UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)

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

                        For the year ended March 31, 2009

                                       OR

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

           For the transition period from ___________ to _____________

                         Commission file number: 0-23908


                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

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

                                 (714) 662-5565
                               (Telephone number)

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

                                      NONE

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

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act
Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]

                                       1
<PAGE>

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


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

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer___   Accelerated filer___   Non-accelerated filer__X__
Small reporting company_____

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]


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

                                  INAPPLICABLE

                       DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).

                                      NONE

                                       2
<PAGE>

PART I.

ITEM 1.  BUSINESS

ORGANIZATION

WNC California Housing Tax Credits III, L.P. (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 ("Local Limited Partnerships") which own multi-family
housing complexes ("Housing Complexes") that are eligible for Federal low income
housing tax credits ("Low Income Housing Tax Credits"). The local general
partners (the "Local General Partners") of each Local Limited Partnership retain
responsibility for maintaining, operating and managing the Housing Complexes.
Each Local Limited Partnership is governed by its agreement of limited
partnership (the "Local Limited Partnership Agreement").

The general partner of the Partnership is WNC Tax Credit Partners III, L.P. (the
"General Partner"). WNC & Associates, Inc. ("Associates") is the general partner
of WNC Tax Credit Partners III, L.P. The chairman and president of Associates
owns all of the outstanding stock of Associates. The business of the Partnership
is conducted primarily through Associates, as the Partnership has no employees
of its 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 ("Partnership Units") at a price of
$1,000 per Partnership Unit. As of the close of the public offering on July 22,
1994, a total of 18,000 Partnership Units representing $18,000,000 had been
sold. Holders of Partnership Units are referred to herein as "Limited Partners".

The Partnership shall continue in full force and effect until December 31, 2050
unless terminated prior to that date pursuant to the Partnership Agreement (as
defined below) or law.

DESCRIPTION OF BUSINESS

The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Tax 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
Housing Complex which will qualify for the Low Income Housing Tax Credits. In
general, under Section 42 of the Internal Revenue Code, an owner of low income
housing can receive the Low Income Housing Tax Credits to be used to reduce
Federal taxes otherwise due in each year of a ten-year credit period. Each
Housing Complex is subject to a 15 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 Tax 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 and (iii) the ability of government lenders to disapprove of transfer,
it is not possible at this time to predict whether the liquidation of the
Partnership's assets and the disposition of the proceeds, if any, in accordance
with the Partnership's Agreement of Limited Partnership, dated September 15,
1988 (the "Partnership Agreement"), will be accomplished promptly at the end of
the Compliance 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.

The Partnership originally invested in eighteen Local Limited Partnerships,
three of which have been sold or otherwise disposed of as of March 31, 2009.
Each of these Local Limited Partnerships owns or owned a Housing Complex that
was eligible for the Federal Low Income Housing Tax Credit and eight of them
were eligible for the California Low Income Housing Tax Credit. Certain Local
Limited Partnerships may also benefit from additional government programs
promoting low- or moderate-income housing.

                                       3
<PAGE>

EXIT STRATEGY

The Compliance Period for a Housing Complex is generally 15 years following
construction or rehabilitation completion. Associates was one of the first in
the industry to offer syndicated investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.

The following table reflects the 15-year compliance period of the fifteen
Housing Complexes:

             EXPIRATION DATE FOR 15-YEAR COMPLIANCE PERIOD

             LOCAL LIMITED
            PARTNERSHIP NAME                     15-YEAR EXPIRATION DATE
 -----------------------------------------------------------------------

 Almond Garden Apartment Associates                                2009
 Almond View Apartments, Ltd.                                      2010
 Buccaneer Associates, Limited                                     2008
 Candleridge Apartments of Perry L.P. II                           2009
 Colonial Village Roseville                                        2010
 Dallas County Housing, Ltd.                                       2009
 La Paloma del Sol Limited Partnership                             2009
 Memory Lane Limited Partnership                                   2009
 Nueva Sierra Vista Associates                                     2010
 Old Fort Limited Partnership                                      2008
 Orosi Apartments, Ltd.                                            2009
 Parlier Garden Apts.                                              2009
 Sun Manor, L.P.                                                   2009
 Tahoe Pines Apartments                                            2009
 Walnut - Pixley, L.P.                                             2009


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

Upon identifying those Housing Complexes with the highest potential for a
successful sale, refinancing or syndication, the Partnership expects to proceed
with efforts to liquidate them. The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the
Partnership. Local Limited Partnership interests may be disposed of any time by
the General Partner in its discretion. While liquidation of the Housing
Complexes continues to be evaluated, the dissolution of the Partnership was not
imminent as of March 31, 2009.

During the year ended March 31, 2009, the Partnership sold its Limited
Partnership interest in Rosewood Apartments L.P. ("Rosewood"), Venus Retirement
Village, Ltd ("Venus") and Winters Investment Group ("Winters"). The Partnership
received $1, $15,000 and $25,000 for its Limited Partnership interest in the
respective Local Limited Partnerships. Rosewood had an appraised value of
$70,000 and the outstanding mortgage balance was approximately $398,000
therefore it was to the best interest of the Partnership to sell its Limited
Partnership interest to the Local General Partner. Venus and Winters were
similar situations with Venus appraised at $170,000 with an outstanding mortgage
balance of $700,000 and Winters appraised at $1,460,000 with an outstanding
mortgage balance of $1,765,000. The Partnership collected $40,001 in total for
the sale of the three Limited Partnership interests and those funds are being
kept in the Partnership's reserves to pay for future operating expenses and
accrued asset management fees.

                                       4
<PAGE>

ITEM 1A.  RISK FACTORS

Set forth below are the principal risks the Partnership believes are material to
the Limited Partners. The Partnership and the Local Limited Partnerships operate
in a continually changing business environment and, therefore, new risks emerge
from time to time. This section contains some forward-looking statements. For an
explanation of the qualifications and limitations on forward-looking statements,
see Item 7.

    a.   RISKS ARISING FROM THE INTERNAL REVENUE CODE RULES GOVERNING LOW
         INCOME HOUSING TAX CREDITS

         UNLESS A BOND IS POSTED OR A TREASURY DIRECT ACCOUNT IS ESTABLISHED,
LOW INCOME HOUSING TAX CREDITS MAY BE RECAPTURED IF HOUSING COMPLEXES ARE NOT
OWNED AND OPERATED FOR 15 YEARS. Housing Complexes must comply with Internal
Revenue Code Section 42 for the 15-year Compliance Period. Low Income Housing
Tax Credits will be recaptured with interest to the extent that a Housing
Complex is not rented as low income housing or in some other way does not
satisfy the requirements of Internal Revenue Code Section 42 during the
Compliance Period. For example, unless a bond is posted or a Treasury Direct
Account is established, recapture with interest would occur if:

     o    a Local Limited Partnership disposed of its interest in a Housing
          Complex during the Compliance Period, or

     o    the Partnership disposed of its interest in a Local Limited
          Partnership during the Compliance Period.

For these purposes, disposition includes transfer by way of foreclosure.

It will be up to the Partnership to determine whether to post a bond. There is
no obligation under the agreements with the Local Limited Partnerships that the
Local Limited Partnerships must do so.

There can be no assurance that recapture will not occur. If it does, recapture
will be a portion of all Low Income Housing Tax Credits taken in prior years for
that Housing Complex, plus interest. During the first 11 years of the Compliance
Period, non-compliance results in one-third of the credits up to that point for
the particular Housing Complex being recaptured, plus interest. Between years 12
and 15, the recapture is phased out ratably.

         SALES OF HOUSING COMPLEXES AFTER 15 YEARS ARE SUBJECT TO LIMITATIONS
WHICH MAY IMPACT A LOCAL LIMITED PARTNERSHIP'S ABILITY TO SELL ITS HOUSING
COMPLEX. Each Local Limited Partnership executes an extended low income housing
commitment with the state in which the Housing Complex is located. The extended
low income housing commitment states the number of years that the Local Limited
Partnership and any subsequent owners must rent the Housing Complex as low
income housing. Under Federal law, the commitment must be for at least 30 years.
The commitment, actually agreed to, may be significantly longer than 30 years.
In prioritizing applicants for Low Income Housing Tax Credits, most states give
additional points for commitment periods in excess of 30 years. On any sale of
the Housing Complex during the commitment period, the purchaser would have to
agree to continue to rent the Housing Complex as low income housing for the
duration of the commitment period. This requirement reduces the potential
market, and possibly the sales price, for the Housing Complexes. The sale of a
Housing Complex may be subject to other restrictions. For example, Federal
lenders or subsidizers may have the right to approve or disapprove a purchase of
a Housing Complex. Accordingly, there can be no assurance that a Local Limited
Partnership will be able to sell its Housing Complex. Even if it does so, there
can be no assurance that any significant amount of cash will be distributed to
the Limited Partners. As a result, a material portion of the Low Income Housing
Tax Credits may represent a return of the money originally invested in the
Partnership.

    b.   RISKS RELATED TO INVESTMENT IN LOCAL LIMITED PARTNERSHIPS AND HOUSING
         COMPLEXES

         BECAUSE THE PARTNERSHIP HAS FEW INVESTMENTS, EACH INVESTMENT WILL HAVE
A GREAT IMPACT ON THE PARTNERSHIP'S RESULTS OF OPERATIONS. Any single Housing
Complex experiencing poor operating performance, impairment of value or
recapture of Low Income Housing Tax Credits will have a significant impact upon
the Partnership as a whole.

         THE FAILURE TO PAY MORTGAGE DEBT COULD RESULT IN A FORCED SALE OF A
HOUSING COMPLEX. Each Local Limited Partnership leverages the Partnership's
investment therein by incurring mortgage debt. A Local Limited Partnership's
revenues could be less than its debt payments and taxes and other operating
costs. If so, the Local Limited Partnership would have to use working capital
reserves, seek additional funds, or suffer a forced sale of its Housing Complex,


                                       5
<PAGE>

which could include a foreclosure. The same results could occur if government
subsidies ceased. Foreclosure would result in a loss of the Partnership's
capital invested in the Housing Complex. Foreclosure could also result in a
recapture of Low Income Housing Tax Credits, and a loss of Low Income Housing
Tax Credits for the year in which the foreclosure occurs. If the Housing Complex
is highly-leveraged, a relatively slight decrease in the rental revenues could
adversely affect the Local Limited Partnership's ability to pay its debt service
requirements. Mortgage debt may be repayable in a self-amortizing series of
equal installments or with a large balloon final payment. Balloon payments
maturing prior to the end of the anticipated holding period for the Housing
Complex create the risk of a forced sale if the debt cannot be refinanced. There
can be no assurance that additional funds will be available to any Local Limited
Partnership if needed on acceptable terms or at all.

         THE PARTNERSHIP DOES NOT CONTROL THE LOCAL LIMITED PARTNERSHIPS AND
MUST RELY ON THE LOCAL GENERAL PARTNERS. The Local General Partners will make
all management decisions for the Local Limited Partnerships and the Housing
Complexes. The Partnership has very limited rights with respect to management of
the Local Limited Partnerships. The Partnership will not be able to exercise any
control with respect to Local Limited Partnership business decisions and
operations. Consequently, the success of the Partnership will depend on the
abilities of the Local General Partners.

         HOUSING COMPLEXES SUBSIDIZED BY OTHER GOVERNMENT PROGRAMS ARE SUBJECT
TO ADDITIONAL RULES WHICH MAY MAKE IT DIFFICULT TO OPERATE AND SELL HOUSING
COMPLEXES. Some or all of the Housing Complexes receive or may receive
government financing or operating subsidies in addition to Low Income Housing
Tax Credits. The following are risks associated with some such subsidy programs:

     o    Obtaining tenants for the Housing Complexes. Government regulations
          limit the types of people who can rent subsidized housing. These
          regulations may make it more difficult to rent the residential units
          in the Housing Complexes.
     o    Obtaining rent increases. In many cases rents can only be increased
          with the prior approval of the subsidizing agency.
     o    Limitations on cash distributions. The amount of cash that may be
          distributed to owners of subsidized Housing Complexes is less than the
          amount that could be earned by the owners of non-subsidized Housing
          Complexes.
     o    Limitations on sale or refinancing of the Housing Complexes. A Local
          Limited Partnership may be unable to sell its Housing Complex or to
          refinance its mortgage loan without the prior approval of the
          subsidizer. The subsidizer may withhold such approval in the
          discretion of the subsidizer. Approval may be subject to conditions,
          including the condition that the purchaser continues to operate the
          property as affordable housing for terms which could be as long as 30
          years or more. In addition, any prepayment of a mortgage may result in
          the assessment of a prepayment penalty.
     o    Limitations on transfers of interests in Local Limited Partnerships.
          The Partnership may be unable to sell its interest in a Local Limited
          Partnership without the prior approval of the subsidizer. The
          subsidizer may withhold such approval in the discretion of the
          subsidizer. Approval may be subject to conditions.
     o    Limitations on removal and admission of Local General Partners. The
          Partnership may be unable to remove a Local General Partner from a
          Local Limited Partnership except for cause, such as the violation of
          the rules of the subsidizer. Regulations may prohibit the removal of a
          Local General Partner or permit removal only with the prior approval
          of the subsidizer. Regulations may also require approval of the
          admission of a successor Local General Partner even upon the death or
          other disability of a Local General Partner.
     o    Limitations on subsidy payments. Subsidy payments may be fixed in
          amount and subject to annual legislative appropriations. The rental
          revenues of a Housing Complex, when combined with the maximum
          committed subsidy, may be insufficient to meet obligations. Congress
          or the state legislature, as the case may be, may fail to appropriate
          or increase the necessary subsidy. In those events, the mortgage
          lender could foreclose on the Housing Complex unless a workout
          arrangement could be negotiated.
     o    Possible changes in applicable regulations. Legislation may be enacted
          which adversely revises provisions of outstanding mortgage loans. Such
          legislation has been enacted in the past.
     o    Limited Partners may not receive distributions if Housing Complexes
          are sold. There is no assurance that Limited Partners will receive any
          cash distributions from the sale or refinancing of a Housing Complex.
          The price at which a Housing Complex is sold may not be high enough to
          pay the mortgage and other expenses which must be paid at such time.
          If that happens, a Limited Partner's return may be derived only from
          the Low Income Housing Tax Credits and tax losses.

                                       6
<PAGE>

         UNINSURED CASUALTIES COULD RESULT IN LOSSES AND RECAPTURE. There are
casualties which are either uninsurable or not economically insurable. These
include earthquakes, floods, wars and losses relating to hazardous materials or
environmental matters. If a Housing Complex experienced an uninsured casualty,
the Partnership could lose both its invested capital and anticipated profits in
such property. Even if the casualty were an insured loss, the Local Limited
Partnership might be unable to rebuild the destroyed property. A portion of
prior tax credits could be recaptured and future tax credits could be lost if
the Housing Complex were not restored within a reasonable period of time. And
liability judgments against the Local Limited Partnership could exceed available
insurance proceeds or otherwise materially and adversely affect the Local
Limited Partnership. The cost of liability and casualty insurance has increased
in recent years. Casualty insurance has become more difficult to obtain and may
require large deductible amounts.

         HOUSING COMPLEXES WITHOUT FINANCING OR OPERATING SUBSIDIES MAY BE
UNABLE TO PAY OPERATING EXPENSES. If a Local Limited Partnership were unable to
pay operating expenses, one result could be a forced sale of its Housing
Complex. If a forced sale occurs during the first 15 years of a Housing Complex,
a partial recapture of Low Income Housing Tax Credits could occur. In this
regard, some of the Local Limited Partnerships may own Housing Complexes which
have no subsidies other than Low Income Housing Tax Credits. Those Housing
Complexes do not have the benefit of below-market-interest-rate financing or
operating subsidies which often are important to the feasibility of low income
housing. Those Housing Complexes rely solely on rents to pay expenses. However,
in order for any Housing Complex to be eligible for Low Income Housing Tax
Credits, it must restrict the rent which may be charged to tenants. Over time,
the expenses of a Housing Complex will increase. If a Local Limited Partnership
cannot increase its rents, it may be unable to pay increased operating expenses.

         THE PARTNERSHIP'S INVESTMENT PROTECTION POLICIES WILL BE WORTHLESS IF
THE NET WORTH OF THE LOCAL GENERAL PARTNERS IS NOT SUFFICIENT TO SATISFY THEIR
OBLIGATIONS. There is a risk that the Local General Partners will be unable to
perform their financial obligations to the Partnership. The General Partner has
not established a minimum net worth requirement for the Local General Partners.
Rather, each Local General Partner demonstrates a net worth which the General
Partner believes is appropriate under the circumstances. The assets of the Local
General Partners are likely to consist primarily of real estate holdings and
similar assets. The fair market value of these types of assets is difficult to
estimate. These types of assets cannot be readily liquidated to satisfy the
financial guarantees and commitments which the Local General Partners make to
the Partnership. Moreover, other creditors may have claims on these assets. No
escrow accounts or other security arrangements will be established to ensure
performance of a Local General Partner's obligations. The cost to enforce a
Local General Partner's obligations may be high. If a Local General Partner does
not satisfy its obligations the Partnership may have no remedy, or the remedy
may be limited to removing the Local General Partner as general partner of the
Local Limited Partnership.

         FLUCTUATING ECONOMIC CONDITIONS CAN REDUCE THE VALUE OF REAL ESTATE.
The Partnership's principal business objective is providing its Limited Partners
with low income housing tax credits, not the generation of gains from the
appreciation of real estate held by the Local Limited Partnerships. In its
financial statements, the Partnership has carried its investments in Local
Limited Partnerships at values reflecting the sum of the total amount of the
remaining future low income housing tax credits estimated to be allocated to the
Partnership and the estimated residual value to the Partnership of its interests
in the Local Limited Partnerships. As of March 31, 2008, the Partnership had
reduced the carrying amount to $0 with respect to all but one of its
investments. As of March 31, 2009, the Partnership had reduced the carrying
amount to $0 with respect to all of its investments.

