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, 2001

                                       OR

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

           For the transition period from ____________ to ____________

                         Commission file number: 0-20057


                      WNC CALFORNIA  HOUSING TAX CREDIT FUND III, L.P.

             California                         33-0391979
      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     No    X
----   -------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|


                                       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, 2001,  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, 2001              December 31, 2000
                                                                    ------------------------------ ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                              Encumbrances
                                               Name          Total Investment  Investment                  Estimated Low    of Local
                                                             in Local Limited   Paid to    Number          Income Housing    Limited
                                                              Partnerships      Date      of Units  Occupancy  Credits  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>                  <C>          <C>            <C>       <C>   <C>          <C>
Almond Garden             Delhi,           Anthony Donovan
Apartment Associates      California                            $  391,000   $  391,000     34         97%  $  807,000   $ 1,386,000

Almond View               Stockton,        Daniel C. Logue and
Apartments,Ltd.           California       Cyrus Youssef         1,639,000    1,639,000     72         96%   3,523,000     1,761,000

Buccaneer Associates,     Fernandia Beach, Clifford E. Olsen
Limited                   Florida                                  365,000      365,000     48         98%     768,000     1,473,000

Candleridge Apartments    Perry,           Eric A. Sheldahl
of Perry L.P. II          Iowa                                     126,000      126,000     24         96%     245,000       698,000

Colonial Village          Roseville,       S.P. Thomas Company
Roseville                 Calfornia        of Northern
                                           CaliforniaInc.
                                           and Project Go,Inc.   2,811,000    2,811,000     56          98%  5,872,000     2,073,000

Dallas County             Orrville,        Thomas H. Cooksey
Housing, Ltd.             Alabama          and Apartment
                                           Developers, Inc.        130,000      130,000     19         100%    287,000       613,000

La Paloma del Sol         Deming,          Dean Greenwalt
Limited Partnership       New Mexico                               254,000      254,000     38          84%    625,000     1,429,000

Memory Lane Limited       Yankton,         Skogen - Peterson, Inc.
Partnership               South Dakota                             151,000      151,000     18         100%    295,000       682,000

Nueva Sierra Vista        Richgrove,       Self-Help Enterprises,
Associates                California       Inc. and Nueva Sierra
                                           Vista Corporation     1,688,000    1,688,000     35          97%  3,516,000     1,631,000

</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                                    -----------------------------  ---------------------------------
                                                                        As of March 31, 2001              December 31, 2000
                                                                    ------------------------------ ---------------------------------
Partnership Name          Location         General Partner    Partnership's     Amount of                              Encumbrances
                                               Name          Total Investment  Investment                  Estimated Low    of Local
                                                             in Local Limited   Paid to    Number          Income Housing    Limited
                                                              Partnerships      Date      of Units  Occupancy  Credits  Partnerships
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>              <C>                 <C>         <C>             <C>      <C>  <C>             <C>
Old Fort Limited          Hidalgo,         Alan Deke Noftsker and
Partnership               Texas            ABO Corporation         249,000      249,000     40       97%      547,000      1,275,000

Orosi Apartments,         Orosi,           Douglas W.
Ltd.                      California       Young                   461,000      461,000     42       98%      902,000      1,943,000

Parlier Garden            Parlier,         David J. Micheal and
Apts.                     California       Proffesional Apartment
                                           Management, Inc.        453,000      453,000     41      100%      917,000      1,705,000

Rosewood Apartments       Superior,        Duffy Development
Limited Partnership       Wisconsin        Company, Inc.           185,000      185,000     20       90%      375,000        495,000

Sun Manor, L.P.           Itta Bena,       Glenn D.
                          Mississippi      Miller                  230,000      230,000     36       94%      464,000      1,055,000

Tahoe Pines               South Lake       David J. Michael,
Apartments                Tahoe,           Bucky Fong, Dean
                          California       Pearson, Coy Elvis
                                           and Dr. Patricia
                                           Hatton                1,633,000    1,633,000     28      100%    3,171,000      1,680,000

Venus Retirement          Venus,           W. Joseph Chamy
Village,Ltd.              Texas                                    161,000      161,000     24      100%      318,000        724,000

Walnut -                  Orange,          Walnut - Pixley,
Pixley, L.P.              California       Inc.                  1,078,000    1,078,000     22      100%    2,309,000      1,710,000

Winters                   Winters,         John P. Casper
Investment Group          California                               531,000      531,000     38      100%    1,072,000      1,830,000
                                                                  --------      --------    --         ---- ----------     ---------
                                                               $12,536,000 $ 12,536,000    635       97% $ 26,013,000    $24,163,000
                                                              ============ =============   ===     ===  =============    ===========

</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>

                                 --------------------------------------------------------------------------
                                               For the year ended December 31, 2000
                                 --------------------------------------------------------------------------
                                                                                Low Income Housing
                                                                                Credits Allocated to
        Partnership Name            Rental Income     Net Income/(Loss)         Partnership
-----------------------------------------------------------------------------------------------------------
<S>                                   <C>                   <C>                        <C>
 Almond Garden
 Apartment Associates                   $ 162,000            $ (55,000)                99%

 Almond View Apartments, Ltd.             196,000             (212,000)                99%

 Buccaneer Associates, Limited            206,000              (48,000)                99%

 Candleridge Apartments
 of Perry L.P. II                         144,000              (17,000)                99%

 Colonial Village Roseville               425,000              (66,000)                99%

 Dallas County Housing, Ltd.               65,000              (18,000)                99%

 La Paloma del Sol
 Limited Partnership                      125,000              (34,000)                99%

 Memory Lane Limited
 Partnership                               61,000              (36,000)                99%

 Nueva Sierra Vista Associates            149,000             (108,000)                99%

 Old Fort Limited Partnership             161,000              (24,000)                99%

 Orosi Apartments, Ltd.                   189,000              (15,000)                99%

 Parlier Garden Apts.                     203,000               (5,000)                95%

 Rosewood Apartments
 Limited Partnership                       83,000                6,000                 99%

 Sun Manor, L.P.                          141,000              (24,000)                99%

 Tahoe Pines Apartments                   174,000             (123,000)                99%

 Venus Retirement Village, Ltd.            87,000              (23,000)                99%

 Walnut - Pixley, L.P.                    146,000              (46,000)                99%

 Winters Investment Group                 192,000              (23,000)                99%
                                         ---------             -------             --------

                                      $ 2,909,000           $ (871,000)
                                      ============           ===========

</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, 2001, there were 973 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, 2001.

