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, 2008

                                       OR

| |  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  5(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__

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<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  "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

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<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 Tax Credits.

The Partnership invested in eighteen Local Limited  Partnerships,  none of which
have been sold or  otherwise  disposed  of as of March 31,  2008.  Each of these
Local  Limited  Partnerships  owns a Housing  Complex  that was eligible for the
Federal Low Income  Housing Tax Credit and eight of them were  eligible  for the

                                       3

<PAGE>

California Low Income Housing Tax Credit. Certain Local Limited Partnerships may
also  benefit   from   additional   government   programs   promoting   low-  or
moderate-income housing.

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 eighteen
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
 Rosewood Apartments Limited Partnership                           2009
 Sun Manor, L.P.                                                   2009
 Tahoe Pines Apartments                                            2009
 Venus Retirement Village, Ltd.                                    2009
 Walnut - Pixley, L.P.                                             2009
 Winters Investment Group                                          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, 2008.

Subsequent  to March 31,  2008,  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

                                       4
<PAGE>

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.

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.

                                       5

<PAGE>

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,  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.

                                       6

<PAGE>

     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  Partne's return may be derived only from
          the Low Income Housing Tax Credits and tax losses.

     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 the beginning of the first year covered
by this  report,  the  Partnership  had reduced the  carrying  amount to $0 with
respect to all but one 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,

                                       7

<PAGE>

     o    monetary inflation,
     o    tax, environmental, land use and zoning policies,
     o    the supply of and demand for similar properties,
     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.

                                       8

<PAGE>

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.

     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.

                                       9

<PAGE>

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.

     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.

                                       10

<PAGE>

     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.

     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

                                       11

<PAGE>

Housing  Complex would have a greater amount  available for  investment  than an
investor investing in Housing Complexes through the Partnership.

     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 $131,000,  $148,000, and $128,000 for the years ended March 31,
2008, 2007 and 2006,  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 has 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 eighteen Housing  Complexes for which the Partnership
had ownership during the year, as of the dates or for the periods indicated:

                                       12

<PAGE>
<TABLE>
<CAPTION>

                                                          As of March 31, 2008                         As of December 31, 2007
                                                     -----------------------------   -----------------------------------------------
                                                       Partnership's                                     Estimated
                                                          Total        Amount of                         Aggregate       Mortgage
                                                       Investment in  Investment                         Low Income    Balances of
 Local Limited                     General Partner     Local Limited     Paid     Number of             Housing Tax   Local Limited
Partnership Name     Location           Name            Partnerships    to Date     Units    Occupancy   Credits(1)    Partnerships
------------------------------------------------------------------------------------------------------------------------------------
                                                       <S>           <C>            <C>        <C>     <C>            <C>

Almond Garden        Delhi,        Anthony Donovan      $   391,000   $  391,000     34         100%    $  807,000     $  1,345,000
Apt, Assoc.          California

Almond View          Stockton,     Daniel C. Logue and    1,639,000    1,639,000     72          94%     3,523,000        1,693,000
Apts., Ltd.          California    Cyrus Youssefi

Buccaneer Assoc.,    Fernandia     Clifford E. Olsen        365,000      365,000     48          98%       768,000        1,428,000
Ltd.                 Beach,
                     Florida

Candleridge Apts.    Perry,        Eric A. Sheldahl         126,000      126,000     24          96%       245,000          667,000
of Perry L.P. II     Iowa

Colonial Village     Roseville,    S.P. Thomas Company    2,811,000    2,811,000     56          98%     5,872,000        1,799,000
Roseville            Calfornia     of Northern
                                   California Inc. and
                                   Project Go, Inc.

Dallas County        Orrville,     Thomas H. Cooksey        130,000      130,000     19          84%       287,000          595,000
Housing, Ltd.        Alabama       and Apartment
                                   Developers, Inc.

La Paloma del Sol    Deming,       Dean Greenwalt           254,000      254,000     38          95%       625,000        1,385,000
L.P.                 New Mexico

Memory Lane L.P.     Yankton,      Skogen - Peterson,       151,000      151,000     18         100%       295,000          657,000
                     South         Inc.
                     Dakota

Nueva Sierra Vista   Richgrove,    Self-Help              1,688,000    1,688,000     35         100%     3,516,000        1,623,000
Assoc.               California    Enterprises, Inc.
                                   and Nueva Sierra
                                   Vista Corporation
</TABLE>

                                                                13

<PAGE>
<TABLE>
<CAPTION>

                                                          As of March 31, 2008                         As of December 31, 2007
                                                     -----------------------------   -----------------------------------------------
                                                       Partnership's                                     Estimated
                                                          Total        Amount of                         Aggregate       Mortgage
                                                       Investment in  Investment                         Low Income    Balances of
 Local Limited                     General Partner     Local Limited     Paid     Number of             Housing Tax   Local Limited
Partnership Name     Location           Name            Partnerships    to Date     Units    Occupancy   Credits(1)    Partnerships
------------------------------------------------------------------------------------------------------------------------------------
                                                       <S>           <C>            <C>        <C>     <C>            <C>

Old Fort L.P.        Hidalgo,      Alan Deke Noftsker   $   249,000   $  249,000     40         100%    $  547,000     $  1,235,000
                     Texas         and ABO
                                   Corporation

Orosi Apts., Ltd.    Orosi,        Douglas W. Young         461,000      461,000     42          86%       902,000        1,826,000
                     California

Parlier Garden       Parlier,      David J. Micheal         453,000      453,000     40         100%       917,000        1,656,000
Apts.                California    and Professional
                                   Apartment
                                   Management, Inc.

Rosewood Apts.       Superior,     Duffy Development        185,000      185,000      20         95%       375,000          398,000
L.P. (2)             Wisconsin     Company, Inc.

Sun Manor, L.P.      Itta Bena,    Glenn D. Miller          230,000      230,000      36         89%       464,000        1,026,000
                     Mississippi

Tahoe Pines Apts.    South Lake    David J. Michael,      1,633,000    1,633,000      28         89%     3,171,000        1,566,000
                     Tahoe,        Bucky Fong,
                     California    Dean Pearson,
                                   Coy Elvis and
                                   Dr. Patricia Hatton

Venus Retirement      Venus,       W. Joseph Chamy          161,000      161,000      24         96%       318,000          703,000
Village, Ltd. (2)     Texas

Walnut-Pixley, L.P.   Orange,      Walnut-Pixley,         1,078,000    1,078,000      22         95%     2,309,000        1,553,000
                      California   Inc.

