TEXTAINER FINANCIAL SERVICES CORPORATION
                       650 California Street, 16th Floor
                            San Francisco, CA 94108


March 28, 2000


Securities and Exchange Commission
Washington, DC  20549

Gentlemen:

Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,  we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund III,
L.P. (the  "Partnership")  the Partnership's  Annual Report on Form 10-K for the
fiscal year ended December 31, 1999.

The financial  statements included in the enclosed Annual Report on Form 10-K do
not reflect a change from the  preceding  year in any  accounting  principles or
practices, or in the method of applying any such principles or practices.

This filing is being effected by direct  transmission to the Commission's  EDGAR
System.

Sincerely,

Nadine Forsman
Controller

<PAGE>

               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington DC 20549

                                  FORM 10-K

               ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                For the fiscal year ended December 31, 1999

                    Commission file number 0-20140

               TEXTAINER EQUIPMENT INCOME FUND III, L.P.
        (Exact name of Registrant as specified in its charter)

           California                                        94-3121277
   (State or other jurisdiction                             (IRS Employer
  of incorporation or organization)                       Identification No.)

    650 California Street, 16th Floor
            San Francisco, CA                                   94108
 (Address of Principal Executive Offices)                     (ZIP Code)

              Registrant's telephone number, including area code:
                               (415) 434-0551

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

                           NONE

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

                LIMITED PARTNERSHIP DEPOSITARY UNITS (THE "UNITS")
                                  (TITLE OF CLASS)

               LIMITED PARTNERSHIP INTERESTS (UNDERLYING THE UNITS)
                                  (TITLE OF CLASS)

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.
[ 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 ]

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold,  or the  average  bid and ask  prices of such
stock, as of a specified date within 60 days prior to the date of the filing.

Not Applicable.

Documents Incorporated by Reference

The Registrant's Prospectus as contained in Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement dated and filed with the Commission December
21, 1990, as supplemented by Post-Effective Amendments No. 1, 2 and 3 filed with
the  Commission  under  Section 8(c) of the  Securities  Act of 1933 on March 1,
1991, January 13, 1992 and February 4, 1992, respectively.

<PAGE>


                                     PART I

ITEM 1.      DESCRIPTION OF BUSINESS

For more detailed information about the Registrant's  business, see "Business of
the Partnership" in the Registrant's Prospectus as supplemented.

(a)      General Development of Business

         The Registrant is a California  Limited  Partnership formed on July 26,
         1990 to purchase,  own, operate,  lease, and sell equipment used in the
         containerized  cargo  shipping  industry.   The  Registrant   commenced
         offering units representing  limited  partnership  interests (Units) to
         the public on January  16,  1991 in  accordance  with its  Registration
         Statement,  and  ceased  to offer  such  Units as of May 4,  1992.  The
         Registrant  raised  a total  of  $125,000,000  from  the  offering  and
         invested a substantial  portion of the money raised in  equipment.  The
         Registrant has since engaged in leasing this and other equipment in the
         international shipping industry.

         See  Item 10  herein  for a  description  of the  Registrant's  General
         Partners.  See  Item 7  herein  for a  description  of  current  market
         conditions affecting the Registrant's business.

(b)      Financial Information About Industry Segments

         Inapplicable.

(c)      Narrative Description of Business

(c)(1)(i)         A container   leasing company  generally, and  the  Registrant
                  specifically, is an operating business comparable  to a rental
                  car  business. A customer can lease a car from a bank  leasing
                  department  for a monthly charge which  represents the cost of
                  the car, plus interest,  amortized over the term of the lease;
                  or  the  customer can  rent  the  same car from  a rental  car
                  company at a much higher  daily lease  rate.  The  customer is
                  willing  to pay the higher  daily   rate for the   convenience
                  and  value-added  features provided by the rental car company,
                  the most  important of which is the ability to pick up the car
                  where it is most  convenient,  use it for the  desired  period
                  of time,  and then  drop  it off at a  location  convenient to
                  the  customer.  Rental car companies compete  with one another
                  on the basis of lease  rates,  availability  of cars,  and the
                  provision of additional  services.  They generate  revenues by
                  maintaining   the  highest   lease rates  and   the    highest
                  utilization  factors that market conditions will allow, and by
                  augmenting  this income with proceeds from sales of insurance,
                  drop-off  fees,  and other special charges. A large percentage
                  of lease revenues earned by car rental companies are generated
                  under corporate rate agreements  wherein,  for a stated period
                  of time, employees  of a  participating  corporation  can rent
                  cars at specific  terms, conditions and rental rates.

                  Container  leasing  companies and the Registrant  operate in a
                  similar  manner  by owning a  worldwide  fleet of new and used
                  transportation  containers  and leasing  these  containers  to
                  international  shipping  companies  hauling  various  types of
                  goods among  numerous  trade  routes.  All lessees pay a daily
                  rental rate and in certain  markets  may pay special  handling
                  fees and/or  drop-off  charges.  In addition to these fees and
                  charges,  a lessee must  either  provide  physical  damage and
                  liability  insurance  or  purchase  a damage  waiver  from the
                  Registrant,  in which  case the  Registrant  agrees to pay the
                  cost of repairing any physical damage to containers  caused by
                  lessees.  Container leasing companies compete with one another
                  on the basis of lease rates,  availability  of  equipment  and
                  services provided.  To ensure the availability of equipment to
                  its customers,  container leasing companies and the Registrant
                  may pay to reposition  containers from low demand locations to
                  higher  demand  locations.  By  maintaining  the highest lease
                  rates and the highest equipment utilization factors allowed by
                  market conditions, the Registrant attempts to generate revenue
                  and profit.  The  majority of the  Registrant's  equipment  is
                  leased  under  master  leases,  which  are  comparable  to the
                  corporate rate  agreements  used by rental car companies.  The
                  master leases provide that the lessee,  for a specified period
                  of time, may rent containers at specific terms, conditions and
                  rental rates. Although the terms of the master lease governing
                  each  container  under  lease  do  not  vary,  the  number  of
                  containers  in use can vary from time to time  within the term
                  of the master  lease.  The terms and  conditions of the master
                  lease provide that the lessee pays a daily rental rate for the
                  entire time the container is in his possession (whether or not
                  he is actively using it), is responsible  for any damage,  and
                  must  insure the  container  against  liabilities.  For a more
                  detailed   discussion  of  the  leases  for  the  Registrant's
                  equipment,   see  "Leasing  Policy"  under  "Business  of  the
                  Partnership" in the  Registrant's  Prospectus as supplemented.
                  The  Registrant  also  sells  containers  in the course of its
                  business as opportunities arise, at the end of the container's
                  useful life or if market and economic  considerations indicate
                  that  a  sale  would  be  beneficial.  See  "Business  of  the
                  Partnership" in Registrant's Prospectus, as supplemented.

(c)(1)(ii)        Inapplicable.

(c)(1)(iii)       Inapplicable.

(c)(1)(iv)        Inapplicable.

(c)(1)(v)         Inapplicable.

(c)(1)(vi)        Inapplicable.

(c)(1)(vii)       No single  lessee had  generated  lease  revenue for the years
                  ended  December 31, 1999,  1998 and 1997 which was 10% or more
                  of the total revenue of the Registrant.

(c)(1)(viii)      Inapplicable.

(c)(1)(ix)        Inapplicable.

 (c)(1)(x)        There are  approximately  80  container  leasing  companies of
                  which  the  top  ten  control  approximately  91% of the total
                  equipment  held  by all container leasing  companies.  The top
                  two container leasing companies combined control approximately
                  36% of the  total  equipment  held  by all  container  leasing
                  companies.  Textainer  Equipment   Management    Limited,   an
                  Associate General Partner of the Registrant and the manager of
                  its  marine   container   equipment,  is  the  third   largest
                  container leasing  company and manages  approximately  13%  of
                  the equipment  held by all container leasing  companies.   The
                  customers  for leased  containers  are primarily international
                  shipping  lines.  The  Registrant  alone   is  not a  material
                  participant in the worldwide container   leasing   market. The
                  principal   methods  of  competition  are  price, availability
                  and the  provision of  worldwide service to the  international
                  shipping community.  Competition   in  the  container  leasing
                  market has  increased  over the past  few years.  Since  1996,
                  shipping alliances and other operational  consolidations among
                  shipping lines have allowed shipping lines to begin  operating
                  with fewer  containers,  thereby   decreasing  the demand  for
                  leased  containers.  Furthermore,   primarily  as a  result of
                  lower new container  prices and low interest  rates,  shipping
                  lines now own, rather  than  lease,  a  higher  percentage  of
                  containers.  The  decrease in  demand   from  shipping  lines,
                  along with   the   entry of new   leasing company  competitors
                  offering low container rental rates, has increased competition
                  among container  lessors such as the Registrant.

(c)(1)(xi)        Inapplicable.

(c)(1)(xii)       Inapplicable.

(c)(1)(xiii)      The Registrant has no employees.  Textainer Financial Services
                  Corporation   (TFS),  the  Managing  General  Partner  of  the
                  Registrant,  is responsible for the overall  management of the
                  business  of the  Registrant  and at  December  31, 1999 had 4
                  employees.  Textainer  Equipment  Management Limited (TEM), an
                  Associate  General Partner,  is responsible for the management
                  of the leasing  operations of the  Registrant  and at December
                  31, 1999 had a total of 164 employees.

(d)      Financial Information about Foreign and Domestic Operations and  Export
         Sales.