         Any investment in real estate is subject to risks from fluctuating
economic conditions. These conditions can adversely affect the ability to
realize a profit or even to recover invested capital. Among these conditions
are:

     o    the general and local job market,
     o    the availability and cost of mortgage financing,
     o    monetary inflation,
     o    tax, environmental, land use and zoning policies,
     o    the supply of and demand for similar properties,

                                       7
<PAGE>

     o    neighborhood conditions,
     o    the availability and cost of utilities and water.

     c.   TAX RISKS OTHER THAN THOSE RELATING TO TAX CREDITS

In addition to the risks pertaining specifically to Low Income Housing Tax
Credits, there are other Federal income tax risks. Additional Federal income tax
risks associated with the ownership of Partnership Units and the operations of
the Partnership and the Local Limited Partnerships include, but are not limited
to, the following:

         NO OPINION OF COUNSEL AS TO CERTAIN MATTERS. No legal opinion is
obtained regarding matters:

     o    the determination of which depends on future factual circumstances,
     o    which are peculiar to individual Limited Partners, or
     o    which are not customarily the subject of an opinion.

The more significant of these matters include:

     o    allocating purchase price among components of a property, particularly
          as between buildings and fixtures, the cost of which is depreciable,
          and the underlying land, the cost of which is not depreciable,
     o    characterizing expenses and payments made to or by the Partnership or
          a Local Limited Partnership,
     o    identifying the portion of the costs of any Housing Complex which
          qualify for historic and other tax credits,
     o    applying to any specific Limited Partner the limitation on the use of
          tax credits and tax losses. Limited Partners must determine for
          themselves the extent to which they can use tax credits and tax
          losses, and
     o    the application of the alternative minimum tax to any specific Limited
          Partner, or the calculation of the alternative minimum tax by any
          Limited Partner. The alternative minimum tax could reduce the tax
          benefits from an investment in the Partnership.

There can be no assurance, therefore, that the IRS will not challenge some of
the tax positions adopted by the Partnership. The courts could sustain an IRS
challenge. An IRS challenge, if successful, could have a detrimental effect on
the Partnership's ability to realize its investment objectives.

         PASSIVE ACTIVITY RULES WILL LIMIT DEDUCTION OF THE PARTNERSHIP'S LOSSES
AND IMPOSE TAX ON INTEREST INCOME. The Internal Revenue Code imposes limits on
the ability of most investors to claim losses from investments in real estate.
An individual may claim these so-called passive losses only as an offset to
income from investments in real estate or rental activities. An individual may
not claim passive losses as an offset against other types of income, such as
salaries, wages, dividends and interest. These passive activity rules will
restrict the ability of most Limited Partners to use losses from the Partnership
as an offset of non-passive income.

         THE PARTNERSHIP MAY EARN INTEREST INCOME ON ITS RESERVES AND LOANS. The
passive activity rules generally will categorize interest as portfolio income,
and not passive income. Passive losses cannot be used as an offset to portfolio
income. Consequently, a Limited Partner could pay tax liability on portfolio
income from the Partnership.

         AT RISK RULES MIGHT LIMIT DEDUCTION OF THE PARTNERSHIP'S LOSSES. If a
significant portion of the financing used to purchase Housing Complexes does not
consist of qualified nonrecourse financing, the "at risk" rules will limit a
Limited Partner's ability to claim Partnership losses to the amount the Limited
Partner invests in the Partnership. The "at risk" rules of the Internal Revenue
Code generally limit a Limited Partner's ability to deduct Partnership losses to
the sum of:

     o    the amount of cash the Limited Partner invests in the Partnership, and
     o    the Limited Partner's share of Partnership qualified nonrecourse
          financing.

Qualified nonrecourse financing is non-convertible, nonrecourse debt which is
borrowed from a government, or with exceptions, any person actively and
regularly engaged in the business of lending money.

                                       8
<PAGE>

         TAX LIABILITY ON SALE OF HOUSING COMPLEX OR LOCAL LIMITED PARTNERSHIP
INTEREST MAY EXCEED THE CASH AVAILABLE FROM THE SALE. When a Local Limited
Partnership sells a Housing Complex it will recognize gain. Such gain is equal
to the difference between:

     o    the sales proceeds plus the amount of indebtedness secured by the
          Housing Complex, and
     o    the adjusted basis for the Housing Complex. The adjusted basis for a
          Housing Complex is its original cost, plus capital expenditures, minus
          depreciation.

Similarly, when the Partnership sells an interest in a Local Limited Partnership
the Partnership will recognize gain. Such gain is equal to the difference
between:

     o    the sales proceeds plus the Partnership's share of the amount of
          indebtedness secured by the Housing Complex, and
     o    the adjusted basis for the interest. The adjusted basis for an
          interest in a Local Limited Partnership is the amount paid for the
          interest, plus income allocations and cash distributions, less loss
          allocations.

Accordingly, gain will be increased by the depreciation deductions taken during
the holding period for the Housing Complex. In some cases, a Limited Partner
could have a tax liability from a sale greater than the cash distributed to the
Limited Partner from the sale.

         ALTERNATIVE MINIMUM TAX LIABILITY COULD REDUCE A LIMITED PARTNER'S TAX
BENEFITS. If a Limited Partner pays alternative minimum tax, the Limited Partner
could suffer a reduction in benefits from an investment in the Partnership. The
application of the alternative minimum tax is personal to each Limited Partner.
Tax credits may not be utilized to reduce alternative minimum tax liability.

         IRS COULD AUDIT THE RETURNS OF THE PARTNERSHIP, THE LOCAL LIMITED
PARTNERSHIPS OR THE LIMITED PARTNERS. The IRS can audit the Partnership or a
Local Limited Partnership at the entity level with regard to issues affecting
the entity. The IRS does not have to audit each Limited Partner in order to
challenge a position taken by the Partnership or a Local Limited Partnership.
Similarly, only one judicial proceeding can be filed to contest an IRS
determination. A contest by the Partnership of any IRS determination might
result in high legal fees.

         AN AUDIT OF THE PARTNERSHIP OR A LOCAL LIMITED PARTNERSHIP ALSO COULD
RESULT IN AN AUDIT OF A LIMITED PARTNER. An audit of a Limited Partner's tax
returns could result in adjustments both to items that are related to the
Partnership and to unrelated items. The Limited Partner could then be required
to file amended tax returns and pay additional tax plus interest and penalties.

         A SUCCESSFUL IRS CHALLENGE TO TAX ALLOCATIONS OF THE PARTNERSHIP OR A
LOCAL LIMITED PARTNERSHIP WOULD REDUCE THE TAX BENEFITS OF AN INVESTMENT IN THE
PARTNERSHIP. Under the Internal Revenue Code, a partnership's allocation of
income, gains, deductions, losses and tax credits must have substantial economic
effect. Substantial economic effect is a highly-technical concept. The
fundamental principle is two-fold. If a partner will benefit economically from
an item of partnership income or gain, that item must be allocated to him so
that he bears the correlative tax burden. Conversely, if a partner will suffer
economically from an item of partnership deduction or loss, that item must be
allocated to him so that he bears the correlative tax benefit. If a
partnership's allocations do not have substantial economic effect, then the
partnership's tax items are allocated in accordance with each partner's interest
in the partnership. The IRS might challenge the allocations made by the
Partnership:

     o    between the Limited Partners and the General Partner,
     o    among the Limited Partners, or
     o    between the Partnership and a Local General Partner.

If any allocations were successfully challenged, a greater share of the income
or gain or a lesser share of the losses or tax credits might be allocated to the
Limited Partners. This would increase the tax liability or reduce the tax
benefits to the Limited Partners.

                                       9
<PAGE>

         TAX LIABILITIES COULD ARISE IN LATER YEARS OF THE PARTNERSHIP. After a
period of years following commencement of operations by a Local Limited
Partnership, the Local Limited Partnership may generate profits rather than
losses. A Limited Partner would have tax liability on his share of such profits
unless he could offset the income with:

     o    unused passive losses from the Partnership or other investments, or
     o    current passive losses from other investments.

In such circumstances, the Limited Partner would not receive a cash distribution
from the Partnership with which to pay any tax liability.

         IRS CHALLENGE TO TAX TREATMENT OF EXPENDITURES COULD REDUCE LOSSES. The
IRS may contend that fees and payments of the Partnership or a Local Limited
Partnership:

     o    should be deductible over a longer period of time or in a later year,
     o    are excessive and may not be capitalized or deducted in full,
     o    should be capitalized and not deducted, or
     o    may not be included as part of the basis for computing tax credits.

Any such contention by the IRS could adversely impact, among other things:

     o    the eligible basis of a Housing Complex used to compute Low Income
          Housing Tax Credits,
     o    the adjusted basis of a Housing Complex used to compute depreciation,
     o    the correct deduction of fees,
     o    the amortization of organization and offering expenses and start-up
          expenditures.

If the IRS were successful in any such contention, the anticipated Low Income
Housing Tax Credits and losses of the Partnership would be reduced, perhaps
substantially.

         CHANGES IN TAX LAW MIGHT REDUCE THE VALUE OF LOW INCOME HOUSING TAX
CREDITS. Although all Low Income Housing Tax Credits are allocated to a Housing
Complex at commencement of the 10-year credit period, there can be no assurance
that future legislation may not adversely affect an investment in the
Partnership. For example, legislation could reduce or eliminate the value of Low
Income Housing Tax Credits. In this regard, before 1986, the principal tax
benefit of an investment in low income housing was tax losses. These tax losses
generally were used to reduce an investor's income from all sources on a
dollar-for-dollar basis. Investments in low income housing were made in reliance
on the availability of such tax benefits. However, tax legislation enacted in
1986 severely curtailed deduction of such losses.

         NEW ADMINISTRATIVE OR JUDICIAL INTERPRETATIONS OF THE LAW MIGHT REDUCE
THE VALUE OF LOW INCOME HOUSING TAX CREDITS. Many of the provisions of the
Internal Revenue Code related to low income housing and real estate investments
have not been interpreted by the IRS in regulations, rulings or public
announcements, or by the courts. In the future, these provisions may be
interpreted or clarified by the IRS or the courts in a manner adverse to the
Partnership or the Local Limited Partnerships. The IRS constantly reviews the
Federal tax rules, and can revise its interpretations of established concepts.
Any such revisions could reduce or eliminate tax benefits associated with an
investment in the Partnership.

         STATE INCOME TAX LAWS MAY ADVERSELY AFFECT THE LIMITED PARTNERS. A
Limited Partner may be required to file income tax returns and be subject to tax
and withholding in each state or local taxing jurisdiction in which: a Housing
Complex is located, the Partnership or a Local Limited Partnership engages in
business activities, or the Limited Partner is a resident. Corporate Limited
Partners may be required to pay state franchise taxes.

         THE TAX TREATMENT OF PARTICULAR ITEMS UNDER STATE OR LOCAL INCOME TAX
LAWS MAY VARY MATERIALLY FROM THE FEDERAL INCOME TAX TREATMENT OF SUCH ITEMS.
Nonetheless, many of the Federal income tax risks associated with an investment
in the Partnership may also apply under state or local income tax law. The
Partnership may be required to withhold state taxes from distributions or income
allocations to Limited Partners in some instances.

                                       10
<PAGE>

     d.   RISKS RELATED TO THE PARTNERSHIP AND THE PARTNERSHIP AGREEMENT

         THE PARTNERSHIP MAY BE UNABLE TO TIMELY PROVIDE FINANCIAL REPORTS TO
THE LIMITED PARTNERS WHICH WOULD ADVERSELY AFFECT THEIR ABILITY TO MONITOR
PARTNERSHIP OPERATIONS. Historically, the Partnership has been unable to timely
file and provide investors with all of its required periodic reports. In some
instances, the delay has been substantial. Each Local General Partner is
required to retain independent public accountants and to report financial
information to the Partnership in a timely manner. There cannot be any assurance
that the Local General Partners will satisfy these obligations. If not, the
Partnership would be unable to provide to the Limited Partners in a timely
manner its financial statements and other reports. That would impact the Limited
Partners' ability to monitor Partnership operations. The Partnership's failure
to meet its filing requirements under the Securities Exchange Act of 1934 could
reduce the liquidity for the Partnership Units due to the unavailability of
public information concerning the Partnership. The failure to file could also
result in sanctions imposed by the SEC. Any defense mounted by the Partnership
in the face of such sanctions could entail legal and other fees, which would
diminish cash reserves.

         LACK OF LIQUIDITY OF INVESTMENT. It is unlikely that a public market
will develop for the purchase and sale of Partnership Units. Accordingly,
Limited Partners may not be able to sell their Partnership Units promptly or at
a reasonable price. Partnership Units should be considered as a long-term
investment because the Partnership is unlikely to sell any Local Limited
Partnership Interests for at least 15 years. Partnership Units cannot be
transferred to tax-exempt or foreign entities, or through a secondary market.
The General Partner can deny effectiveness of a transfer if necessary to avoid
adverse tax consequences from the transfer. The General Partner does not
anticipate that any Partnership Units will be redeemed by the Partnership.

         THE LIMITED PARTNERS WILL NOT CONTROL THE PARTNERSHIP AND MUST RELY
TOTALLY ON THE GENERAL PARTNER. The General Partner will make all management
decisions for the Partnership. Management decisions include exercising powers
granted to the Partnership by a Local Limited Partnership. Limited Partners have
no right or power to take part in Partnership management.

Individual Limited Partners will have no recourse if they disagree with actions
authorized by a vote of the majority. The Partnership Agreement grants to
Limited Partners owning more than 50% of the Partnership Units the right to:

     o    remove the General Partner and elect a replacement general partner,
     o    amend the Partnership Agreement,
     o    terminate the Partnership.

Accordingly, a majority-in-interest of the Limited Partners could cause any such
events to occur, even if Limited Partners owning 49% of the Partnership Units
opposed such action.

         LIMITATIONS ON LIABILITY OF THE GENERAL PARTNER TO THE PARTNERSHIP. The
ability of Limited Partners to sue the General Partner and it affiliates is
subject to limitations. The Partnership Agreement limits the liability of the
General Partner and it affiliates to the Limited Partners. The General Partner
and it affiliates will not be liable to the Limited Partners for acts and
omissions: performed or omitted in good faith, and performed or omitted in a
manner which the General Partner reasonably believed to be within the scope of
its authority and in the best interest of the Limited Partners, provided such
conduct did not constitute negligence or misconduct.

Therefore, Limited Partners may be less able to sue the General Partner and it
affiliates than would be the case if such provisions were not included in the
Partnership Agreement.

         PAYMENT OF FEES TO THE GENERAL PARTNER AND ITS AFFILIATES REDUCES CASH
AVAILABLE FOR INVESTMENT IN LOCAL LIMITED PARTNERSHIPS. The General Partner and
it affiliates perform many services for the Partnership. They are paid fees for
these services, which reduce the amount of the cash available for investment in
Local Limited Partnerships. Accordingly, an investor investing directly in a
Housing Complex would have a greater amount available for investment than an
investor investing in Housing Complexes through the Partnership.

                                       11
<PAGE>

         ASSOCIATES AND ITS AFFILIATES ARE SERVING AS THE GENERAL PARTNERS OF
MANY OTHER PARTNERSHIPS. Depending on their corporate area of responsibility,
the officers of Associates initially devote approximately 5% to 50% of their
time to the Partnership. These individuals spend significantly less time devoted
to the Partnership after the investment of the Partnership's capital in Local
Limited Partnerships.

         THE INTERESTS OF LIMITED PARTNERS MAY CONFLICT WITH THE INTERESTS OF
THE GENERAL PARTNER AND ITS AFFILIATES. The General Partner and its affiliates
are committed to the management of more than 100 other limited partnerships that
have investments similar to those of the Partnership. The General Partner and
its affiliates receive substantial compensation from the Partnership. The
General Partner decides how the Partnership's investments in Housing Complexes
are managed, and when the investments will be sold. The General Partner may face
a conflict in these circumstances because the General Partner's share of fees
and cash distributions from the transaction may be more or less than their
expected share of fees if a Housing Complex was not sold. The result of these
conflicts could be that a Series may make investments which are less desirable,
or on terms which are less favorable, to the Series than might otherwise be the
case. The Partnership has not developed any formal process for resolving
conflicts of interest. However, the General Partner is subject to a fiduciary
duty to exercise good faith and integrity in handling the affairs of the
Partnership, and that duty will govern its actions in all such matters.
Furthermore, the manner in which the Partnership can operate and sell
investments is subject to substantial restrictions as outlined in the
Partnership Agreement.

         Anticipated future and existing cash resources of the Partnership are
not sufficient to pay existing liabilities of the Partnership. However,
substantially all of the existing liabilities of the Partnership are payable to
the General Partner and/or its affiliates.

         The Partnership's accrued payables consist primarily of the asset
management fees payable to the General Partner. These accrued payables increased
by approximately $129,000, $131,000, and $148,000 for the years ended March 31,
2009, 2008 and 2007, respectively. The Partnership's future contractual cash
obligations consist solely of its obligations to pay future annual asset
management fees. These will equal approximately $161,000 per year through the
termination of the Partnership, which must occur no later than December 31,
2050. Though the amounts payable to the General Partner and/or its affiliates
are contractually currently payable, the Partnership anticipates that the
General Partner and/or its affiliates will not require the payment of these
contractual obligations until capital reserves are in excess of the aggregate of
the existing contractual obligations and anticipated future foreseeable
obligations of the Partnership. The Partnership would be adversely affected
should the General Partner and/or its affiliates demand current payment of the
existing contractual obligations and or suspend services for this or any other
reason.