Winters Investment    Winters,     John P. Casper           531,000      531,000      38         97%     1,072,000        1,775,000
Group (2)             California                          ---------    ---------     ---        ----    ----------       ----------
                                                       $ 12,536,000 $ 12,536,000     634         95%  $ 26,013,000     $ 22,930,000
                                                       ============ ============     ===        ====  ============     ============
</TABLE>

(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.

                                       14

<PAGE>

2) The Partnership sold its Limited Partnership  interest in these Local Limited
Partnerships subsequent to March 31, 2008

                                       15

<PAGE>
<TABLE>
<CAPTION>

                                                ----------------------------------------------------------
                                                          For the year ended December 31, 2007
                                                ----------------------------------------------------------
                                                                                        Low Income
                                                                                    Housing Tax Credits
                 Local Limited                                       Net Income         Allocated to
                Partnership Name                Rental Income          (Loss)           Partnership
----------------------------------------------------------------------------------------------------------
                                               <S>                <C>                              <C>

 Almond Garden Apartment Associates             $   199,000        $    (21,000)                    99%

 Almond View Apartments, Ltd.                       256,000            (259,000)                    99%

 Buccaneer Associates, Limited                      282,000             (12,000)                    99%

 Candleridge Apartments of Perry L.P. II            154,000               5,000                     99%

 Colonial Village Roseville                         554,000             (35,000)                    99%

 Dallas County Housing, Ltd.                         86,000             (10,000)                    99%

 La Paloma del Sol Limited Partnership              192,000             (18,000)                    99%

 Memory Lane Limited Partnership                     87,000             (10,000)                    99%

 Nueva Sierra StateVista Associates                 176,000            (123,000)                    99%

 Old Fort Limited Partnership                       232,000             (24,000)                    99%

 Orosi Apartments, Ltd.                             210,000             (39,000)                    99%

 Parlier Garden Apts.                               287,000              (3,000)                    95%

 Rosewood Apartments Limited Partnership            100,000               3,000                     99%

 Sun Manor, L.P.                                    179,000             (36,000)                    99%

 Tahoe Pines Apartments                             237,000            (119,000)                    99%

 Venus Retirement Village, Ltd.                     108,000             (16,000)                    99%

 Walnut - Pixley, L.P.                              193,000              12,000                     99%

 Winters Investment Group                           276,000             (44,000)                    99%
                                                -----------        -------------

                                                $ 3,808,000        $   (749,000)
                                                ===========        =============
</TABLE>

                                       16

<PAGE>

WNC California Housing Tax Credit Fund III, L.P.
March 31, 2007
<TABLE>
<CAPTION>

                                                                                       Occupancy Rates
                                                         ---------------------------------------------------------------------------
                                                                                      As of December 31,
                                                         ---------------------------------------------------------------------------

 Local Limited
Partnership Name     Location      General Partner Name     2007            2006            2005           2004            2003
------------------------------------------------------------------------------------------------------------------------------------
                                                           <S>              <C>            <C>            <C>               <C>

Almond Garden        Delhi,        Anthony Donovan          100%             97%            100%            97%              97%
Apt, Assoc.          California

Almond View          Stockton,     Daniel C. Logue and       94%             94%            100%            99%              97%
Apts., Ltd.          California    Cyrus Youssefi

Buccaneer Assoc.,    Fernandia     Clifford E. Olsen         98%            100%            100%           100%              96%
Ltd.                 Beach,
                     Florida

Candleridge Apts.    Perry,        Eric A. Sheldahl          96%             96%            100%           100%              83%
of Perry L.P. II     Iowa

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

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

La Paloma del Sol    Deming,       Dean Greenwalt            95%             95%             95%            89%              92%
L.P.                 New Mexico

Memory Lane L.P.     Yankton,      Skogen - Peterson,       100%            100%             94%            94%             100%
                     South         Inc.
                     Dakota

Nueva Sierra Vista   Richgrove,    Self-Help                100%            100%            100%            97%              91%
Assoc.               California    Enterprises, Inc.
                                   and Nueva Sierra
                                   Vista Corporation
</TABLE>

                                                                17

<PAGE>

WNC California Housing Tax Credit
Fund III, L.P.
March 31, 2007
<TABLE>
<CAPTION>

                                                                                       Occupancy Rates
                                                         ---------------------------------------------------------------------------
                                                                                      As of December 31,
                                                         ---------------------------------------------------------------------------

 Local Limited
Partnership Name     Location      General Partner Name     2007            2006            2005           2004            2003
------------------------------------------------------------------------------------------------------------------------------------
                                                           <S>              <C>             <C>            <C>            <C>

Old Fort L.P.        Hidalgo,      Alan Deke Noftsker       100%             95%             93%            98%             97%
                     Texas         and ABO
                                   Corporation

Orosi Apts., Ltd.    Orosi,        Douglas W. Young          86%             95%             93%            93%            100%
                     California

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

Rosewood Apts.       Superior,     Duffy Development         95%             95%             85%            85%             95%
L.P. (2)             Wisconsin     Company, Inc.

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

Tahoe Pines Apts.    South Lake    David J. Michael,         89%             96%             96%           100%             89%
                     Tahoe,        Bucky Fong,
                     California    Dean Pearson,
                                   Coy Elvis and
                                   Dr. Patricia Hatton

Venus Retirement      Venus,       W. Joseph Chamy           96%             96%            100%           100%             96%
Village, Ltd. (2)     Texas

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

Winters Investment    Winters,     John P. Casper           97%             100%            100%           100%            100%
Group (2)             California                           ----             ----            ----           ----            ----
                                                            95%              96%             96%            96%             95%
                                                          =====             ====            ====           ====            ====
</TABLE>

1                                                               18

<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,  2008,  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, 2008.