         The  Registrant  is involved in the leasing of shipping  containers  to
         international   shipping   companies   for  use  in  world   trade  and
         approximately  15%,  22% and  17% of the  Registrant's  rental  revenue
         during the years ended December 31, 1999, 1998 and 1997,  respectively,
         was derived from operations sourced or terminated  domestically.  These
         percentages do not reflect the proportion of the  Partnership's  income
         from  operations  generated  domestically  or  in  domestic  waterways.
         Substantially  all of  the  Partnership's  income  from  operations  is
         derived from assets  employed in foreign  operations.  See "Business of
         the  Partnership",  and  for a  discussion  of  the  risks  of  leasing
         containers for use in world trade,  "Risk Factors" in the  Registrant's
         Prospectus, as supplemented.

ITEM 2.      PROPERTIES

As of December 31, 1999, the Registrant owned the following types and quantities
of equipment:

         20-foot standard dry freight containers                           8,863
         40-foot standard dry freight containers                          11,276
         40-foot high cube dry freight containers                          7,086
                                                                          ------
                                                                          27,225
                                                                          ======
During  December 1999,  approximately  77% of these  containers were on lease to
international shipping companies, and the balance were being stored at container
manufacturers'  locations  and at a  large  number  of  storage  depots  located
worldwide. At December 31, 1999, less than 2% of the Partnership's equipment had
been identified as being for sale.

For  information  about  the  Registrant's   property,   see  "Business  of  the
Partnership" and "Risk Factors" in the Registrant's Prospectus, as supplemented.
See also Item 7, "Results of Operations" regarding current, and possible future,
write-downs of some of the Registrant's property.

ITEM 3.      LEGAL PROCEEDINGS

The Registrant is not subject to any legal proceedings.

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

Inapplicable.

                                        PART II

ITEM 5.      MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
             MATTERS

ITEM 201:

(a)          Market Information.

(a)(1)(i)         The Registrant's  limited  partnership  Units are not publicly
                  traded  and there is no  established  trading  market for such
                  Units.  The Registrant has a program whereby limited  partners
                  may redeem Units for a specified redemption price. The program
                  operates only when the Managing  General  Partner  determines,
                  among other matters,  that payment for redeemed units will not
                  impair the capital or operations of the Registrant.

(a)(1)(ii)        Inapplicable.

(a)(1)(iii)       Inapplicable.

(a)(1)(iv)        Inapplicable.

(a)(1)(v)         Inapplicable.

(a)(2)            Inapplicable.

(b)          Holders.

(b)(1)            As of  January  1, 2000, there were  7,925  holders  of record
                  of limited  partnership interests in the Registrant.

(b)(2)            Inapplicable.

(c)          Dividends.

                  Inapplicable.

For details of the distributions which are made monthly by the Registrant to its
limited partners, see Item 6 "Selected Financial Data".

ITEM 701:         Inapplicable.

ITEM 6.      SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                  (Amounts in thousands except for per unit amounts)

                                                                       Year Ended December 31,
                                               ------------------------------------------------------------------------
                                                      1999          1998          1997           1996           1995
                                                      ----          ----          ----           ----           ----
<S>                                                    <C>            <C>            <C>         <C>             <C>

Rental income...........................          $ 15,224      $ 18,904      $ 19,361     $   21,349     $   23,724

Net (loss) earnings.....................          $    (21)     $  3,886      $  5,173     $    7,795     $   10,319

Net (loss) earnings per unit of
  limited partner interest..............          $  (0.02)     $   0.61      $   0.82     $     1.24     $     1.64


Distributions per unit of
  limited partner interest..............          $   1.61      $   1.77      $   1.85     $     1.85     $     1.82

Distributions per unit of limited
   partnership interest representing
   a return of capital..................          $   1.61      $   1.16      $   1.03     $     0.61     $     0.18

Total assets............................          $ 64,803      $ 74,579      $ 82,248     $   88,765     $   92,981
</TABLE>

<PAGE>


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

              (Amounts in thousands except for unit and per unit amounts)

The Financial  Statements contain information that will assist in evaluating the
financial  condition of the  Partnership  for the years ended December 31, 1999,
1998 and 1997.  Please refer to the  Financial  Statements  and Notes thereto in
connection with the following discussion.

Liquidity and Capital Resources

From  January  16,  1991  until May 4, 1992,  the  Partnership  offered  limited
partnership  interests  to the  public.  The  Partnership  received  its minimum
subscription  amount  of  $1,000  on  February  11,  1991 and on May 4, 1992 the
Partnership's offering of limited partnership interest was closed at $125,000.

From time to time,  the  Partnership  redeems units from limited  partners for a
specified  redemption  value,  which  is  set  by  formula.  Up  to  2%  of  the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the Managing General  Partner's  discretion.  All redemptions
are subject to the Managing  General  Partner's  good faith  determination  that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a  corporation,  (ii) impair the capital or  operations of the  Partnership,  or
(iii) impair the ability of the Partnership to pay  distributions  in accordance
with its  distribution  policy.  During the year ended  December 31,  1999,  the
Partnership  redeemed  16,926  units  for a total  dollar  amount  of $157.  The
Partnership used cash flow from operations to pay for the redeemed units.

The Partnership invests working capital,  cash flow from operations prior to its
distribution  to the partners and proceeds  from  container  sales that have not
been  used  to  purchase  containers  in  short-term,  liquid  investments.  The
Partnership's  cash is  affected  by  cash  provided  by or  used in  operating,
investing and financing  activities.  These  activities  are discussed in detail
below.

Limited partners are currently receiving monthly  distributions in an annualized
amount equal to 7% of their original investment.  During the year ended December
31, 1999,  the  Partnership  declared  cash  distributions  to limited  partners
pertaining to the period from December 1998 through November 1999, in the amount
of $9,873. On a cash basis, $8,393 of these distributions were from current year
operating activities and the remainder was from cash provided by previous years'
operations  that had not been  distributed  or used to  purchase  containers  or
redeem  units.  On a GAAP  basis,  all of these  distributions  were a return of
capital.

At December 31, 1999, the Partnership had no commitments to purchase containers.

Net cash provided by operating  activities for the years ended December 31, 1999
and 1998 was $8,550 and $12,419,  respectively.  The decrease of $3,869, or 31%,
was  primarily  attributable  to the  decrease  in net  earnings,  adjusted  for
non-cash  transactions  and  fluctuations  in  accounts  receivable,   excluding
write-offs,  partially offset by fluctuations in due from  affiliates,  net. Net
earnings,  adjusted for non-cash  transactions,  decreased  primarily due to the
decline  in  rental  income,  which  is  discussed  more  fully in  "Results  of
Operations".  The  decrease  in accounts  receivable  of $145 for the year ended
December 31, 1999 was primarily due to the decrease in rental income,  offset by
an  increase  in the  average  collection  period of  accounts  receivable.  The
decrease  in  accounts  receivable,  excluding  write-offs,  of  $1,041  for the
comparable  period in 1998 was primarily due to the resolution of payment issues
with one lessee and a decrease  in the  average  collection  period of  accounts
receivable.  The fluctuations in due from affiliates,  net, resulted from timing
differences in the payment of expenses and fees and the remittance of net rental
revenues.

For the year ended December 31, 1999, net cash provided by investing  activities
(the purchase and sale of containers) was $1,501 compared to $1,849 for the year
ended  December 31, 1998.  Net cash provided by investing  activities  decreased
$348 due to the Partnership  having  purchased more  containers  during the year
ended December 31, 1999 than in 1998, partially offset by the Partnership having
sold more  containers  during the year ended December 31, 1999 than in 1998. The
increase in  container  purchases  from 1998 to 1999 was due to the  increase in
cash  available for equipment  purchases as a result of the increased  container
sales.  The increase in proceeds from container sales during 1999 was due to the
Partnership  continuing to sell  containers  located in low demand  locations as
discussed below in "Results of Operations", offset by lower average sales prices
received on the container  sales.  The sales prices  received on these container
sales decreased as a result of current market  conditions,  which have adversely
affected the value of used  containers.  Until  conditions  improve in these low
demand  locations,  the  Partnership  plans  to  continue  to  sell  some of its
containers  located there. The Partnership sells containers when (i) a container
reaches the end of its useful life or (ii) an analysis  indicates  that the sale
is  warranted  based on existing  market  conditions  and the  container's  age,
location and condition.  Proceeds from container  sales will fluctuate  based on
the number of containers sold and the actual price received on the sale.

Consistent with its investment  objectives,  the Partnership intends to continue
to reinvest available cash from operations, after distributions and redemptions,
and  all or a  significant  amount  of the  proceeds  from  container  sales  in
additional containers. However, the number of additional containers purchased is
not likely to equal the number of containers  sold, as new container  prices are
likely to be greater than the average  sales price of  containers  sold.  Market
conditions  have had an  adverse  effect on the  average  sales  price  recently
realized from  container  sales and on the amount of cash provided by operations
that is  available  for  additional  container  purchases.  These  factors  have
contributed  to a lower than  anticipated  reinvestment in  containers. The rate
of reinvestment is also  affected by  distributions  and  redemptions, which are
determined by the General Partners in accordance with the Partnership Agreement.
Market  conditions  are  discussed  more  fully under  "Results of  Operations".
A  slower  rate  of  reinvestment will, over  time,   affect  the  size  of  the
Partnership's  container fleet.