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

                                        2001         2000         1999         1998         1997          1996
                                    -----------  -----------   ----------   ----------   ----------   -----------
<S>                                <C>          <C>           <C>          <C>           <C>          <C>
ASSETS
Cash and cash equivalents          $    437,863 $    480,598  $   509,695  $   561,751   $ 1,451,071  $  1,498,036
Investments in limited
  partnerships, net                   7,329,890    8,224,971    9,164,197    9,415,032    10,400,720    11,447,928
Other assets                                  -            -            -            -         2,242         5,419
                                    -----------  -----------   ----------   ----------    ----------   -----------
                                   $  7,767,753 $  8,705,569  $ 9,673,892  $ 9,976,783    11,854,033  $ 12,951,383
                                   ===========  ===========   ==========   ==========   ==========   ===========
LIABILITIES
Payables to limited partnerships   $          - $          -  $    16,836  $    16,836   $    16,836   $    16,836
Due to General Partner and
  affiliates                            849,164      718,279      552,257      561,391       370,223       233,380
Due to limited partners                       -            -            -            -       900,000             -
PARTNERS' EQUITY                      6,918,589    7,987,290    9,104,799    9,398,556    10,566,974    12,701,167
                                     -----------  -----------   ----------   ----------   ----------   -----------
                                   $  7,767,753 $  8,705,569  $ 9,673,892  $ 9,976,783  $ 11,854,033  $ 12,951,383
                                     ===========  ===========   ==========   ==========   ==========   ===========
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>

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

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

                              2001         2000          1999           1998         1998           1997           1996
                          -----------   ----------    ----------     ---------    ----------     ----------    -----------
                                                                     Unaudited
<S>                      <C>            <C>             <C>              <C>          <C>          <C>          <C>
Loss from operations     $   (246,997)  $    (244,656)  $    (64,061)    $(54,043)    (249,631)    $ (205,576)  $   (197,723)
Equity in  income(loss) from
  limited partnerships       (821,704)       (872,853)      (229,696)    (244,537)    (918,787)    (1,028,617)    (1,132,216)
                           -----------      ----------      ---------   ---------    ----------    ----------    -----------
Net income (loss)        $ (1,068,701)  $  (1,117,509)  $   (293,757)    (298,580)  (1,168,418)   $(1,234,193)  $ (1,329,939)
                           ===========      ==========      ==========  =========    ==========    ==========    ===========
Net income(loss)
  allocated to:
  General partner        $    (10,687)  $     (11,175)  $     (2,938)    $ (2,986)     (11,684)    $  (12,342)  $    (13,300)
                           ===========      ==========      ==========  =========    ==========   ==========     ===========
  Limited partners       $ (1,058,014)     (1,106,334)      (290,819)    (295,594)  (1,156,734)    (1,221,851)  $ (1,316,639)
                                       $               $                $
                           ===========      ==========      ==========  =========    ==========   ==========     ===========
Net income(loss) per
  limited partner unit   $     (58.78)  $      (61.46)  $     (16.16)    $ (16.42)      (64.26)    $   (67.88)  $     (73.15)
                           ===========      ==========      ==========  ==========   ==========     =========   =============
Outstanding weighted           18,000          18,000         18,000       18,000       18,000         18,000         18,000
  limited partner
  units
                          ===========      ==========       ========== =========    ==========     ==========   ============
</TABLE>
<TABLE>
<CAPTION>
                            For the Years Ended               For the                     For the Years Ended
                               Three Months Ended
                                  March 31                    March 31                         December 31
                           ------------------------    ------------------------   ---------------------------------------

                              2001         2000          1999           1998         1998           1997           1996
                           ----------   -----------   -----------    ----------   -----------   -----------    ----------
                                                                    Unaudited
<S>                      <C>            <C>            <C>            <C>          <C>          <C>             <C>
Net cash provided by
  (used in):

  Operating activities   $    (55,648)  $     (18,170) $     (58,079) $     9,678  $     4,243  $      (6,960)  $  (143,337)
  Investing activities         12,913         (10,927)         6,023        3,200        6,437        (40,005)     (248,263)
  Financing activities              -               -              -     (900,000)    (900,000)             -       (26,564)
                           ----------   -----------   -----------    ----------   -----------   -----------     ----------
Net change in cash
  and cash equivalents        (42,735)        (29,097)       (52,056)    (887,122)   (889,320)        (46,965)     (418,164)
Cash and cash
  equivalents,
  beginning of period         480,598         509,695        561,751    1,451,071   1,451,071       1,498,036     1,916,200
                           ----------      -----------     -----------  ----------   -----------   -----------    ----------
Cash and cash
  equivalents, end of
  period                 $    437,863  $      480,598  $     509,695   $  563,949  $  561,751   $   1,451,071 $   1,498,036
                           ==========      ===========    ===========   ==========   ===========   ===========    ==========
Low Income Housing Credit per Unit was as follows for the years ended December
31:
</TABLE>
<TABLE>
<CAPTION>
                                     2000            1999             1998             1997             1996
                                 -------------   --------------   -------------    -------------    -------------
<S>                        <C>                 <C>              <C>              <C>              <C>
 Federal                   $   $          113  $           113  $          113   $          113   $          113
 State                                      -                -              17               66               85
                                 -------------   --------------   -------------    -------------    -------------
 Total                     $   $          113  $           113  $          130   $          179   $          198
                                 =============   ==============   =============    =============    =============

</TABLE>

                                       9
<PAGE>


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


Forward Looking Statements

With  the  exception  of  the  discussion  regarding   historical   information,
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and other  discussions  elsewhere in this Form 10-K contain forward
looking statements. Such statements are based on current expectations subject to
uncertainties  and other  factors which may involve known and unknown risks that
could  cause  actual  results  of  operations  to differ  materially  from those
projected or implied. Further, certain forward-looking statements are based upon
assumptions about future events which may not prove to be accurate.

Risks and uncertainties  inherent in forward looking statements include, but are
not  limited  to,  our  future  cash  flows and  ability  to  obtain  sufficient
financing, level of operating expenses, conditions in the low income housing tax
credit property market and the economy in general, as well as legal proceedings.
Historical  results are not necessarily  indicative of the operating results for
any future period.

Subsequent  written and oral forward  looking  statements  attributable to us or
persons  acting on our behalf  are  expressly  qualified  in their  entirety  by
cautionary  statements  in this Form 10-K and in other reports we filed with the
Securities and Exchange  Commission.  The following discussion should be read in
conjunction  with  the  Financial  Statements  and the  Notes  thereto  included
elsewhere in this filing.

Financial Condition

The  Partnership's  assets at March 31, 2001  consisted  of $438,000 in cash and
aggregate  investments in the eighteen Local Limited Partnerships of $7,330,000.
Liabilities at March 31, 2001 primarily  consisted of $849,000 of accrued annual
management fees due to the General Partner.

Results of Operations

Year  Ended  March  31,  2001  Compared  to  Year  Ended  March  31,  2000.  The
Partnership's  net loss for the year  ended  March  31,  2001 was  $(1,069,000),
reflecting a decrease of $49,000 from the net loss of  $(1,118,000)  experienced
for the year ended March 31, 2000.  The decrease in net loss is primarily due to
equity  in losses  from  limited  partnerships  which  declined  by  $51,000  to
$(822,000) for the year ended March 31, 2000 from  $(873,000) for the year ended
March 31, 2000.  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.

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.

                                       10
<PAGE>


Cash Flows

Year Ended March 31, 2001  Compared to Year Ended March 31, 2000.  Net cash used
during the year ended  March 31, 2001 was  $(43,000),  compared to net cash used
for the year ended March 31, 2000 of $(29,000).  The change was due primarily to
an  increase in the amount of cash paid to the  General  Partner for  management
fees compared with the amount paid in the prior year.

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.

During the years ended March 31, 2001 and 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 $131,000,  $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, 2001, to be  sufficient  to meet all  currently  foreseeable
future cash requirements.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

NOT APPLICABLE

Item 8.  Financial Statements and Supplementary Data

                                       11
<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, 2001 and 2000,  and the related  statements of  operations,  partners'
equity (deficit) and cash flows for the years ended March 31, 2001 and 2000, the
three  months  ended  March  31,  1999 and the year  ended  December  31,  1998,
respectively.   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 76% and 77% of the total assets of the Partnership at March 31, 2001
and 2000,  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 auditing standards generally accepted
in the  United  States of  America.  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, 2001 and 2000, and the results
of its  operations  and its cash flows for the years  ended  March 31,  2001 and
2000,  the three  months  ended March 31, 1999 and the year ended  December  31,
1998, in conformity with accounting  principles generally accepted in the United
States of America.