Item 5b. Use of Proceeds

NOT APPLICABLE

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

NONE

                                       19

<PAGE>

Item 6.  Selected Financial Data

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

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

                                            2008            2007         2006         2005            2004
                                         -----------    -----------  ------------  ------------    ------------
                                        <S>            <C>          <C>           <C>            <C>

ASSETS
Cash                                     $  228,980     $   239,164  $   253,910   $   293,367     $   310,717
Investments in Local Limited
  Partnerships, net                       1,740,459       1,815,552    1,891,029     2,173,564       3,525,413
                                         -----------    -----------  ------------  ------------    ------------

        Total Assets                     $1,969,439     $ 2,054,716  $ 2,144,939   $ 2,466,931     $ 3,836,130
                                         ===========    ===========  ============  ============    ============

LIABILITIES
Accrued fees and expenses
  due to General Partner and
  affiliates                             $1,841,301     $ 1,686,278  $ 1,539,639   $ 1,413,074     $ 1,256,656

PARTNERS' EQUITY                            128,138         368,438      605,300     1,053,857       2,579,474
                                         -----------    -----------  -----------   ------------    ------------

         Total Liabilities and
           Partners' Equity              $ 1,969,439    $ 2,054,716  $2,144,939    $2,466,931     $  3,836,130
                                         ===========    ===========  ===========   ===========    =============
</TABLE>


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

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

                                            2008           2007          2006         2005            2004
                                         -----------    -----------  ------------  ------------    ------------
                                        <S>            <C>          <C>           <C>             <C>

Loss from operations (Note 1)            $ (206,166)    $ (203,083)  $  (317,823)  $(1,217,245)    $ (1,948,46)
Equity in losses of  Local Limited
  Partnerships                              (34,537)       (34,921)     (132,114)     (309,324)       (289,176)
Interest income                                 403          1,142         1,380           952               -
                                         -----------    -----------  ------------  ------------    ------------

Net loss                                 $ (240,300)    $ (236,862)  $  (448,557)  $(1,525,617)    $ (2,237,64)
                                         ===========    ===========  ============  ============    ============

Net loss allocated to:
  General  Partner                       $   (2,403)    $   (2,369)  $    (4,486)  $   (15,256)    $   (22,376)
                                         ===========    ===========  ============  ============    ============

  Limited Partners                       $ (237,897)    $ (234,493)  $  (444,071)  $(1,510,361)    $(2,215,268)
                                         ===========    ===========  ============  ============    ============

Net loss per Partnership Unit            $   (13.22)    $   (13.03)  $    (24.67)  $    (83.90)    $   (123.07)
                                         ===========    ===========  ============  ============    ============
Outstanding weighted Partnership Units       18,000         18,000        18,000        18,000          18,000
                                         ===========    ===========  ============  ============    ============
</TABLE>

Note 1 - Net loss for the years ended March 31, 2008,  2007, 2006, 2005 and 2004
includes a charge for impairment  losses and write- off of acquisition  cost and
fees on investments in Local Limited Partnerships of $0, $0, $101,658,  $972,589
and $1,701,293, respectively.

                                       20

<PAGE>
<TABLE>
<CAPTION>

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

                                            2008           2007          2006         2005            2004
                                         -----------    -----------  ------------  ------------    ------------
                                        <S>            <C>          <C>           <C>             <C>

Net cash provided by (used in):
  Operating activities                   $  (42,224)    $  (46,786)  $   (77,214)  $   (44,726)    $   (69,359)
  Investing activities                       32,040         32,040        37,757        27,376           8,650
                                         -----------    -----------  ------------  ------------    ------------

Net decrease in cash                        (10,184)       (14,746)      (39,457)      (17,350)        (60,709)

Cash, beginning of period                   239,164        253,910       293,367       310,717         371,426
                                         -----------    -----------  ------------  ------------    ------------

Cash, end of period                      $  228,980     $  239,164   $   253,910   $   293,367     $   310,717
                                         ===========    ===========  ============  ===========     ============

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

                                            2007           2006          2005         2004            2003
                                         -----------    -----------  ------------  -----------     -------------

Federal                                  $        -     $        -   $        21   $       83      $        111
State                                             -              -             -            -                 -
                                         -----------   ------------  ------------  -----------     -------------

Total                                    $        -     $        -   $        21   $       83      $        111
                                         ===========   ============  ============  ===========     =============
</TABLE>

                                       21

<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

                                       22

<PAGE>

financial  statements,  upon receiving the actual annual results reported by the
Local Limited  Partnerships,  management reverses its prior estimate and records
the actual results reported by the Local Limited Partnerships.  Equity in losses
from  the  Local  Limited  Partnerships  allocated  to  the  Partnership  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  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  Financial   Accounting  Standards  Board  ("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.

                                       23

<PAGE>

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.

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 Tax Credits.

                                       24

<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, 2008  consisted  of $229,000 in cash and
aggregate  investments  in eighteen  Local Limited  Partnerships  of $1,740,000.
Liabilities at March 31, 2008 primarily consisted of $1,814,000 of accrued asset
management  fees and $27,000 in advance  payables  due to the General  Partners.
(See "Future Contractual Cash Obligations' below).

Results of Operations

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.

Year  Ended  March  31,  2007  Compared  to  Year  Ended  March  31,  2006.  The
partnership's  net  loss for the  year  ended  March  31,  2007 was  $(237,000),
reflecting  a decrease of $212,000  from the net loss  experienced  for the year
ended  March  31,  2006 of  $(449,000).  The  decrease  in net  loss is due to a
decrease in loss from  operations of $115,000 along with a decrease in equity in
losses from Local  Limited  Partnerships  of $97,000.  The decrease in equity in
losses of Local Limited  Partnerships  is primarily due to the  Partnership  not
recognizing losses of certain of Local Limited Partnerships.  The investments in
such Local Limited Partnerships had reached zero as of March 31, 2007. Since the
Partnership's  liability with respect to its  investments is limited,  losses in
excess of the  investment are not  recognized.  The decrease of $115,000 in loss
from  operations  was due to a decrease of $11,000 in accounting  fees, a $2,000
decrease in amortization,  a $1,000 decrease in other operating expenses,  and a
$2,000  increase  in  distribution  income  offset  by a  $(3,000)  decrease  in
reporting fee income.  In addition,  impairment  loss of $(102,000) was incurred
for the year ended March 31, 2006 and $0 was  incurred  for the year ended March
31, 2007.

Liquidity and Capital Resources

Year Ended March 31, 2008  Compared to Year Ended March 31, 2007 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.