Results of Operations

The  Partnership's  income from operations,  which consists  primarily of rental
income, container depreciation,  direct container expenses, management fees, and
reimbursement of administrative expenses was directly related to the size of the
container fleet during the years ended December 31, 1999, 1998 and 1997, as well
as certain other factors as discussed  below.  The following is a summary of the
container fleet (in units) available for lease during those periods:

                                                    1999        1998        1997
                                                    ----        ----        ----

     Beginning container fleet...............     29,237      31,342      30,605
     Ending container fleet..................     27,225      29,237      31,342
     Average container fleet.................     28,231      30,290      30,974

The decline in the average  container  fleet of 7% from the year ended  December
31, 1998 to the year ended December 31, 1999 was due to the  Partnership  having
sold more containers than it purchased since December 31, 1998. Although some of
the sales proceeds were used to purchase additional containers, fewer containers
were  bought  than  sold,  resulting  in the  net  decrease  in the  size of the
container fleet.  The Partnership  plans to use the remaining sales proceeds for
future  container  purchases.  As noted above,  when containers are sold,  sales
proceeds are not likely to be sufficient to replace all of the containers  sold.
This trend,  which is expected to continue,  has contributed to a slower rate of
reinvestment  than had been  expected by the  General  Partners.  Other  factors
related  to  this  trend  are  discussed  above  under  "Liquidity  and  Capital
Resources."

Rental income and direct container expenses are also affected by the utilization
of the container  fleet,  which was 72%, 78% and 80% on average during the years
ended December 31, 1999, 1998 and 1997, respectively. In addition, rental income
is affected by daily rental rates.

The  following is a comparative  analysis of the results of  operations  for the
years ended December 31, 1999, 1998 and 1997.

The  Partnership's  income from operations for the years ended December 31, 1999
and 1998 was $802 and  $5,009,  respectively,  on rental  income of $15,224  and
$18,904, respectively. The decrease in rental income of $3,680, or 19%, from the
year  ended  December  31,  1998  to  the  year  ended  December  31,  1999  was
attributable  to decreases in container  rental income and other rental  income,
which is discussed below. Income from container rentals,  the major component of
total revenue,  decreased $3,217, or 19%,  primarily due to the decreases in the
average on-hire utilization of 8%, the average container fleet of 7% and average
rental rates of 5%.

The  Partnership's  income from operations for the years ended December 31, 1998
and 1997 was at $5,009 and $5,224, respectively, on rental income of $18,904 and
$19,361,  respectively.  The decrease in rental  income of $457, or 2%, from the
year  ended  December  31,  1997  to the  same  period  in  1998  was  primarily
attributable to a decrease in income from container rentals, partially offset by
an increase in other rental  income.  Income from  container  rentals  decreased
$967, or 5%,  primarily due to the decreases in the average  container  fleet of
2%, average on-hire utilization of 3% and average rental rates of 3%.

Since 1996, the container leasing industry has been adversely  affected by lower
demand for leased containers, increased competition and a trade imbalance, which
have resulted in declining utilization and rental rates and increased costs.

Demand for  leased  containers  decreased  due to  changes  in the  business  of
shipping  line  customers as a result of (i)  over-capacity  resulting  from the
additions of new, larger ships to the existing container ship fleet at a rate in
excess of the growth rate in  containerized  cargo  trade;  (ii)  shipping  line
alliances and other operational  consolidations that have allowed shipping lines
to operate with fewer containers; and (iii) shipping lines purchasing containers
to take advantage of low prices and favorable interest rates.

The entry of new leasing company competitors offering low container rental rates
to shipping  lines  resulted in downward  pressure on rental  rates,  and caused
leasing  companies to offer higher  leasing  incentives  and other  discounts to
shipping lines. The decline in the purchase price of new containers  during this
period  and  excess  industry  capacity  have also  caused  additional  downward
pressure on rental rates.

The  weakening  of many  Asian  currencies  in 1998  resulted  in a  significant
increase in exports  from Asia to North  America and Europe and a  corresponding
decrease  in  imports  into Asia from  North  America  and  Europe.  This  trade
imbalance created a weak demand for containers in North America and Europe and a
strong  demand for  containers in Asia,  which  resulted in a decline in leasing
incentives in Asia, but contributed to a further decline in average  utilization
and rental rates for the fleet managed by TEM. This  imbalance has also resulted
in an  unusually  high  build-up of  containers  in lower demand  locations.  To
alleviate  the  container  build-up,  the  Partnership  has  repositioned  newer
containers to higher demand locations.  However, as a result of this effort, the
Partnership has incurred  increased  direct  container  expenses during 1998 and
1999.

In  addition to  repositioning  containers,  the  Partnership  has sold  certain
containers  located  in lower  demand  locations.  The  decision  to sell  these
containers  was based on the current  expectation  that the economic  benefit of
selling  these  containers  is greater than the  estimated  economic  benefit of
continuing to own these  containers.  The majority of the containers sold during
1998  and 1999  were  older  containers  as the  expected  economic  benefit  of
continuing to own these  containers  was  significantly  less than that of newer
containers,  primarily due to their shorter  remaining  marine life, the cost to
reposition   containers  and  shipping  lines'   preference  for  leasing  newer
containers.

Once the decision had been made to sell certain containers during 1998 and 1999,
the Partnership wrote down the value of these specifically identified containers
to their  estimated fair value,  which was based on recent sales prices.  Due to
unanticipated  declines in  container  sales  prices,  the actual  sales  prices
received on some  containers  during 1999 were lower than the estimates used for
the write-down,  resulting in the Partnership  incurring losses upon the sale of
some of these containers. The Partnership recorded additional write-downs during
1999 on  previously  written  down  containers  and on  containers  subsequently
identified for sale. Until market conditions improve,  the Partnership may incur
further  write-downs  and/or losses on the sale of such  containers.  Should the
decline in economic  value of continuing to own such  containers  turn out to be
permanent,  the Partnership may be required to increase its depreciation rate or
write-down the value for some or all of its container rental equipment.

Although average  utilization  during the year ended December 31, 1999 was lower
than the comparable period in 1998 for the reasons discussed above,  utilization
has been  steadily  improving  during the second  half of 1999 and has  remained
stable into the beginning of 2000.  This  improvement in utilization  was due to
slight  improvements  in demand for leased  containers  and the trade  imbalance
primarily  as a result of the  improvement  in  certain  Asian  economies  and a
related increase in exports out of Europe.  Although the General Partners do not
foresee material  changes in existing market  conditions for the near term, they
are  cautiously  optimistic  that  the  current  level of  utilization  might be
maintained during 2000. However,  the General Partners caution that utilization,
lease rates and container  sale prices could also decline,  adversely  affecting
the Partnership's operating results.

Substantially  all of the  Partnership's  rental income was  generated  from the
leasing of the Partnership's containers under short-term operating leases.

The  balance of other  rental  income  consists  of other  lease-related  items,
primarily  income from charges to lessees for dropping off containers in surplus
locations less credits  granted to lessees for leasing  containers  from surplus
locations (location income), income from charges to lessees for handling related
to leasing and returning containers (handling income) and income from charges to
lessees for a Damage  Protection  Plan (DPP).  For the year ended  December  31,
1999,  the total of these other rental  income  items was $1,807,  a decrease of
$463 from the year ended  December 31, 1998.  This decrease was primarily due to
the decrease in location  income of $460.  Location  income  decreased  due to a
decrease in charges to lessees for dropping off containers in certain  locations
and an increase  in credits  given to lessees  for  picking up  containers  from
certain locations.  These decreases and increases were in the lessees' favor and
were driven by the market conditions described above.

For the year ended  December  31, 1998,  the total of these other rental  income
items was $2,270,  an increase of $510 from the year ended  December  31,  1997.
Other income increased  primarily due to an increase in location income of $723,
offset by a decrease  in  handling  income of $154.  Location  income  increased
primarily  due to a  decrease  in  credits  given  to  lessees  for  picking  up
containers from certain locations.  Handling income decreased primarily due to a
decrease in container movement.

Direct container  expenses  increased $486, or 12%, from the year ended December
31, 1998 to same period in 1999.  The increase was primarily due to increases in
DPP and storage  expenses of $393 and $341,  respectively,  partially  offset by
decreases in insurance and repositioning  expenses of $84 and $72, respectively.
DPP expense  increased  primarily due to an increase in the average  repair cost
per DPP container and an increase in the number of containers covered under DPP.
Storage expense increased primarily due to the decrease in average  utilization.
Insurance  expense   decreased  due  to  a  reduction  in  insurance   premiums.
Repositioning  expense  decreased due to lower average  repositioning  costs per
container,  partially  offset  by  an  increase  in  the  number  of  containers
repositioned from the year ended December 31, 1998 to the same period in 1999.

Direct  container  expenses  increased $277, or 7%, from the year ended December
31, 1997 to the year ended  December 31, 1998. The increase was primarily due to
an increase in  repositioning  expense of $519,  offset by decreases in handling
and  maintenance  expense of $75 and $51,  respectively.  Repositioning  expense
increased primarily due to an increase in the number of containers  repositioned
at a higher average repositioning cost per container. Handling expense decreased
primarily  due  to the  decrease  in  container  movement.  Maintenance  expense
decreased  due to decreases  in the average  repair cost per  container  and the
number of units requiring repair.

Bad debt  expense  (benefit)  was  $353,  ($244)  and $166 for the  years  ended
December 31, 1999, 1998 and 1997, respectively. The effect of insurance proceeds
received during 1998 relating to certain  receivables against which reserves had
been recorded in 1994 and 1995, as well as from the resolution of payment issues
with one lessee during 1998, were primarily responsible for the benefit recorded
in 1998 and,  therefore,  the fluctuation in bad debt expense  (benefit) between
the periods.

Depreciation  expense  decreased  $498,  or 7%, and $171,  or 3%, from the years
ended December 31, 1998 to 1999 and December 31, 1997 to 1998, respectively, due
to the declines in the average fleet size.

