
                                                                --------------   --------------   ---------------

Commitments and contingencies

Partners' equity (deficit):
 General partner                                                      (90,258)         (79,083)          (76,145)
 Limited partners (30,000 units authorized; 18,000 units
  issued and outstanding)                                           8,077,548        9,183,882         9,474,701
                                                                --------------   --------------   ---------------

         Total partners' equity                                     7,987,290        9,104,799         9,398,556
                                                                --------------   --------------   ---------------

                                                              $     8,705,569  $     9,673,892  $      9,976,783
                                                                ==============   ==============   ===============
</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
                                                         For the           Months
                                                         Year Ended        Ended          For the Years Ended
                                                         March 31          March 31            December 31
                                                        -------------   ------------    ----------------------------
                                                            2000           1999            1998            1997
                                                        -------------   ------------    ------------   -------------
<S>                                                 <C>            <C>              <C>            <C>
Interest income                                     $       19,937 $        5,154   $      26,577  $       57,279

Operating expenses:
 Amortization (Note 2)                                      60,464         15,116          60,464          58,596
 Asset management fees (Note 3)                            181,385         46,542         186,167         186,166
 Other                                                      22,744          7,557          29,577          18,093
                                                        -----------     ----------      ----------     -----------

    Total operating expenses                               264,593         69,215         276,208         262,855
                                                        -----------     ----------      ----------     -----------

Loss from operations                                      (244,656)       (64,061)       (249,631)       (205,576)

Equity in losses of limited
 partnerships (Note 2)                                    (872,853)      (229,696)       (918,787)     (1,028,617)
                                                        -----------     ----------      ----------     -----------

Net loss                                            $   (1,117,509) $    (293,757)  $  (1,168,418) $   (1,234,193)
                                                        ===========     ==========      ==========     ===========
Net loss allocated to:
 General partner                                    $      (11,175) $      (2,938)  $     (11,684) $      (12,342)
                                                        ===========     ==========      ==========     ===========

 Limited partners                                   $   (1,106,334) $    (290,819)  $  (1,156,734) $   (1,221,851)
                                                        ===========     ==========      ==========     ===========

Net loss per limited partner unit                   $       (61.46) $      (16.16)  $      (64.26) $       (67.88)
                                                        ===========     ==========      ==========     ===========

Outstanding weighted limited partner units                  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 Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>

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

<S>                                   <C>                 <C>               <C>                 <C>
Partners' equity (deficit) at January 1, 1997                     (52,119)        12,753,286          12,701,167

Return of capital                                                       -           (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

Net loss                                                          (11,175)        (1,106,334)         (1,117,509)
                                                            --------------     --------------      --------------

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

</TABLE>

                 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
                                                      For the         Months
                                                      Year Ended      Ended              For the Years Ended
                                                      March 31        March 31               December 31
                                                    -------------   ------------   -----------------------------
                                                        2000           1999            1998           1997
                                                    -------------   ------------    ------------   ------------
<S>                                             <C>             <C>             <C>             <C>
Cash flows from operating activities:
Net loss                                        $   (1,117,509) $    (293,757)  $  (1,168,418)  $  (1,234,193)
 Adjustments to reconcile net loss to
  net cash (used in) provided by
  operating activities:
   Amortization                                          60,464         15,116          60,464          58,596
   Equity in loss of limited
     partnerships                                       872,853        229,696         918,787       1,028,617
   Change in other assets                                     -              -           2,242           3,177
   Change in accrued fees and
    expenses due to General
    Partner and affiliates                              166,022         (9,134)        191,168         136,843
                                                    ------------   ------------    ------------    ------------
Net cash provided by (used in)
 operating activities                                   (18,170)       (58,079)          4,243          (6,960)
                                                    ------------   ------------    ------------    ------------
Cash flows from investing activities:
 Investments in limited partnerships,                   (16,836)             -               -               -
  net
 Capitalized acquisition costs and fees                       -              -               -         (55,994)
 Distributions from limited
  partnerships                                            5,909          6,023           6,437          15,989
                                                    ------------   ------------    ------------    ------------

Net cash provided by (used in)
 investing activities                                   (10,927)         6,023           6,437         (40,005)
                                                    ------------   ------------    ------------    ------------
Cash flows from financing activities
 Return of capital                                            -              -        (900,000)              -
                                                     ------------   ------------    ------------    ------------

Net cash used in financing activities                         -              -        (900,000)              -
                                                    ------------   ------------    ------------    ------------