         Associates agreed to continue providing advances sufficient enough to
fund the operations and working capital requirements of the Partnership through
October 31, 2010.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

Not Applicable

ITEM 2. PROPERTIES

Through its investments in Local Limited Partnerships, the Partnership holds
indirect ownership interests in the Housing Complexes. The following table
reflects the status of the seventeen Housing Complexes for which the Partnership
had ownership during the year, as of the dates or for the periods indicated:

                                       12
<PAGE>
<TABLE>
<S>     <C>
                                                                        AS OF MARCH 31, 2009            AS OF DECEMBER 31, 2008
                                                                      -------------------------   ----------------------------------
                                                                      PARTNERSHIP'S                          ESTIMATED    MORTGAGE
                                                                         TOTAL                               AGGREGATE   BALANCES OF
                                                                      INVESTMENT IN  AMOUNT OF               LOW INCOME     LOCAL
     LOCAL LIMITED                                                    LOCAL LIMITED  INVESTMENT   NUMBER OF  HOUSING TAX   LIMITED
   PARTNERSHIP NAME          LOCATION          GENERAL PARTNER NAME   PARTNERSHIPS  PAID TO DATE    UNITS    CREDITS(1) PARTNERSHIPS
------------------------------------------------------------------------------------------------------------------------------------

Almond Garden Apartment  Delhi, California       Anthony Donovan
Associates                                                             $  391,000    $  391,000       34      $ 807,000   $1,337,000

Almond View Apartments,  Stockton, California    Daniel C. Logue and
Ltd.                                             Cyrus Youssefi         1,639,000     1,639,000       72      3,523,000    1,679,000

Buccaneer Associates,    Fernandia Beach,        Clifford E. Olsen
Limited                  Florida                                          365,000       365,000       48        768,000    1,420,000

Candleridge Apartments   Perry, Iowa             Eric A. Sheldahl
of Perry L.P. II                                                          126,000       126,000       24        245,000      661,000

                                                 S.P. Thomas Company
                                                 of Northern
                                                 California Inc. and
Colonial Village                                 Project Go, Inc.
Roseville                Roseville, Calfornia                           2,811,000     2,811,000       56      5,872,000    1,745,000

                                                 Thomas H. Cooksey
Dallas County                                    and Apartment
Housing, Ltd.            Orrville, Alabama       Developers, Inc.         130,000       130,000       19        287,000      592,000

La Paloma del Sol                                Dean Greenwalt
Limited Partnership      Deming, New Mexico                               254,000       254,000       38        625,000    1,376,000

Memory Lane Limited                              Skogen - Peterson,
Partnership              Yankton, South Dakota   Inc.                     151,000       151,000       18        295,000      652,000

                                                 Self-Help
                                                 Enterprises, Inc.
Nueva Sierra Vista                               and Nueva Sierra
Associates               Richgrove, California   Vista Corporation      1,688,000     1,688,000       35      3,516,000    1,623,000


                                       13
<PAGE>

                                                                        AS OF MARCH 31, 2009            AS OF DECEMBER 31, 2008
                                                                      -------------------------   ----------------------------------
                                                                      PARTNERSHIP'S                          ESTIMATED    MORTGAGE
                                                                         TOTAL                               AGGREGATE   BALANCES OF
                                                                      INVESTMENT IN  AMOUNT OF               LOW INCOME     LOCAL
     LOCAL LIMITED                                                    LOCAL LIMITED  INVESTMENT   NUMBER OF  HOUSING TAX   LIMITED
   PARTNERSHIP NAME          LOCATION          GENERAL PARTNER NAME   PARTNERSHIPS  PAID TO DATE    UNITS    CREDITS(1) PARTNERSHIPS
------------------------------------------------------------------------------------------------------------------------------------
                                                 Alan Deke Noftsker
Old Fort Limited                                 and ABO Corporation
Partnership              Hidalgo, Texas                                   249,000       249,000       40        547,000    1,227,000

Orosi Apartments, Ltd.   Orosi, California       Douglas W. Young         461,000       461,000       42        902,000    1,804,000

                                                 David J. Micheal
                                                 and Professional
                                                 Apartment
Parlier Garden Apts.     Parlier, California     Management, Inc.         453,000       453,000       40        917,000    1,646,000


Sun Manor, L.P.          Itta Bena, Mississippi  Glenn D. Miller          230,000       230,000       36        464,000    1,020,000

                                                 David J. Michael,
                                                 Bucky Fong, Dean
                                                 Pearson, Coy Elvis
                         South Lake Tahoe,       and Dr. Patricia
Tahoe Pines Apartments   California              Hatton                 1,633,000     1,633,000       28      3,171,000    1,543,000

Venus Retirement         Venus, Texas            W. Joseph Chamy
Village, Ltd. (2)                                                               -             -       24        318,000      700,000

Walnut - Pixley, L.P.    Orange, California      Walnut - Pixley,       1,078,000     1,078,000       22      2,309,000      843,000
                                                 Inc.

Winters Investment
Group (2)                Winters, California     John P. Casper                 -             -       38      1,072,000    1,765,000
                                                                      ----------- -------------    ------   -----------    ---------

                                                                      $11,659,000 $  11,659,000       614   $25,638,000   21,633,000
                                                                      =========== =============    ======   ===========   ==========

(1) Represents aggregate total anticipated Low Income Housing Tax Credits to be
received over the 10 year credit period if the Housing Complexes are retained
and rented in compliance with credit rules for the 15-year Compliance Period.
All of the anticipated Low Income Housing Tax Credits have been received from
the Local Limited Partnerships. Accordingly, the Partnership does not anticipate
a significant amount of Low Income Housing Tax Credits being allocated to the
Limited Partners in the future.
(2) The Partnership sold its Limited Partnership interest in these Local Limited
Partnerships subsequent to December 31, 2008 but prior to year ended March 31,
2009

                                                                14
<PAGE>

                                                ----------------------------------------------------------
                                                          FOR THE YEAR ENDED DECEMBER 31, 2008
                                                ----------------------------------------------------------
                                                                                           LOW INCOME
                                                                                       HOUSING TAX CREDITS
        LOCAL LIMITED                                                   NET INCOME         ALLOCATED TO
       PARTNERSHIP NAME                           RENTAL INCOME           (LOSS)           PARTNERSHIP
 ---------------------------------------------------------------------------------------------------------

 Almond Garden Apartment Associates                $   199,000          $ (34,000)               99%

 Almond View Apartments, Ltd.                          293,000           (234,000)               99%

 Buccaneer Associates, Limited                         301,000                  -                99%

 Candleridge Apartments of Perry L.P. II               155,000             (1,000)               99%

 Colonial Village Roseville                            568,000            (87,000)               99%

 Dallas County Housing, Ltd.                            91,000            (12,000)               99%

 La Paloma del Sol Limited Partnership                 207,000            (22,000)               99%

 Memory Lane Limited Partnership                        88,000            (14,000)               99%

 Nueva Sierra Vista Associates                         187,000           (126,000)               99%

 Old Fort Limited Partnership                          242,000            (18,000)               99%

 Orosi Apartments, Ltd.                                240,000            (58,000)               99%

 Parlier Garden Apts.                                  282,000            (26,000)               95%

 Sun Manor, L.P.                                       191,000            (45,000)               99%

 Tahoe Pines Apartments                                244,000           (115,000)               99%

 Venus Retirement Village, Ltd. (1)                    111,000            (34,000)               99%

 Walnut - Pixley, L.P.                                 204,000             25,000                99%

 Winters Investment Group (1)                          278,000              2,000                99%
                                                  ------------         -----------

                                                  $  3,881,000         $ (799,000)
                                                  ============         ===========

(1) The Partnership sold its Limited Partnership interest in these Local Limited
Partnerships subsequent to December 31, 2008 but prior to March 31, 2009.

                                                      15
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDIT FUND III, L.P.
MARCH 31, 2009                                                                                     OCCUPANCY RATES
                                                                                 ---------------------------------------------------
                                                                                                  AS OF DECEMBER 31,
                                                                                 ---------------------------------------------------


         LOCAL LIMITED
        PARTNERSHIP NAME             LOCATION          GENERAL PARTNER NAME       2008      2007       2006        2005        2004
------------------------------------------------------------------------------------------------------------------------------------

Almond Garden Apartment          Delhi, California Anthony Donovan
Associates                                                                        100%      100%        97%         100%        97%

                                 Stockton,         Daniel C. Logue and Cyrus
Almond View Apartments, Ltd.     California        Youssefi                        94%       94%        94%         100%        99%

                                 Fernandia Beach,
Buccaneer Associates, Limited    Florida           Clifford E. Olsen               96%       98%       100%         100%       100%


Candleridge Apartments of Perry
L.P. II                          Perry, Iowa       Eric A. Sheldahl                96%       96%        96%         100%       100%

                                                   S.P. Thomas Company of
                                 Roseville,        Northern California Inc. and
Colonial Village Roseville       California        Project Go, Inc.                95%       98%        93%         100%        98%

                                                   Thomas H. Cooksey and
Dallas County Housing, Ltd.      Orrville, Alabama Apartment Developers, Inc.      84%       84%        79%          84%        89%

La Paloma del Sol Limited        Deming, New
Partnership                      Mexico            Dean Greenwalt                  95%       95%        95%          95%        89%

                                 Yankton, South
Memory Lane Limited Partnership  Dakota            Skogen - Peterson, Inc.        100%      100%       100%          94%        94%

                                                   Self-Help Enterprises, Inc.
                                 Richgrove,        and Nueva Sierra Vista
Nueva Sierra Vista Associates    California        Corporation                    100%      100%       100%         100%        97%


                                                                16
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDIT FUND III, L.P.
MARCH 31, 2009                                                                                     OCCUPANCY RATES
                                                                                 ---------------------------------------------------
                                                                                                  AS OF DECEMBER 31,
                                                                                 ---------------------------------------------------


         LOCAL LIMITED
        PARTNERSHIP NAME             LOCATION          GENERAL PARTNER NAME       2008      2007       2006        2005       2004
------------------------------------------------------------------------------------------------------------------------------------

                                                    Alan Deke Noftsker and ABO
Old Fort Limited Partnership      Hidalgo, Texas    Corporation                   93%       100%       95%          93%        98%

Orosi Apartments, Ltd.            Orosi, California Douglas W. Young              95%        86%       95%          93%        93%

                                                    David J. Micheal and
                                  Parlier,          Professional Apartment
Parlier Garden Apts.              California        Management, Inc.             100%       100%      100%         100%        98%

Rosewood Apartments Limited       Superior,         Duffy Development Company,
Partnership                       Wisconsin         Inc.                          N/A        95%       95%          85%        85%

                                  Itta Bena,                                     100%        89%      100%         100%        94%
Sun Manor, L.P.                   Mississippi       Glenn D. Miller

                                                    David J. Michael, Bucky
                                                    Fong, Dean Pearson, Coy
                                  South Lake        Elvis and Dr. Patricia
Tahoe Pines Apartments            Tahoe, California Hatton                        96%        89%       96%          96%       100%
Venus Retirement Village, Ltd.
(1)                               Venus, Texas      W. Joseph Chamy              100%        96%       96%         100%       100%

                                  Orange,
Walnut - Pixley, L.P.             California        Walnut - Pixley, Inc.        100%        95%      100%          95%       100%


                                  Winters,
Winters Investment Group (1)      California        John P. Casper               100%        97%      100%         100%       100%
                                                                                 ----       ----      ----         ----       ----
                                                                                  97%        95%       96%          96%        96%
                                                                                 ====       ====      ====         ====       ====

N/A- The Partnership sold its interest in the Local Limited Partnership prior to
the respective year end.

(1) The Partnership sold its Limited Partnership interest in these Local Limited
Partnerships subsequent to December 31, 2008 but prior to March 31, 2009.
</TABLE>

                                                                17
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

NONE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE

PART II.

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5a.

(a)  The Partnership 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 Partnership Units and none
     exists. Partnership Units can be assigned or otherwise transferred only if
     certain requirements in the Partnership Agreement are satisfied.

(b)  At March 31, 2009, there were 907 Limited Partners and 0 assignees of
     Partnership Units who were not admitted as Limited Partners.

(c)  The Partnership was not designed to provide cash distributions to Limited
     Partners in circumstances other than refinancing or disposition of its
     investments in Local Limited Partnerships. Any such distributions would be
     made in accordance with the terms of the Partnership Agreement. No cash
     distributions were made to the Limited Partners for the periods presented.

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

(e)  The Partnership does not issue common stock

(f)  No unregistered securities were sold by the Partnership during the year
     ended March 31, 2009.

ITEM 5b. USE OF PROCEEDS

NOT APPLICABLE

ITEM 5c. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

NONE


                                       18
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA

Selected balance sheet information for the Partnership is as follows:
<TABLE>
                                                             MARCH 31,
                               --------------------------------------------------------------------

                                   2009           2008          2007          2006         2005
                               -----------    -----------   -----------   -----------   -----------
<S>                            <C>            <C>           <C>           <C>           <C>
ASSETS
Cash                           $   234,631    $   228,980   $   239,164   $   253,910   $   293,367
Investments in Local Limited
  Partnerships, net                   --        1,740,459     1,815,552     1,891,029     2,173,564
                               -----------    -----------   -----------   -----------   -----------

       Total Assets            $   234,631    $ 1,969,439   $ 2,054,716   $ 2,144,939   $ 2,466,931
                               ===========    ===========   ===========   ===========   ===========

LIABILITIES
Accrued fees and expenses
  due to General Partner and
  affiliates                   $ 1,945,760    $ 1,841,301   $ 1,686,278   $ 1,539,639   $ 1,413,074

PARTNERS' EQUITY (DEFICIT)      (1,711,129)       128,138       368,438       605,300     1,053,857
                               -----------    -----------   -----------   -----------   -----------

       Total Liabilities and
       Partners' Equity        $   234,631    $ 1,969,439   $ 2,054,716   $ 2,144,939   $ 2,466,931
                               ===========    ===========   ===========   ===========   ===========


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

                                                                   FOR THE YEARS ENDED
                                                                        MARCH 31,
                                         -----------------------------------------------------------------------

                                             2009           2008           2007           2006           2005
                                         -----------    -----------    -----------    -----------    -----------
Loss from operations (Note 1)            $(1,700,157)   $  (206,166)   $  (203,083)   $  (317,823)   $(1,217,245)
Equity in losses of Local Limited
  Partnerships                              (179,270)       (34,537)       (34,921)      (132,114)      (309,324)
Gain on sale of Local Limited
  Partnerships                                40,001           --             --             --             --
Interest income                                  159            403          1,142          1,380            952
                                         -----------    -----------    -----------    -----------    -----------
NET LOSS                                 $(1,839,267)   $  (240,300)   $  (236,862)   $  (448,557)   $(1,525,617)
                                         ===========    ===========    ===========    ===========    ===========

NET LOSS ALLOCATED TO:

  General  Partner                       $   (18,393)   $    (2,403)   $    (2,369)   $    (4,486)   $   (15,256)
                                         ===========    ===========    ===========    ===========    ===========

  Limited Partners                       $(1,820,874)   $  (237,897)   $  (234,493)   $  (444,071)   $(1,510,361)
                                         ===========    ===========    ===========    ===========    ===========

NET LOSS PER PARTNERSHIP UNIT            $   (101.16)   $    (13.22)   $    (13.03)   $    (24.67)   $    (83.90)
                                         ===========    ===========    ===========    ===========    ===========

OUTSTANDING WEIGHTED PARTNERSHIP UNITS        18,000         18,000         18,000         18,000         18,000
                                         ===========    ===========    ===========    ===========    ===========

Note 1 - Net loss for the years ended March 31, 2009, 2008, 2007, 2006 and 2005
includes a charge for impairment losses and write-off of acquisition cost and
fees on investments in Local Limited Partnerships of $1,633,410, $0, $0,
$101,658 and $972,589, respectively.

                                                      19
<PAGE>

                                                      FOR THE YEARS ENDED
                                                            MARCH 31,
                            -------------------------------------------------------------------------

                               2009            2008            2007            2006           2005
                            ---------       ---------       ---------       ---------       ---------
NET CASH PROVIDED BY
  (USED IN):
  Operating activities      $ (73,920)      $ (42,224)      $ (46,786)      $ (77,214)      $ (44,726)
  Investing activities         79,571          32,040          32,040          37,757          27,376
                            ---------       ---------       ---------       ---------       ---------

NET CHANGE IN CASH              5,651         (10,184)        (14,746)        (39,457)        (17,350)

CASH, BEGINNING OF
  PERIOD                      228,980         239,164         253,910         293,367         310,717
                            ---------       ---------       ---------       ---------       ---------

CASH, END OF PERIOD         $ 234,631       $ 228,980       $ 239,164       $ 253,910       $ 293,367
                            =========       =========       =========       =========       =========


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

                      2008            2007             2006             2005             2004
                  -------------   --------------   -------------    -------------    -------------

Federal           $          -    $           -    $          -     $         21     $         83
State                        -                -               -                -                -
                  -------------   --------------   -------------    -------------    -------------

Total             $          -    $           -    $          -     $         21      $        83
                  =============   ==============   =============    =============    =============
</TABLE>

                                                      20
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD LOOKING STATEMENTS

With the exception of the discussion regarding historical information, this
"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, the Partnerhip's future cash flows and ability to obtain
sufficient financing, level of operating expenses, conditions in the Low Income
Housing Tax Credits 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 the
Partnership or persons acting on its behalf are expressly qualified in their
entirety by cautionary statements in this Form 10-K and in other reports filed
with the Securities and Exchange Commission. The following discussion should be
read in conjunction with the Financial Statements and the Notes thereto included
elsewhere in this filing.