New  container  prices  have  been  declining  since  1995,  and the cost of new
containers at year-end  1998 and during 1999,  was  significantly  less than the
cost of  containers  purchased in prior years.  The  Partnership  evaluated  the
recoverability  of the recorded amount of container rental equipment at December
31, 1998 and 1999, and determined  that a reduction to the carrying value of the
containers  held for continued  use was not  required,  but that a write-down in
value of certain  containers  identified for sale was required.  The Partnership
wrote down the value of these  containers to their  estimated fair value,  which
was based on recent sales prices less cost to sell.

During the fourth quarter of 1998, the Partnership recorded a write-down of $349
on 930 containers  identified for sale. During the year ended December 31, 1999,
the Partnership  recorded  additional  write-downs of $733 on previously written
down containers and on 1,398  containers  subsequently  identified for sale. The
Partnership  sold 1,998  previously  written down containers for a loss of $290.
The  Partnership  incurred  losses  on the  sale of some  containers  previously
written down as the actual sales prices received on these  containers were lower
than  the  estimates  used  for the  write-downs,  primarily  due to  unexpected
declines in container sale prices. Additionally, the Partnership incurred losses
of $691 on the sale of containers that had not been written-down.

If more containers are subsequently identified as for sale or if container sales
prices continue to decline, the Partnership may incur additional  write-downs on
containers and/or may incur losses on the sale of containers.

Management  fees to  affiliates  decreased  $244,  or 14%,  from the year  ended
December  31, 1998 to the year ended  December 31, 1999 due to decreases in both
equipment and incentive  management  fees. The decrease in equipment  management
fees  resulted  primarily  from the  decrease in rental  income,  upon which the
management fee is primarily  based.  These fees were  approximately 7% of rental
income  for both  periods.  Incentive  management  fees,  which are based on the
Partnership's limited and general partner distribution  percentage and partners'
capital,  decreased  from $454 for the year ended  December 31, 1998 to $410 for
the same period in 1999, due to the decrease in the limited partner distribution
percentage from 8.25% to 7% of partners' capital in October 1999.

Management  fees to  affiliates  decreased  $100,  or 6%,  from the  year  ended
December  31,  1997 to the year ended  December  31,  1998 due to  decreases  in
equipment and incentive  management fees. Equipment management fees decreased as
a result of the  decrease in rental  income and due to an  adjustment  resulting
from the write-off of receivables  for two lessees.  Incentive  management  fees
decreased  from  $480 to $454  from  the year  ended  December  31,  1997 to the
comparable  period  in  1998,  due  to  the  decrease  in  the  limited  partner
distribution percentage from 9.25% to 8.25% of partners' capital, effective July
1998.

General and administrative  costs to affiliates  decrease $224, or 22% and $144,
or 12%, from the years ended  December 31, 1998 to 1999 and December 31, 1997 to
1998, respectively.  These decreases were due to a decrease in the allocation of
overhead costs from TEM, as the Partnership represented a smaller portion of the
total fleet managed by TEM and due to lower costs allocated by TFS.

Other expense  decreased  $300 from the year ended December 31, 1998 to the year
ended  December  31,  1999  primarily  due to a decrease  in the loss on sale of
containers.  Although the Partnership continued to sell containers in low demand
locations at lower average sales prices,  as a result of market  conditions,  it
incurred  fewer losses during 1999 than 1998  primarily due to the write-down of
certain containers recorded during 1998 and 1999.

Other expense increased $1,072 from the year ended December 31, 1997 to the year
ended  December  31, 1998 due to an increase in the loss on sale of  containers,
partially  offset  by an  increase  in  interest  income.  The  loss  on sale of
containers was primarily due to the Partnership  selling  containers  located in
low demand  locations  at a younger  age than they  would have been sold  during
previous years, as a result of current market conditions.

Net earnings per limited  partnership unit decreased from earnings of $0.61 to a
loss of $0.02, and from $0.82 to $0.61 from the years ended December 31, 1998 to
1999 and from December 31, 1997 to 1998,  respectively.  These decreases reflect
the  decreases in net earnings  allocated to limited  partners  from earnings of
$3,771 to a loss of $125 from the year ended  December 31, 1998 to 1999 and from
$5,053 to $3,771 from December 31, 1997 to 1998.  The allocation of net earnings
for the  years  ended  December  31,  1999,  1998 and 1997  included  a  special
allocation of gross income of $104,  $76 and $68,  respectively,  to the General
Partners in accordance with the Partnership Agreement.

Although  substantially  all of the  Partnership's  income  from  operations  is
derived from assets employed in foreign operations, virtually all of this income
is  denominated  in United  States  dollars.  The  Partnership's  customers  are
international  shipping  lines,  which transport  goods on  international  trade
routes.  The  domicile  of the lessee is not  indicative  of where the lessee is
transporting  the  containers.  The  Partnership's  business risk in its foreign
operations lies with the  creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease,  rather than the geographic location
of the  containers or the domicile of the lessees.  The containers are generally
operated on the international high seas rather than on domestic  waterways.  The
containers are subject to the risk of war or other political, economic or social
occurrence  where  the  containers  are used,  which  may  result in the loss of
containers,  which,  in turn,  may have a material  impact on the  Partnership's
results of operations  and  financial  condition.  The General  Partners are not
aware of any  conditions  as of December 31, 1999,  which would result in such a
risk materializing.

Other risks of the Partnership's  leasing  operations include  competition,  the
cost of  repositioning  containers  after  they come  off-lease,  the risk of an
uninsured  loss,  increases in maintenance  expenses or other costs of operating
the  containers,  and the effect of world trade,  industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented,  for additional information on
risks of the Partnership's business.

Effect of Date Crossing to Year 2000

There has been no material effect on the Partnership's  financial  condition and
results of  operations as a result of problems  arising from  computer  systems'
abilities to process dates beyond January 1, 2000.  The General  Partners do not
currently  expect any such problems to arise within their own computer  systems.
The  likelihood  that a failure in a third party's system would occur and have a
significant  adverse effect on the Partnership's  operations seems  increasingly
remote,  but no assurance can be given that,  due to  unforeseen  circumstances,
such an event could not occur.  Therefore,  the  Partnership's  contingency plan
remains in place;  that is, the General  Partners  continue to remain capable of
switching  temporarily to manual  operations in the event of a computer system's
failure. There can be no assurance, however, that switching to manual operations
would prevent all adverse effects of any future year 2000 problem.

Forward Looking Statements

The foregoing includes forward-looking statements and predictions about possible
or  future  events,  results  of  operations  and  financial  condition.   These
statements  and  predictions  may  prove  to  be  inaccurate,   because  of  the
assumptions  made by the  Partnership  or the  General  Partners  or the  actual
development  of  future  events.  No  assurance  can be given  that any of these
forward-looking statements or predictions will ultimately prove to be correct or
even substantially correct. The risks and uncertainties in these forward-looking
statements  include,  but are not  limited  to,  changes  in demand  for  leased
containers,  changes in global  business  conditions  and their  effect on world
trade,  future  modifications  in the way in  which  the  Partnership's  lessees
conduct their business or of the  profitability of their business,  increases or
decreases in new container  prices or the  availability  of financing  therefor,
alterations in the costs of maintaining and repairing used containers, increases
in competition,  changes in the Partnership's  ability to maintain insurance for
its  containers  and its  operations,  the effects of  political  conditions  on
worldwide  shipping and demand for global trade or of other general business and
economic cycles on the  Partnership,  as well as other risks detailed herein and
from time to time in the Partnership's  filings with the Securities and Exchange
Commission.  The  Partnership  does  not  undertake  any  obligation  to  update
forward-looking statements.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Inapplicable.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached pages 13 to 25.

<PAGE>

                       Independent Auditors' Report



The Partners
Textainer Equipment Income Fund III, L.P.:

We have audited the  accompanying  balance sheets of Textainer  Equipment Income
Fund III, L.P. (a California  limited  partnership)  as of December 31, 1999 and
1998, the related statements of operations, partners' capital and cash flows for
each of the years in the  three-year  period  ended  December  31,  1999.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
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 Textainer Equipment Income Fund
III, L.P. as of December 31, 1999 and 1998,  and the results of its  operations,
its partners' capital and its cash flows for each of the years in the three-year
period ended December 31, 1999, in conformity with generally accepted accounting
principles.



