<PAGE> PAGE 1
000 B000000 12/31/95
000 C000000 0000914248
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 SPECIAL SITUATIONS FUND III, L.P.
001 B000000 811-8110
001 C000000 2128325300
002 A000000 153 EAST 53RD STREET, 51ST FLOOR
002 B000000 NEW YORK
002 C000000 NY
002 D010000 10022
003 000000 N
004 000000 N
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008 A000001 MGP ADVISERS LIMITED PARTNERSHIP
008 B000001 A
008 C000001 801-24027
008 D010001 NEW YORK
008 D020001 NY
008 D030001 10022
010 A000001 AWM INVESTMENT COMPANY, INC
010 C010001 NEW YORK
010 C020001 NY
010 C030001 10022
013 A000001 ANCHIN, BLOCK & ANCHIN
013 B010001 NEW YORK
013 B020001 NY
013 B030001 10022
015 A000001 PRUDENTIAL SECURITIES
015 B000001 C
015 C010001 NEW YORK
015 C020001 NY
015 C030001 10022
015 E020001 X
018 000000 Y
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020 A000001 INSTINET CORPORATION
020 B000001 13-3443395
020 C000001 364
020 A000002 WASSERSTEIN PERELLA SECURITIES
020 B000002 13-3502271
020 C000002 17
<PAGE> PAGE 2
020 A000003 HAMBRECHT & QUIST INC.
020 B000003 94-2856935
020 C000003 16
020 A000004 WILLIAM BLAIR & CO.
020 B000004 36-2214610
020 C000004 15
020 A000005 PRUDENTIAL SECURITIES
020 B000005 22-2347336
020 C000005 11
020 A000006 PACIFIC GROWTH EQUITIES
020 B000006 94-3097093
020 C000006 7
020 A000007 FECHTOR, DETWILER & CO., INC.
020 B000007 04-2473303
020 C000007 5
020 A000008 SALOMON BROTHERS INC.
020 B000008 13-3082694
020 C000008 5
020 A000009 VOLPE, WELTY & COMPANY
020 B000009 94-3015811
020 C000009 4
020 A000010 ROBERTSON, STEPHENS & COMPANY
020 B000010 94-2524501
020 C000010 4
021 000000 480
022 A000001 HERZOG HEINE GEDULD
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022 C000001 7322
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022 A000002 HAMBRECHT & QUIST INC.
022 B000002 94-2856935
022 C000002 23278
022 D000002 6823
022 A000003 MONTGOMERY SECURITIES
022 B000003 94-1701676
022 C000003 8218
022 D000003 12906
022 A000004 ROBERTSON, STEPHEN & COMPANY
022 B000004 94-2524501
022 C000004 16044
022 D000004 4616
022 A000005 PACIFIC GROWTH EQUITIES
022 B000005 94-3097093
022 C000005 7127
022 D000005 5004
022 A000006 PIPER JAFFREY, INC.
022 B000006 41-1422918
022 C000006 5294
022 D000006 6772
022 A000007 FURMAN SLEZ INCORPORATED
022 B000007 13-2753731
<PAGE> PAGE 3
022 C000007 7333
022 D000007 3479
022 A000008 WILLIAM BLAIR & CO.
022 B000008 36-2214610
022 C000008 6464
022 D000008 2740
022 A000009 SALOMON BROTHERS, INC.
022 B000009 13-3082694
022 C000009 6782
022 D000009 1819
022 A000010 ALEX BROWN & SONS, INC.
022 B000010 52-1319768
022 C000010 5758
022 D000010 2334
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023 D000000 128436
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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SIGNATURE AUSTIN W. MARXE
TITLE GENERAL PARTNER
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 81935
<INVESTMENTS-AT-VALUE> 102977
<RECEIVABLES> 2420
<ASSETS-OTHER> 191
<OTHER-ITEMS-ASSETS> 13648
<TOTAL-ASSETS> 119236
<PAYABLE-FOR-SECURITIES> 3306
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10705
<TOTAL-LIABILITIES> 14011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 4209
<SHARES-COMMON-PRIOR> 3013
<ACCUMULATED-NII-CURRENT> 29056<F1>
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21016
<NET-ASSETS> 105225
<DIVIDEND-INCOME> 31
<INTEREST-INCOME> 488
<OTHER-INCOME> 103
<EXPENSES-NET> 1092
<NET-INVESTMENT-INCOME> (470)
<REALIZED-GAINS-CURRENT> 19899
<APPREC-INCREASE-CURRENT> 15765
<NET-CHANGE-FROM-OPS> 35194
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 10388<F2>
<NUMBER-OF-SHARES-SOLD> 143
<NUMBER-OF-SHARES-REDEEMED> 415
<SHARES-REINVESTED> 1408<F3>
<NET-CHANGE-IN-ASSETS> 29893
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7038
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1092
<AVERAGE-NET-ASSETS> 92407
<PER-SHARE-NAV-BEGIN> 25000
<PER-SHARE-NII> 0<F4>
<PER-SHARE-GAIN-APPREC> 0<F4>
<PER-SHARE-DIVIDEND> 0<F4>
<PER-SHARE-DISTRIBUTIONS> 0<F4>
<RETURNS-OF-CAPITAL> 0<F5>
<PER-SHARE-NAV-END> 25000
<EXPENSE-RATIO> 1.18
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1> Amount represents cumulative net income less repurchases of units. As a
partnership, no distributions are made. Partners elect to have their units
partly or wholly redeemed. As a partnership, there is no requirement to
separate the income catagories.
<F2> This amount represents repurchases of Units.
<F3> The Fund allocates additional units at the close of each fiscal period in
order to maintain a $25,000 price per unit. This is the amounts shown here as
reinvested.
<F4> These are not meaningful for the Partnership.
<F5> No amounts are shown here as they may be misleading. The returns vary
depending on when a partner invested.
</FN>
</TABLE>