Year Ended March 31, 2007  Compared to Year Ended March 31, 2006.  Net cash used
during the year ended March 31,  2007 was  $(15,000),  reflecting  a decrease in
cash used of $24,000 compared to net cash used for the year ended March 31, 2006

                                       25

<PAGE>

of  $(39,000).  The  change  was due  primarily  to a decrease  of  $(2,000)  in
amortization,  a $(6,000)  decrease in cash provided by distribution  from Local
Limited Partnerships,  offset by a $20,000 increase in accrued fees and expenses
due to General Partner and affiliates.

Accrued  payables,  which consist primarily of related party management fees due
to the General  Partner,  increased  by  approximately  $155,000,  $147,000  and
$127,000 for the years ended March 31, 2008,  2007 and 2006,  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.

The  following  table  summarizes  the  Partnership's  future  contractual  cash
obligations as of March 31, 2008:
<TABLE>
<CAPTION>

                                2009         2010       2011       2012        2013     Thereafter        Total

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

Asset management fees (1)     $1,993,093   $ 161,339  $ 161,339  $  161,339  $ 161,339  $  5,969,543    $8,607,992
                              ----------   ---------  ---------  ----------  ---------  ------------    ----------
Total contractual cash
   obligations                $1,993,093   $ 161,339  $ 161,339  $  161,339  $ 161,339  $  5,969,543    $8,607,992
                              ==========   =========  =========  ==========  =========  ============    ==========
</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,  2008 have  been  included  in the 2009  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.

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, 2008 and 2007,  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, 2008.  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
$1,612,697 and $0 of the total Partnership assets as of March 31, 2008 and 2007,
respectively,  and $(34,537),  $0 and $0 of the total  Partnership  loss for the
years ended March 31, 2008, 2007 and 2006,  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  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,  assessing
the accounting principles used and significant estimates made by management,  as
well as evaluating the overall financial statement presentation. We believe that
our audits,  and the reports of the other auditors,  provide a reasonable  basis
for our opinion.

     In our opinion,  based on our audits and the reports of 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, 2008 and 2007, and the results
of its  operations  and its cash  flows for each of the years in the  three-year
period ended March 31, 2008, in conformity with accounting  principles generally
accepted in the United States of America.

     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>


                          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>
<CAPTION>

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

                                                            BALANCE SHEETS


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

                                                                            2008             2007
                                                                        -------------    -------------
 ASSETS
                                                                       <S>              <C>

 Cash and cash equivalent                                               $    228,980     $    239,164
 Investments in Local Limited Partnerships, net
   (Notes 2 and 3)                                                         1,740,459         1,815,552
                                                                        -------------    -------------

         Total Assets                                                   $  1,969,439     $   2,054,716
                                                                        =============    =============

 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

 Liabilities:
    Accrued fees and expenses due to General Partner
       and affiliates (Note 3)                                          $  1,841,301     $   1,686,278
                                                                        -------------    -------------

 Partners' equity (deficit):
    General Partner                                                         (168,850)         (166,447)
    Limited Partners (30,000 Partnership Units authorized; 18,000
       Partnership Units issued and outstanding)                             296,988           534,885
                                                                        -------------    -------------

         Total partners' equity                                              128,138          368,438
                                                                        -------------    -------------

              Total Liabilities and Partners' Equity (Deficit)          $  1,969,439     $  2,054,716
                                                                        =============    =============


                                       See accompanying notes to financial statements

                                                           28
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

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

                                                       STATEMENTS OF OPERATIONS
                                           For the years ended March 31, 2008, 2007 and 2006


                                                                   For the Years Ended
                                                                        March 31
                                                      ----------------------------------------------
                                                          2008             2007            2006
                                                      -------------     ------------    ------------
                                                     <S>               <C>             <C>

Reporting fees                                        $      8,173      $     5,669     $     9,241
Distribution income                                         18,033            2,484             718
                                                      -------------     ------------    ------------

   Total income                                             26,206            8,153           9,959
                                                      -------------     ------------    ------------

Operating expenses:
   Amortization (Notes 2 and 3)                              8,516            8,516          11,006
   Asset management fees (Note 3)                          181,384          181,384         181,385
    Impairment loss (Note 2)                                     -                -         101,658
   Accounting fees                                          38,634           15,083          26,472
   Other                                                     3,838            6,253           7,261
                                                      -------------     ------------    ------------

    Total operating expenses                               232,372          211,236         327,782
                                                      -------------     ------------    ------------

Loss from operations                                      (206,166)        (203,083)       (317,823)

Equity in losses of Local Limited
  Partnerships (Note 2)                                    (34,537)         (34,921)       (132,114)

Interest income                                                403            1,142           1,380
                                                      -------------     ------------    ------------

Net loss                                              $   (240,300)     $  (236,862)    $   (448,557)
                                                      =============     ============    ============

Net loss allocated to:
   General Partner                                    $     (2,403)     $    (2,369)    $     (4,486)
                                                      =============     ============    ============

   Limited Partners                                   $   (237,897)     $  (234,493)    $   (444,071)
                                                      =============     ============    ============

Net loss per Partnership Unit                         $     (13.22)     $    (13.03)    $     (24.67)
                                                      =============     ============    ============

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

                                       See accompanying notes to financial statements

                                                           29
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

                                                STATEMENTS OF PARTNERS EQUITY (DEFICIT)
                                           For the years ended March 31, 2008, 2007 and 2006


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

Partners' equity (deficit) at March 31, 2005                $     (159,592)    $    1,213,449      $    1,053,857

Net loss                                                            (4,486)          (444,071)           (448,557)
                                                            ---------------    ---------------     ---------------

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
                                                            ===============    ===============     ===============

                                       See accompanying notes to financial statements

                                                           30
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                       STATEMENTS OF CASH FLOWS

                                           For the Years Ended March 31, 2008, 2007 and 2006


                                                                        For the Years Ended
                                                                              March 31
                                                          -------------------------------------------------
                                                              2008             2007               2006
                                                          --------------   --------------     -------------
                                                         <S>              <C>                <C>

