<PAGE> PAGE 1
000 A000000 06/30/98
000 C000000 0000914248
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000 I000000 3.0.a
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001 A000000 SPECIAL SITUATIONS FUND III, L.P.
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001 C000000 2128325300
002 A000000 153 EAST 53RD STREET, 51ST FLOOR
002 B000000 NEW YORK
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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
<PAGE> PAGE 2
010 C030001 10022
013 A000001 ANCHIN, BLOCK & ANCHIN
013 B010001 NEW YORK
013 B020001 NY
013 B030001 10018
015 A000001 PRUDENTIAL SECURITIES, INC.
015 B000001 C
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015 C020001 NY
015 C030001 10292
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020 A000001 INSTINET CORPORATION
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020 A000002 TUCKER ANTHONY
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020 A000003 PRUDENTIAL SECURITIES, INC.
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<PAGE> PAGE 3
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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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<PAGE> PAGE 8
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SIGNATURE AUSTIN W. MARXE
TITLE INDIVIDUAL G. P.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 140239
<INVESTMENTS-AT-VALUE> 152775
<RECEIVABLES> 3912
<ASSETS-OTHER> 45
<OTHER-ITEMS-ASSETS> 21631
<TOTAL-ASSETS> 178363
<PAYABLE-FOR-SECURITIES> 4148
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 18036
<TOTAL-LIABILITIES> 22184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6247
<SHARES-COMMON-PRIOR> 6780
<ACCUMULATED-NII-CURRENT> 0<F1>
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12750
<NET-ASSETS> 156179
<DIVIDEND-INCOME> 143
<INTEREST-INCOME> 321
<OTHER-INCOME> 0
<EXPENSES-NET> 917
<NET-INVESTMENT-INCOME> (453)
<REALIZED-GAINS-CURRENT> 21949
<APPREC-INCREASE-CURRENT> (25748)
<NET-CHANGE-FROM-OPS> (4253)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 11492<F2>
<NUMBER-OF-SHARES-SOLD> 97
<NUMBER-OF-SHARES-REDEEMED> 460
<SHARES-REINVESTED> (170)<F3>
<NET-CHANGE-IN-ASSETS> (13328)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 917
<AVERAGE-NET-ASSETS> 176239
<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> 1.04
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>This item is not applicable to financial statements of a Partnership.
<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
amount 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>