                                         /s/  BDO SEIDMAN, LLP
                                              BDO SEIDMAN, LLP
Orange County, California
June 7, 2001


                                       12
<PAGE>


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

                                 BALANCE SHEETS


<TABLE>
<CAPTION>



                 See accompanying notes to financial statements
                                       15
                                                                                  March 31
                                                                        ------------------------------

                                                                            2001             2000
                                                                        -------------    -------------
 ASSETS
<S>                                                                   <C>              <C>
 Cash and cash equivalents                                            $      437,863   $      480,598
 Investments in limited partnerships, net
   (Notes 2 and 3)                                                         7,329,890        8,224,971
                                                                        -------------    -------------

                                                                      $    7,767,753   $    8,705,569
                                                                        =============    =============

 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 Liabilities:
    Accrued fees and expenses due to General Partner
       and affiliates (Note 3)                                        $      849,164   $      718,279
                                                                        -------------    -------------

          Total liabilities                                                  849,164          718,279
                                                                        -------------    -------------

 Commitments and contingencies

 Partners' equity (deficit):
    General partner                                                         (100,945)         (90,258)
    Limited partners (30,000 units authorized; 18,000 units
       issued and outstanding)                                             7,019,534        8,077,548
                                                                        -------------     -------------

          Total partners' equity                                           6,918,589        7,987,290
                                                                        -------------    -------------

                                                                      $    7,767,753   $    8,705,569
                                                                        =============    =============

</TABLE>


                                       13

<PAGE>


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

                            STATEMENTS OF OPERATIONS




<TABLE>
<CAPTION>
                                                                                        For the
                                                                                      Three Months       For the Year
                                                                                       Ended March      Ended December
                                                      For the Years Ended March 31         31                 31
                                                      -----------------------------   --------------    ----------------

                                                          2001           2000             1999               1998
                                                      -------------   ------------    --------------    ----------------


<S>                                                 <C>             <C>             <C>               <C>
Interest income                                     $       19,599  $      19,937   $         5,154   $          26,577

Operating expenses:
   Amortization (Note 2)                                    60,464         60,464            15,116              60,464
   Asset management fees (Note 3)                          181,571        181,385            46,542             186,167
   Other                                                    24,561         22,744             7,557              29,577
                                                      -------------   ------------    --------------    ----------------

    Total operating expenses                               266,596        264,593            69,215             276,208
                                                      -------------   ------------    --------------    ----------------

Loss from operations                                      (246,997)      (244,656)          (64,061)           (249,631)

Equity in losses of limited
  partnerships (Note 2)                                   (821,704)      (872,853)         (229,696)           (918,787)
                                                      -------------   ------------    --------------    ----------------

Net loss                                            $   (1,068,701) $  (1,117,509)         (293,757)$        (1,168,418)
                                                      =============   ============    ==============    ================

Net loss allocated to:
   General partner                                  $      (10,687) $     (11,175)$          (2,938)$           (11,684)
                                                      =============   ============    ==============    ================

   Limited partners                                 $   (1,058,014) $  (1,106,334)$        (290,819)$        (1,156,734)
                                                      =============   ============    ==============    ================

Net loss per limited partner unit                   $       (58.78) $      (61.46)$          (16.16)$            (64.26)
                                                      =============   ============    ==============    ================

Outstanding weighted limited partner units                  18,000         18,000            18,000              18,000
                                                      =============   ============    ==============    ================


</TABLE>

                                       14
<PAGE>



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

                    STATEMENTS OF PARTNERS' EQUITY (DEFICIT)

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                               General            Limited
                                                               Partner            Partners             Total
                                                           ---------------    ---------------     ---------------
<S>                                                       <C>               <C>                 <C>
Partners' equity (deficit) at January 1, 1998             $        (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

Net loss                                                           (10,687)       (1,058,014)         (1,068,701)
                                                           ---------------    ---------------     ---------------
Partners' equity (deficit) at March 31, 2001              $       (100,945) $      7,019,534    $      6,918,589
                                                            ===============    ===============     ===============

</TABLE>

                                       15

<PAGE>


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

                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>




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

                                                         2001           2000            1999             1998
                                                     -------------   -----------    -------------   ---------------
<S>                                                <C>              <C>          <C>             <C>
Cash flows from operating activities:
   Net loss                                        $   (1,068,701)  $ (1,117,509)$      (293,757)$     (1,168,418)
   Adjustments to reconcile net loss to
     net cash (used in) provided by
     operating activities:
     Amortization                                          60,464         60,464          15,116           60,464
     Equity in loss of limited
       partnerships                                       821,704        872,853         229,696          918,787
     Change in other assets                                     -             -                -            2,242
     Change in accrued fees and
       expenses due to General
       Partner and affiliates                             130,885        166,022          (9,134)         191,168
                                                     -------------   -----------    -------------   ---------------
Net cash provided by (used in)
  operating activities                                    (55,648)       (18,170)        (58,079)           4,243
                                                     -------------    -----------    -------------   ---------------
Cash flows from investing activities:
   Investments in limited partnerships, net                     -        (16,836)              -                -
   Distributions from limited
     partnerships                                          12,913          5,909            6,023           6,437
                                                     -------------   -----------    -------------   ---------------
Net cash provided by (used in)
  investing activities                                     12,913        (10,927)           6,023           6,437
                                                     -------------   -----------    -------------   ---------------
Cash flows from financing activities:
   Return of capital                                            -              -                -        (900,000)
                                                     -------------   -----------    -------------   ---------------
Net decrease in cash and cash
  equivalents                                             (42,735)       (29,097)        (52,056)        (889,320)
Cash and cash equivalents,
   beginning of year                                      480,598        509,695          561,751       1,451,071
                                                     -------------   -----------    -------------   ---------------
Cash and cash equivalents,
   end of year                                     $      437,863   $    480,598   $      509,695  $      561,751
                                                     =============   ===========    =============   ===============
SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW
  INFORMATION:

   Taxes paid                                      $          800  $         800   $            -  $          800
                                                      ============   ============    =============   ===============
                 See accompanying notes to financial statements
</TABLE>
                                       16

<PAGE>


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

                          NOTES TO FINANCIAL STATEMENTS

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998



                                       24
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.



                                       17
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998


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 year ended December 31, 1998 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 years ended March 31, 2001 and
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.


                                       18
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998





 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,  2001,  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.

                                       19

<PAGE>






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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998


 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,  2001 and 2000 are  approximately  $1,308,000  and
$1,340,000 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.
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, 2001 and 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 years ended March 31, 2001
and  2000  and the  three  month  period  ended  March  31,  1999  amounting  to
approximately  $23,838,  $51,893  and  $7,306,   respectively,   have  not  been
recognized. The Partnership's share of losses during the year ended December 31,
1998 amounting to approximately  $29,226, have not been recognized.  As of March
31, 2001, the aggregate  share of net losses not  recognized by the  Partnership
amounted to $127,590.