Cash flows from operating activities:
   Net loss                                               $    (240,300)   $    (236,862)     $   (448,557)
   Adjustments to reconcile net loss to
    net cash used in operating activities:
      Amortization                                                8,516            8,516            11,006
      Equity in losses of Local Limited Partnerships             34,537           34,921           132,114
      Impairment loss                                                 -                -           101,658
      Change in accrued fees and expenses due to
       General Partner and affiliates                           155,023          146,639           126,565
                                                          --------------   --------------     -------------
Net cash used in operating activities                           (42,224)         (46,786)          (77,214)
                                                          --------------   --------------     -------------

Cash flows from investing activities:
   Distributions from Local Limited Partnerships                 32,040           32,040            37,757
                                                          --------------   --------------     -------------

Net cash provided by investing activities                        32,040           32,040            37,757
                                                          --------------   --------------     -------------

Net decrease in cash                                            (10,184)         (14,746)          (39,457)

Cash, beginning of year                                         239,164          253,910           293,367
                                                          --------------   --------------     -------------

Cash, end of year                                         $     228,980    $     239,164      $    253,910
                                                          ==============   ==============     =============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

   Taxes paid                                             $         800    $         800    $          800
                                                          ==============   ==============     =============

                                       See accompanying notes to financial statements

                                                           31
</TABLE>


<PAGE>

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

                          NOTES TO FINANCIAL STATEMENTS

                For the Years Ended March 31, 2008, 2007 and 2006

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>

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>

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.

Associates has agreed to continue providing  advances  sufficient enough to fund
the operations  and working  capital  requirements  of the  Partnership  through
October 31,  2010,  if the  Partnership  were to  experience  a working  capital
deficiency.

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,  2008.  As of  March  31,  2008  two  Local  Limited
Partnerships had completed the 15 year compliance period.

Subsequent  to March 31,  2008,  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>

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>

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,
2008 and 2007, the Partnership had no cash equivalents.

Concentration of Credit Risk
----------------------------

At March  31,  2008,  the  Partnership  maintained  cash  balances  at a certain
financial   institution  in  excess  of  the  federally  insured  maximum.   The
Partnership  believes it is not  exposed to any  significant  financial  risk on
cash.

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>

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 5,
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  Partnershi'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>

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  are  being  amortized  over 30  years  using  the
straight-line  method.  Amortization expense for the years ended March 31, 2008,
2007 and 2006 was $8,516, $8,516 and $11,006, 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, 2008, 2007 and 2006 impairment expense related to investments in
Local Limited Partnerships as $0, $0 and $101,658, 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 each of
the years ended March 31, 2008,  2007 and 2006,  impairment  expense  related to
acquisition fees and costs was $0.

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

As of the periods  presented,  the  Partnership  owns Local Limited  Partnership
interests  in 18 Local  Limited  Partnerships,  each of which  owns one  Housing
Complex  consisting of an aggregate of 634 apartment units. The respective Local
General  Partners  of the  Local  Limited  Partnerships  manage  the  day to day
operations  of the entities.  Significant  Local  Limited  Partnership  business
decisions require 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>

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, 2008 and 2007,  are  approximately  $1,378,000  and
$653,000  respectively,  greater than the Partnership's  equity at the preceding
December  31 as shown in the  Local  Limited  Partnerships'  combined  financial
statements  presented  below.  This  difference  is primarily  due to unrecorded
losses as discussed below, 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, 2008, the investment accounts in certain Local Limited Partnerships
have  reached  a zero  balance.  Consequently,  a portion  of the  Partnership's
estimate  of its share of losses for the years ended  March 31,  2008,  2007 and
2006, amounting to approximately $707,000, $642,000 and $661,000,  respectively,
have not been  recognized.  As of March 31,  2008,  the  aggregate  share of net
losses not recognized by the Partnership amounted to $3,784,000.

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

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

                                                                   2008               2007              2006
                                                              ---------------    ---------------    --------------
                                                             <S>                <C>                <C>

Investments per balance sheet, beginning of period            $    1,815,552     $    1,891,029     $   2,173,564
Distributions received from Local Limited Partnerships               (32,040)           (32,040)          (37,757)
Equity in losses of Local Limited Partnerships                       (34,537)           (34,921)         (132,114)
Impairment loss                                                            -                  -          (101,658)
Amortization of paid acquisition fees and costs                       (8,516)            (8,516)          (11,006)
                                                              ---------------    ---------------    --------------

Investments per balance sheet, end of period                  $    1,740,459     $    1,815,552     $   1,891,029
                                                              ===============    ===============    ==============


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

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

Investments in Local Limited Partnerships, net                $    1,612,697     $    1,679,274     $   1,746,236
Acquisition fees and costs, net of accumulated
Amortization of $1,686,257, $1,677,741 and $1,669,226                127,762            136,278           144,793
                                                              ---------------    ---------------    --------------
Investments per balance sheet, end of period                  $    1,740,459     $    1,815,552     $   1,891,029
                                                              ===============    ===============    ==============
</TABLE>

                                       39

<PAGE>

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
<TABLE>
<CAPTION>

                                                                                    2007                2006
                                                                               ---------------     ---------------
ASSETS
                                                                             <S>                  <C>

  Buildings and improvements, net of accumulated depreciation as of
   December 31, 2007 and 2006 of $15,387,000 and $14,283,000,
   respectively.                                                               $   21,088,000      $    22,078,000
  Land                                                                              2,234,000           2,233,000
  Other assets                                                                      3,404,000           3,237,000
                                                                               ---------------     ---------------

         Total Assets                                                          $   26,726,000      $   27,548,000
                                                                               ===============     ===============

LIABILITIES

Mortgage loans payable                                                         $   22,930,000      $   23,129,000
Due to related parties                                                                738,000           1,414,000
Other liabilities                                                                   2,478,000           1,525,000
                                                                               ---------------     ---------------

         Total Liabilities                                                         26,146,000          26,068,000
                                                                               ---------------     ---------------

PARTNERS' EQUITY

WNC California Housing Tax Credits III, L.P.                                          362,000           1,163,000
Other partners                                                                        218,000             317,000
                                                                               ---------------     ---------------

         Total Partners' Equity                                                       580,000           1,480,000
                                                                               ---------------     ---------------

              Total Liabilities and Partners' Equity                           $   26,726,000      $   27,548,000
                                                                               ===============     ===============
</TABLE>

                                       40

<PAGE>

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

<TABLE>
<CAPTION>

                                              COMBINED CONDENSED STATEMENTS OF OPERATIONS

                                                                 2007                2006                2005
                                                            ----------------    ----------------   -----------------
                                                           <S>                 <C>                <C>