CRITICAL ACCOUNTING POLICIES AND CERTAIN RISKS AND UNCERTAINTIES

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

USE OF ESTIMATES

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

METHOD OF ACCOUNTING FOR INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated value derived by
management, generally consisting of the product of the remaining future Low
Income Housing Tax Credits estimated to be allocable to the Partnership and the
estimated residual value to the Partnership. If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the Local Limited
Partnerships, generally, are expected to be consistent with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments are
capitalized as part of the investment account and are being amortized over 30
years. (See Notes 2 and 3 to the financial statements)

"Equity in losses of Local Limited Partnerships" for each year ended March 31
has been recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships for each year ended December 31 and
on three months of results estimated by management of the Partnership.
Management's estimate for the three-month period is based on either actual
unaudited results reported by the Local Limited Partnerships or historical
trends in the operations of the Local Limited Partnerships. In subsequent annual
financial statements, upon receiving the actual annual results reported by the


                                       21
<PAGE>

Local Limited Partnerships, management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships. Equity in losses
from the Local Limited Partnerships allocated to the Partnership is not
recognized to the extent that the investment balance would be adjusted below
zero. As soon as the investment balance reaches zero, the related costs of
acquiring the investment are impaired.

Distributions received from the Local Limited Partnerships are accounted for as
a reduction of the investment balance. Distributions received after the
investment has reached zero are recognized as distribution income. If the Local
Limited Partnerships report net income in future years, the Partnership will
resume applying the equity method only after its share of such net income equals
the share of net losses not recognized during the period(s) the equity method
was suspended.

The Partnership does not consolidate the accounts and activities of the Local
Limited Partnerships which are Variable Interest Entities under Financial
Accounting Standards Board ("FASB") Interpretation No. 46-Revised,
"Consolidation of Variable Interest Entities", because the Partnership is not
considered the primary beneficiary. The Partnership's balance in Investments in
Local Limited Partnerships represents the maximum exposure to loss in connection
with such investments. The Partnership's exposure to loss on the Local Limited
Partnerships is mitigated by the condition and financial performance of the
underlying Housing Complexes as well as the strength of the Local General
Partners.

INCOME TAXES

No provision for income taxes has been recorded in the financial statements as
any liabilities and/or benefits from income taxes flow to the partners of the
Partnership and are their obligations and/or benefits. For income tax purposes,
the Partnership reports on a calendar year basis.

In June 2006, the FASB issued Interpretation No. 48 "Accounting for Uncertainty
in Income Taxes" (FIN 48), an interpretation of FASB Statement No. 109. FIN 48
provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Partnership's tax returns to determine whether the tax positions
are more-likely-than-not of being sustained upon examination by the applicable
tax authority, based on the technical merits of the tax position, and then
recognizing the tax benefit that is more-likely-than-not to be realized. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax expense in the current reporting period. As required, the
Partnership adopted FIN 48 effective April 1, 2007 and concluded that the effect
is not material to its financial statements. Accordingly, no cumulative effect
adjustment related to the adoption of FIN 48 was recorded.

Impact of New Accounting Pronouncements
---------------------------------------

In September 2006, the FASB issued SFAS No. 157 ("SFAS 157"), Fair Value
Measurements, which provides enhanced guidance for using fair value to measure
assets and liabilities. SFAS 157 also requires expanded information about the
extent to which the Partnership measures assets and liabilities at fair value,
the information used to measure fair value, and the effect of fair value
measurements on earnings. The standard applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value. The standard
does not expand the use of fair value in any new circumstances. In 2008, the
FASB issued FASB Staff Position 157-2 ("FAS FSP 157-2"), Effective Date of FASB
Statement No. 157, which delays the effective date of SFAS 157 for nonfinancial
assets and nonfinancial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. The Partnership does not anticipate either of
these pronouncements will have a material impact on the Partnership's financial
statements.

In February 2007, the FASB issued SFAS No. 159 ("SFAS 159"), The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115. SFAS 159 permits the choice of measuring financial
instruments and certain other items at fair value. SFAS 159 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The Partnership does not anticipate that this pronouncement will have a material
impact on the Partnership's financial statements.

                                       22
<PAGE>

In December 2007, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 141(R) ("SFAS 141R"), which amends SFAS No. 141, and provides
revised guidance for recognizing and measuring identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree.
SFAS 141R is effective for fiscal years beginning after December 15, 2008 and is
to be applied prospectively. SFAS 141R also requires changes to the accounting
for transaction costs, certain contingent assets and liabilities, and other
balances in a business combination. In addition, in partial acquisitions, when
control is obtained, the acquiring company must measure and record all of the
target's assets and liabilities, including goodwill, at fair value as if the
entire target company had been acquired. It also provides disclosure
requirements to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. The Partnership is currently
evaluating the impacts and disclosures of this pronouncement, but would not
expect SFAS 141R to have a material impact on the Partnership's financial
statements.

On December 4, 2007, the FASB issued SFAS No. 160 ("SFAS 160"), Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS
160 replaces the concept of minority interest with noncontrolling interests in
subsidiaries. Noncontrolling interests will now be reported as a component of
equity in the consolidated statement of financial position. Earnings
attributable to noncontrolling interests will continue to be reported as part of
consolidated earnings; however, SFAS 160 requires that income attributable to
both controlling and noncontrolling interests be presented separately on the
face of the consolidated income statement. In addition, SFAS 160 provides that
when losses attributable to noncontrolling interests exceed the noncontrolling
interest's basis, losses continue to be attributed to the noncontrolling
interest as opposed to being absorbed by the consolidating entity. SFAS 160
required retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements of SFAS 160 shall be
applied prospectively. SAS 160 is effective for the first annual reporting
period beginning on or after December 15, 2008. The Partnership does not expect
SFAS 160 to have a material impact on the Partnership's financial statements.

In November 2008 the FASB ratified EITF No. 08-6, Equity Method Investment
Accounting Considerations, which clarifies the accounting for how to account for
certain transactions and impairment considerations involving equity method
investments. This Issue shall be effective in fiscal years beginning on or after
December 15, 2008, and interim periods within those fiscal years. This Issue
shall be applied prospectively. Earlier application by an entity that has
previously adopted an alternative accounting policy is not permitted. The
transition disclosures in paragraphs 17 and 18 of Statement 154 shall be
provided, if applicable. The Partnership does not expect this pronouncement to
have a material impact on the Partnership's financial statements.

In December 2008, the FASB issue FASB Staff Position No. FAS 140-4 and
FIN46(R)-8 (the "FSP"), Disclosures by Public Entities (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest Entities. It
amends SFAS 140 to require public entities to provide additional disclosures
about transferors' continuing involvements with transferred financial assets.
The FSP is effective for public companies in their first reporting period
(interim or annual) that ends after December 15, 2008. The FSP also amends
FIN46R to require public enterprises, including sponsors that have a variable
interest in a variable interest entity, to provide additional disclosures about
their involvement with variable interest entities. The FSP also requires
disclosures by a public enterprise that is (a) a sponsor of a qualifying
special-purpose entity (SPE) that holds a variable interest in the qualifying
SPE but was not the transferor of financial assets to the qualifying SPE and (b)
a servicer of a qualifying SPE that holds a significant variable interest in the
qualifying SPE but was not the transferor of financial assets to the qualifying
SPE. The Partnership does not expect the FSP to have a material impact on the
Partnership's financial statements.

CERTAIN RISKS AND UNCERTAINTIES

See Item 1A for a discussion of risks regarding the Partnership.

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

                                       23
<PAGE>

To date, certain Local Limited Partnerships have incurred significant operating
losses and have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners 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
lost, and the loss and recapture of the related Low Income Housing Tax Credits
could occur.

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

FINANCIAL CONDITION

The Partnership's assets at March 31, 2009 consisted of $235,000 in cash.
Liabilities at March 31, 2009 consisted of $1,943,000 of accrued asset
management fees and $3,000 in advances payable due to the General Partner. (See
"Future Contractual Cash Obligations' below).

RESULTS OF OPERATIONS

YEAR ENDED MARCH 31, 2009 COMPARED TO YEAR ENDED MARCH 31, 2008 The
Partnership's net loss for the year ended March 31, 2009 was $(1,839,000),
reflecting an increase of $(1,599,000) from the net loss of $(240,000)
experienced for the year ended March 31, 2008. The primary factor contributing
to the increase in net loss was the $(1,514,000) impairment loss recorded for
the year ended March 31, 2009 compared to no impairment loss recorded for the
year ended March 31, 2008. The significant increase is due to a change in the
impairment analysis in the current year. For the year ended March 31, 2008 the
impairment analysis calculated any residual value to the Partnership in addition
to the remaining Low Income Housing Tax Credits available to the Partnership and
compared that to the current carrying value of each investment to the
Partnership. For the year ended March 31, 2009 all Local Limited Partnerships
were not considered to have any residual value in consideration of the current
economic conditions. During the year ended March 31, 2009 the Partnership
experienced a $40,000 gain on the sale of three Local Limited Partnerships
compared to no gains for the year ended March 31, 2008. The gain recorded by the
Partnership can vary depending on the sales prices and values of the Housing
Complexes that are being sold. The reporting fees decreased by $(8,000) due to
the fact that Local Limited Partnerships pay the reporting fees to the
Partnership when the Local Limited Partnership's cash flow will allow for the
payment. The legal and accounting expenses decreased by $28,000, due to the
timing of the accounting and legal work being performed. The equity in losses of
Local Limited Partnerships increased by $(145,000) from $(34,000) for the year
ended March 31, 2008 to $(179,000) for the year ended March 31, 2009. The
increase was largely due to the $120,000 write off of acquisition costs and fees
associated with the Local Limited Partnership whose investment balance was
reduced to zero in the current year. The annual asset management fees decreased
by $3,000 due to the fact that the fees are calculated based on the value of the
invested assets, which decreased due to the sale of two Local Limited
Partnerships in the current year.

YEAR ENDED MARCH 31, 2008 COMPARED TO YEAR ENDED MARCH 31, 2007 The
Partnership's net loss for the year ended March 31, 2008 was $(240,000),
reflecting an increase of $(3,000) from the net loss of $(237,000) experienced
for the year ended March 31, 2007. The increase in net loss was due to an
increase of legal and accounting expenses of $(24,000) due to the timing of the
accounting work being performed. The increase in legal and accounting was offset
by an increase of $16,000 in distribution income along with a $3,000 increase in
reporting fees due to the fact that Local Limited Partnerships pay the reporting
fee and distribution income to the Partnership when the Local Limited
Partnership's cash flow will allow for the payment. Additionally, there was a
decrease of $2,000 in other operating expenses.

                                       24
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

YEAR ENDED MARCH 31, 2009 COMPARED TO YEAR ENDED MARCH 31, 2008 The net increase
in cash during the year ended March 31, 2009 was $6,000 compared to a net
decrease in cash for the year ended March 31, 2008 of $(10,000). The net
increase in the change in cash of $16,000 was due to an increase of $40,000 in
proceeds from the sale of Local Limited Partnerships during the year ended March
31, 2009 compared to no proceeds received during the year ended March 31, 2008.
There were no investments in Local Limited Partnerships sold during the year
ended March 31, 2008. The Partnership also received $40,000 in distributions
from Local Limited Partnerships compared to $32,000 for the year ended March 31,
2008. Distributions received from Local Limited Partnerships vary due to the
fact that Local Limited Partnerships pay distributions to the Partnership when
the Local Limited Partnership's cash flow will allow for the payment. The
Partnership paid the General Partner or an affiliate $(41,000) for
reimbursements of operating expenses that were paid on the Partnership's behalf
compared to only $(19,000) paid during the year ended March 31, 2008. Lastly,
the Partnership received $8,000 less in reporting fees for the year ended March
31, 2009 as reporting fees are paid to the Partnership when the Local Limited
Partnership has the allowable cash flow for the payments to be made.

YEAR ENDED MARCH 31, 2008 COMPARED TO YEAR ENDED MARCH 31, 2007 The net decrease
in cash during the year ended March 31, 2008 was $(10,000) compared to net
decrease in cash for the year ended March 31, 2007 of $(15,000). The net cash
increase of $5,000 was due to an increase of $8,000 in accrued fees and expenses
due to the General Partner and affiliates offset by a $3,000 increase in
reporting fees paid to the Partnership.

Accrued payables, which consist primarily of related party management fees due
to the General Partner, increased by approximately $104,000, $155,000 and
$147,000 for the years ended March 31, 2009, 2008 and 2007, respectively. The
General Partner does not anticipate that these accrued fees will be paid until
such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.

The Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances sufficient
enough to fund the operations and working capital requirements of the
Partnership through October 31, 2010.


Future Contractual Cash Obligations

The following table summarizes the Partnership's future contractual cash
obligations as of March 31, 2009:

<TABLE>
                                     2010         2011       2012       2013        2014     THEREAFTER        TOTAL
                                   ----------   ---------  ---------  ----------  ---------  ------------    ----------
<S>                              <C>          <C>        <C>        <C>         <C>        <C>             <C>
Asset management fees (1)        $ 2,104,433  $  161,339 $  161,339 $   161,339 $  161,339 $   5,808,204   $ 8,557,993
                                 -----------  ---------- ---------- ----------- ---------- -------------   -----------
Total contractual cash
   obligations                   $ 2,104,433  $  161,339 $  161,339 $   161,339 $  161,339 $   5,808,204   $ 8,557,993
                                 ===========  ========== ========== =========== ========== =============   ===========
</TABLE>

(1)  Asset management fees are payable annually until termination of the
     Partnership, which is to occur no later than 2050. The estimate of the fees
     payable included herein assumes the retention of the Partnership's interest
     in all Housing Complexes until 2050. Amounts due to the General Partner as
     of March 31, 2009 have been included in the 2010 column. The General
     Partner does not anticipate that these fees will be paid until such time as
     capital reserves are in excess of the aggregate of the existing contractual
     obligations and the anticipated future foreseeable obligations of the
     Partnership.

For additional information regarding asset management fees, see Note 3 to the
financial statements included elsewhere herein.

                                       25
<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

The Partnerships has no off-balance sheet arrangements.

EXIT STRATEGY

See Item 1 for information in this regard.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

See footnote 1 to the financial statements.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NOT APPLICABLE

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                                       26
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

     We have audited the accompanying  balance sheets of WNC California  Housing
Tax Credits III, L.P. (a California Limited Partnership) (the Partnership) as of
March 31, 2009 and 2008,  and the related  statements of  operations,  partners'
equity  (deficit) and cash flows for each of the years in the three-year  period
ended March 31, 2009.  The  Partnership's  management is  responsible  for these
financial  statements.  Our  responsibility  is to  express  an opinion on these
financial  statements  based  on our  audits.  We did not  audit  the  financial
statements of certain local limited partnerships which investments  represent $0
and  $1,612,697 of the total  Partnership  assets as of March 31, 2009 and 2008,
respectively,  and $(85,720), $(34,537) and $0 of the total Partnership loss for
the years ended March 31, 2009, 2008 and 2007,  respectively.  Those  statements
were audited by other auditors, whose reports have been furnished to us, and our
opinion,  insofar as it relates to those local  limited  partnerships,  is based
solely on the reports of the other auditors.

     We  conducted  our audits in  accordance  with the  standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements are free of material  misstatement.  The Partnership it is
not required to have,  nor were we engaged to perform,  an audit of its internal
control over financial reporting.  Our audit included  consideration of internal
control over financial  reporting as a basis for designing audit procedures that
are appropriate in the  circumstances,  but not for the purpose of expressing an
opinion  on  the  effectiveness  of  the  Partnership's  internal  control  over
financial reporting.  Accordingly, we express no such opinion. An audit includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   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  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, 2009 and 2008, and the results
of its  operations  and its cash  flows for each of the years in the  three-year
period ended March 31, 2009, in conformity with accounting  principles generally
accepted in the United States of America.



<PAGE>



     Our  audits  were  conducted  for the  purpose of forming an opinion on the
basic financial  statements  taken as a whole.  The schedules  listed under Item
15(a)(2) in the index  related to years above are  presented  for the purpose of
complying with the Securities and Exchange  Commission's  rules and are not part
of the basic  financial  statements.  These schedules have been subjected to the
auditing procedures applied to the audits of the basic financial statements and,
in our opinion,  fairly state in all material  respects the financial  statement
data  required  to be set forth  therein  in  relation  to the  basic  financial
statements taken as a whole.




/s/ Reznick Group, P.C.
-----------------------

Bethesda, Maryland
October 9, 2009


<PAGE>


                       PAILET, MEUNIER AND LEBLANC, L.L.P.
                          Certified Public Accountants

                             Management Consultants


                          INDEPENDENT AUDITOR'S REPORT




To the Partners
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)



         We have audited the accompanying balance sheets of COLONIAL VILLAGE
ROSEVILLE, (A California Limited Partnership), as of December 31, 2008 and 2007,
and the related statements of operations, changes in partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

         We conducted our audits in accordance with the Standards of the Public
Accounting Oversight Board (United States), Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The partnership has
determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
partnership's internal control over financial reporting. Accordingly, we express
no such opinion. 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 provide a reasonable basis for our
opinion. In our 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, 2008 and 2007,
and the results of its operations, changes in partners' capital and cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.


/s/ Pailet, Meunier and LeBlanc, L.L.P.
---------------------------------------
Metairie, Louisiana
August 21, 2009



<PAGE>

                          INDEPENDENT AUDITOR'S REPORT


To the Partners
COLONIAL VILLAGE ROSEVILLE
(A California Limited Partnership)



         We have audited the accompanying balance sheets of COLONIAL VILLAGE
ROSEVILLE, (A California Limited Partnership), as of December 31, 2007 and 2006,
and the related statements of operations, changes in partners' capital and cash
flows for the years then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

         We conducted our audits in accordance with the Standards of the Public
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The partnership has
determined that it is not required to have, nor were we engaged to perform, an
audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
partnership's internal control over financial reporting. Accordingly, we express
no such opinion. 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 provide a reasonable basis for our
opinion.