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

<TABLE>
<CAPTION>
                                                              For the Years            For the Three       For the Year
                                                                                        Months Ended           Ended
                                                             Ended March 31               March 31          December 31
                                                        ----------------------------   -----------------    --------------

                                                            2001           2000              1999               1998
                                                        -------------   ------------   -----------------    --------------
<S>                                                   <C>             <C>            <C>                  <C>
Investments per balance sheet, beginning of period    $    8,224,971  $   9,164,197  $        9,415,032   $    10,400,720
Distributions received                                       (12,913)        (5,909)             (6,023)           (6,437)
Equity in losses of limited partnerships                    (821,704)      (872,853)           (229,696)         (918,787)
Amortization of paid acquisition fees and costs              (60,464)       (60,464)            (15,116)          (60,464)
                                                        -------------   ------------   -----------------    --------------

Investments per balance sheet, end of period          $    7,329,890  $   8,224,971  $        9,164,197   $     9,415,032
                                                        =============   ============   =================    ==============
</TABLE>

                                       20
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998


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>

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


<S>                                                                          <C>                 <C>
  ASSETS

  Buildings and improvements, net of accumulated depreciation for 2000
   and 1999 of $7,676,000 and $6,517,000, respectively.                      $     28,334,000    $     29,592,000
  Land                                                                              2,380,000           2,213,000
  Other assets                                                                      2,214,000           2,035,000
                                                                               ---------------     ---------------

                                                                             $     32,928,000    $     33,840,000
                                                                               ===============     ===============

LIABILITIES

Mortgage and construction loans payable                                      $     24,163,000    $     24,293,000
Due to related parties                                                                626,000             722,000
Other liabilities                                                                   1,164,000             946,000
                                                                               ---------------     ---------------

                                                                                   25,953,000          25,961,000
                                                                               ---------------     ---------------

PARTNERS' CAPITAL

WNC California Housing Tax Credits III, L.P.                                        6,022,000           6,885,000
Other partners                                                                        953,000             994,000
                                                                               ---------------     ---------------

                                                                                    6,975,000           7,879,000
                                                                               ---------------     ---------------

                                                                             $     32,928,000    $     33,840,000
                                                                               ===============     ===============
</TABLE>
                                       21

<PAGE>




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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998

<TABLE>
<CAPTION>

NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
-------------------------------------------------------
                   COMBINED CONDENSED STATEMENTS OF OPERATIONS
                                                                 2000               1999                1998
                                                            ---------------    ---------------     ---------------

<S>                                                       <C>                <C>                 <C>
Revenues                                                  $      3,040,000   $      2,986,000    $      2,901,000
                                                            ---------------    ---------------     ---------------

Expenses:
   Operating expenses                                            1,944,000          1,886,000           1,800,000
   Interest expense                                                814,000            870,000             871,000
   Depreciation and amortization                                 1,153,000          1,169,000           1,188,000
                                                            ---------------    ---------------     ---------------

         Total expenses                                          3,911,000          3,925,000           3,859,000
                                                            ---------------    ---------------     ---------------

Net loss                                                  $       (871,000) $        (939,000)   $       (958,000)
                                                            ===============    ===============     ===============

Net loss allocable to the Partnership                     $       (862,000) $        (930,000)   $       (948,000)
                                                            ===============    ===============     ===============

Net loss recorded by the Partnership                      $       (822,000) $        (873,000)   $       (919,000)
                                                           ===============    ===============     ===============
</TABLE>
Certain Local Limited  Partnerships have incurred  significant  operating losses
and  have  working  capital  deficiencies.  In the  event  these  Local  Limited
Partnerships continue to incur significant operating losses,  additional capital
contributions  by the  Partnership  and/or  the  Local  General  Partner  may be
required  to sustain  the  operations  of such Local  Limited  Partnerships.  If
additional  capital  contributions  are not made  when  they are  required,  the
Partnership's  investment in certain of such Local Limited Partnerships could be
impaired, and the loss and recapture of the related tax credits could occur.

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  $412,391 and $324,520 as of
     March 31,  2001 and 2000,  respectively.  Of the  accumulated  amortization
     recorded  on the  balance  sheet at March 31,  2001  $33,875 of the related
     expense was  reflected as equity in losses of limited  partnerships  on the
     statement of operations  during the fourth  quarter of the year ended March
     31,  2001 to  reduce  the  respective  net  acquisition  fee  component  of
     investments in local limited  partnerships  to zero for those Local Limited
     Partnerships which would otherwise be below a zero balance.

     Reimbursement  of costs incurred by the General  Partner or an affiliate in
     connection  with the  acquisition  of  Local  Limited  Partnerships.  These
     reimbursements have not exceeded 1.5% of the gross proceeds.  As of the end
     of all periods  presented,  the Partnership  incurred  acquisition costs of
     $194,019,  which have been included in investments in limited partnerships.
     Accumulated  amortization  was $42,738 and $27,276 as of March 31, 2001 and
     2000, respectively. Of the accumulated amortization recorded on the balance
     sheet at March 31,  2001,  $8,994 of the related  expense was  reflected as
     equity in losses of limited  partnerships  on the  statement of  operations
     during the fourth  quarter of the year ended  March 31,  2001 to reduce the

                                       22
<PAGE>


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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998




     respective net  acquisition  cost component of investments in local limited
     partnerships  to zero for those  Local  Limited  Partnerships  which  would
     otherwise be below a zero balance.

     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 $181,571 and $181,385 were incurred  during
     the years ended March 31, 2001 and 2000,  respectively,  and $46,542 during
     the three  months ended March 31, 1999 and $186,167  were  incurred  during
     1998, of which,  $50,000 and $12,500 were paid during the years ended March
     31, 2001 and 2000,  and  $53,350  during the three  months  ended March 31,
     1999. No fees were paid during 1998.

     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
                                                                 --------------------------------
                                                                      2001             2000
                                                                ---------------   --------------
<S>                                                            <C>               <C>
Reimbursement for expenses paid by the General                 $             -   $           500
   Partner or an affiliate

Asset management fee payable                                           849,164           717,779
                                                                 --------------    --------------

                                                               $       849,164   $       718,279
                                                                 ==============    ==============
</TABLE>
The General Partner does not anticipate that these accrued fees will be paid in
full until such time as capital reserves are in excess of future foreseeable
working capital requirements of the Partnership.

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
----------------------------------------------------
The following is a summary of the quarterly operations for the years ended March
31, 2001 and 2000:
<TABLE>
<CAPTION>
                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------
               2001

<S>                                   <C>                 <C>                <C>                 <C>
Income                                $          5,264    $          5,220   $          5,018    $          4,097

Operating expenses                              64,939              71,908             64,907              64,842

Equity in losses of limited
     partnerships                             (218,159)           (218,159)          (218,159)           (167,227)

Net loss                                      (277,834)           (284,847)          (278,048)           (227,972)

Loss available to limited partner             (275,056)           (281,999)          (275,268)           (225,691)

Loss per limited partnership unit                  (15)                (16)               (15)                (13)

</TABLE>

                                       23
<PAGE>





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

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                  For The Years Ended March 31, 2001 and 2000,
                  For The Three Months Ended March 31, 1999 and
                      For The Year Ended December 31, 1998



<TABLE>
<CAPTION>

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) continued
                                           June 30           September 30       December 31           March 31
                                        ---------------     ---------------    ---------------     ---------------
               2000
<S>                                   <C>                 <C>                <C>                 <C>
Income                                $          4,987    $          5,059   $          4,954    $          4,937

Operating expenses                              68,474              67,920             63,272              64,927

Equity in losses of limited
     partnerships                             (229,696)           (224,354)          (223,175)           (195,628)

Net loss                                      (293,183)           (287,215)          (281,493)           (255,618)

Loss available to limited partner             (290,251)           (284,343)          (278,678)           (253,062)

Loss per limited partnership unit                  (16)                (16)               (15)                (14)

</TABLE>

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.