Revenues                                                    $     4,042,000     $     3,838,000    $      3,704,000
--------                                                    ----------------    ----------------   -----------------

Expenses:
   Operating expenses                                             2,774,000           2,730,000           2,524,000
   Interest expense                                                 898,000             783,000             829,000
   Depreciation and amortization                                  1,119,000           1,118,000           1,117,000
                                                            ----------------    ----------------   -----------------

         Total expenses                                           4,791,000           4,631,000           4,470,000
                                                            ----------------    ----------------   -----------------

Net loss                                                    $      (749,000)    $      (793,000)   $       (766,000)
                                                            ================    ================   =================

Net loss allocable to the Partnership                       $      (741,000)    $      (667,000)   $       (758,000)
                                                            ================    ================   =================

Net loss recorded by the Partnership                        $       (35,000)    $       (35,000)   $       (132,000)
                                                            ================    ================   =================
</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  $1,492,238 and
     $1,483,722 as of March 31, 2008 and 2007, respectively.  Of the accumulated
     amortization  recorded on the balance  sheet at March 31, 2008,  $0, $0 and
     $95,525 of the related  expense was reflected as impairment loss during the
     years ended March 31, 2008,  2007,  and 2006,  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, 2008 and 2007. Of the accumulated  amortization recorded on
     the  balance  sheet at March 31,  2008,  $0, $0 and  $6,133 of the  related
     expense was reflected as  impairment  loss during the years ended March 31,
     2008, 2007 and 2006, respectively, to reduce the respective net acquisition
     cost  component of investments  in Local Limited  Partnerships  to zero for
     those Local  Limited  Partnerships  which would  otherwise  be below a zero
     balance.

                                       41

<PAGE>

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 $181,384, $181,384 and $181,385 were incurred during the
     years ended March 31, 2008,  2007 and 2006,  respectively of which $50,000,
     $34,000 and $53,000  was paid during the years ended March 31,  2008,  2007
     and 2006, 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  $19,000,  $22,000 and $35,000 during the
     years ended March 31, 2008, 2007 and 2006, respectively.

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

                                                                                March 31,
                                                                       -----------------------------

                                                                          2008            2007
                                                                       ------------   --------------
                                                                      <S>            <C>

Expenses paid by the General Partners
   or an affiliate on behalf of the Partnership                        $    26,819    $       3,180

Asset management fee payable                                             1,814,482        1,683,098
                                                                      ------------   --------------

Total                                                                  $ 1,841,301    $   1,686,278
                                                                       ============   ==============
</TABLE>

The General  Partners 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>

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

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

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

               2008
               ----
                                       <S>                 <C>                <C>                 <C>

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)



                                           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>

                                                 43


<PAGE>

NOTE 4 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED), continued
---------------------------------------------------------------
<TABLE>
<CAPTION>

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

               2006
               ----
                                       <S>                 <C>               <C>                  <C>

Income                                  $        6,000      $       12,000     $           -       $       (8,000)

Operating expenses                             (62,000)            (62,000)         (152,000)             (52,000)

Loss from operations                           (56,000)            (50,000)         (152,000)             (60,000)

Equity in losses of Local Limited
  Partnerships                                 (42,000)            (40,000)          (36,000)             (14,000)

Interest income                                      -                   -                 -                1,000

Net loss                                       (98,000)            (90,000)         (188,000)             (73,000)

Net Loss available to Limited
  Partners                                     (97,000)            (89,000)         (186,000)             (72,000)

Net Loss per Partnership Unit                       (5)                (5)               (10)                  (4)
</TABLE>


NOTE 5 - SUBSEQUENT EVENTS
--------------------------

Subsequent  to March 31,  2008,  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.

                                       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,  2008.  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, 2008.  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,  2008 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 State 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.

Thomas J. Riha, age 53, 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

                                       47

<PAGE>

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  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 $181,384,  $181,384 and $181,385,  were incurred during the
     years ended March 31, 2008,  2007 and 2006,  respectively.  The Partnership
     paid the General  Partners  and or their  affiliates  $50,000,  $34,000 and
     $53,000 of those fees during the years ended March 31, 2008, 2007 and 2006,
     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

                                       49


<PAGE>

          accounting  equipment,  travel and  telephone  expenses,  salaries and
          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  $28,619,  $3,180 and $4,175 for the years ended March 31,
     2008, 2007 and 2006,  respectively.  The Partnership reimbursed the General
     Partner or its affiliates for operating expenses of approximately  $19,000,
     $22,000  and  $35,000 of the years  ended  March 31,  2008,  2007 and 2006,
     respectively.

(c)  Interest in Partnership

     The General Partner receives 1% of the  Partnership's  allocated Low Income
     Housing Tax  Credits,  which  approximated  which  approximated  $0, $0 and
     $4,000 for the General Partner in the aggregate for the tax years (calendar
     years) ended December 31, 2007,  2006 and 2005,  respectively.  The General
     Partner is also entitled to receive 1% of the Partnershp'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, 2008,  2007 and 2006. 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, 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, 2008, 2007 or 2006.

                                       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:
<TABLE>
<CAPTION>

                                             2008                2007
                                        ---------------     ---------------
                                       <S>                 <C>

Audit Fees                              $       34,650      $       12,083
Audit-related Fees                                   -                   -
Tax Fees                                         2,755               3,000
All Other Fees                                       -                   -
                                        ---------------     ---------------
TOTAL                                   $       37,405      $       15,083
                                        ===============     ===============
</TABLE>

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, 2008 and 2007
          Statements of Operations for the years ended March 31, 2008,  2007 and
            2006
          Statements of Partners' Equity (Deficit) for the years ended March 31,
            2008, 2007 and 2006
          Statements of Cash Flows for the years ended March 31, 2008,  2007 and
            2006
          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, 2007 and 2006 together with  Independent  Auditors'
          Report thereon; a significant subsidiary

                                       54

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2008

<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2008                                   As of December 31, 2007
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of    Mortgage Balances          Buildings
  Local Limited                     in Local Limited   Investment     of Local Limited             and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date      Partnerships   Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                    <S>              <C>              <C>            <C>        <C>          <C>         <C>