                                    KPMG LLP



San Francisco, California
February 18, 2000


<PAGE>
<TABLE>
<CAPTION>



TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Balance Sheets

December 31, 1999 and 1998
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------

                                                                           1999                 1998
                                                                     ----------------     ----------------
<S>                                                                   <C>                 <C>

Assets
Container rental equipment, net of accumulated
   depreciation of  $40,469 (1998:  $40,147)                          $       56,757      $        65,872
Cash                                                                           3,355                3,455
Accounts receivable, net of allowance for doubtful
   accounts of $756 (1998: $439) (note 5)                                      3,857                4,185
Due from affiliates, net (note 2)                                                816                1,041
Prepaid expenses                                                                  18                   26
                                                                      ---------------     ----------------

                                                                      $       64,803      $        74,579
                                                                      ===============     ================

Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                   $          432      $           502
   Accrued liabilities                                                           286                  163
   Accrued recovery costs (note 1(j))                                            165                  116
   Accrued damage protection plan costs (note 1(k))                              436                  291
   Warranty claims (note 1(l))                                                   149                  188
   Deferred quarterly distributions (note 1(g))                                   81                   97
   Container purchases payable                                                   243                   56
                                                                      ---------------     ----------------

      Total liabilities                                                        1,792                1,413
                                                                      ---------------     ----------------

Partners' capital:
   General partners                                                                -                    -
   Limited partners                                                           63,011               73,166
                                                                      ---------------     ----------------

      Total partners' capital                                                 63,011               73,166
                                                                      ---------------     ----------------


                                                                      $       64,803      $        74,579
                                                                      ===============     ================

See accompanying notes to financial statements
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Statements of Operations

Years ended  December 31, 1999,  1998 and 1997
(Amounts in thousands  except for unit and per unit amounts)
-------------------------------------------------------------------------------------------------------

                                                           1999             1998              1997
                                                     ---------------- ----------------  ---------------
<S>                                                    <C>                 <C>                 <C>

Rental income                                        $        15,224  $        18,904   $       19,361
                                                     ---------------- ----------------  ---------------

Costs and expenses:
      Direct container expenses                                4,693            4,207            3,930
      Bad debt expense (benefit)                                 353             (244)             166
      Depreciation                                             6,148            6,646            6,817
      Write-down of containers (note 1(e))                       733              349                -
      Professional fees                                           70               41               37
      Management fees to affiliates (note 2)                   1,474            1,718            1,818
      General and administrative costs
        to affiliates (note 2)                                   785            1,009            1,153
      Other general and administrative costs                     166              169              216
                                                     ---------------- ----------------  ---------------

                                                              14,422           13,895           14,137
                                                     ---------------- ----------------  ---------------

      Income from operations                                     802            5,009            5,224
                                                     ---------------- ----------------  ---------------

Other expense:
      Interest income                                            158              117               77
      Loss on sale of containers                                (981)          (1,240)            (128)
                                                     ---------------- ----------------  ---------------

                                                                (823)          (1,123)             (51)
                                                     ---------------- ----------------  ---------------

      Net (loss) earnings                            $           (21) $         3,886   $        5,173
                                                     ================ ================  ===============

Allocation of net (loss) earnings (note 1(g)):
      General partners                               $           104  $           115   $          120
      Limited partners                                          (125)           3,771            5,053
                                                     ---------------- ----------------  ---------------

                                                     $           (21) $         3,886   $        5,173
                                                     ================ ================  ===============
Limited partners' per unit share
      of net (loss) earnings                         $         (0.02) $          0.61   $         0.82
                                                     ================ ================  ===============

Limited partners' per unit share
      of distributions                               $          1.61  $          1.77   $         1.85
                                                     ================ ================  ===============

Weighted average number of limited
      partnership units outstanding (note 1(m))            6,136,934        6,162,976        6,168,527
                                                     ================ ================  ===============


See accompanying  notes to financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Statements of Partners' Capital

Years ended December 31, 1999, 1998 and 1997
(Amounts in thousands)
----------------------------------------------------------------------------------------------------

                                                              Partners' Capital
                                           ---------------------------------------------------------

                                              General               Limited               Total
                                           --------------        --------------       --------------
<S>                                          <C>                 <C>                      <C>
Balances at December 31, 1996              $           -         $      86,801        $      86,801

Distributions                                       (120)              (11,412)             (11,532)

Redemptions (note 1(n))                                -                    (4)                  (4)

Net earnings                                         120                 5,053                5,173
                                           --------------        --------------       --------------

Balances at December 31, 1997                          -                80,438               80,438
                                           --------------        --------------       --------------


Distributions                                       (115)              (10,890)             (11,005)

Redemptions (note 1(n))                                -                  (153)                (153)

Net earnings                                         115                 3,771                3,886
                                           --------------        --------------       --------------

Balances at December 31, 1998                          -                73,166               73,166
                                           --------------        --------------       --------------


Distributions                                       (104)               (9,873)              (9,977)

Redemptions (note 1(n))                                -                  (157)                (157)

Net earnings (loss)                                  104                  (125)                 (21)
                                           --------------        --------------       --------------

Balances at December 31, 1999              $           -         $      63,011        $      63,011
                                           ==============        ==============       ==============


See accompanying notes to financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>


TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------------------------

                                                                                  1999            1998             1997
                                                                             -------------   --------------   --------------
<S>                                                                        <C>                 <C>            <C>

Cash flows from operating activities:
   Net (loss) earnings                                                       $        (21)   $       3,886    $       5,173
   Adjustments to reconcile net (loss) earnings to net cash provided
      by operating activities:
         Depreciation and container write-downs                                     6,881            6,995            6,817
         Increase (decrease) in allowance for doubtful accounts,
            excluding write-off (note 5)                                              317             (415)             (82)
         Loss on sale of containers                                                   981            1,240              128
         (Increase) decrease in assets:
            Accounts receivable, excluding write-off (note 5)                         145            1,041              608
            Due from affiliates, net                                                   31             (410)            (267)
            Prepaid expenses                                                            8              146             (127)
         Increase (decrease) in liabilities:
            Accounts payable and accrued liabilities                                   53               39              170
            Accrued recovery costs                                                     49               (3)              48
            Accrued damage protection plan costs                                      145              (60)             (71)
            Warranty claims                                                           (39)             (40)             (39)
                                                                             -------------   --------------   --------------

            Net cash provided by operating activities                               8,550           12,419           12,358
                                                                             -------------   --------------   --------------

Cash flows from investing activities:
     Proceeds from sale of containers                                               4,947            3,329            1,601
     Container purchases                                                           (3,446)          (1,480)          (4,484)
                                                                             -------------   --------------   --------------

            Net cash provided by (used in) investing activities                     1,501            1,849           (2,883)
                                                                             -------------   --------------   --------------

Cash flows from financing activities:
    Redemptions of limited partnership units                                         (157)            (153)              (4)
    Distributions to partners                                                      (9,994)         (11,030)         (11,527)
                                                                             -------------   --------------   --------------

            Net cash used in financing activities                                 (10,151)         (11,183)         (11,531)
                                                                             -------------   --------------   --------------

Net (decrease) increase in cash                                                      (100)           3,085           (2,056)

Cash at beginning of period                                                         3,455              370            2,426
                                                                             -------------   --------------   --------------

Cash at end of period                                                        $      3,355    $       3,455    $         370
                                                                             =============   ==============   ==============


See accompanying notes to financial statements
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(A California Limited Partnership)

Statements of Cash Flows - Continued

Years ended December 31, 1999, 1998 and 1997
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------

Supplemental Disclosures:

Supplemental schedule of non-cash investing and financing activities:

The following table summarizes the amounts of container purchases, distributions
to partners  and  proceeds  from sale of  containers  which had not been paid or
received  by the  Partnership  as of December  31,  1999,  1998,  1997 and 1996,
resulting in  differences  in amounts  recorded and amounts of cash disbursed or
received by the Partnership, as shown in the Statements of Cash Flows.

                                                                     1999          1998           1997           1996
                                                                     ----          ----           ----           ----
<S>                                                                   <C>            <C>            <C>            <C>

Container purchases included in:
   Due to affiliates.....................................         $     -         $  16          $  42        $     -
   Container purchases payable...........................             243            56            365            580

Distributions to partners included in:
   Due to affiliates.....................................               8             9             10             10
   Deferred quarterly distributions......................              81            97            121            116

Proceeds from sale of containers included in:
   Due from affiliates...................................             601           812            399            381

The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts  paid or received as shown on the  Statements  of Cash Flows for the
years ended December 31, 1999, 1998 and 1997.

                                                                                   1999           1998           1997
                                                                                   ----           ----           ----

Container purchases recorded.........................................          $  3,617       $  1,145       $  4,311
Container purchases paid.............................................             3,446          1,480          4,484

Distributions to partners declared...................................             9,977         11,005         11,532
Distributions to partners paid.......................................             9,994         11,030         11,527

Proceeds from sale of containers recorded............................             4,736          3,742          1,619
Proceeds from sale of containers received............................             4,947          3,329          1,601

The  Partnership  has  entered  into direct  finance  leases,  resulting  in the
transfer of containers from container rental  equipment to accounts  receivable.
The carrying  values of containers  transferred  during the years ended December
31, 1999, 1998 and 1997 was $134, $98 and $20, respectively.

See accompanying notes to financial statements
</TABLE>

<PAGE>



TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Notes to Financial Statements

Years ended  December 31, 1999,  1998 and 1997
(Amounts in thousands  except for unit and per unit amounts)
--------------------------------------------------------------------------------

Note 1.  Summary of Significant Accounting Policies

      (a)  Nature of Operations

      Textainer Equipment Income Fund III, L.P. (TEIF III or the Partnership), a
      California  limited  partnership,  with a maximum  life of 20  years,  was
      formed  on July 26,  1990.  The  Partnership  was  formed to engage in the
      business  of  owning,  leasing  and  selling  both new and used  equipment
      related  to  the  international  containerized  cargo  shipping  industry,
      including,   but  not  limited   to,   containers,   trailers   and  other
      container-related  equipment.  On January 16, 1991 TEIF III began offering
      units representing limited partnership interests (Units) to the public. On
      May 4, 1992, the Partnership had sold the maximum number of units offered.
      On that date, the Partnership had issued  6,250,000  units, for a total of
      $125,000.

      Textainer  Financial  Services  Corporation  (TFS) is the managing general
      partner of the Partnership  and is a wholly-owned  subsidiary of Textainer
      Capital Corporation (TCC).  Textainer  Equipment  Management Limited (TEM)
      and  Textainer   Limited  (TL)  are  associate  general  partners  of  the
      Partnership.  The  managing  general  partner  and the  associate  general
      partners  are  collectively  referred to as the General  Partners  and are
      commonly  owned by Textainer  Group Holdings  Limited  (TGH).  The General
      Partners also act in this capacity for other limited  partnerships.  Prior
      to its liquidation in October 1998, Textainer Acquisition Services Limited
      (TAS),  a former  affiliate of the General  Partners,  performed  services
      related to the  acquisition  of  containers  outside the United  States on
      behalf of the  Partnership.  Effective  November 1998,  these services are
      being  performed  by TEM.  The  General  Partners  manage and  control the
      affairs of the Partnership.