                                       24

<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 70, 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 67,  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 38, 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 49, 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.



                                       25
<PAGE>


Thomas J. Riha, age 46, became Chief Financial  Officer  effective January 2001.
Prior to his  appointment  as Chief  Financial  Officer he was 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 55, is Vice  President - National  Sales of WNC & Associates,
Inc.  and has been  employed by the  Sponsor  since  1989.  Mr.  Garban has been
involved in real estate  investment  activities since 1978. Prior to joining the
Sponsor he served as  Executive  Vice  President  of MRW,  Inc.,  a real  estate
development  and management  firm.  Mr. Garban is a member of the  International
Association of Financial  Planners.  He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.

N. Paul Buckland,  age 38, 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 46, 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 64, 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.

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  $181,571,
     $181,385,  $46,542 and $186,167 were incurred  during the years ended March
     31, 2001 and 2000,  the three  months  ended March 31,  1999,  and the year
     ended December 31, 1998,  respectively.  The  Partnership  paid the General
     Partner or its affiliates,  $50,000,  $12,500, $53,350 and $0 of those fees
     during the years ended March 31, 2001 and 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

                                       26
<PAGE>


     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 $23,000, $9,000, $10,000
     and $6,000 during the years ended March 31, 2001 and 2000, 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
     $21,000, $20,000 and $24,000 for the General Partner for the calendar years
     ended December 31, 2000, 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 years ended March
     31,  2001 and 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.

     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.

                                       27
<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
       Balance Sheets, March 31, 2001 and 2000
       Statements of Operations for the years ended March 31,
       2001 and 2000,  the three  months ended March 31, 1999 and the year ended
       December  31, 1998
       Statements  of  Partners'  Equity for the years ended
       March 31, 2001 and 2000,  the three  months  ended March 31, 1999 and the
       year ended December 31, 1998
       Statements of Cash Flows for the years ended
       March 31, 2001 and 2000,  the three  months  ended March 31, 1999 and the
       year ended December 31, 1998
       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.
       -------------------

       None

(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.

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.

                                       28
<PAGE>

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, 2000 and 1999 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.



                                       29
<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 June 7, 2001,  relating to the 2001,
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
June 7, 2001




                                       30
<PAGE>


WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                                ------------------------------    ------------------------------------------------
                                                         As of March 31, 2001                As of December 31, 2000
                                                  ----------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                 <C>             <C>          <C>           <C>           <C>       <C>
Almond Garden                     Delhi,
Apartment Associates              California          $   391,000     $  391,000   $ 1,386,000   $ 1,757,000   $ 448,000 $ 1,309,000

Almond View                       Stockton,
Apartments, Ltd.                  California            1,639,000      1,639,000     1,761,000     3,525,000     809,000   2,716,000

Buccaneer Associates,             Fernandia
Limited                           Beach, Florida          365,000        365,000     1,473,000     2,218,000     406,000   1,812,000

Candleridge Apartments            Perry,
of Perry L.P. II                  Iowa                    126,000        126,000       698,000       892,000     200,000     692,000

Colonial Village                  Roseville,
Roseville                         Calfornia             2,811,000      2,811,000     2,073,000     5,300,000   1,174,000   4,126,000

Dallas County                     Orrville,
Housing, Ltd.                     Alabama                 130,000        130,000       613,000       760,000     161,000     599,000

La Paloma del Sol                 Deming, New
Limited Partnership               Mexico                  254,000        254,000     1,429,000     1,784,000     320,000   1,464,000

Memory Lane                       Yankton,
Limited Partnership               South Dakota            151,000        151,000       682,000       875,000     341,000     534,000

Nueva Sierra                      Richgrove,
Vista Associates                  California            1,688,000      1,688,000     1,631,000     3,288,000     471,000   2,817,000

Old Fort Highway                  Hidalgo,
Limited Partnership               Texas                   249,000        249,000     1,275,000     1,671,000     312,000   1,359,000

</TABLE>

                                       31
<PAGE>


WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                                  -----------------------------    ------------------------------------------------
                                                         As of March 31, 2001                As of December 31, 2000
                                                  ----------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>          <C>           <C>          <C>         <C>
Orosi Apartments,                 Orosi,
Ltd.                              California             461,000         461,000    1,943,000     2,443,000     315,000    2,128,000

Parlier Garden                    Parlier,
Apts.                             California             453,000         453,000    1,705,000     2,193,000     376,000    1,817,000

Rosewood Apartments               Superior,
Limited Partnership               Wisconsin              185,000         185,000      495,000       767,000     138,000      629,000

Sun Manor, L.P.                   Itta Bena,
                                  Mississippi            230,000         230,000    1,055,000     1,341,000     313,000    1,028,000

Tahoe Pines                       South Lake
Apartments                        Tahoe,
                                  California           1,633,000       1,633,000    1,680,000     3,291,000     769,000    2,522,000

Venus Retirement                  Venus,
Village, Ltd.                     Texas                  161,000         161,000      724,000       928,000     247,000      681,000

Walnut - Pixley,                  Orange,
L.P.                              California           1,078,000       1,078,000    1,710,000     2,765,000     518,000    2,247,000

Winters Investment                Winters,
Group                             California             531,000         531,000    1,830,000     2,592,000     358,000    2,234,000
                                                   --------------   ------------ ------------  ------------ ----------- ------------
                                                   $  12,536,000    $ 12,536,000 $ 24,163,000  $ 38,390,000 $ 7,676,000 $ 30,714,000
                                                   ==============   ============ ============  ============= =========== ===========


</TABLE>

                                       32

<PAGE>



WNC Housing Tax Credit Fund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 2000
                                   ------------------------------------------------------------------------------------------------
                                                                            Year Investment                      Estimated Useful
          Partnership Name           Rental Income    Net Loss               Acquired             Status             Life (Years)
------------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>           <C>                      <C>              <C>                     <C>
Almond Garden
Apartment Associates                   $ 162,000    $  (55,000)               1994             Completed               27.5

Almond View
Apartments, Ltd.                         196,000      (212,000)               1994             Completed               27.5

Buccaneer Associates, Limited            206,000       (48,000)               1994             Completed                 40

Candleridge Apartments of Perry
L.P. II                                  144,000       (17,000)               1994             Completed               27.5

Colonial Village Roseville               425,000       (66,000)               1993             Completed               27.5

Dallas County Housing, Ltd.               65,000       (18,000)               1993             Completed                 40

La Paloma del Sol Limited
Partnership                              125,000       (34,000)               1993             Completed                 40

Memory Lane
Limited Partnership                       61,000       (36,000)               1994             Completed                 25

Nueva Sierra Vista Associates            149,000      (108,000)               1994             Completed                 40

Old Fort Limited Partnership             161,000       (24,000)               1993             Completed                 40

Orosi Apartments, Ltd.                   189,000       (15,000)               1993             Completed                 50

Parlier Garden Apts.                     203,000        (5,000)               1994             Completed                 40

Rosewood Apartments Limited
Partnership                               83,000         6,000                1994             Completed                 40

Sun Manor, L.P.                          141,000       (24,000)               1993             Completed               27.5

Tahoe Pines Apartments                   174,000      (123,000)               1994             Completed               27.5

Venus Retirement Village, Ltd.            87,000       (23,000)               1993             Completed                 25

Walnut - Pixley, L.P.                    146,000       (46,000)               1993             Completed                 40