Almond Garden Apts.   Delhi,         $    391,000   $   391,000      $ 1,345,000    $  93,000  $ 1,717,000  $  885,000    $  925,000
Assoc.                California

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

Buccaneer Assoc.,     Fernandia           365,000       365,000        1,428,000       60,000    2,158,000     783,000     1,435,000
Ltd.                  Beach,
                      Florida

Candleridge Apts.     Perry,              126,000       126,000          667,000       50,000      888,000     445,000       493,000
of Perry Ltd. II      Iowa

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

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

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

Memory Lane Ltd.      Yankton,            151,000       151,000          657,000       25,000      893,000     546,000       372,000
                      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
Assoc.                California

Old Fort Highway      Hidalgo,            249,000       249,000        1,235,000       78,000    1,738,000     648,000     1,168,000
Ltd.                  Texas

</TABLE>

                                                                55

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2008

<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2008                                   As of December 31, 2007
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of   Mortgage Balances           Buildings
  Local Limited                     in Local Limited   Investment   of Local Limited               and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date    Partnerships     Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                       <S>            <C>             <C>            <C>        <C>          <C>         <C>

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

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

Rosewood Apts.        Superior,           185,000       185,000          398,000            -      768,000     272,000       496,000
Ltd. (1)              Wisconsin

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

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

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

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

Winters Investment    Winters,            531,000       531,000        1,775,000      165,000    2,427,000     692,000     1,900,000
Group (1)             California     ------------   -----------      -----------   ---------- ------------  ----------    ----------
                                     $ 12,536,000   $12,536,000      $22,930,000   $2,234,000 $ 36,475,000 $15,387,000  $ 22,322,000
                                     ============   ===========      ===========   ========== ============ ===========  ============
</TABLE>

(1)  Subsequent to March 31, 2008, 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, 2008

<TABLE>
<CAPTION>

                                   ---------------------------------------------------------------
                                                 For the year ended December 31, 2007
                                   ---------------------------------------------------------------
                                                                Year                  Estimated
Local Limited                                  Net Income    Investment              Useful Life
Partnership Name              Rental Income      (Loss)       Acquired      Status     (Years)
--------------------------------------------------------------------------------------------------
                              <S>              <C>             <C>       <C>               <C>

Almond Garden Apts Assoc.      $  199,000       (21,000)        1994      Completed         27.5

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

Buccaneer Assoc. Ltd.             282,000       (12,000)        1994      Completed           40

Candleridge Apts.                 154,000         5,000         1994      Completed         27.5
of Perry Ltd. II

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

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

La Paloma del Sol                 192,000       (18,000)        1993      Completed           40
L. P.

Memory Lane L.P.                   87,000       (10,000)        1994      Completed           25

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

Old Fort L.P.                     232,000       (24,000)        1993      Completed           40

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

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

Rosewood Apts. Ltd.               100,000         3,000         1994      Completed           40

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

Tahoe Pines Apts.                 237,000      (119,000)        1994      Completed         27.5

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

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)
                               ==========    ===========
</TABLE>

                                                 57

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2007

<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2007                                   As of December 31, 2006
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of    Mortgage Balances          Buildings
  Local Limited                     in Local Limited   Investment     of Local Limited             and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date      Partnerships   Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                    <S>              <C>              <C>            <C>        <C>          <C>         <C>

Almond Garden Apts.   Delhi,         $    391,000   $   391,000      $ 1,352,000    $  93,000  $ 1,693,000  $  823,000    $  963,000
Assoc.                California

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

Buccaneer Assoc.,     Fernandia           365,000       365,000        1,436,000       60,000    2,158,000     730,000     1,488,000
Ltd.                  Beach,
                      Florida

Candleridge Apts.     Perry,              126,000       126,000          672,000       50,000      884,000     412,000       522,000
of Perry Ltd. II      Iowa

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

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

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

Memory Lane Ltd.      Yankton,            151,000       151,000          662,000       25,000      893,000     516,000       402,000
                      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
Assoc.                California

Old Fort Highway      Hidalgo,            249,000       249,000        1,242,000       77,000    1,696,000     593,000     1,180,000
Ltd.                  Texas
</TABLE>

                                                                58

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2007

<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2007                                   As of December 31, 2006
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of   Mortgage Balances           Buildings
  Local Limited                     in Local Limited   Investment   of Local Limited               and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date    Partnerships     Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                       <S>            <C>             <C>            <C>        <C>          <C>         <C>

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

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

Rosewood Apts.        Superior,           185,000       185,000          413,000            -      767,000     253,000       514,000
Ltd. (1)              Wisconsin

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

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

Venus Retirement      Venus,              161,000       161,000          707,000       32,000      618,000     412,000       238,000
Village, Ltd. (1)     Texas

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

Winters Investment    Winters,            531,000       531,000        1,785,000      165,000    2,427,000     645,000     1,947,000
Group (1)             California     ------------  ------------     ------------  -----------  -----------  ----------   -----------
                                     $ 12,536,000  $ 12,536,000     $ 23,129,000  $ 2,233,000  $36,361,000 $14,283,000   $24,311,000
                                     ============  ============     ============  ===========  =========== ===========   ===========
</TABLE>

                                                      59

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2007
<TABLE>
<CAPTION>

                                   ---------------------------------------------------------------
                                                 For the year ended December 31, 2006
                                   ---------------------------------------------------------------
                                                                Year                  Estimated
Local Limited                                  Net Income    Investment              Useful Life
Partnership Name              Rental Income      (Loss)       Acquired      Status     (Years)
--------------------------------------------------------------------------------------------------
                              <S>              <C>             <C>       <C>               <C>

Almond Garden Apts Assoc.      $  198,000       (30,000)        1994      Completed         27.5

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

Buccaneer Assoc. Ltd.             257,000       (53,000)        1994      Completed           40

Candleridge Apts.                 153,000         4,000         1994      Completed         27.5
of Perry Ltd. II

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

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

La Paloma del Sol                 193,000        (6,000)        1993      Completed           40
L. P.