Net decrease in cash and cash                           (29,097)       (52,056)       (889,320)        (46,965)
 equivalents

Cash and cash equivalents, beginning
 of year                                                509,695        561,751       1,451,071       1,498,036
                                                    ------------   ------------    ------------    ------------
Cash and cash equivalents, end of
 year                                            $      480,598  $     509,695   $     561,751   $   1,451,071
                                                    ============   ============    ============    ============
</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
                                                      For the         Months
                                                      Year Ended      Ended              For the Years Ended
                                                      March 31        March 31               December 31
                                                    -------------   ------------   -----------------------------
                                                        1999           1999            1998           1997
                                                    -------------   ------------    ------------   ------------


SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW
  INFORMATION:

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


</TABLE>



                 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 Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

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. Wilfred N. Cooper,  Jr., President
of WNC, owns 2.1% 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

In 1999, the Partnership  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.


                                       20

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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                       For The Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

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 and 1997
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  have  been   estimated  by  management  of  the
Partnership. Losses from Local Limited Partnerships for the year ended March 31,
2000 have been  recorded  by the  Partnership  based on nine  months of reported
results  provided  by the  Local  Limited  Partnerships  and on three  months of
results  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 Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

 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.  The Partnership
 had no cash equivalents at the end of all periods presented.

 Concentration of Credit Risk

 At March 31,  2000,  the  Partnership  maintained  a cash  balance at a certain
financial institution in excess of the maximum federally insured amounts.

 Net Loss Per Limited Partner Unit

 Net loss per limited  partnership  unit is calculated  pursuant to Statement of
 Financial  Accounting  Standards No. 128, Earnings Per Share. Net loss per unit
 includes no dilution  and is computed  by dividing  loss  available  to limited
 partners by the weighted average number of units outstanding during the period.
 Calculation of diluted net loss 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 Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

 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 March 31,  2000 and 1999 are  approximately  $1,340,000  and
 $1,351,000  greater than the Partnership's  equity at the preceding December 31
 as shown in the  Local  Limited  Partnerships'  combined  financial  statements
 presented  below.  This  difference is primarily due to unrecorded  losses,  as
 discussed  below,  acquisition,  selection  and  other  costs  related  to  the
 acquisition of the investments which have been capitalized in the Partnership's
 investment  account  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). The Partnership's  investment
 is also  lower  than the  Partnership's  equity as shown in the  Local  Limited
 Partnership's  combined  financial  statements  due  to  the  estimated  losses
 recorded by the Partnership for the three month period ended March 31.

 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,  2000,  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 year ended March 31, 2000
 and the three month  period  ended March 31, 1999  amounting  to  approximately
 $51,893 and $7,306,  respectively,  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, 2000,  the  aggregate  share of net losses not  recognized  by the
 Partnership amounted to $103,752.

 Following  is a summary of the equity  method  activity of the  investments  in
Local Limited Partnerships for periods presented:
<TABLE>
<CAPTION>
                                                                           For the
                                                                           Three
                                                          For the          Months
                                                          Year Ended       Ended              For the Years Ended
                                                          March 31         March 31               December 31
                                                       ---------------   -------------    ------------------------------

                                                            2000             1999             1998             1997
                                                       ---------------   -------------    --------------    ------------

<S>                                                  <C>               <C>             <C>              <C>
Investments per balance sheet, beginning of period   $      9,164,197  $   9,415,032   $   10,400,720   $ 11,447,928
Capitalized acquisition fees and costs                              -              -                -         55,994
Distributions received                                         (5,909)        (6,023)          (6,437)       (15,989)
Equity in losses of limited partnerships                     (872,853)      (229,696)        (918,787)    (1,028,617)
Amortization of paid acquisition fees and costs               (60,464)       (15,116)         (60,464)       (58,596)
                                                       ---------------  -------------   --------------   ------------

Investments per balance sheet, end of period         $      8,224,971  $   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 Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

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

                        COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                               1999                1998
                                                         ---------------     ---------------


ASSETS
<S>                                                    <C>                 <C>
Buildings and improvements, net of
 accumulated depreciation for 1999
 and 1998 of $6,517,000 and $5,360,000,
 respectively.                                         $     29,592,000    $     30,690,000
Land                                                          2,213,000           2,213,000
Other assets                                                  2,035,000           1,958,000
                                                         ---------------     ---------------

                                                       $     33,840,000    $     34,861,000
                                                         ===============     ===============

LIABILITIES

Mortgage and construction loans payable                $     24,293,000    $     24,587,000
Due to related parties                                          722,000             792,000
Other liabilities                                               946,000             661,000
                                                         ---------------     ---------------