Winters Investment Group                 192,000       (23,000)               1994             Completed                 50
                                    -------------   -----------
                                     $ 2,909,000     $(871,000)
                                    ============    ===========

</TABLE>


                                       33
<PAGE>


WNC Housing Tax Cund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                                ------------------------------    ------------------------------------------------
                                                         As of March 31, 2000               As of December 31, 1999
                                                  ----------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                 <C>             <C>          <C>           <C>           <C>       <C>
Almond Garden                     Delhi,
Apartment Associates              California          $   391,000     $  391,000   $ 1,390,000   $ 1,757,000   $ 383,000 $ 1,374,000

Almond View                       Stockton,
Apartments, 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,
of Perry L.P. II                  Iowa                    126,000        126,000       701,000       891,000     167,000     724,000

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

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

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


</TABLE>

                                       34
<PAGE>


WNC Housing Tax Cund III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2000
<TABLE>
<CAPTION>
                                                  -----------------------------    ------------------------------------------------
                                                         As of March 31, 2000                As of December 31, 1999
                                                  ----------------------------------------------------------------------------------
                                                  Total Investment   Amount of     Encumbrances of
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>          <C>           <C>          <C>         <C>
Orosi Apartments,                 Orosi,
Ltd.                              California             461,000         461,000    1,955,000     2,442,000     268,000    2,174,000

Parlier Garden                    Parlier,
Apts.                             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                       South Lake
Apartments                        Tahoe,
                                  California           1,633,000       1,633,000    1,692,000     3,289,000     642,000    2,647,000

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

Walnut - Pixley,                  Orange,
L.P.                              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 Housing Tax Credit FunIII, 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 Housing Tax Credit Fund I
WNC Housing Tax Cund 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
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                 <C>             <C>          <C>           <C>           <C>       <C>
Almond Garden                     Delhi,
Apartment Associates              California          $   391,000     $  391,000   $ 1,394,000   $ 1,756,000   $ 318,000 $ 1,438,000

Almond View                       Stockton,
Apartments, 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,
of Perry L.P. II                  Iowa                    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                       Yankton,
Limited Partnership               South Dakota            151,000        151,000       688,000       874,000     257,000     617,000

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

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

</TABLE>

                                       37
<PAGE>

WNC Housing Tax Credit Fund III
WNC Housing Tax Cund 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
                                                  in Local Limited InvestmentPaid  Local Limited  Property and  Accumulated Net Book
         Partnership Name         Location           Partnerships    to Date       Partnerships   Equipment     Depreciation  Value
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>              <C>          <C>           <C>          <C>         <C>
Orosi Apartments,                 Orosi,
Ltd.                              California             461,000         461,000    1,966,000     2,437,000     220,000    2,217,000

Parlier Garden                    Parlier,
Apts.                             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                       South Lake
Apartments                        Tahoe,
                                  California           1,633,000       1,633,000    1,702,000     3,290,000     515,000    2,775,000

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

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

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

</TABLE>

                                       38
<PAGE>


WNC Housing Tax Credit Fun
WNC Housing Tax Credit FunIII, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2001
<TABLE>
<CAPTION>
                                   -------------------------------------------------------------------------------------------------
                                                             For the year ended December 31, 1998
                                   ------------------------------------------------------------------------------------------------
                                                                            Year Investment                      Estimated Useful
          Partnership Name           Rental Income    Net Loss               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       (55,000)               1993             Completed               27.5

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

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

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

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

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

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

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

Rosewood Apartments Limited
Partnership                               71,000        (9.000)               1994             Completed                 40

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

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

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

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

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


                                       39

<PAGE>



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

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

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

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

Date:  June 27,2001
----------------------

By:  /s/ Thomas J. Riha
-----------------------
Thomas J. Riha, Vice-President
Chief Financial Officer of WNC & Associates, Inc.

Date:  June 27,2001
-------------------

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

Date: June 27,2001
------------------
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: June 27,2001
------------------

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

Date: June 27,2001


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

Date: June 27,2001
------------------
                                       40

<PAGE>


Exhibit
Number      Exhibit Description

EX-21.1     Financial  Statements of Colonial  Village  Roseville.













                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)


                             Financial Statements.
                     Years Ended December 31, 2000 and 1999




                                       41
<PAGE>






                                 C O N T E N T S


INDEPENDENT AUDITOR'S REPORT ON
     THE FINANCIAL STATEMENTS............................................... 1


FINANCIAL STATEMENTS

     Balance sheets......................................................  2-3
     Statements of income..................................................4-7
     Statements of changes in partners' equity...............................8
     Statements of cash flows.............................................9-10
     Notes to financial statements.......................................11-14




<PAGE>




                          INDEPENDENT AUDITORS REPORT



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




I have audited the accompanying  balance sheets of Colonial Village Roseville (A
California  Limited  Partnership),  as of December  31,  2000 and 1999,  and the
related  statements of income,  partners'  equity,  and cash flows for the years
then  ended.   These  financial   statements  are  the   responsibility  of  the
Partnership's  management.  My  responsibility is to express an opinion on these
financial statements based on my audits.

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

In my opinion, the financial statements referred to above present fairly, in all
material  respects,  the  financial  position of Colonial  Village  Roseville (A
California  Limited  Partnership)  as of  December  31,  2000 and 1999,  and the
results  of its  operations  and its cash  flows  for the  years  then  ended in
conformity with generally accepted accounting principles.





Stockton, California                           /s/ Bernard E. Rea, CPA
March 22, 2001                                     Bernard E. Rea, CPA








                                       1
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2000 and 1999

<TABLE>
<CAPTION>


                   ASSETS                                                         2000                        1999
                                                                                  ----                        ----

<S>                                                                                   <C>                           <C>
CURRENT ASSETS
     Cash                                                                             $  128,354                    $ 78,528
     Rents receivable                                                                        - -                         587
     Other receivables                                                                       - -                         - -
     Prepaid expense                                                                       2,768                       2,939
                                                                                      ----------                    --------
                  Total current assets                                                $  131,122                    $ 82,054
                                                                                      ----------                    --------


RESTRICTED DEPOSITS AND FUNDED RESERVES
     Tenants' security deposits                                                       $  25,692                   $  24,903
     Replacement reserve escrow                                                          97,897                      76,760
                                                                                      ----------                  ---------
                                                                                      $ 123,589                   $ 101,663
                                                                                      ----------                  ---------

PROPERTY AND EQUIPMENT, AT COST
     Land                                                                             $  315,303                  $  315,303
     Building                                                                          4,808,665                   4,808,665
     Equipment                                                                           175,386                     167,665
                                                                                      ----------                  ----------
                                                                                      $5,299,354                  $5,291,633
     Less accumulated depreciation                                                     1,173,502                     981,267
                                                                                      ----------                  ----------
                                                                                      $4,125,852                  $4,310,366
                                                                                      ----------                  ----------

OTHER ASSETS
     Deferred charges, less accumulated
         amortization of $28,875 and $23,662                                          $  104,547                  $  109,760
                                                                                      ----------                  ----------
                                                                                      $  104,547                  $  109,760
                                                                                      ----------                  ----------


                                                                                      $4,485,110                  $4,603,843
                                                                                      ==========                  ==========


</TABLE>


See Notes to Financial Statements.
                                        2
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                                 BALANCE SHEETS
                           December 31, 2000 and 1999

<TABLE>
<CAPTION>


                   LIABILITIES AND PARTNERS' EQUITY                               2000                        1999
                                                                                  ----                        ----