Memory Lane L.P.                   81,000       (14,000)        1994      Completed           25

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

Old Fort L.P.                     214,000       (42,000)        1993      Completed           40

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

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

Rosewood Apts. Ltd.                94,000        (1,000)        1994      Completed           40

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

Tahoe Pines Apts.                 225,000      (141,000)        1994      Completed         27.5

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

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>

                                                 60

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006

<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2006                                   As of December 31, 2005
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of    Mortgage Balances          Buildings
  Local Limited                     in Local Limited   Investment     of Local Limited             and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date      Partnerships   Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                    <S>            <C>              <C>            <C>        <C>          <C>          <C>

Almond Garden Apts.   Delhi,         $    391,000   $   391,000      $ 1,359,000    $  93,000  $ 1,693,000  $  759,000   $ 1,027,000
Assoc.                California

Almond View Apts.,    Stockton,         1,639,000     1,639,000        1,718,000      110,000    3,415,000   1,428,000     2,096,000
Ltd.                  California

Buccaneer Assoc.,     Fernandia           365,000       365,000        1,443,000       60,000    2,158,000     676,000     1,542,000
Ltd.                  Beach,
                      Florida

Candleridge Apts.     Perry,              126,000       126,000          677,000       50,000      880,000     378,000       552,000
of Perry Ltd. II      Iowa

Colonial Village      Roseville,        2,811,000     2,811,000        1,898,000      315,000    5,043,000   2,085,000     3,273,000
Roseville             California

Dallas County         Orrville,           130,000       130,000          601,000       35,000      764,000     276,000       524,000
Housing, Ltd.         Alabama

La Paloma del Sol     Deming,             254,000       254,000        1,400,000      101,000    1,756,000     559,000     1,297,000
Ltd.                  New Mexico

Memory Lane Ltd.      Yankton,            151,000       151,000          666,000       25,000      889,000     486,000       428,000
                      South Dakota

Nueva Sierra Vista    Richgrove,        1,688,000     1,688,000        1,623,000      115,000    3,137,000     850,000     2,402,000
Assoc.                California

Old Fort Highway      Hidalgo,            249,000       249,000        1,248,000       77,000       77,000     543,000     1,195,000
Ltd.                  Texas
</TABLE>

                                                                61
<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006
<TABLE>
<CAPTION>

                                  --------------------------------  ----------------------------------------------------------------
                                       As of March 31, 2006                                   As of December 31, 2005
------------------------------------------------------------------  ----------------------------------------------------------------
                                    Total Investment    Amount of   Mortgage Balances           Buildings
  Local Limited                     in Local Limited   Investment   of Local Limited               and     Accumulated    Net Book
Partnership Name      Location        Partnerships    Paid to Date    Partnerships     Land     Equipment  Depreciation    Value
------------------------------------------------------------------------------------------------------------------------------------
                                       <S>            <C>             <C>            <C>        <C>          <C>         <C>

Orosi Apts., Ltd.     Orosi,              461,000       461,000        1,865,000      100,000    2,391,000     572,000     1,919,000
                      California

Parlier Garden        Parlier,            453,000       453,000        1,673,000      138,000    2,070,000     637,000     1,571,000
Apts.                 California

Rosewood Apts.        Superior,           185,000       185,000          428,000            -      767,000     234,000       534,000
Ltd. (1)              Wisconsin

Sun Manor, L.P.       Itta Bena,          230,000       230,000        1,036,000       40,000    1,319,000     559,000       800,000
                      Mississippi

Tahoe Pines Apts.     South Lake        1,633,000     1,633,000        1,607,000       87,000    3,236,000   1,356,000     1,967,000
                      Tahoe,
                      California

Venus Retirement      Venus,              161,000       161,000          710,000       32,000      618,000     381,000       269,000
Village, Ltd. (1)     Texas

Walnut - Pixley,      Orange,           1,078,000     1,078,000          927,000      690,000    2,078,000     798,000     1,970,000
Ltd.                  California

Winters Investment    Winters,            531,000       531,000        1,794,000      165,000    2,427,000     597,000     1,995,000
Group (1)             California     ------------  ------------     ------------  -----------  -----------  ----------   -----------
                                     $ 12,536,000  $ 12,536,000     $ 22,673,000   $2,233,000  $36,302,000 $13,174,000   $25,361,000
                                     ============  ============     ============  ===========  =========== ===========   ===========

</TABLE>

                                                                62

<PAGE>

WNC California Housing Tax Credits III, L.P.
Schedule III
Real Estate Owned by Local Limited Partnerships
March 31, 2006
<TABLE>
<CAPTION>
                                   ---------------------------------------------------------------
                                                 For the year ended December 31, 2005
                                   ---------------------------------------------------------------
                                                                Year                  Estimated
Local Limited                                  Net Income    Investment              Useful Life
Partnership Name              Rental Income      (Loss)       Acquired      Status     (Years)
--------------------------------------------------------------------------------------------------
                              <S>              <C>             <C>       <C>               <C>

Almond Garden Apts Assoc.      $  190,000    $  (47,000)        1994      Completed         27.5

Almond View Apts., Ltd.           245,000      (238,000)        1994      Completed         27.5

Buccaneer Assoc. Ltd.             245,000       (33,000)        1994      Completed           40

Candleridge Apts.                 151,000       (10,000)        1994      Completed         27.5
of Perry Ltd. II

Colonial Village                  541,000       (12,000)        1993      Completed         27.5
Roseville

Dallas County Housing,             67,000       (29,000)        1993      Completed           40
Ltd.

La Paloma del Sol                 182,000        (3,000)        1993      Completed           40
L. P.

Memory Lane L.P.                   79,000       (13,000)        1994      Completed           25

Nueva Sierra Vista                168,000      (128,000)        1994      Completed           40
Assoc.

Old Fort L.P.                     203,000       (31,000)        1993      Completed           40

Orosi Apts., Ltd.                 232,000       (10,000)        1993      Completed           50

Parlier Garden Apts.              293,000        16,000         1994      Completed           40

Rosewood Apts. Ltd.                89,000        (5,000)        1994      Completed           40

Sun Manor, L.P.                   147,000       (60,000)        1993      Completed         27.5

Tahoe Pines Apts.                 226,000      (140,000)        1994      Completed         27.5

Venus Retirement Village,          99,000       (27,000)        1993      Completed           25
Ltd.

Walnut - Pixley, L.P.             168,000       (20,000)        1993      Completed           40

Winters Investment Group          278,000        24,000         1994      Completed           50
                               ----------    ----------

                               $3,603,000    $ (766,000)
                               ==========    ==========
</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

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