                                                             25,961,000          26,040,000
                                                         ---------------     ---------------

PARTNERS' CAPITAL

WNC California Housing Tax Credits III, L.P.                  6,885,000           7,813,000
Other partners                                                  994,000           1,008,000
                                                         ---------------     ---------------

                                                              7,879,000           8,821,000
                                                         ---------------     ---------------

                                                       $     33,840,000    $     34,861,000
                                                         ===============     ===============
</TABLE>
                                       24

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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                       For The Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued

                   COMBINED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                 1999               1998                1997
                                                            ---------------    ---------------     ---------------
<S>                                                      <C>                <C>                  <C>
Revenues                                                 $      2,986,000   $       2,901,000    $      2,895,000

Expenses:
 Operating expenses                                             1,886,000           1,800,000           1,779,000
 Interest expense                                                 870,000             871,000             950,000
 Depreciation and amortization                                  1,169,000           1,188,000           1,220,000
                                                           ---------------     ---------------     ---------------

         Total expenses                                         3,925,000           3,859,000           3,949,000
                                                           ---------------     ---------------     ---------------

Net loss                                                 $       (939,000)  $        (958,000)   $     (1,054,000)
                                                           ===============     ===============     ===============

Net loss allocable to the Partnership                    $       (930,000)  $        (948,000)   $     (1,044,000)
                                                           ===============     ===============     ===============

Net loss recorded by the Partnership                     $       (873,000)  $        (919,000)   $     (1,029,000)
                                                           ===============     ===============     ===============
</TABLE>
Certain Local Limited  Partnerships have incurred  significant  operating losses
and have  substantial  working  capital  deficiencies.  In the event these Local
Limited Partnerships continue to incur significant operating losses,  additional
capital contributions by the Partnership and/or the Local General Partner may be
required  to sustain  the  operations  of such Local  Limited  Partnerships.  If
additional  capital  contributions  are not made  when  they are  required,  the
Partnership's  investment in certain of such Local Limited Partnerships could be
impaired and the loss and recapture of the related tax credits could occur.

NOTE 3 - RELATED PARTY TRANSACTIONS

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

         Acquisition  fees of up to 9% of the  gross  proceeds  from the sale of
         Units as  compensation  for services  rendered in  connection  with the
         acquisition  of Local Limited  Partnerships.  At the end of all periods
         presented,  the Partnership  incurred  acquisition  fees of $1,620,000.
         Accumulated  amortization  of these  capitalized  costs  was  $324,520,
         $270,524  and  $257,025 as of March 31, 2000 and 1999 and  December 31,
         1998, 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 $27,276, $20,808 and $19,191
         as of March 31, 2000 and 1999 and December 31, 1998, 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 $181,385 and $46,542 were incurred
         during the year ended March 31, 2000 and the three  months  ended March
         31, 1999,  respectively,  and $186,167 and $186,166  were  incurred for
         1998 and 1997,  respectively,  of which,  $12,500 and $53,350 were paid
         during the year ended March 31, 2000 and the three  months  ended March
         31,  1999  and  $0  and  $50,000   were  paid  during  1998  and  1997,
         respectively.

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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                       For The Year Ended March 31, 2000,
                  For The Three Months Ended March 31, 1999 and
                 For The Years Ended December 31, 1998 and 1997

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:
<TABLE>
<CAPTION>
                                                          March 31                 December 31
                                               --------------------------------   ---------------
                                                   2000              1999              1998
                                               --------------    --------------   ---------------
<S>                                          <C>               <C>              <C>
Reimbursement for expenses paid
 by the General Partner or an affiliate      $           500   $         3,363  $         5,690

Asset management fee payable                         717,779           548,894          555,701
                                               --------------    --------------   --------------

                                             $       718,279   $       552,257  $       561,391
                                               ==============    ==============   ==============
</TABLE>