<S>                                                                                  <C>                         <C>
CURRENT LIABILITIES
     Current maturities of long-term debt                                            $    29,679                 $    27,320
     Accounts payable                                                                     13,032                       8,021
     Accrued expense                                                                         800                         800
     Developer fees payable                                                               26,500                      25,500
     Advances from general partner, without
         interest, due date, or collateral                                                   - -                       7,355
     Accrued interest                                                                        - -                         - -
                                                                                       -----------                 -----------
             Total current liabilities                                               $    70,011                 $    68,996
                                                                                       -----------                 -----------


DEPOSIT AND PREPAYMENT LIABILITIES
     Tenants' security deposits                                                      $    26,164                 $    23,964
     Prepaid rents                                                                           - -                         - -
                                                                                       -----------                 -----------
                                                                                     $    26,164                 $    23,964
                                                                                       -----------                 -----------


LONG-TERM DEBT
     Mortgage payable, less current maturities                                       $ 2,043,658                 $ 2,073,512
     Developer fees payable                                                              355,053                     381,553
                                                                                     -------------               -------------
                                                                                    $  2,398,711                 $ 2,455,065
                                                                                    --------------              --------------
COMMITMENT


PARTNERS' EQUITY                                                                     $ 1,990,224                 $ 2,055,818
                                                                                     -------------               -------------



                                                                                     $ 4,485,110                 $ 4,603,843
                                                                                     =============               =============


</TABLE>

See Notes to Financial Statements.


                                       3
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                              STATEMENTS OF INCOME
                     Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                  2000                        1999
                                                                                  ----                        ----
<S>                                                                                     <C>                         <C>
RENTAL INCOME
     Apartments                                                                         $  424,721                   $ 402,297
     Tenant assistance payments                                                                - -                         - -
     Furniture and equipment                                                                   - -                         - -
     Commercial                                                                                - -                         - -
     Parking spaces                                                                            - -                         - -
     Subsidy income                                                                            - -                         - -
     Miscellaneous                                                                             - -                         - -
                                                                                        ------------                 -----------
        Net rental revenue                                                              $  424,721                   $ 402,297
                                                                                        ------------                 -----------


FINANCIAL REVENUE
     Interest Income - project operations                                               $    1,708                   $   2,032
     Income from investments - replacement reserve                                           4,525                       1,954
     Income from investments - operating reserve                                             1,884                         570
     Income from investments - miscellaneous                                                   - -                         - -
                                                                                        ------------                 ------------
        Sub-total financial revenue                                                     $    8,117                   $   4,556
                                                                                        ------------                 ------------


OTHER REVENUE
     Laundry and vending                                                                $    7,921                   $   6,958
     NSF and late charges                                                                    2,339                       1,707
     Damage and cleaning fees                                                                4,204                       5,001
     Forfeited tenant security deposits                                                        - -                         - -
     Other revenue                                                                           3,094                      59,379
                                                                                        ------------                 -----------
        Sub-total other revenue                                                         $   17,558                   $  73,045
                                                                                        ------------                 ------------


                    Total revenues                                                      $  450,396                   $ 479,898
                                                                                        ============                 ============

</TABLE>

See Notes to Financial Statements.


                                       4
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999


<TABLE>
<CAPTION>
                                                                                   2000                        1999
                                                                                   ----                        ----
<S>                                                                                   <C>                           <C>
OPERATING EXPENSES

     Renting expenses
         Advertising                                                                  $      - -                    $      50
         Miscellaneous renting expenses                                                    4,505                        5,592
                                                                                      ----------                    ----------
            Sub-total renting expenses                                                $    4,505                    $   5,642
                                                                                      ----------                    ----------

     Administrative expenses
         Office salaries                                                              $      - -                    $     467
         Office supplies                                                                   1,957                        1,926
         Office rent                                                                         - -                          - -
         Management fee                                                                   24,192                       24,192
         Manager's salary                                                                 20,147                       23,589
         Manager rent free unit                                                              - -                          - -
         Legal expense                                                                       210                          679
         Audit expense                                                                     4,868                        4,368
         Bookkeeping / accounting services                                                   - -                         - -
         Telephone and answering service                                                   2,099                        2,590
         Bad debts                                                                         3,673                         - -
         Miscellaneous administrative expenses                                             5,815                        3,564
                                                                                      -----------                   ----------
            Sub-total administrative expenses                                         $   62,961                    $  61,375
                                                                                      -----------                   ----------

     Utilities expense
         Fuel oil / coal                                                              $      - -                     $    - -
         Electricity                                                                       5,493                        5,932
         Water                                                                             3,363                        3,421
         Gas                                                                               2,088                        2,190
         Sewer                                                                             5,843                        4,968
                                                                                      -------------                 ------------
           Sub-total utilities expense                                                $   16,787                   $   16,511
                                                                                      -------------                 ------------

</TABLE>

See Notes to Financial Statements.

                                       5
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>
                                                                                   2000                        1999
                                                                                   ----                        ----

<S>                                                                                    <C>                             <C>
         Operating and maintenance expense
         Janitor and cleaning payroll                                                  $      - -                      $  - -
         Janitor and cleaning supplies                                                        896                       1,451
         Janitor and cleaning contract                                                      1,965                       2,383
         Exterminating payroll / contract                                                     741                         702
         Exterminating supplies                                                               - -                         - -
         Garbage and trash removal                                                          8,278                       5,545
         Security payroll / contract                                                          - -                         - -
         Grounds payroll                                                                      - -                         - -
         Grounds supplies                                                                     551                         866
         Grounds contract                                                                   6,020                       5,931
         Repairs payroll                                                                   23,916                      10,851
         Repairs material                                                                   4,016                      13,127
         Repairs contract                                                                   3,314                       1,480
         Elevator maintenance / contract                                                      - -                         - -
         Heating / cooling repairs and maintenance                                            - -                         - -
         Swim pool maintenance / contract                                                     - -                         - -
         Snow removal                                                                         - -                         - -
         Decorating payroll / contract                                                      1,041                         801
         Decorating supplies                                                                  978                       1,276
         Vehicle and maintenance equipment o & r                                              - -                         176
         Miscellaneous operating and maint. expenses                                        2,668                       7,447
                                                                                      ------------                   ---------
            Sub-total operating & maint. expense                                      $    54,384                    $ 52,036
                                                                                      ------------                   ---------

     Taxes and insurance
         Real estate taxes                                                             $    1,850                    $  1,819
         Payroll taxes                                                                      4,088                       3,571
         Miscellaneous taxes, licenses, and permits                                           800                         800
         Property and liability insurance                                                   4,349                       3,889
         Fidelity bond insurance                                                              - -                         - -
         Workman's compensation                                                             2,646                       1,929
         Health insurance and other employee benefits                                       5,992                       4,722
         Other insurance                                                                      - -                         - -
                                                                                       -----------                   ---------
            Sub-total taxes & insurance                                                $   19,725                    $ 16,730
                                                                                       -----------                   ---------

                    Total operating expenses                                           $  158,362                   $ 152,294
                                                                                       -----------                  ----------

</TABLE>

See Notes to Financial Statements.