         In our 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, 2007 and 2006,
and the results of its operations, changes in partners' capital and cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.




/s/ Pailet, Meunier and LeBlanc, L.L.P.
---------------------------------------
Metairie, Louisiana
August 21, 2009



<PAGE>
<TABLE>

                            WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                                 (A CALIFORNIA LIMITED PARTNERSHIP)

                                           BALANCE SHEETS

                                                                                MARCH 31
                                                                      -----------------------------

                                                                         2009               2008
                                                                      -----------       -----------
<S>                                                                   <C>               <C>
ASSETS

Cash                                                                  $   234,631       $   228,980
Investments in Local Limited Partnerships, net
  (Notes 2 and 3)                                                              --         1,740,459
                                                                      -----------       -----------

            Total Assets                                              $   234,631       $ 1,969,439
                                                                      ===========       ===========

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Liabilities:
   Accrued fees and expenses due to General Partner
      and affiliates (Note 3)                                         $ 1,945,760       $ 1,841,301
                                                                      -----------       -----------

Partners' equity (deficit):
   General Partner                                                       (187,243)         (168,850)
   Limited Partners (30,000 Partnership Units authorized; 18,000
      Partnership Units issued and outstanding)                        (1,523,886)          296,988
                                                                      -----------       -----------

       Total partners' equity (deficit)                                (1,711,129)          128,138
                                                                      -----------       -----------

             Total Liabilities and Partners' Equity (Deficit)         $   234,631       $ 1,969,439
                                                                      ===========       ===========

                                See accompanying notes to financial statements

                                                      28
<PAGE>

                                 WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                                      (A CALIFORNIA LIMITED PARTNERSHIP)

                                           STATEMENTS OF OPERATIONS
                               FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


                                                                 FOR THE YEARS ENDED
                                                                       MARCH 31
                                                -----------------------------------------------------
                                                     2009                2008               2007
                                                -------------       -------------       -------------

Reporting fees                                  $          --       $       8,173       $       5,669
Distribution income                                    18,329              18,033               2,484
                                                -------------       -------------       -------------

   Total income                                        18,329              26,206               8,153
                                                -------------       -------------       -------------

Operating expenses:
   Amortization (Notes 2 and 3)                         7,984               8,516               8,516
   Asset management fees (Note 3)                     178,612             181,384             181,384
   Impairment loss (Note 2)                         1,513,635                  --                  --
   Accounting and legal fees                           10,589              38,634              15,083
   Other                                                7,666               3,838               6,253
                                                -------------       -------------       -------------

    Total operating expenses                        1,718,486             232,372             211,236
                                                -------------       -------------       -------------

Loss from operations                               (1,700,157)           (206,166)           (203,083)

Equity in losses of Local Limited
  Partnerships (Note 2)                              (179,270)            (34,537)            (34,921)

Gain on sale of Local Limited Partnerships             40,001                  --                  --

Interest income                                           159                 403               1,142
                                                -------------       -------------       -------------

Net loss                                        $  (1,839,267)      $    (240,300)      $    (236,862)
                                                =============       =============       =============

Net loss allocated to:
   General Partner                              $     (18,393)      $      (2,403)      $      (2,369)
                                                =============       =============       =============

   Limited Partners                             $  (1,820,874)      $    (237,897)      $    (234,493)
                                                =============       =============       =============

Net loss per Partnership Unit                   $     (101.16)      $      (13.22)      $      (13.03)
                                                =============       =============       =============

Outstanding weighted Partnership Units                 18,000              18,000              18,000
                                                =============       =============       =============

                                See accompanying notes to financial statements

                                                      29
<PAGE>

                                 WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                                      (A CALIFORNIA LIMITED PARTNERSHIP)

                                    STATEMENTS OF PARTNERS EQUITY (DEFICIT)
                               FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


                                                    GENERAL          LIMITED
                                                    PARTNER          PARTNERS            TOTAL
                                                  -----------       -----------       -----------

Partners' equity (deficit) at March 31, 2006      $  (164,078)      $   769,378       $   605,300

Net loss                                               (2,369)         (234,493)         (236,862)
                                                  -----------       -----------       -----------

Partners' equity (deficit) at March 31, 2007         (166,447)          534,885           368,438

Net loss                                               (2,403)         (237,897)         (240,300)
                                                  -----------       -----------       -----------

Partners' equity (deficit) at March 31, 2008         (168,850)          296,988           128,138

Net loss                                              (18,393)       (1,820,874)       (1,839,267)
                                                  -----------       -----------       -----------

Partners' equity (deficit) at March 31, 2009      $  (187,243)      $(1,523,886)      $(1,711,129)
                                                  ===========       ===========       ===========



                                See accompanying notes to financial statements

                                                      30
<PAGE>

                                 WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                                      (A CALIFORNIA LIMITED PARTNERSHIP)

                                           STATEMENTS OF CASH FLOWS

                               FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


                                                                    FOR THE YEARS ENDED
                                                                         MARCH 31
                                                     -----------------------------------------------
                                                        2009               2008             2007
                                                     -----------       -----------       -----------
Cash flows from operating activities:
   Net loss                                          $(1,839,267)      $  (240,300)      $  (236,862)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     Amortization                                          7,984             8,516             8,516
     Equity in losses of Local Limited
       Partnerships                                      179,270            34,537            34,921
     Impairment loss                                   1,513,635                --                --
     Change in accrued fees and expenses due
       to General Partner and affiliates                 104,459           155,023           146,639
     Gain on sale of Local Limited Partnerships          (40,001)               --                --
                                                     -----------       -----------       -----------

Net cash used in operating activities                    (73,920)          (42,224)          (46,786)

Cash flows from investing activities:
   Distributions from Local Limited
      Partnerships                                        39,570            32,040            32,040
   Proceeds from sale of Local Limited
      Partnerships                                        40,001                --                --
                                                     -----------       -----------       -----------

Net cash provided by investing activities                 79,571            32,040            32,040
                                                     -----------       -----------       -----------

Net increase (decrease) in cash                            5,651           (10,184)          (14,746)

Cash, beginning of year                                  228,980           239,164           253,910
                                                     -----------       -----------       -----------

Cash, end of year                                    $   234,631       $   228,980       $   239,164
                                                     ===========       ===========       ===========

SUPPLEMENTAL DISCLOSURE
  OF CASH FLOW INFORMATION:

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


                                See accompanying notes to financial statements

                                                      31
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                          NOTES TO FINANCIAL STATEMENTS

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

Organization
------------

WNC California Housing Tax Credits III, L.P. (the "Partnership") is a California
Limited Partnership formed under the laws of the State of California on October
5, 1992 and began operations on July 19, 1993. The Partnership was formed to
acquire limited partnership interests in other limited partnerships ("Local
Limited Partnerships") which own multi-family housing complexes ("Housing
Complexes") that are eligible for Federal low income housing tax credits ("Low
Income Housing Tax Credits"). The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complexes. Each Local Limited
Partnership is governed by its agreement of limited partnership (the "Local
Limited Partnership Agreement").

The general partner of the Partnership is WNC Tax Credit Partners III, L.P. (the
"General Partner"). WNC & Associates, Inc. ("Associates") is the general partner
of WNC Tax Credit Partners III, L.P. The chairman and president of Associates
owns all of the outstanding stock of Associates. The business of the Partnership
is conducted primarily through Associates, as the Partnership has no employees
of its own.

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

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.

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 ("Partnership Units") at a price of
$1,000 per Partnership Unit. As of the close of the public offering on July 22,
1994, a total of 17,990 Partnership Units representing $17,990,000 had been
sold. During 1995, an additional 10 Partnership 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, in cash available for distribution from the Partnership and
Low Income Housing Tax Credits of the Partnership. The investors in the
Partnership ("Limited Partners") will be allocated the remaining 99% of these
items in proportion to their respective investments.

The proceeds from the disposition of any of the Local Limited Partnership
properties will be used first to pay debts and other obligations per the
respective Local Limited Partnership Agreement. Any remaining proceeds will then
be paid to the Partnership. The sale of a Housing Complex may be subject to
other restrictions and obligations. Accordingly, there can be no assurance that
a Local Limited Partnership will be able to sell its Housing Complex. Even if it
does so, there can be no assurance that any significant amounts of cash will be
distributed to the Partnership. Should such distributions occur, the Limited
Partners will be entitled to receive distributions equal to their capital
contributions and their return on investment (as defined in the Partnership
Agreement) and the General Partners would then be entitled to receive proceeds
equal to their capital contributions 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.

                                       32
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

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

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

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

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

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

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

                                       33
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

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

The Partnership currently has insufficient working capital to fund its
operations. Associates has agreed to continue providing advances sufficient
enough to fund the operations and working capital requirements of the
Partnership through October 31, 2010.

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

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

The Compliance Period for a Housing Complex is generally 15 years following
construction or rehabilitation completion. Associates was one of the first in
the industry to offer syndicated investments in Low Income Housing Tax Credits.
The initial programs are completing their Compliance Periods.

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

Upon identifying those Housing Complexes with the highest potential for a
successful sale, refinancing or syndication, the Partnership expects to proceed
with efforts to liquidate them. The objective is to maximize the Limited
Partners' return wherever possible and, ultimately, to wind down the
Partnership. Local Limited Partnership interests may be disposed of any time by
the General Partner in its discretion. While liquidation of the Housing
Complexes continues to be evaluated, the dissolution of the Partnership was not
imminent as of March 31, 2009. As of March 31, 2009, twelve Local Limited
Partnerships had completed the 15 year compliance period.

During the year ended March 31, 2009, the Partnership sold its Limited
Partnership interest in Rosewood Apartments L.P. ("Rosewood"), Venus Retirement
Village, Ltd ("Venus") and Winters Investment Group ("Winters"). The Partnership
received $1, $15,000 and $25,000 for its Limited Partnership interest in the
respective Local Limited Partnerships. Rosewood had an appraised value of
$70,000 and the outstanding mortgage balance was approximately $398,000
therefore it was to the best interest of the Partnership to sell its Limited
Partnership interest to the Local General Partner. Venus and Winters were
similar situations with Venus appraising at $170,000 with an outstanding
mortgage balance of $700,000 and Winters appraised at $1,460,000 with an
outstanding mortgage balance of $1,765,000. The Partnership collected $40,001 in
total for the sell of the three Limited Partnership interests and those funds
are being kept in the Partnerships reserves to pay for future operating expenses
and accrued asset management fees.

                                       34
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

Method of Accounting For Investments in Local Limited Partnerships
------------------------------------------------------------------

The Partnership accounts for its investments in Local Limited Partnerships using
the equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnerships' results of operations
and for any contributions made and distributions received. The Partnership
reviews the carrying amount of an individual investment in a Local Limited
Partnership for possible impairment whenever events or changes in circumstances
indicate that the carrying amount of such investment may not be recoverable.
Recoverability of such investment is measured by the estimated value derived by
management, generally consisting of the sum of the remaining future Low Income
Housing Tax Credits estimated to be allocated to the Partnership and the
estimated residual value to the Partnership. If an investment is considered to
be impaired, the Partnership reduces the carrying value of its investment in any
such Local Limited Partnership. The accounting policies of the Local Limited
Partnerships, generally, are expected to be consistent with those of the
Partnership. Costs incurred by the Partnership in acquiring the investments are
capitalized as part of the investment and are being amortized over 30 years.
(See Notes 2 and 3)

"Equity in losses of Local Limited Partnerships" for each year ended March 31
have been recorded by the Partnership based on nine months of reported results
provided by the Local Limited Partnerships for each year ended December 31 and
on three months of results, estimated by management of the Partnership.
Management's estimate for the three-month period is based on either actual
unaudited results reported by the Local Limited Partnerships or historical
trends in the operations of the Local Limited Partnerships. In subsequent annual
financial statements, upon receiving the actual annual results reported by the
Local Limited Partnerships, management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships. Equity in losses
of Local Limited Partnerships allocated to the Partnership are not recognized to
the extent that the investment balance would be adjusted below zero. As soon as
the investment balance reaches zero, the related costs of acquiring the
investment are impaired (see Note 3). If the Local Limited Partnerships reported
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.

The Partnership does not consolidate the accounts and activities of the Local
Limited Partnerships which are considered Variable Interest Entities under
Financial Accounting Standards Board ("FASB") Interpretation No. 46-Revised,
"Consolidation of Variable Interest Entities", because the Partnership is not
considered the primary beneficiary. The Partnership's balance in Investments in
Local Limited Partnerships, plus the risk of recapture of Low Income Housing Tax
Credits previously recognized on such investments, represents the maximum
exposure to loss in connection with such investments. The Partnership's exposure
to loss on the Local Limited Partnerships is mitigated by the condition and
financial performance of the underlying Housing Complexes as well as the
strength of the Local General Partners and their guarantees against Low Income
Housing Tax Credit recapture.

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

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

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

                                       35
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

Cash and Cash Equivalents
-------------------------

The Partnership considers all highly liquid investments with original maturities
of three months or less when purchased to be cash equivalents. As of March 31,
2009 and 2008, the Partnership had no cash equivalents.

Reporting Comprehensive Income
------------------------------

The STATEMENT OF FINANCIAL ACCOUNTING STANDARDS ("SFAS") NO. 130, REPORTING
COMPREHENSIVE INCOME established standards for the reporting and display of
comprehensive income (loss) and its components in a full set of general-purpose
financial statements. The Partnership had no items of other comprehensive income
for all periods presented, as defined by SFAS No. 130.

Net Loss Per Partnership Unit
-----------------------------

Net loss per Partnership Unit is calculated pursuant to STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS NO. 128, EARNINGS PER SHARE. Net loss per Partnership Unit
includes no dilution and is computed by dividing loss available to Limited
Partners by the weighted average number of Partnership Units outstanding during
the period. Calculation of diluted net loss per Partnership Unit is not
required.

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

No provision for income taxes has been recorded in the accompanying financial
statements as any liabilities and/or benefits for income taxes flow to the
partners of the Partnership and are their obligations and/or benefits. For
income tax purposes, the Partnership reports on a calendar year basis.

In June 2006, the FASB issued Interpretation No. 48 "Accounting for Uncertainty
in Income Taxes" (FIN 48), an interpretation of FASB Statement No. 109. FIN 48
provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Partnership's tax returns to determine whether the tax positions
are more-likely-than-not of being sustained upon examination by the applicable
tax authority, based on the technical merits of the tax position, and then
recognizing the tax benefit that is more-likely-than-not to be realized. Tax
positions not deemed to meet the more-likely-than-not threshold would be
recorded as a tax expense in the current reporting period. As required, the
Partnership adopted FIN 48 effective April 1, 2007 and concluded that the effect
is not material to its financial statements. Accordingly, no cumulative effect
adjustment related to the adoption of FIN 48 was recorded.

Impact of New Accounting Pronouncements
---------------------------------------

In September 2006, the FASB issued SFAS No. 157 ("SFAS 157"), Fair Value
Measurements, which provides enhanced guidance for using fair value to measure
assets and liabilities. SFAS 157 also requires expanded information about the
extent to which the Partnership measures assets and liabilities at fair value,
the information used to measure fair value, and the effect of fair value
measurements on earnings. The standard applies whenever other standards require
(or permit) assets or liabilities to be measured at fair value. The standard
does not expand the use of fair value in any new circumstances. In 2008, the

                                       36
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

FASB issued FASB Staff Position 157-2 ("FAS FSP 157-2"), Effective Date of FASB
Statement No. 157, which delays the effective date of SFAS 157 for nonfinancial
assets and nonfinancial liabilities, except for items that are recognized or
disclosed at fair value in the financial statements on a recurring basis (at
least annually), to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years. The Partnership does not anticipate either of
these pronouncements will have a material impact on the Partnership's financial
statements.

In February 2007, the FASB issued SFAS No. 159 ("SFAS 159"), The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115. SFAS 159 permits the choice of measuring financial
instruments and certain other items at fair value. SFAS 159 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
The Partnership does not anticipate that this pronouncement will have a material
impact on the Partnership's financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 141(R) ("SFAS 141R"), which amends SFAS No. 141, and provides
revised guidance for recognizing and measuring identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree.
SFAS 141R is effective for fiscal years beginning after December 15, 2008 and is
to be applied prospectively. SFAS 141R also requires changes to the accounting
for transaction costs, certain contingent assets and liabilities, and other
balances in a business combination. In addition, in partial acquisitions, when
control is obtained, the acquiring company must measure and record all of the
target's assets and liabilities, including goodwill, at fair value as if the
entire target company had been acquired. It also provides disclosure
requirements to enable users of the financial statements to evaluate the nature
and financial effects of the business combination. The Partnership is currently
evaluating the impacts and disclosures of this pronouncement, but would not
expect SFAS 141R to have a material impact on the Partnership's financial
statements.

On December 4, 2007, the FASB issued SFAS No. 160 ("SFAS 160"), Noncontrolling
Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS
160 replaces the concept of minority interest with noncontrolling interests in
subsidiaries. Noncontrolling interests will now be reported as a component of
equity in the consolidated statement of financial position. Earnings
attributable to noncontrolling interests will continue to be reported as part of
consolidated earnings; however, SFAS 160 requires that income attributable to
both controlling and noncontrolling interests be presented separately on the
face of the consolidated income statement. In addition, SFAS 160 provides that
when losses attributable to noncontrolling interests exceed the noncontrolling
interest's basis, losses continue to be attributed to the noncontrolling
interest as opposed to being absorbed by the consolidating entity. SFAS 160
required retroactive adoption of the presentation and disclosure requirements
for existing minority interests. All other requirements of SFAS 160 shall be
applied prospectively. SAS 160 is effective for the first annual reporting
period beginning on or after December 15, 2008. The Partnership does not expect
SFAS 160 to have a material impact on the Partnership's financial statements.