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

NOTE 4 - 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 - 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 69, is the  founder,  Chief  Executive  Officer,
Chairman,  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 66,  is Vice  Chairman,  a  Director,  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 37, is  President,  Chief  Operating  Officer,  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 48, is  Executive  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 43, 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 45, 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 54, is Vice  President -  Instituional  investments  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 37, is Vice President - Acquisitions  and a member of the
Acquisition  Committee 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 45, 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 63, 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  $181,385,
     $46,542 and $186,167 were incurred during the year ended March 31, 2000 and
     the three  months  ended March 31,  1999,  and the year ended  December 31,
     1998,  respectively.  The  Partnership  paid  the  General  Partner  or its
     affiliates  $12,500,  $53,350  and $0 of those  fees  during the year ended
     March 31, 2000 and 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  $9,000,  $10,000 and
     $6,000  during the year ended  March 31,  2000 and 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
     $20,000 and $24,000 for the General  Partner for the  calendar  years ended
     December  31,  1999 and 1998,  respectively.  The  General  Partner is also
     entitled to receive 1% of cash  distributions.  There were no distributions
     of cash to the General Partner during the year ended March 31, 2000 and 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, 2000 and 1999, and December 31, 1998
         Statements  of  Operations  for the year  ended  March 31, 2000 and the
          three months ended March 31,  1999,  and for the years ended  December
          31, 1998 and 1997
         Statements of Partners'  Equity (Deficit) for  the year ended March 31,
          2000 and the three  months  ended  March 31,  1999,  and for the years
          ended December 31, 1998 and 1997
         Statements  of Cash  Flows for the year ended  March 31,  2000 and  the
          three months ended March 31,  1999,  and for the years ended  December
          31, 1998 and 1997
         Notes to Financial Statements

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

         Report  of  Independent  Certified  Public  Accountants  on  Financial
          Statement 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
         Village  Roseville  (1) filed as exhibit 10.1 to  Form 8-K/A  Amendment
         No. 1 to Current Report dated December 27, 1993 is  hereby incorporated
         herein by reference as exhibit 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
         Amendment  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
         Apartments, Ltd. filed as exhibit 10.6  to Post-Effective Amendment No.
         2 to Form S-11 dated September 17, 1993 is  hereby  incorporated herein
         by reference as exhibit 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
         reference as exhibit 10.9.

10.10    Amended  and  Restated  Agreement  of  Limited  Partnership  of   Venus
         Retirement  Village,  Ltd.  filed as  exhibit  10.8  to  Post-Effective
         Amendment  No. 2 to Form  S-11  dated  September  17,  1993  is  hereby
         incorporated herein by reference as exhibit 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  Amendment
         No. 2 to Form S-11 dated  September  17,  1993  is hereby  incorporated
         herein by reference as exhibit 10.11.

10.12    Amended and Restated  Agreement of Limited  Partnership of  Almond View
         Apartments, Ltd. filed as exhibit 10.11 to Form 10K  dated December 31,
         1993 is hereby incorporated herein by reference as exhibit 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, 1999 and 1998 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 May 5, 2000,  relating to the 2000,
1999 and 1998 financial  statements of WNC  California  Housing Tax Credits III,
L.P.  (the  "Partnership"),  which are  contained  in Item 8 of this Form  10-K,
included  the  audit of the  accompanying  financial  statement  schedules.  The
financial  statement  schedules  are  the  responsibility  of the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statement schedules based upon our audits.

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




                              /s/BDO SEIDMAN, LLP
                                BDO SEIDMAN, LLP


Orange County, California
May 5, 2000


                                       33


<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>

                                         -----------------------------------  ------------------------------------------------------
                                                     March 31, 2000                             As of December 31, 1999
                                         -----------------------------------  ------------------------------------------------------
                                           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    $  1,390,000   $  1,757,000   $    383,000   $  1,374,000

Almond View Apartments,     Stockton,
Ltd.                        California         1,639,000      1,639,000       1,767,000      3,525,000        682,000      2,843,000

Buccaneer Associates,       Fernandia
Limited                     Beach, Florida       365,000        365,000       1,477,000      2,218,000        353,000      1,865,000

Candleridge Apartments      Perry, Iowa          126,000        126,000         701,000        891,000        167,000        724,000
of Perry L.P. II

Colonial Village            Roseville,
Roseville                   Calfornia          2,811,000      2,811,000       2,101,000      5,292,000        981,000      4,311,000

Dallas County               Orrville,
Housing, Ltd.               Alabama              130,000        130,000         615,000        760,000        139,000        621,000

La Paloma del Sol           Deming, New
Limited Partnership         Mexico               254,000        254,000       1,434,000      1,780,000        274,000      1,506,000

Memory Lane Limited         Yankton,
Partnership                 South Dakota         151,000        151,000         685,000        874,000        299,000        575,000

Nueva Sierra Vista          Richgrove,
Associates                  California         1,688,000      1,688,000       1,633,000      3,253,000        373,000      2,880,000

Old Fort                    Hidalgo, Texas       249,000        249,000       1,279,000      1,657,000        266,000      1,391,000
Limited Partnership