                                       6
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                        STATEMENTS OF INCOME (CONTINUED)
                     Years Ended December 31, 2000 and 1999


<TABLE>
<CAPTION>

                                                                                   2000                        1999
                                                                                   ----                        ----
<S>                                                                                    <C>                         <C>
OTHER EXPENSES
     Interest expense - mortgage                                                       $ 160,180                   $ 162,204
     Interest expense - notes                                                                - -                         - -
     Miscellaneous financial expense                                                         - -                         - -
     Depreciation and amortization                                                       197,448                     195,417
     Non project expenses                                                                    - -                         - -
                                                                                      -----------                  -----------
        Sub-total other expenses                                                       $ 357,628                   $ 357,621
                                                                                      -----------                  -----------

                    Total expenses                                                     $ 515,990                   $ 509,915
                                                                                      -----------                  -----------

                    Net income (loss)                                                  $ (65,594)                  $ (30,017)
                                                                                       ===========                 ============

</TABLE>


See Notes to Financial Statements.


                                        7

<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                         STATEMENTS OF PARTNERS' EQUITY
                     Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>
                                                                              General                    Limited
                                                     Total                    Partner                   Partner
                                                     ------                  ----------                 --------
<S>                                                     <C>                         <C>                     <C>
Partners' equity
     December 31, 1998                                  $2,085,835                  $ 46,299                $2,039,536

Partners' capital
     contributions                                             - -                       - -                       - -

Partners' capital
     distributions                                             - -                       - -                       - -

Net income (loss)                                          (30,017)                     (300)                  (29,717)
                                                        ------------                ----------              ------------
Partners' equity
     December 31, 1999                                  $2,055,818                  $ 45,999                $2,009,819

Partners' capital
     contributions                                             - -                       - -                       - -

Partners' capital
     distributions                                             - -                       - -                       - -

Net income (loss)                                          (65,594)                     (656)                  (64,938)
                                                        -------------               ----------              ------------
Partners' equity
     December 31, 2000                                  $1,990,224                  $ 45,343                $1,944,881
                                                        ============                ==========              ============


Percentage at
     December 31, 2000                                        100%                         1%                      99%
                                                         ============                ==========             =============


</TABLE>

See Notes to Financial Statements.

                                       8
<PAGE>

                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                     Years Ended December 31, 2000 and 1999
<TABLE>
<CAPTION>


                                                                                 2000                        1999
                                                                                 -----                       -----
<S>                                                                                 <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                               $  (65,594)                  $ (30,017)
     Adjustments to reconcile net income
      (loss) to net cash provided by
       (used in) operating activities:
         Depreciation and amortization                                                  197,448                     195,417
         Change in assets and liabilities:
          Decrease (increase) in:
             Prepaid expenses                                                               171                         (30)
             Tenants' security deposits                                                    (789)                     (5,474)
             Rents receivable                                                               587                        (587)
             Other receivables                                                              - -                         - -
          Increase (decrease) in:
             Accounts payable                                                            (5,011)                     (3,441)
             Accrued expenses                                                               - -                         - -
             Accrued interest                                                               - -                     (13,604)
             Prepaid rents                                                                  - -                         - -
             Tenants' security deposits                                                   2,200                       4,725
                                                                                     -----------                  -----------
                Net cash provided by (used in)
                      operating activities                                           $  139,034                   $ 146,989
                                                                                     -----------                  -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Funding of replacement reserve escrow                                           $  (21,137)                  $ (19,360)
     Withdrawals from replacement reserve escrow                                            - -                         - -
     Acquisition of property and equipment                                               (7,721)                     (6,693)
                                                                                     ------------                ------------
             Net cash provided by (used in)
                     investing activities                                            $  (28,858)                  $ (26,053)
                                                                                     ------------                 -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Partner contributions                                                              $   - -                  $      - -
     Partner distributions                                                                  - -                         - -
     Advances from general partner                                                       (7,355)                       (896)
     Payment of development fees payable                                                (25,500)                    (24,500)
     Principal payments on long-term debt                                               (27,495)                    (27,507)
                                                                                     ------------                 -----------
             Net cash provided by (used in)
                     financing activities                                            $  (60,350)                  $ (52,903)
                                                                                     ------------                 -----------



</TABLE>

See Notes to Financial Statements.

                                       9

<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                      STATEMENTS OF CASH FLOWS (CONTINUED)
                     Years Ended December 31, 2000 and 1999

<TABLE>
<CAPTION>


                                                                                 2000                        1999
                                                                                 ----                        ----
<S>                                                                                 <C>                         <C>
Increase (decrease) in cash and
cash equivalents                                                                    $   49,826                  $   68,033

Cash and cash equivalents
     Beginning                                                                          78,528                      10,495
                                                                                    -----------                 -----------
     Ending                                                                         $  128,354                  $   78,528
                                                                                    ===========                 ===========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
     INFORMATION
         Cash paid during the year for interest                                     $  160,180                  $  175,808
                                                                                    ===========                 ===========


</TABLE>

See Notes to Financial Statements.
                                       10
<PAGE>


                           COLONIAL VILLAGE ROSEVILLE
                       (A California Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS




NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A summary of the Partnership's significant accounting policies consistently
     applied  in  the  preparation  of  the  accompanying  financial  statements
     follows.

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


                                                              Years

               Buildings                                       27.5
               Equipment                                          7


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

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

     Amortization
     ------------
     Deferred charges are amortized over the following estimated useful lives
     using the straight-line method:


                                                           Years
                                                           -----
                      Deferred debt expense                   30
                      Tax credit monitoring fee               15

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


                                       11
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS




Note 1 - Summary of Significant Accounting Policies (continued)

      Estimates

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

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


NOTE 2 - ORGANIZATION

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

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


NOTE 3 - Deferred charges

     Deferred  charges  as of  December  31,  2000  and  1999,  consists  of the
     following:

                                                       2000           1999
     Deferred debt expense                              $  110,462   $   110,462
     Tax credit monitoring fee                              22,960        22,960
                                                         ------------  ---------
                                                        $  133,422   $   133,422
              Less accumulated amortization                 28,875        23,662
                                                        ------------- ----------
                                                        $  104,547   $   109,760
                                                        ===========  ===========
                                       12
<PAGE>




                          NOTES TO FINANCIAL STATEMENTS



Note 4 - Restricted deposits and Funded reserves

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


Note 5 - Long-Term Debt

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

     Under the terms of the 30-year Promissory Note with CCRC, the loan provides
     for an initial  interest  rate of 7.67% and monthly  payments of $15,639.62
     commencing on September 1, 1995,  and  continuing  through August 2025. The
     interest rate and monthly  payment will be adjusted at year eleven (11) and
     year  twenty-one  (21),  at which time the  interest  rate will be adjusted
     based on the Current  Index plus 2.75% and the payment will be adjusted and
     determined by the amount of the monthly payment that would be sufficient to
     repay  the note  within  360  months of the  initial  payment  date.  As Of
     December 31, 2000, the current  interest rate, and minimum  monthly payment
     due is 7.67% and $15,639.62, respectively.

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

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

                  December 31,      2001                        $      29,679
                                    2002                               32,038
                                    2003                               34,583
                                    2004                               37,331
                                    2005                               40,297
                                 Thereafter                         1,899,409
                                                                 --------------
                                  TOTAL                         $   2,073,337
                                                                ================


NOTE 6 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

      Developer Fees
      --------------

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

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

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

     Management Fee
     --------------

     In accordance with the Management  Agreement,  the Partnership paid Project
     Go, Inc., the general  partner,  a management fee during 2000 in the amount
     of  $24,192,  for  services  rendered  in  connection  with the leasing and
     operation of the project.  The fee for its services is  approximately 6% of
     the project's rental income.
                                       13
<PAGE>


                          NOTES TO FINANCIAL STATEMENTS




Note 7 - Commitment

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


Note 8 - Current VULNERABILITY due to certain concentrations

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



                                       14