In November 2008 the FASB ratified EITF No. 08-6, Equity Method Investment
Accounting Considerations, which clarifies the accounting for how to account for
certain transactions and impairment considerations involving equity method
investments. This Issue shall be effective in fiscal years beginning on or after
December 15, 2008, and interim periods within those fiscal years. This Issue
shall be applied prospectively. Earlier application by an entity that has
previously adopted an alternative accounting policy is not permitted. The
transition disclosures in paragraphs 17 and 18 of Statement 154 shall be
provided, if applicable. The Partnership does not expect this pronouncement to
have a material impact on the Partnership's financial statements.

                                       37
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

In December 2008, the FASB issue FASB Staff Position No. FAS 140-4 and
FIN46(R)-8 (the "FSP"), Disclosures by Public Entities (Enterprises) about
Transfers of Financial Assets and Interests in Variable Interest Entities. It
amends SFAS 140 to require public entities to provide additional disclosures
about transferors' continuing involvements with transferred financial assets.
The FSP is effective for public companies in their first reporting period
(interim or annual) that ends after December 15, 2008. The FSP also amends
FIN46R to require public enterprises, including sponsors that have a variable
interest in a variable interest entity, to provide additional disclosures about
their involvement with variable interest entities. The FSP also requires
disclosures by a public enterprise that is (a) a sponsor of a qualifying
special-purpose entity (SPE) that holds a variable interest in the qualifying
SPE but was not the transferor of financial assets to the qualifying SPE and (b)
a servicer of a qualifying SPE that holds a significant variable interest in the
qualifying SPE but was not the transferor of financial assets to the qualifying
SPE. The Partnership does not expect the FSP to have a material impact on the
Partnership's financial statements.

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

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

Amortization
------------

Acquisition fees and costs were being amortized over 30 years using the
straight-line method. Amortization expense for the years ended March 31, 2009,
2008 and 2007 was $7,984, $8,516 and $8,516, respectively.

Impairment
----------

A loss in value of an investment in a Local Limited Partnership other than a
temporary decline is recorded as an impairment loss. Impairment is measured by
comparing the investment's carrying amount to the sum of the total amount of the
remaining future Low Income Housing Tax Credits estimated to be allocated to the
Partnership and the estimated residual value to the Partnership. For the years
ended March 31, 2009, 2008 and 2007 impairment expense related to investments in
Local Limited Partnerships was $1,513,635, $0 and $0, respectively.

When the value of the Partnership's investment in a Local Limited Partnership
has been reduced to zero, the respective net acquisition fees and costs
component of investments in Local Limited Partnerships are impaired. For the
years ended March 31, 2009, 2008 and 2007, impairment expense related to
acquisition fees and costs was $119,775, $0, and $0, respectively.

NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
--------------------------------------------------

As of the March 31, 2009 and 2008, the Partnership owns Local Limited
Partnership interests in 15 and 18 Local Limited Partnerships, respectively,
each of which owns one Housing Complex consisting of an aggregate of 552 and 634
apartment units, respectively. The respective Local General Partners of the
Local Limited Partnerships manage the day to day operations of the entities.
Significant Local Limited Partnership business decisions require 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 Low Income Housing Tax
Credits of the Local Limited Partnerships.

                                       38
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------

The Partnership's investments in Local Limited Partnerships as shown in the
balance sheets at March 31, 2009 and 2008, are approximately $576,000 less than
and $1,378,000 greater than, respectively, 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, and acquisition, selection and other costs
related to the acquisition of the investments which have been capitalized in the
Partnership's investment account along with impairment losses recorded in the
Partnership's investment account.

At March 31, 2009, the investment accounts in all the Local Limited Partnerships
have reached a zero balance, and at March 31, 2008 the investment accounts in
certain Local Limited Partnerships had reached a zero balance. Consequently, a
portion of the Partnership's estimate of its share of losses for the years ended
March 31, 2009, 2008 and 2007, amounting to approximately $699,000, $707,000 and
$642,000, respectively, have not been recognized. As of March 31, 2009, the
aggregate share of net losses not recognized by the Partnership amounted to
$3,960,000.

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

<TABLE>
                                                                             FOR THE YEARS
                                                                            ENDED MARCH 31,
                                                            -----------------------------------------------

                                                                2009              2008              2007
                                                            -----------       -----------       -----------
<S>                                                         <C>               <C>               <C>
Investments per balance sheet, beginning of period          $ 1,740,459       $ 1,815,552       $ 1,891,029
Distributions received from Local Limited Partnerships          (39,570)          (32,040)          (32,040)
Equity in losses of Local Limited Partnerships                 (179,270)          (34,537)          (34,921)
Impairment loss                                              (1,513,635)               --                --
Amortization of paid acquisition fees and costs                  (7,984)           (8,516)           (8,516)
                                                            -----------       -----------       -----------

Investments per balance sheet, end of period                $        --       $ 1,740,459       $ 1,815,552
                                                            ===========       ===========       ===========


                                                                             FOR THE YEARS
                                                                            ENDED MARCH 31,
                                                           -----------------------------------------------

                                                                2009              2008             2007
                                                           ------------       ----------        ----------

Investments in Local Limited Partnerships, net             $         --       $1,612,697        $1,679,274
Acquisition fees and costs, net of accumulated
amortization of $1,814,019, $1,686,257 and $1,677,741                --          127,762           136,278
                                                           ------------       ----------        ----------
Investments per balance sheet, end of period               $         --       $1,740,459        $1,815,552
                                                           ============       ==========        ==========


                                       39
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------

The financial information from the individual financial statements of the Local
Limited Partnerships includes 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

                                                                                     2008               2007
                                                                                 ------------       ------------
ASSETS

  BUILDINGS AND IMPROVEMENTS, NET OF ACCUMULATED DEPRECIATION AS OF
   DECEMBER 31, 2008 AND 2007 OF $16,221,000 AND $15,387,000 ,RESPECTIVELY.      $ 19,726,000       $ 21,088,000
  LAND                                                                              2,234,000          2,234,000
  OTHER ASSETS                                                                      3,256,000          3,404,000
                                                                                 ------------       ------------

    TOTAL ASSETS                                                                 $ 25,216,000       $ 26,726,000
                                                                                 ============       ============

LIABILITIES

MORTGAGE LOANS PAYABLE                                                           $ 21,633,000       $ 22,930,000
DUE TO RELATED PARTIES                                                              1,413,000            738,000
OTHER LIABILITIES                                                                   2,651,000          2,478,000
                                                                                 ------------       ------------

    TOTAL LIABILITIES                                                              25,697,000         26,146,000
                                                                                 ------------       ------------

PARTNERS' EQUITY (DEFICIT)

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.                                         (576,000)           362,000
OTHER PARTNERS                                                                         95,000            218,000
                                                                                 ------------       ------------

    TOTAL PARTNERS' EQUITY (DEFICIT)                                                 (481,000)           580,000
                                                                                 ------------       ------------

       TOTAL LIABILITIES AND PARTNERS' EQUITY (DEFICIT)                          $ 25,216,000       $ 26,726,000
                                                                                 ============       ============

                                       40
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS, CONTINUED
-------------------------------------------------------------

                        COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                              2008              2007              2006
                                           -----------       -----------       -----------

REVENUES                                   $ 4,001,000       $ 4,042,000       $ 3,838,000
                                           -----------       -----------       -----------

EXPENSES:
   OPERATING EXPENSES                        2,910,000         2,774,000         2,730,000
   INTEREST EXPENSE                            775,000           898,000           783,000
   DEPRECIATION AND AMORTIZATION             1,115,000         1,119,000         1,118,000
                                           -----------       -----------       -----------

         TOTAL EXPENSES                      4,800.000         4,791,000         4,631,000
                                           -----------       -----------       -----------

NET LOSS                                   $  (799,000)      $  (749,000)      $  (793,000)
                                           ===========       ===========       ===========

NET LOSS ALLOCABLE TO THE PARTNERSHIP      $  (790,000)      $  (741,000)      $  (667,000)
                                           ===========       ===========       ===========

NET LOSS RECORDED BY THE PARTNERSHIP       $  (179,000)      $   (35,000)      $   (35,000)
                                           ===========       ===========       ===========
</TABLE>

Certain Local Limited Partnerships have incurred significant operating losses
and/or have working capital deficiencies. In the event these Local Limited
Partnerships continue to incur significant operating losses, additional capital
contributions by the Partnership and/or the Local General Partners may be
required to sustain 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 Low Income Housing Tax Credits could
occur.

NOTE 3 - RELATED PARTY TRANSACTIONS
-----------------------------------

Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partners or their affiliates for the following items:

         Acquisition fees equal to 9% of the gross proceeds from the sale of
         Partnership Units as compensation for services rendered in connection
         with the acquisition of Local Limited Partnerships. At the end of all
         periods presented, the Partnership incurred acquisition fees of
         $1,620,000. Accumulated amortization of these capitalized costs was
         $1,620,000 and $1,492,238 as of March 31, 2009 and 2008, respectively.
         Of the accumulated amortization recorded on the balance sheet at March
         31, 2009, $119,775, $0 and $0 of the related expense was reflected as
         equity in losses of Local Limited Partnerships during the years ended
         March 31, 2009, 2008, and 2007, respectively, to reduce the respective
         net acquisition fee component of investments in Local Limited
         Partnerships to zero for those Local Limited Partnerships which would
         otherwise be below a zero balance.

         Reimbursement of costs incurred by the General Partners or an affiliate
         in connection with the acquisition of the Local Limited Partnerships.
         These reimbursements have not exceeded 1.5% of the gross proceeds. As
         of the end of all periods presented, the Partnership had incurred
         acquisition costs of $194,019 which have been included in investments
         in Local Limited Partnerships. Accumulated amortization was $194,019
         for each of the years ended March 31, 2009 and 2008.

                                       41
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


NOTE 3 - RELATED PARTY TRANSACTIONS, CONTINUED
----------------------------------------------

          An annual asset management fee 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 mortgage loans on and other debts
          related to the Housing Complexes owned by such Local Limited
          Partnerships. Management fees of $178,612, $181,384 and $181,384 were
          incurred during the years ended March 31, 2009, 2008 and 2007,
          respectively, of which $50,000, $50,000 and $34,000 was paid during
          the years ended March 31, 2009, 2008 and 2007, respectively.

         The Partnership reimbursed the General Partner or its affiliates for
          operating expenses incurred by the Partnership and paid for by the
          General Partner or its affiliates on behalf of the Partnership.
          Operating expense reimbursements were approximately $41,000, $19,000
          and $22,000 during the years ended March 31, 2009, 2008 and 2007,
          respectively.

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

                                                             MARCH 31,
                                                     --------------------------

                                                        2009            2008
                                                     ----------      ----------

Expenses paid by the General Partner
   or an affiliate on behalf of the Partnership      $    2,666      $   26,819

Asset management fee payable                          1,943,094       1,814,482
                                                     ----------      ----------

Total                                                $1,945,760      $1,841,301
                                                     ==========      ==========

The General Partner and/or its affiliates do not anticipate that these accrued
fees will be paid until such time as capital reserves are in excess of the
future foreseeable working capital requirements of the Partnership.

                                       42
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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

The following is a summary of the quarterly operations for the years ended
March 31:
<TABLE>
                                         JUNE 30         SEPTEMBER 30       DECEMBER 31       MARCH 31
                                       ------------      ------------      ------------      -----------
<S>                                    <C>               <C>               <C>               <C>
               2009
               ----
Income                                 $     6,000       $     5,000       $         -       $     7,000

Operating expenses                      (1,545,000)          (53,000)          (60,000)          (60,000)

Loss from operations                    (1,539,000)          (48,000)          (60,000)          (53,000)

Equity in losses of Local Limited
     Partnerships                          (14,000)          (15,000)          (15,000)         (135,000)

Gain on sale of Local Limited
     Partnership                                 -                 -                 -             40,000

Net loss                                (1,553,000)          (63,000)          (75,000)         (148,000)

Net loss available to Limited
     Partners                           (1,537,000)          (62,000)          (74,000)         (148,000)

Net loss per Partnership Unit                  (85)               (3)               (4)               (8)



                                         JUNE 30           SEPTEMBER 30       DECEMBER 31        MARCH 31
                                       -----------         ------------       -----------        ---------
               2008
               ----

Income                                 $ 20,000             $  4,000           $     --          $  2,000

Operating expenses                      (48,000)             (61,000)           (50,000)          (73,000)

Loss from operations                    (28,000)             (57,000)           (50,000)          (71,000)

Equity in losses of Local Limited
     Partnerships                        (8,000)              (8,000)            (7,000)          (12,000)

Net loss                                (36,000)             (65,000)           (57,000)          (83,000)

Net loss available to Limited
     Partners                           (35,000)             (64,000)           (56,000)          (83,000)

Net loss per Partnership Unit                (2)                  (4)                (3)               (5)



                                       43
<PAGE>

                  WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
                       (A CALIFORNIA LIMITED PARTNERSHIP)

                    NOTES TO FINANCIAL STATEMENTS -CONTINUED

                FOR THE YEARS ENDED MARCH 31, 2009, 2008 AND 2007


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


                                        JUNE 30      SEPTEMBER 30    DECEMBER 31    MARCH 31
                                       ----------    ------------    -----------    ---------
               2007
               ----
Income                                 $  5,000       $  3,000       $     --       $     --

Operating expenses                      (48,000)       (64,000)       (48,000)       (51,000)

Loss from operations                    (43,000)       (61,000)       (48,000)       (51,000)

Equity in losses of Local Limited
     Partnerships                        (8,000)        (8,000)        (8,000)       (11,000)

Interest income                              --             --             --          1,000

Net loss                                (51,000)       (69,000)       (56,000)       (61,000)

Net loss available to Limited
     Partners                           (50,000)       (68,000)       (55,000)       (61,000)

Net loss per Partnership Unit                (3)            (4)            (3)            (4)
</TABLE>

                                       44
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

NONE

ITEM 9A. CONTROLS AND PROCEDURES

(a)      Disclosure controls and procedures
         ----------------------------------

         As of the end of the period covered by this report, the Partnership's
         General Partner, under the supervision and with the participation of
         the Chief Executive Officer and Chief Financial Officer of Associates,
         carried out an evaluation of the effectiveness of the Partnership's
         "disclosure controls and procedures" as defined in Securities Exchange
         Act of 1934 Rule 13a-15 and 15d-15. Based on that evaluation, the Chief
         Executive Officer and Chief Financial Officer have concluded that, as
         of the end of the period covered by this report, the Partnership's
         disclosure controls and procedures were not effective to ensure that
         material information required to be disclosed in the Partnership's
         periodic report filings with SEC is recorded, processed, summarized and
         reported within the time period specified by the SEC's rules and forms,
         consistent with the definition of "disclosure controls and procedures"
         under the Securities Exchange Act of 1934.

         The Partnership must rely on the Local Limited Partnerships to provide
         the Partnership with certain information necessary to the timely filing
         of the Partnership's periodic reports. Factors in the accounting at the
         Local Limited Partnerships have caused delays in the provision of such
         information during past reporting periods, and resulted in the
         Partnership's inability to file its periodic reports in a timely
         manner.

         Once the Partnership has received the necessary information from the
         Local Limited Partnerships, the Chief Executive Officer and the Chief
         Financial Officer of Associates believe that the material information
         required to be disclosed in the Partnership's periodic report filings
         with SEC is effectively recorded, processed, summarized and reported,
         albeit not in a timely manner. Going forward, the Partnership will use
         the means reasonably within its power to impose procedures designed to
         obtain from the Local Limited Partnerships the information necessary to
         the timely filing of the Partnership's periodic reports.

(b)      Management's annual report on internal control over financial reporting
         -----------------------------------------------------------------------

         The management of Associates is responsible for establishing and
         maintaining for the Partnership adequate internal control over
         financial reporting as that term is defined in Securities Exchange Act
         Rule 13a-15(f), and for performing an assessment of the effectiveness
         of internal control over financial reporting as of March 31, 2009. The
         internal control process of Associates, as it is applicable to the
         Partnership, was designed to provide reasonable assurance to Associates
         regarding the preparation and fair presentation of published financial
         statements, and includes those policies and procedures that:

                  (1)      Pertain to the maintenance of records that in
                           reasonable detail accurately and fairly reflect the
                           transactions and dispositions of the assets of the
                           Partnership;
                  (2)      Provide reasonable assurance that transactions are
                           recorded as necessary to permit preparation of
                           financial statements in accordance with generally
                           accepted accounting principles in the United States,
                           and that the Partnership's receipts and expenditures
                           are being made only in accordance with authorization
                           of the management of Associates; and
                  (3)      Provide reasonable assurance regarding prevention or
                           timely detection of unauthorized acquisition, use or
                           disposition of the Partnership's assets that could
                           have a material effect on the financial statements.

         All internal control processes, no matter how well designed, have
         inherent limitations. Therefore, even those processes determined to be
         effective can provide only reasonable assurance with respect to the
         reliability of financial statement preparation and presentation.
         Further, projections of any evaluation of effectiveness to future
         periods are subject to the risk that controls may become inadequate
         because of changes in conditions or that the degree of compliance with
         the policies or procedures may deteriorate.