</TABLE>
                                       34
<PAGE>


WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                          ----------------------------------  ------------------------------------------------------
                                                   March 31, 2000                              As of December 31, 1999
                                          ----------------------------------  ------------------------------------------------------
                                           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         1,955,000      2,442,000        268,000      2,174,000

Parlier Garden Apts.        Parlier,
                            California         453,000        453,000         1,710,000      2,190,000        325,000      1,865,000

Rosewood Apartments         Superior,
Limited Partnership         Wisconsin          185,000        185,000           507,000        767,000        118,000        649,000

Sun Manor, L.P.             Itta Bena,
                            Mississippi        230,000        230,000         1,058,000      1,340,000        265,000      1,075,000

Tahoe Pines Apartments      South Lake
                            Tahoe,
                            California       1,633,000      1,633,000         1,692,000      3,289,000        642,000      2,647,000

Venus Retirement            Venus, Texas       161,000        161,000           726,000        929,000        212,000        717,000
Village, Ltd.

Walnut - Pixley, L.P.       Orange,
                            California       1,078,000      1,078,000         1,727,000      2,766,000        459,000      2,307,000

Winters Investment          Winters,
Group                       California         531,000        531,000         1,836,000      2,592,000        311,000      2,281,000
                                            ----------     ----------        ----------     ----------      ---------     ----------
                                         $  12,536,000  $  12,536,000    $   24,293,000  $  38,322,000  $   6,517,000  $  31,805,000
                                            ==========     ==========        ==========     ==========      =========     ==========
</TABLE>

                                       35

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                          ---------------------------------------------------------------------------
                                                             For the year ended December 31, 1999
                                          ---------------------------------------------------------------------------
                                                                          Year
                                                                       Investment                   Estimated Useful
Partnership Name                        Rental Income   Net Loss        Acquired    Status          Life (Years)
---------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>                  <C>       <C>               <C>

Almond Garden Apartment
Associates                            $   158 000   $  (52,000)          1994      Completed         27.5

Almond View Apartments, Ltd.              183,000     (230,000)          1994      Completed         27.5

Buccaneer Associates, Limited             197,000      (43,000)          1994      Completed           40

Candleridge Apartments of Perry
L.P. II                                   140,000      (12,000)          1994      Completed         27.5

Colonial Village Roseville                402,000      (30,000)          1993      Completed         27.5

Dallas County Housing, Ltd.                61,000      (19,000)          1993      Completed           40

La Paloma del Sol Limited
Partnership                               137,000      (22,000)          1993      Completed           40

Memory Lane Limited Partnership            64,000      (36,000)          1994      Completed           25

Nueva Sierra Vista Associates             146,000     (139,000)          1994      Completed           40

Old Fort Limited Partnership              163,000      (17,000)          1993      Completed           40

Orosi Apartments, Ltd.                    183,000      (19,000)          1993      Completed           50

Parlier Garden Apts.                      190,000      (48,000)          1994      Completed           40

Rosewood Apartments Limited
Partnership                                73,000      (10,000)          1994      Completed           40

Sun Manor, L.P.                           139,000      (27,000)          1993      Completed         27.5

Tahoe Pines Apartments                    178,000     (122,000)          1994      Completed         27.5

Venus Retirement Village, Ltd.             83,000      (22,000)          1993      Completed           25

Walnut - Pixley, L.P.                     141,000      (45,000)          1993      Completed           40

Winters Investment Group                  188,000      (46,000)          1994      Completed           50
                                        ----------   ----------

                                      $ 2,826,000   $ (939,000)
                                        ==========   ==========
</TABLE>
                                       36

<PAGE>
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>

                                           --------------------------------- -------------------------------------------------------
                                                   As of 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                    Hidalgo, Texas       249,000        249,000       1,282,000      1,646,000        223,000      1,423,000
Limited Partnership


</TABLE>

                                       37
<PAGE>
WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 1999
<TABLE>
<CAPTION>
                                          --------------------------------- --------------------------------------------------------
                                                As of 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>

                                       38

<PAGE>


WNC California Housing Tax Credits 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>

                                       39

<PAGE>
WNC California Housing Tax Credits 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
of Perry L.P. II                                 126,000        126,000         705,000        878,000        136,000        742,000

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


</TABLE>

                                       40
<PAGE>
WNC California Housing Tax Credits 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>

                                       41
<PAGE>
WNC California Housing Tax Credits 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>

                                       42


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

Date:


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

Date:


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

Date:

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:


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

Date:


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

Date:

                                       43