      (b)  Basis of Accounting

      The  Partnership  utilizes the accrual  method of  accounting.  Revenue is
      recorded  when  earned  according  to the  terms of the  container  rental
      contracts.  These  contracts are classified as operating  leases or direct
      finance leases if they so qualify under Statement of Financial  Accounting
      Standards  No.  13:  "Accounting  for  Leases".  Substantially  all of the
      Partnership's  rental  income  was  generated  from  the  leasing  of  the
      Partnership's containers under short-term operating leases.

      (c)  Use of Estimates

      Certain   estimates  and  assumptions  were  made  by  the   Partnership's
      management that affect the reported  amounts of assets and liabilities and
      disclosures  of  contingent  assets  and  liabilities  at the  date of the
      financial  statements  and the  reported  amounts of revenue and  expenses
      during the  reporting  period.  Actual  results  could  differ  from those
      estimates.

      (d)  Fair Value of Financial Instruments

      In accordance  with Statement of Financial  Accounting  Standards No. 107,
      "Disclosures  about Fair Value of Financial  Instruments," the Partnership
      calculates  the fair value of  financial  instruments  and  includes  this
      additional  information in the notes to the financial  statements when the
      fair  value  is  different   than  the  book  value  of  those   financial
      instruments.  At  December  31,  1999  and  1998,  the  fair  value of the
      Partnership's financial instruments approximates the related book value of
      such instruments.

      (e)  Container Rental Equipment

      Container  rental  equipment  is  recorded  at  the  cost  of  the  assets
      purchased,  which includes  acquisition fees, less  depreciation  charged.
      Depreciation of new containers is computed using the straight-line  method
      over an  estimated  useful life of 12 years to a 28% salvage  value.  Used
      containers are  depreciated  based upon their estimated  remaining  useful
      life at the date of  acquisition  (from 2 to 11  years).  When  assets are
      retired  or  otherwise  disposed  of,  the  cost and  related  accumulated
      depreciation  are removed from the  equipment  accounts and any  resulting
      gain or loss is recognized in income for the period.

      In accordance  with Statement of Financial  Accounting  Standards No. 121,
      "Accounting for the Impairment of Long-Lived  Assets and Long-Lived Assets
      to be Disposed Of" (SFAS 121), the Partnership  periodically  compares the
      carrying  value of the  containers  to expected  future cash flows for the
      purpose of assessing the  recoverability of the recorded  amounts.  If the
      carrying value exceeds  expected future cash flows, the assets are written
      down to estimated  fair value.  In  addition,  containers  identified  for
      disposal are  recorded at the lower of carrying  amount or fair value less
      cost to sell.

      New container  prices have been declining  since 1995, and the cost of new
      containers at year-end 1998 and during 1999, was  significantly  less than
      the cost of  containers  purchased in prior  years.  The  Partnership  has
      evaluated the  recoverability  of the recorded amount of container  rental
      equipment  at December  31, 1997 and  determined  that a reduction  to the
      carrying  value of  containers  was not  required.  During the years ended
      December 31, 1998 and 1999, the Partnership determined that a reduction to
      the  carrying  value  of the  containers  held for  continued  use was not
      required,  but that a write-down in value of certain containers identified
      for sale was  required.  The  Partnership  wrote  down the  value of these
      containers to their estimated fair value,  which was based on recent sales
      prices less cost to sell.

      During the fourth quarter of 1998, the  Partnership  recorded a write-down
      of $349 on 930  containers  identified  for sale.  During  the year  ended
      December 31, 1999, the Partnership recorded additional write-downs of $733
      on previously written down containers and on 1,398 containers subsequently
      identified for sale. The Partnership  sold 1,998  previously  written down
      containers for a loss of $290. The Partnership incurred losses on the sale
      of some  containers  previously  written  down as the actual  sales prices
      received on these  containers  were lower than the estimates  used for the
      write-downs,  primarily  due to  unexpected  declines in  container  sales
      prices. Additionally, the Partnership  incurred losses of $691 on the sale
      of containers that had not been written-down.

      If more containers are subsequently identified as for sale or if container
      sales prices continue to decline,  the  Partnership  may incur  additional
      write-downs  on  containers  and/or  may  incur  losses  on  the  sale  of
      containers.  The Partnership will continue to evaluate the  recoverability
      of the recorded  amounts of container rental equipment and cautions that a
      write-down  of  container  rental  equipment  and/or  an  increase  in its
      depreciation rate may be required in future periods for some or all of its
      container rental equipment.

      (f)  Nature of Income from Operations

      Although  substantially all of the Partnership's income from operations is
      derived from assets employed in foreign operations,  virtually all of this
      income  is  denominated  in  United  States  dollars.   The  Partnership's
      customers  are  international  shipping  lines  that  transport  goods  on
      international  trade routes.  The domicile of the lessee is not indicative
      of where the lessee is  transporting  the  containers.  The  Partnership's
      business risk in its foreign operations lies with the  creditworthiness of
      the lessees rather than the  geographic  location of the containers or the
      domicile of the lessees.

      No single lessee accounted for more than 10% of the Partnership's revenues
      for the years ended December 31, 1999, 1998 and 1997.

      (g)  Allocation of Net Earnings and Partnership Distributions

      In accordance with the Partnership Agreement,  sections 3.08 through 3.12,
      net earnings or losses and distributions are generally allocated 1% to the
      General  Partners and 99% to the Limited  Partners.  If the  allocation of
      distributions exceeds the allocation of net earnings and creates a deficit
      in the  General  Partners'  aggregate  capital  account,  the  Partnership
      Agreement  provides for a special  allocation of gross income equal to the
      amount of the deficit.

      Actual  cash  distributions  to  the  Limited  Partners  differ  from  the
      allocated net earnings (losses) as presented in these financial statements
      because cash  distributions  are based on cash available for distribution.
      Cash  distributions  are paid to the  general  and  limited  partners on a
      monthly  basis  in  accordance  with  the  provisions  of the  Partnership
      Agreement.  Some limited partners have elected to have their distributions
      paid quarterly. The Partnership has recorded deferred distributions of $81
      and $97 at December 31, 1999 and 1998, respectively.

      (h)  Income Taxes

      The Partnership is not subject to income taxes. Accordingly,  no provision
      for income taxes has been made.  The  Partnership  files federal and state
      information  returns  only.  Taxable  income or loss is  reportable by the
      individual partners.

      (i)  Acquisition Fees

      In  accordance  with the  Partnership  Agreement,  acquisition  fees equal
      to 5% of the   container  purchase  price  were paid to TEM   beginning in
      November  1998 and TAS through  October  1998.  These fees are capitalized
      as part of the cost of the containers.

      (j)  Recovery Costs

      The  Partnership  accrues an estimate  for  recovery  costs as a result of
      defaults under its leases that it expects to incur, which are in excess of
      estimated insurance  proceeds.  At December 31, 1999 and 1998, the amounts
      accrued were $165 and $116, respectively.

      (k)  Damage Protection Plan

      The  Partnership  offers a Damage  Protection Plan (DPP) to lessees of its
      containers.  Under  the terms of DPP,  the  Partnership  earns  additional
      revenues  on a daily  basis  and,  in return,  has agreed to bear  certain
      repair costs.  It is the  Partnership's  policy to recognize  revenue when
      earned  and  provide  a  reserve  sufficient  to cover  the  Partnership's
      obligation for estimated future repair costs. DPP expenses are included in
      direct container  expenses in the Statements of Operations and the related
      reserve at December 31, 1999 and 1998, was $436 and $291, respectively.

      (l)  Warranty Claims

      During 1992 and 1995, the  Partnership  settled  warranty claims against a
      container  manufacturer.  The  Partnership  is amortizing  the  settlement
      amounts  over the  remaining  estimated  useful  lives  of the  applicable
      containers (between six and seven years),  reducing maintenance and repair
      costs over that time.  At  December  31,  1999 and 1998,  the  unamortized
      portion of the settlement amount was equal to $149 and $188, respectively.

      (m)  Limited  Partners'  Per  Unit  Share    of Net  Earnings  (Loss)  and
           Distributions

      Limited  partners'  per  unit  share  of  both  net  earnings  (loss)  and
      distributions  were computed  using the weighted  average  number of units
      outstanding during the years ended December 31, 1999, 1998 and 1997, which
      were 6,136,934, 6,162,976, and 6,168,527, respectively.

      (n)  Redemptions

      The following  redemption  offerings were  consummated by the  Partnership
      during the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>

                                                         Units                     Average
                                                        Redeemed               Redemption Price         Amount Paid
                                                       ----------             -----------------        -------------
<S>                                                     <C>                          <C>                 <C>
      Total Partnership redemptions as of
      December 31, 1996 .....................            81,098                   $14.71                   $1,193
                                                         ------                                            ------
      Year ended December 31, 1997:
            1st quarter.......................              375                   $10.67                        4
                                                         ------                                            ------
      Year ended December 31, 1998:
            3rd quarter.......................            7,538                   $10.61                       80
            4th quarter.......................            7,129                   $10.24                       73
                                                         ------                                            ------
                                                         14,667                   $10.43                      153
                                                         ------                                            ------
      Year ended December 31, 1999:
            1st quarter.......................           16,926                   $ 9.28                      157
                                                         ------                                            ------

      Total Partnership redemptions as of
      December 31, 1999 .....................           113,066                   $13.33                   $1,507
                                                        =======                                            ======
</TABLE>

      The redemption price is fixed by formula.