                                       45

<PAGE>


         Management of Associates assessed the effectiveness of its internal
         control over financial reporting, as it is applicable to the
         Partnership, as of the end of the Partnership's most recent fiscal
         year. In making this assessment, it used the criteria set forth in
         Internal Control - Integrated Framework issued by the Committee of
         Sponsoring Organizations of the Treadway Commission (COSO). Based on
         its assessment, management of Associates concluded that, for the
         reasons set forth above under "Disclosure controls and procedures", the
         internal control over financial reporting, as it is applicable to the
         Partnership, was not effective as of March 31, 2009. This annual report
         does not include an attestation report of the Partnership's independent
         registered public accounting firm regarding internal control over
         financial reporting. Management's report was not subject to attestation
         by the Partnership's independent registered public accounting firm
         pursuant to temporary rules of the Securities and Exchange Commission
         that permit the Partnership to provide only management's report in this
         annual report.

         For purposes of the Securities Exchange Act of 1934, the term "material
         weakness" is a deficiency, or a combination of deficiencies, in a
         reporting company's internal control over financial reporting such that
         there is a reasonable possibility that a material misstatement of the
         company's annual or interim financial statements will not be prevented
         or detected on a timely basis. For the reasons discussed above in this
         Item 9A, sub-section (a) under the caption "Disclosure Controls and
         Procedures," the Partnership's internal control over financial
         reporting has not been effective in permitting timely reporting of the
         Partnership's financial information. Accordingly, the management of
         Associates believes that this inability to generate timely reports
         constitutes a material weakness in its internal control over financial
         reporting.

(c)      Changes in internal controls
         ----------------------------

         There were no changes in the Partnership's internal control over
         financial reporting that occurred during the quarter ended March 31,
         2009 that materially affected, or are reasonably likely to materially
         affect, the Partnership's internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

NONE

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

Neither the General Partner nor the Partnership has directors, executives
officers or employees of its own. The business of the Partnership is conducted
primarily through Associates. Associates is a California corporation which was
organized in 1971. The following biographical information is presented for the
officers and employees of Associates with principal responsibility for the
Partnership's affairs.

Wilfred N. Cooper, Sr.         Chairman
Wilfred N. Cooper, Jr.         President and Chief Executive Officer
David N. Shafer, Esq.          Executive Vice President
Michael J. Gaber               Executive Vice President
Sylvester P. Garban            Senior Vice President - Institutional Investments
Thomas J. Riha, CPA            Senior Vice President - Asset Management
Thomas J. Hollingsworth        Vice President - Asset Management
Gregory S. Hand                Vice President - Acquisitions
Melanie R. Wenk                Vice President - Chief Financial Officer
Kay L. Cooper                  Director of WNC & Associates, Inc.
Jennifer E. Cooper             Director of WNC & Associates, Inc.

                                       46
<PAGE>

In addition to Wilfred N. Cooper, Sr., the directors of Associates are Wilfred
N. Cooper, Jr., Kay L. Cooper, and Jennifer Cooper. The principal shareholders
of Associates are a trust established by the Coopers.

Wilfred N. Cooper, Sr., age 77, is the founder and Chairman of the Board of
Directors of Associates, a Director of WNC Capital Corporation, and a general
partner in some of the partnerships previously sponsored by Associates Mr.
Cooper has been actively involved in the affordable housing industry since 1968.
Previously, during 1970 and 1971, he was founder and a principal of Creative
Equity Development Corporation, a predecessor of Associates, and of Creative
Equity Corporation, a real estate investment firm. For 12 years before that, Mr.
Cooper was employed by Rockwell International Corporation, last serving as its
manager of housing and urban developments where he had responsibility for
factory-built housing evaluation and project management in urban planning and
development. He has testified before committees of the U.S. Senate and the U.S.
House of Representatives on matters pertaining to the affordable housing
industry. Mr. Cooper is a Life Director of the National Association of Home
Builders, a National Trustee for NAHB's Political Action Committee, and a past
Chairman of NAHB's Multifamily Council. He is a Director of the National Housing
Conference and a member of NHC's Board of Governors, and a founder and Director
of the California Housing Consortium. He is the husband of Kay Cooper and the
father of Wilfred N. Cooper, Jr. Mr. Cooper graduated from Pomona College in
1956 with a Bachelor of Arts degree.

Wilfred N. Cooper, Jr., age 45, is President, Chief Executive Officer,
Secretary, a Director and a member of the Acquisition Committee of Associates.
He is President and a Director of, and a registered principal with, WNC Capital
Corporation, and is a Director and Vice President of WNC Management, Inc. He has
been involved in real estate investment and acquisition activities since 1988
when he joined Associates. Previously, he served as a Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Editorial Advisory Boards of Affordable Housing Finance and LIHTC Monthly
Report, a Steering Member of the Housing Credit Group of the National
Association of Home Builders, a member of the Tax Policy Council for the
National Trust for Historical Preservation, a member of the Advisory Board of
the New York State Association for Affordable Housing, a member of the Urban
Land Institute and a member of TEC International, a global network of business
leaders and chief executives. He is the son of Wilfred Cooper, Sr. and Kay
Cooper. Mr. Cooper graduated from The American University in 1985 with a
Bachelor of Arts degree.

David N. Shafer, age 56, is an Executive Vice President, and a member of the
Acquisition Committee of Associates, and a Director, Vice President and
Secretary of WNC Management, Inc. Mr. Shafer has been active in the real estate
industry since 1984. Before joining Associates in 1990, he was engaged as an
attorney in the private practice of law with a specialty in real estate and
taxation. Mr. Shafer is a Director and past President of the California Council
of Affordable Housing, and a member of the State Bar of California. Mr. Shafer
graduated from the University of California at Santa Barbara in 1978 with a
Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris
Doctor degree cum laude and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.

Michael J. Gaber, age 42, is an Executive Vice President - Oversees the
Originations, Acquisitions and Real Estate Development Department, and is a
member of the Acquisition Committee of Associates and Vice President of WNC
Management, Inc... Mr. Gaber has been involved in real estate acquisition,
valuation and investment activities since 1989 and has been associated with
Associates since 1997. Prior to joining Associates, he was involved in the
valuation and classification of major assets, restructuring of debt and analysis
of real estate taxes with H.F. Ahmanson & Company, parent of Home Savings of
America. Mr. Gaber graduated from the California State University, Fullerton in
1991 with a Bachelor of Science degree in Business Administration - Finance.

Sylvester P. Garban, age 62, is Senior Vice President - Institutional
Investments of Associates and registered principal with WNC Capital Corporation.
Mr. Garban has been involved in real estate investment activities since 1978.
Before joining Associates in 1989, he served as Executive Vice President with
MRW, Inc., a real estate development and management firm. Mr. Garban is a member
of the National Association of Affordable Housing Lenders and the Financial
Planning Association. He graduated from Michigan State University in 1967 with a
Bachelor of Science degree in Business Administration.

                                       47
<PAGE>

Thomas J. Riha, age 54, is Senior Vice President - Asset Management and a member
of the Acquisition Committee and the Commercial Real Estate Group of Associates
and Vice President, Treasurer and a Director of WNC Management, Inc. He has been
involved in real estate acquisition and investment activities since 1979. Before
joining Associates in 1994, Mr. Riha was employed by Trust Realty Advisor, a
real estate acquisition and Management Company, last serving as Vice President -
Operations. He is a founding member of the Housing Credit Certified Professional
Board of Governors, a national professional certification program administered
by the NAHB and the National Affordable Housing Management Association. 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.

Thomas J. Hollingsworth, CPA, age 57, is Vice President - Asset Management of
WNC & Associates, Inc. and oversees WNC's asset management group. Mr.
Hollingsworth has been involved in real estate acquisitions, operations and
syndication of multifamily properties for 25 years. Prior to joining WNC in
2005, he was the senior workout specialist at Key Corporation Housing
Management, Inc., a division of Key Bank. He has also been responsible for
structuring several tax sheltered multifamily acquisitions during his career.
Mr. Hollingsworth graduated from the University of Utah in 1973 with a Bachelor
of Science degree (cum laude) in Business Administration.

Gregory S. Hand, age 44, is Vice President - Acquisitions and a member of the
Commercial Real Estate Group of Associates. He is responsible for the oversight
of property underwriting. Mr. Hand has been involved in real estate analysis,
development and management since 1987. Prior to joining Associates in 1998, he
was a portfolio asset manager with a national tax credit sponsor with
responsibility for the management of $200 million in assets. Prior to that, he
was a finance manager with The Koll Company and a financial analyst with The
Irvine Company. Mr. Hand graduated from Iowa State University in 1987 with a
Bachelor of Business Administration degree in finance.

Melanie R. Wenk, CPA, age 41, is Vice President-Chief Financial Officer of
Associates. She is responsible for overseeing institutional and retail fund
portfolio management, including partnership accounting, SEC reporting, quarterly
and annual investor reporting and monitoring investment returns for all
stabilized WNC institutional funds. Prior to joining Associates in 2003, Ms.
Wenk was associated as a public accountant with BDO Seidman, LLP. She graduated
from the California Polytechnic State University, Pomona, in 1999 with a
Bachelor of Science degree in accounting.

Kay L. Cooper, age 72, is a Director of WNC & Associates, Inc. and has not
otherwise been engaged in business activities during the previous five years.
Kay Cooper was the sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products from 1975 until its sale in 1998. She is the wife of
Wilfred Cooper, Sr. and the mother of Wilfred Cooper, Jr. Ms. Cooper graduated
from the University of Southern California in 1958 with a Bachelor of Science
degree.

Jennifer E. Cooper, age 46, is a Director of WNC & Associates, Inc. and has not
otherwise been engaged in business activities during the previous five years.
She is the wife of Wilfred Cooper, Jr. and attended the University of Texas from
1981 to 1986.

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

     None.

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

     Inapplicable.

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

     Neither the Partnership nor the General Partners, has an audit committee.

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

     Inapplicable.

                                       48
<PAGE>

(k)  Compliance With Section 16(a) of the Exchange Act
     -------------------------------------------------

     None.

(l)  Code of Ethics
     --------------

     Associates has adopted a Code of Ethics which applies to the Chief
     Executive Officer and Chief Financial Officer of Associates. The Code of
     Ethics will be provided without charge to any person who requests it. Such
     requests should be directed to: Investor Relations at (714)662-5565
     extension 187.

ITEM 11.  EXECUTIVE COMPENSATION

The General Partners and their Affiliates are not permitted under Section 5.6 of
the Partnership's Agreement of Limited Partnership (the "Agreement,"
incorporated as Exhibit 3.1 to this report) to receive any salary, fees,
profits, distributions or allocations from the Partnership or any Local Limited
Partnership in which the Partnership invests except as expressly allowed by the
Agreement. The compensation and other economic benefits to the General Partner
and its Affiliates provided for in the Agreement are summarized below.

(a)  Compensation for Services

     For services rendered by the Managing General Partner or an Affiliate of
     the Managing General Partner in connection with the administration of the
     affairs of the Partnership, the Managing General Partner or any such
     Affiliate may receive an annual asset management fee in an amount equal to
     0.5% of Invested Assets in Local Limited Partnerships which are subsidized
     under one or more Federal, state or local housing assistance programs. The
     asset management fee is payable with respect to the previous calendar
     quarter on the first day of each calendar quarter during the year. Accrued
     but unpaid asset management fees for any year are deferred without interest
     and are payable in subsequent years from any funds available to the
     Partnership after payment of all other costs and expenses of the
     Partnership, including any capital reserves then determined by the Managing
     General Partner to no longer be necessary to be retained by the
     Partnership, or from the proceeds of a sale or refinancing of Partnership
     assets. Fees of $178,612, $181,384 and $181,384, were incurred during the
     years ended March 31, 2009, 2008 and 2007, respectively. The Partnership
     paid the General Partners and or their affiliates $50,000, $50,000 and
     $34,000 of those fees during the years ended March 31, 2009, 2008 and 2007,
     respectively.

     Subject to a number of terms and conditions set forth in the Agreement, the
     General Partner and its Affiliates may be entitled to compensation for
     services actually rendered or to be rendered in connection with (i)
     selecting, evaluating, structuring, negotiating and closing the
     Partnership's investments in Local Limited Partnership Interests, (ii) the
     acquisition or development of Properties for the Local Limited
     Partnerships, or (iii) property management services actually rendered by
     the General Partners or their Affiliates respecting the Properties owned by
     Local Limited Partnerships. The Partnership has completed its investment
     stage, so no compensation for the services in (i) or (ii) has been paid
     during the period covered by this report and none will be paid in the
     future. None of the services described in (iii) were rendered and no such
     compensation was payable for such services during the periods covered by
     this report.

(b)  Operating Expenses

     Reimbursement to a General Partner or any of its Affiliates of Operating
     Cash Expenses is subject to specific restrictions in Section 5.3.4 of the
     Partnership's Agreement of Limited Partnership (the "Agreement,"
     incorporated as Exhibit 3.1 to this report). The Agreement defines
     "Operating Cash Expenses" as

         " . . . the amount of cash disbursed by the Partnership . . . in the
         ordinary course of business for the payment of its operating expenses,
         such as expenses for advertising and promotion, management, utilities,
         repair and maintenance, insurance, investor communications, legal,
         accounting, statistical and bookkeeping services, use of computing or
         accounting equipment, travel and telephone expenses, salaries and


                                       49
<PAGE>

         direct expenses of Partnership employees while engaged in Partnership
         business, and any other operational and administrative expenses
         necessary for the prudent operation of the Partnership. Without
         limiting the generality of the foregoing, Operating Cash Expenses shall
         include fees paid by the Partnership to any General Partner or any
         Affiliate of a General Partner permitted by this Agreement and the
         actual cost of goods, materials and administrative services used for or
         by the Partnership, whether incurred by a General Partner, an Affiliate
         of a General Partner or a non-Affiliated Person in performing the
         foregoing functions. As used in the preceding sentence, actual cost of
         goods and materials means the actual cost of goods and materials used
         for or by the Partnership and obtained from entities not Affiliated
         with a General Partner, and actual cost of administrative services
         means the pro rata cost of personnel (as if such persons were employees
         of the Partnership) associated therewith, but in no event to exceed the
         Competitive amount."

     The Agreement provides that no such reimbursement shall be permitted for
     services for which a General Partner or any of its Affiliates is entitled
     to compensation by way of a separate fee. Furthermore, no such
     reimbursement is to be made for (a) rent or depreciation, utilities,
     capital equipment or other such administrative items, and (b) salaries,
     fringe benefits, travel expenses and other administrative items incurred or
     allocated to any "controlling person" of a General Partner or any Affiliate
     of a General Partner. For the purposes of Section 5.3.4, "controlling
     person" includes, but is not limited to, any person, however titled, who
     performs functions for a General Partner or any Affiliate of a General
     Partner similar to those of: (1) chairman or member of the board of
     directors; (2) executive management, such as president, vice president or
     senior vice president, corporate secretary or treasurer; (3) senior
     management, such as the vice president of an operating division who reports
     directly to executive management; or (4) those holding 5% or more equity
     interest in such General Partner or any such Affiliate of a General Partner
     or a person having the power to direct or cause the direction of such
     General Partner or any such Affiliate of a General Partner, whether through
     the ownership of voting securities, by contract or otherwise.

     The unpaid operating expenses reimbursable to the General Partner or its
     affiliates were $2,666, $26,819 and $3,180 for the years ended March 31,
     2009, 2008 and 2007, respectively. The Partnership reimbursed the General
     Partner or its affiliates for operating expenses of approximately $41,000,
     $19,000 and $22,000 for the years ended March 31, 2009, 2008 and 2007,
     respectively.

(c)  Interest in Partnership

     The General Partner receives 1% of the Partnership's allocated Low Income
     Housing Tax Credits, there were no remaining credits for the tax years
     (calendar years) ended December 31, 2008, 2007 and 2006, as such the
     General Partner received $0 in Low Income Housing Tax Credits for all
     periods presented. The General Partner is also entitled to receive 1% of
     the Partnership's operating income or losses, gain or loss from the sale of
     property and operating cash distributions. There were no distributions of
     operating cash to the General Partner during the years ended March 31,
     2009, 2008 and 2007. The General Partner has an interest in sale or
     refinancing proceeds as follows: after the Limited Partners have received a
     return of their capital plus a specified return on capital, the General
     Partner may receive an amount equal to its capital contribution, less any
     prior distribution of such proceeds, then the General Partner may receive
     10% and the Limited Partners 90% of any remaining proceeds. There were no
     such distributions to the General Partner during the years ended March 31,
     2009, 2008 or 2007.

                                       50
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

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

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

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

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

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

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

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

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

     First, with the consent of any other General Partners and a
     majority-in-interest of the Limited Partners, any General Partners 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 Partners of the Partnership and elect a successor General Partner.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                       51
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of fees paid to the Partnership's principal
independent registered public accounting firm for the years ended March 31:

                                             2009                2008
                                        ---------------     ---------------

Audit Fees                              $            -      $       34,650
Audit-related Fees                                   -                   -
Tax Fees                                         2,890               2,755
All Other Fees                                       -                   -
                                        ---------------     ---------------
TOTAL                                   $        2,890      $       37,405
                                        ===============     ===============


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

                                       52
<PAGE>

PART IV.