Note 2.  Transactions with Affiliates

      As part of the operation of the Partnership,  the Partnership is to pay to
      the General Partners, or TAS prior to its liquidation, an acquisition fee,
      an equipment  management fee, an incentive management fee and an equipment
      liquidation  fee.  These  fees  are  for  various  services   provided  in
      connection with the administration and management of the Partnership.  The
      Partnership  capitalized $172, $55, and $216 of container acquisition fees
      as part of  container  rental  equipment  costs  during  the  years  ended
      December 31, 1999, 1998 and 1997,  respectively.  The Partnership incurred
      $410, $454, and $480 of incentive management fees during each of the three
      years ended December 31, 1999, 1998 and 1997,  respectively.  No equipment
      liquidation fees were incurred during these periods.

      The  Partnership's  containers are managed by TEM. In its role as manager,
      TEM has authority to acquire, hold, manage, lease, sell and dispose of the
      containers.  TEM holds,  for the payment of direct operating  expenses,  a
      reserve of cash that has been collected from leasing operations; such cash
      is included in due from affiliates, net, at December 31, 1999 and 1998.

      Subject to certain reductions, TEM receives a monthly equipment management
      fee equal to 7% of gross lease revenues  attributable to operating  leases
      and 2% of gross lease revenues attributable to full payout net leases. For
      the years ended  December 31, 1999,  1998 and 1997,  equipment  management
      fees totaled $1,064, $1,264, and $1,338,  respectively.  The Partnership's
      containers  are leased by TEM to third party  lessees on operating  master
      leases,  spot leases, term leases and full payout net leases. The majority
      of the Partnership's leases are operating leases with limited terms and no
      purchase option.

      Certain  indirect  general  and  administrative  costs  such as  salaries,
      employee  benefits,   taxes  and  insurance  are  incurred  in  performing
      administrative  services  necessary to the  operation of the  Partnership.
      These  costs  are  incurred  and paid by TEM and TFS.  Total  general  and
      administrative costs allocated to the Partnership were as follows:

                                                  1999         1998         1997
                                                  ----         ----         ----

            Salaries                             $ 437      $   547      $   628
            Other                                  348          462          525
                                                   ---        -----        -----
            Total general and
             administrative costs                $ 785       $1,009       $1,153
                                                   ===        =====        =====

      TEM allocates these general and administrative costs based on the ratio of
      the  Partnership's  interest  in  the  managed  containers  to  the  total
      container  fleet  managed by TEM during the period.  TFS  allocates  these
      costs  based on the  ratio of the  Partnership's  containers  to the total
      container  fleet of all limited  partnerships  managed by TFS. The General
      Partners allocated the following general and  administrative  costs to the
      Partnership:

                                                  1999         1998         1997
                                                  ----         ----         ----

            TEM                                  $ 701      $   914       $1,020
            TFS                                     84           95          133
                                                   ---        -----        -----
               Total general and
                 administrative costs            $ 785       $1,009       $1,153
                                                   ===        =====        =====

      The General Partners,  or TAS through October 1998, may acquire containers
      in their own name and hold title on a  temporary  basis for the purpose of
      facilitating the acquisition of such containers for the  Partnership.  The
      containers may then be resold to the Partnership on an all-cash basis at a
      price equal to the actual cost, as defined in the  Partnership  Agreement.
      In addition,  the General Partners and, prior to its liquidation,  TAS are
      entitled  to  an  acquisition  fee  for  any  containers   resold  to  the
      Partnership.

      At December 31, 1999 and 1998, due from affiliates, net, is comprised of:

                                                             1999           1998
                                                             ----           ----
             Due from affiliates:
              Due from TEM...........................     $   864         $1,087
                                                           ------          -----

             Due to affiliates:
              Due to TFS.............................          34             37
              Due to TCC.............................          13              8
              Due to TL..............................           1              1
                                                           ------          -----
                                                               48             46
                                                           ------          -----

             Due from affiliates, net                     $   816         $1,041
                                                           ======          =====

      These amounts  receivable  from and payable to affiliates were incurred in
      the ordinary course of business between the Partnership and its affiliates
      and represent  timing  differences  in the accrual and payment of expenses
      and fees  described  above or in the accrual and  remittance of net rental
      revenues from TEM.

Note 3.   Rentals under Operating Leases

      The following  are  the  future minimum rent receivables  under cancelable
      long-term  operating leases at December 31, 1999.  Although the leases are
      generally  cancelable  at  the  end of  each  twelve-month  period  with a
      penalty,  the  following  schedule  assumes  that the  leases  will not be
      terminated.

      Year ending December 31,
      2000......................................................         $1,165
      2001......................................................            229
      2002......................................................            197
      2003......................................................             77
      2004......................................................             25
                                                                          -----

     Total minimum future rentals receivable....................         $1,693
                                                                          =====

Note 4.   Income Taxes

      At December 31, 1999, 1998 and 1997,  there were temporary  differences of
      $24,756,  $33,140,  and  $36,125,  respectively,   between  the  financial
      statement carrying value of certain assets and liabilities and the federal
      income tax basis of such assets and liabilities. The reconciliation of net
      income for financial  statement  purposes to net income for federal income
      tax  purposes for the years ended  December 31, 1999,  1998 and 1997 is as
      follows:
<TABLE>
<CAPTION>

                                                                              1999               1998             1997
                                                                              ----               ----             ----
<S>                                                                             <C>            <C>                 <C>

      Net (loss) income per financial statements...............            $   (21)           $ 3,886         $  5,173

      Increase (decrease) in provision for bad debt............                317             (1,095)             (82)
      Depreciation for federal income tax purposes
        less than (in excess of) depreciation for
        financial statement purposes............................             2,373               (782)         (10,389)
      Gain on sale of fixed assets for federal income
        tax purposes in excess of gain/loss recognized
        for financial statement purposes.......................              5,588              4,962            1,534
      Increase (decrease) in damage protection plan costs......                145                (60)             (71)
      Warranty reserve income for tax purposes in excess
        of financial statement purposes........................                (39)               (40)             (39)
                                                                             -----             ------           -------

      Net income (loss) for federal income tax purposes........            $ 8,363            $ 6,871         $ (3,874)
                                                                             =====              =====           =======
</TABLE>

Note 5.   Accounts Receivable Write-Off

      During 1998, the Partnership wrote-off $680 of delinquent receivables from
      two lessees against which reserves were recorded in 1994 and 1995.  During
      the year ended December 31, 1999, there were no such write-offs.



<PAGE>


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

There have been none.

                                   PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Registrant has no officers or directors.

As described in the Prospectus, the Registrant's three original general partners
were TCC, TEM and Textainer Inc. (TI),  which  comprised the original  Textainer
Group.   Effective  October  1,  1993,  the  Textainer  Group  restructured  its
organization by forming a new holding company,  Textainer Group Holdings Limited
(TGH),  and the  shareholders  of the  underlying  companies  which  include the
General  Partners  accepted  shares in TGH in exchange  for their  shares in the
individual  companies.  Textainer  Financial  Services  Corporation (TFS) is the
Managing  General Partner of the Partnership  (prior to its name change on April
4, 1994, TFS was known as Textainer Capital Corporation).  TFS is a wholly-owned
subsidiary of Textainer  Capital  Corporation (TCC) (prior to its name change on
April 4, 1994, TCC was known as Textainer  (Delaware) Inc.). Textainer Equipment
Management Limited (TEM) is an Associate General Partner of the Partnership.  TI
was an Associate  General Partner of the Partnership  through September 30, 1993
when it was replaced in that capacity by Textainer Limited (TL), pursuant to the
corporate  restructuring effective October 1, 1993, which caused TFS, TEM and TL
to fall under the common ownership of TGH.  Pursuant to this  restructuring,  TI
transferred  substantially  all of its  assets  including  all of its rights and
duties as Associate  General  Partner to TL. This  transfer was  effective  from
October 1, 1993. The end result was that TFS now serves as the Managing  General
Partner and TEM and TL now serve as the Associate General Partners. The Managing
General Partner and Associate  General Partners are collectively  referred to as
the General Partners and are wholly-owned or substantially-owned subsidiaries of
TGH.  The  General  Partners  also  act  in  this  capacity  for  other  limited
partnerships.  Prior to its liquidation in October 1998,  Textainer  Acquisition
Services  Limited  (TAS) was an affiliate of the General  Partners and performed
services  related to the  acquisition of equipment  outside the United States on
behalf of the Partnership. Effective November 1998, these services are performed
by TEM.

TFS,  as  the  Managing  General  Partner,   is  responsible  for  managing  the
administration  and operation of the  Registrant,  and for the  formulation  and
administration of investment policies.

TEM, an Associate  General Partner,  manages all aspects of the operation of the
Registrant's equipment.

TL, an Associate  General  Partner,  owns a fleet of container  rental equipment
which is  managed  by TEM.  TL  provides  advice  to the  Partnership  regarding
negotiations  with financial  institutions,  manufacturers and equipment owners,
and regarding the terms upon which particular items of equipment are acquired.

Section 16(a) Beneficial Ownership Reporting Compliance.

Section 16(a) of the Securities  Exchange Act of 1934 requires the Partnership's
General Partners,  policy-making officials and persons who beneficially own more
than ten  percent  of the Units to file  reports  of  ownership  and  changes in
ownership with the Securities and Exchange  Commission.  Copies of these reports
must also be furnished to the Partnership.