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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

         Balance Sheets, March 31, 2009 and 2008
         Statements of Operations for the years ended March 31, 2009, 2008 and
           2007
         Statements of Partners' Equity (Deficit) for the years ended March
           31, 2009, 2008 and 2007
         Statements of Cash Flows for the years ended March 31, 2009, 2008 and
           2007
         Notes to Financial Statements

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

         Schedule III - Real Estate Owned by Local Limited Partnerships

(a)(3)   Exhibits.
         ---------

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

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

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

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

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

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

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

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

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

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

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

                                       53
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

99.19    Financial Statements of Colonial Village - Roseville, for the years
         ended December 31, 2008 and 2007 together with Independent Auditors'
         Report thereon; a significant subsidiary

                                       54
<PAGE>
<TABLE>
<S>     <C>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2009

                                          ---------------------------  -------------------------------------------------------------
                                               AS OF MARCH 31, 2009                      AS OF DECEMBER 31, 2008
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME                LOCATION    PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Almond Garden                  Delhi,
Apartment Associates           California    $   391,000  $   391,000  $ 1,337,000  $  93,000  $ 1,744,000  $   952,000  $   885,000

Almond View Apartments, Ltd.   Stockton,
                               California      1,639,000    1,639,000    1,679,000    110,000    3,425,000    1,790,000    1,745,000

Buccaneer Associates, Limited  Fernandia
                               Beach,
                               Florida           365,000      365,000    1,420,000     60,000    2,158,000      838,000    1,380,000

Candleridge Apartments
of Perry L.P. II               Perry, Iowa       126,000      126,000      661,000     50,000      900,000      480,000      470,000

Colonial Village Roseville     Roseville,
                               California      2,811,000    2,811,000    1,745,000    315,000    5,083,000    2,622,000    2,776,000

Dallas County Housing, Ltd.    Orrville,
                               Alabama           130,000      130,000      592,000     35,000      764,000      340,000      459,000

La Paloma del Sol Limited      Deming,
Partnership                    New Mexico        254,000      254,000    1,376,000    101,000    1,857,000      715,000    1,243,000


Memory Lane Limited            Yankton,
Partnership                    South Dakota      151,000      151,000      652,000     25,000      894,000      575,000      344,000

Nueva Sierra Vista             Richgrove,
Associates                     California      1,688,000    1,688,000    1,623,000    115,000    3,137,000    1,087,000    2,165,000

Old Fort Highway Limited       Hidalgo,
Partnership                    Texas             249,000      249,000    1,227,000     78,000    1,762,000      704,000    1,136,000



                                                                55
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2009
                                          ---------------------------  -------------------------------------------------------------
                                               AS OF MARCH 31, 2009                      AS OF DECEMBER 31, 2008
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME              LOCATION      PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Orosi Apartments, Ltd.       Orosi,
                             California        461,000       461,000    1,804,000     100,000   2,416,000     734,000     1,782,000

Parlier Garden Apts.         Parlier,
                             California        453,000       453,000    1,646,000     138,000   2,078,000     792,000     1,424,000

Sun Manor, L.P.              Itta Bena,
                             Mississippi       230,000       230,000    1,020,000      40,000   1,370,000     715,000       695,000

Tahoe Pines Apartments       South Lake
                             Tahoe,
                             California      1,633,000     1,633,000    1,543,000      87,000   3,236,000   1,701,000     1,622,000

Venus Retirement             Venus, Texas            -             -      700,000      32,000     618,000     474,000       176,000
Village, Ltd. (1)

Walnut - Pixley, L.P.        Orange,
                             California      1,078,000     1,078,000      843,000     690,000   2,078,000     962,000     1,806,000

Winters Investment           Winters,
Group (1)                    California              -             -    1,765,000     165,000   2,427,000     740,000     1,852,000
                                          ------------  ------------  -----------  ---------- ----------- -----------   ------------

                                          $ 11,659,000  $ 11,659,000  $21,633,000  $2,234,000 $35,947,000 $16,221,000   $21,960,000
                                          ============  ============  ===========  ========== =========== ===========   ===========

(1) Subsequent to December 31, 2008 but before March 31, 2009 the Partnership
sold its Limited Partnership interest in these Local Limited Partnerships.

                                                                56
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2009

                                     ----------------------------------------------------------------------
                                                     FOR THE YEAR ENDED DECEMBER 31, 2008
                                     ----------------------------------------------------------------------
                                                                           YEAR                  ESTIMATED
                                                      NET INCOME        INVESTMENT              USEFUL LIFE
 LOCAL LIMITED PARTNERSHIP NAME        RENTAL INCOME    (LOSS)           ACQUIRED    STATUS       (YEARS)
-----------------------------------------------------------------------------------------------------------

Almond Garden Apartment Associates
                                          $199,000    $ (34,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               293,000     (234,000)           1994     Completed         27.5

Buccaneer Associates, Limited              301,000            -            1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    155,000       (1,000)           1994     Completed         27.5

Colonial Village Roseville                 568,000      (87,000)           1993     Completed         27.5

Dallas County Housing, Ltd.                 91,000      (12,000)           1993     Completed           40

La Paloma del Sol Limited                  207,000      (22,000)           1993     Completed           40
Partnership

Memory Lane Limited Partnership             88,000      (14,000)           1994     Completed           25

Nueva Sierra Vista Associates              187,000     (126,000)           1994     Completed           40

Old Fort Limited Partnership               242,000      (18,000)           1993     Completed           40

Orosi Apartments, Ltd.                     240,000      (58,000)           1993     Completed           50

Parlier Garden Apts.                       282,000      (26,000)           1994     Completed           40

Sun Manor, L.P.                            191,000      (45,000)           1993     Completed         27.5

Tahoe Pines Apartments                     244,000     (115,000)           1994     Completed         27.5

Venus Retirement Village, Ltd. (1)         111,000      (34,000)           1993     Completed           25

Walnut - Pixley, L.P.                      204,000       25,000            1993     Completed           40

Winters Investment Group (1)               278,000        2,000            1994     Completed           50
                                           -------        -----

                                        $3,881,000    $(799,000)
                                        ==========    ==========

(1) The Partnership sold its Limited Partnership interest in these Local Limited
Partnerships subsequent to December 31, 2008 but prior to March 31, 2009.

                                                      57
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2008


                                     --------------------------------  -------------------------------------------------------------
                                              AS OF MARCH 31, 2008                     AS OF DECEMBER 31, 2007
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME              LOCATION      PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Almond Garden                  Delhi,        $  391,000    $  391,000  $1,345,000  $   93,000  $1,717,000    $  885,000  $  925,000
Apartment Associates           California

Almond View Apartments, Ltd.   Stockton,      1,639,000     1,639,000   1,693,000     110,000   3,414,000     1,669,000   1,855,000
                               California

Buccaneer Associates, Limited  Fernandia        365,000       365,000   1,428,000      60,000   2,158,000       783,000   1,435,000
                               Beach,
                               Florida

Candleridge Apartments
of Perry L.P. II               Perry, Iowa      126,000       126,000     667,000      50,000     888,000       445,000     493,000

Colonial Village Roseville     Roseville,     2,811,000     2,811,000   1,799,000     315,000   5,052,000     2,442,000   2,925,000
                               California

Dallas County Housing, Ltd.    Orrville,        130,000       130,000     595,000      35,000     764,000       319,000     480,000
                               Alabama

La Paloma del Sol Limited      Deming,          254,000       254,000   1,385,000     101,000   1,788,000       660,000   1,229,000
Partnership                    New Mexico


Memory Lane Limited            Yankton,         151,000       151,000     657,000      25,000     893,000       546,000     372,000
Partnership                    South Dakota

Nueva Sierra Vista             Richgrove,     1,688,000     1,688,000   1,623,000     115,000   3,137,000     1,009,000   2,243,000
Associates                     California

Old Fort Highway Limited       Hidalgo,         249,000       249,000   1,235,000      78,000   1,738,000       648,000   1,168,000
Partnership                    Texas


                                                                58
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2008


                                     --------------------------------  -------------------------------------------------------------
                                              AS OF MARCH 31, 2008                     AS OF DECEMBER 31, 2007
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME              LOCATION      PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Orosi Apartments, Ltd.      Orosi,
                            California       461,000         461,000     1,826,000    100,000   2,395,000      678,000     1,817,000

Parlier Garden Apts.        Parlier,
                            California       453,000         453,000     1,656,000    138,000   2,070,000      741,000     1,467,000

Rosewood Apartments         Superior,
Limited Partnership (1)     Wisconsin        185,000         185,000       398,000          -     768,000      272,000       496,000

Sun Manor, L.P.             Itta Bena,
                            Mississippi      230,000         230,000     1,026,000     40,000   1,334,000      661,000       713,000

Tahoe Pines Apartments      South Lake
                            Tahoe,
                            California     1,633,000       1,633,000     1,566,000     87,000   3,236,000    1,587,000     1,736,000

Venus Retirement Village,   Venus, Texas     161,000         161,000       704,000     32,000     618,000      443,000       207,000
Ltd. (1)

Walnut - Pixley, L.P.       Orange,
                            California     1,078,000       1,078,000     1,553,000    690,000   2,078,000      907,000     1,861,000

Winters Investment          Winters,
Group (1)                   California       531,000         531,000     1,775,000    165,000   2,427,000      692,000     1,900,000
                                             -------         -------     ---------   --------   ---------      -------     ---------

                                         $12,536,000     $12,536,000   $22,930,000 $2,234,000 $36,475,000  $15,387,000   $22,322,000
                                         ===========     ===========   =========== ========== ===========  ===========   ===========

(1) Subsequent to March 31, 2008, the Partnership sold its Limited Partnership
interest in these Local Limited Partnerships.

                                                                59
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2008

                                   ------------------------------------------------------------------------
                                                    FOR THE YEAR ENDED DECEMBER 31, 2007
                                   ------------------------------------------------------------------------
                                                                           YEAR                  ESTIMATED
                                                      NET INCOME        INVESTMENT              USEFUL LIFE
 LOCAL LIMITED PARTNERSHIP NAME        RENTAL INCOME    (LOSS)           ACQUIRED    STATUS       (YEARS)
-----------------------------------------------------------------------------------------------------------

Almond Garden Apartment Associates
                                         $ 199,000      (21,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               256,000     (259,000)           1994     Completed         27.5

Buccaneer Associates, Limited              282,000      (12,000)           1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    154,000        5,000            1994     Completed         27.5

Colonial Village Roseville                 554,000      (35,000)           1993     Completed         27.5

Dallas County Housing, Ltd.                 86,000      (10,000)           1993     Completed           40

La Paloma del Sol Limited
Partnership                                192,000      (18,000)           1993     Completed           40

Memory Lane Limited Partnership             87,000      (10,000)
                                                                           1994     Completed           25

Nueva Sierra Vista Associates              176,000     (123,000)           1994     Completed           40

Old Fort Limited Partnership               232,000      (24,000)           1993     Completed           40

Orosi Apartments, Ltd.                     210,000      (39,000)           1993     Completed           50

Parlier Garden Apts.                       287,000       (3,000)           1994     Completed           40

Rosewood Apartments Limited
Partnership                                100,000        3,000            1994     Completed           40

Sun Manor, L.P.                            179,000      (36,000)           1993     Completed         27.5

Tahoe Pines Apartments                     237,000     (119,000)           1994     Completed         27.5

Venus Retirement Village, Ltd.             108,000      (16,000)           1993     Completed           25

Walnut - Pixley, L.P.                      193,000       12,000            1993     Completed           40

Winters Investment Group                   276,000      (44,000)           1994     Completed           50
                                           -------      --------

                                        $3,808,000   $ (749,000)
                                        ==========   ===========


                                                 60
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2007

                                         ----------------------------  -------------------------------------------------------------
                                              AS OF MARCH 31, 2007                       AS OF DECEMBER 31, 2006
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME              LOCATION      PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Almond Garden                  Delhi,       $ 391,000     $ 391,000    $ 1,352,000  $ 93,000  $ 1,693,000    $ 823,000     $ 963,000
Apartment Associates           California

Almond View Apartments, Ltd.   Stockton,    1,639,000     1,639,000      1,706,000   110,000    3,414,000    1,548,000     1,976,000
                               California

Buccaneer Associates, Limited  Fernandia      365,000       365,000      1,436,000    60,000    2,158,000      730,000     1,488,000
                               Beach,
                               Florida

Candleridge Apartments
of Perry L.P. II               Perry, Iowa    126,000       126,000        672,000    50,000      884,000      412,000       522,000

Colonial Village Roseville     Roseville,   2,811,000     2,811,000      1,850,000   315,000    5,042,000    2,263,000     3,094,000
                               California

Dallas County Housing, Ltd.    Orrville,      130,000       130,000        599,000    35,000      764,000      298,000       501,000
                               Alabama

La Paloma del Sol Limited      Deming,        254,000       254,000      1,393,000   101,000    1,761,000      609,000     1,253,000
Partnership                    New Mexico


Memory Lane Limited            Yankton,       151,000       151,000        662,000    25,000      893,000      516,000       402,000
Partnership                    South Dakota

Nueva Sierra Vista             Richgrove,   1,688,000     1,688,000      2,284,000   115,000    3,137,000      930,000     2,322,000
Associates                     California

Old Fort Highway Limited       Hidalgo,       249,000       249,000      1,242,000    77,000    1,696,000      593,000     1,180,000
Partnership                    Texas


                                                                61
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2007

                                         ----------------------------  -------------------------------------------------------------
                                              AS OF MARCH 31, 2007                       AS OF DECEMBER 31, 2006
---------------------------------------------------------------------  -------------------------------------------------------------
                                          TOTAL INVESTMENT  AMOUNT OF  MORTGAGE BALANCES
 LOCAL LIMITED                            IN LOCAL LIMITED INVESTMENT  OF LOCAL LIMITED        BUILDINGS    ACCUMULATED    NET BOOK
PARTNERSHIP NAME              LOCATION      PARTNERSHIPS  PAID TO DATE  PARTNERSHIPS   LAND  AND EQUIPMENT  DEPRECIATION    VALUE
------------------------------------------------------------------------------------------------------------------------------------

Orosi Apartments, Ltd.       Orosi,
                             California         461,000      461,000    1,846,000     100,000    2,397,000      629,000    1,868,000

Parlier Garden Apts.         Parlier,
                             California         453,000      453,000    1,664,000     138,000    2,070,000      689,000    1,519,000

Rosewood Apartments          Superior,
Limited Partnership          Wisconsin          185,000      185,000      413,000          --      767,000      253,000      514,000

Sun Manor, L.P.              Itta Bena,
                             Mississippi        230,000      230,000    1,031,000      40,000    1,325,000      609,000      756,000

Tahoe Pines Apartments       South Lake
                             Tahoe,
                             California       1,633,000    1,633,000    1,587,000      87,000    3,237,000    1,471,000    1,853,000

Venus Retirement             Venus, Texas       161,000      161,000      707,000      32,000      618,000      412,000      238,000
Village, Ltd.

Walnut - Pixley, L.P.        Orange,
                             California       1,078,000    1,078,000      900,000     690,000    2,078,000      853,000    1,915,000

Winters Investment Group     Winters,
                             California         531,000      531,000    1,785,000     165,000    2,427,000      645,000    1,947,000
                                            -----------  -----------  ----------- -----------  -----------  -----------  -----------

                                            $12,536,000  $12,536,000  $23,129,000 $ 2,233,000  $36,361,000  $14,283,000  $24,311,000
                                            ===========  ===========  =========== ===========  ===========  ===========  ===========



                                                                62
<PAGE>

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.
SCHEDULE III
REAL ESTATE OWNED BY LOCAL LIMITED PARTNERSHIPS
MARCH 31, 2007

                                   ------------------------------------------------------------------------
                                                    FOR THE YEAR ENDED DECEMBER 31, 2006
                                   ------------------------------------------------------------------------
                                                                           YEAR                  ESTIMATED
                                                      NET INCOME        INVESTMENT              USEFUL LIFE
 LOCAL LIMITED PARTNERSHIP NAME        RENTAL INCOME    (LOSS)           ACQUIRED    STATUS       (YEARS)
-----------------------------------------------------------------------------------------------------------

Almond Garden Apartment Associates
                                         $ 198,000      (30,000)           1994     Completed         27.5

Almond View Apartments, Ltd.               245,000     (306,000)           1994     Completed         27.5

Buccaneer Associates, Limited              257,000      (53,000)           1994     Completed           40

Candleridge Apartments of Perry
L.P. II                                    153,000        4,000            1994     Completed         27.5

Colonial Village Roseville                 537,000      (30,000)           1993     Completed         27.5

Dallas County Housing, Ltd.                 78,000      (15,000)           1993     Completed           40

La Paloma del Sol Limited
Partnership                                193,000       (6,000)           1993     Completed           40

Memory Lane Limited Partnership             81,000      (14,000)
                                                                           1994     Completed           25

Nueva Sierra Vista Associates              177,000     (121,000)           1994     Completed           40

Old Fort Limited Partnership               214,000      (42,000)           1993     Completed           40

Orosi Apartments, Ltd.                     230,000      (18,000)           1993     Completed           50

Parlier Garden Apts.                       288,000       17,000            1994     Completed           40

Rosewood Apartments Limited
Partnership                                 94,000       (1,000)           1994     Completed           40

Sun Manor, L.P.                            170,000      (32,000)           1993     Completed         27.5

Tahoe Pines Apartments                     225,000     (141,000)           1994     Completed         27.5

Venus Retirement Village, Ltd.             103,000      (28,000)           1993     Completed           25

Walnut - Pixley, L.P.                      181,000        5,000            1993     Completed           40

Winters Investment Group                   278,000       18,000            1994     Completed           50
                                           -------       ------

                                        $3,702,000   $ (793,000)
                                        ==========   ==========
</TABLE>


                                                      63
<PAGE>


                                   SIGNATURES


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

WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

By:      WNC & Associates, Inc.,
         General Partner



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

Date:  October 9, 2009

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




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

Date:  October 9, 2009



By:      /s/ Melanie R. Wenk
         -------------------
         Melanie R. Wenk
         Vice-President  - Chief  Financial Officer of WNC & Associates, Inc.
        (principal financial officer and principal accounting officer)

Date:  October 9, 2009



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

Date:  October 9, 2009



By:      /s/ Kay L. Cooper
         -----------------
         Kay L. Cooper
         Director of WNC & Associates, Inc.

Date:  October 9, 2009


                                       64