Based  solely  on a  review  of  the  copies  of  such  forms  furnished  to the
Partnership  or on written  representations  that no forms were  required  to be
filed, the Partnership believes that with respect to its most recent fiscal year
ended  December 31, 1999,  all Section 16(a) filing  requirements  were complied
with. No member of management, or beneficial owner owned more than 10 percent of
any  interest in the  Partnership.  None of the  individuals  subject to section
16(a) failed to file or filed late any reports of transactions in the Units.

The directors and executive officers of the General Partners are as follows:
<TABLE>
<CAPTION>

Name                              Age    Position
<S>                               <C>       <C>

Neil I. Jowell                     66    Director and Chairman of TGH, TEM, TL, TCC and TFS
John A. Maccarone                  55    President, CEO and Director of TGH, TEM, TL, TCC and TFS
James E. Hoelter                   60    Director of TGH, TEM, TL, TCC and TFS
Alex M. Brown                      61    Director of TGH, TEM, TL, TCC and TFS
Harold J. Samson                   78    Director of TGH and TL
Philip K. Brewer                   43    Senior Vice President - Asset Management Group
Robert D. Pedersen                 41    Senior Vice President - Leasing Group, Director of TEM
Ernest J. Furtado                  44    Senior Vice  President , CFO and  Secretary  of TGH,  TEM,  TL, TCC and TFS,
                                         Director of TCC and TFS
Wolfgang Geyer                     46    Regional Vice President - Europe
Mak Wing Sing                      42    Regional Vice President - South Asia
Masanori Sagara                    44    Regional Vice President - North Asia
John. A. Lore                      46    Regional Vice President - Americas
Stefan Mackula                     47    Vice President -  Equipment Resale
Anthony C. Sowry                   47    Vice President - Corporate Operations and Acquisitions
Richard G. Murphy                  47    Vice President - Risk Management
Janet S. Ruggero                   51    Vice President - Administration and Marketing Services
Jens W. Palludan                   49    Regional Vice President - Logistics Division
Isam K. Kabbani                    65    Director of TGH and TL
James A. C. Owens                  60    Director of TGH and TL
S. Arthur Morris                   66    Director of TGH, TEM and TL
Dudley R. Cottingham               48    Assistant Secretary, Vice President and Director of TGH, TEM and TL
Nadine Forsman                     32    Controller of TCC and TFS
</TABLE>

          Neil I. Jowell is Director and  Chairman of TGH,  TEM, TL, TCC and TFS
and a member of the Investment  Advisory Committee (see "Committees"  below). He
has served on the Board of Trencor Ltd.  since 1966 and as Chairman  since 1973.
He is also a director of Mobile Industries, Ltd. (1969 to present), an affiliate
of Trencor,  and a non-executive  director of Forward  Corporation Ltd. (1993 to
present).  Trencor is a publicly traded  diversified  industrial group listed on
the Johannesburg Stock Exchange. Its business is the leasing,  owning,  managing
and  financing of marine cargo  containers  worldwide  and the  manufacture  and
export of containers for international  markets.  In South Africa, it is engaged
in manufacturing,  trading and exports of general commodities.  Trencor also has
an interest in Forward  Corporation  Ltd.,  a publicly  traded  holding  company
listed on the  Johannesburg  Stock Exchange.  It has interests in industrial and
consumer  businesses  operating in South Africa and abroad.  Mr.  Jowell  became
affiliated  with the General  Partners and its affiliates  when Trencor  became,
through  its  beneficial  ownership  in  two  controlled   companies,   a  major
shareholder  of the  Textainer  Group in 1992.  Mr.  Jowell  has over 36  years'
experience  in the  transportation  industry.  He holds an  M.B.A.  degree  from
Columbia  University  and  Bachelor  of  Commerce  and L.L.B.  degrees  from the
University of Cape Town.

          John A. Maccarone is President,  CEO and Director of TGH, TEM, TL, TCC
and TFS. In this capacity he is responsible for overseeing the management of and
coordinating  the  activities  of  Textainer's  worldwide  fleet of marine cargo
containers  and the activities of TCC and TFS.  Additionally,  he is Chairman of
the Equipment  Investment  Committee,  the Credit  Committee and the  Investment
Advisory Committee (see "Committees",  below). Mr. Maccarone was instrumental in
co-founding  Intermodal  Equipment  Associates (IEA), a marine container leasing
company based in San Francisco,  and held a variety of executive  positions with
IEA from 1979 until 1987, when he joined the Textainer  Group. Mr. Maccarone was
previously a Director of Marketing for Trans Ocean Leasing  Corporation  in Hong
Kong with responsibility for all leasing activities in Southeast Asia. From 1969
to 1977, Mr. Maccarone was a marketing  representative  for IBM Corporation.  He
holds a  Bachelor  of  Science  degree in  Engineering  Management  from  Boston
University and an M.B.A. from Loyola University of Chicago.

          James E.  Hoelter  is a director  of TGH,  TEM,  TL,  TCC and TFS.  In
addition,  Mr. Hoelter is a member of the Equipment Investment Committee and the
Investment  Advisory  Committee (see  "Committees",  below). Mr. Hoelter was the
President  and  Chief  Executive  Officer  of TGH and TL from  1993 to 1998  and
currently serves as a consultant to Trencor (1999 to present).  Prior to joining
the  Textainer  Group in 1987,  Mr.  Hoelter was  president of IEA. Mr.  Hoelter
co-founded IEA in 1978 with Mr. Maccarone and was president from inception until
1987.  From 1976 to 1978,  Mr.  Hoelter was vice president for Trans Ocean Ltd.,
San Francisco,  a marine container leasing company, where he was responsible for
North America. From 1971 to 1976, he worked for Itel Corporation, San Francisco,
where he was  director of  financial  leasing for the  container  division.  Mr.
Hoelter  received his B.B.A. in finance from the University of Wisconsin,  where
he is an emeritus member of its Business School's Dean's Advisory Board, and his
M.B.A. from the Harvard Graduate School of Business Administration.

          Alex  M.   Brown is a  director  of  TGH,  TEM,   TL,   TCC  and  TFS.
Additionally,  he is a member of  the   Equipment  Investment  Committee and the
Investment    Advisory     Committee   (see   "Committees",    below).     Among
other  directorships, Mr. Brown is a director of Trencor Ltd.  (1996 to present)
and Forward  Corporation (1997 to present).  Both  companies are publicly traded
and listed on the  Johannesburg  Stock  Exchange. Mr.  Brown  became  affiliated
with the  Textainer  Group in April   1986.   From  1987  until  1993,   he  was
President and Chief  Executive  Officer of Textainer,  Inc. and the Chairman  of
the Textainer  Group.  Mr. Brown  was the   managing   director of Cross  County
Leasing in England  from 1984 until it was acquired by Textainer  in 1986.  From
1993 to  1997,  Mr.  Brown   was  Chief  Executive  Officer  of AAF,  a  company
affiliated  with  Trencor Ltd. Mr. Brown was also Chairman of WACO International
Corporation,  based in Cleveland, Ohio until 1997.

          Harold  J.  Samson  is a  director  of TGH and TL and is a  member  of
the  Investment Advisory Committee (see "Committees", below).  Mr. Samson served
as a consultant to various securities firms from 1981 to 1989. From 1974 to 1981
he was Executive  Vice  President of Foster & Marshall,  Inc., a New York  Stock
Exchange  member firm based in Seattle.  Mr.  Samson was a director  of IEA from
1979 to 1981. From 1957 to 1984 he served as Chief Financial  Officer in several
New York Stock Exchange  member firms.  Mr. Samson  holds  a  B.S.  in  Business
Administration   from  the   University  of   California,   Berkeley  and  is  a
California Certified Public Accountant.

          Philip K. Brewer was  President of TCC and TFS from January 1, 1998 to
December  31,  1998  until his  appointment  as Senior  Vice  President  - Asset
Management Group. As President of TCC, Mr. Brewer was responsible for overseeing
the  management  of, and  coordinating  the activities of TCC and TFS. As Senior
Vice President,  he is responsible  for optimizing the capital  structure of and
identifying  new sources of finance for  Textainer,  as well as  overseeing  the
management of and  coordinating  the activities of Textainer's  risk management,
logistics  and the resale  divisions.  Mr.  Brewer is a member of the  Equipment
Investment  Committee,  the Credit  Committee and was a member of the Investment
Advisory Committee through December 31, 1998 (see "Committees"  below). Prior to
joining  Textainer in 1996, as Senior Vice  President - Capital  Markets for TGH
and TL, Mr. Brewer worked at Bankers Trust from 1990 to 1996, starting as a Vice
President  in  Corporate  Finance  and ending as Managing  Director  and Country
Manager for  Indonesia;  from 1989 to 1990,  he was Vice  President in Corporate
Finance at Jarding Fleming; from 1987 to 1989, he was Capital Markets Advisor to
the United States Agency for International Development; and from 1984 to 1987 he
was an Associate  with Drexel  Burnham  Lambert in New York. Mr. Brewer holds an
M.B.A. in Finance from the Graduate  School of Business at Columbia  University,
and a B.A. in Economics and Political Science from Colgate University.

          Robert D.  Pedersen  is Senior  Vice-President  - Leasing  Group and a
Director  of  TEM,   responsible  for  worldwide  sales  and  marketing  related
activities and operations.  Mr. Pedersen is a member of the Equipment Investment
Committee and the Credit Committee (see "Committees" below). He joined Textainer
in 1991 as Regional Vice  President for the Americas  Region.  Mr.  Pedersen has
extensive  experience  in the industry  having held a variety of positions  with
Klinge Cool, a manufacturer of refrigerated  container  cooling units (from 1989
to 1991), where he was worldwide sales and marketing director, XTRA, a container
lessor (from 1985 to 1988) and Maersk Line, a container shipping line (from 1978
to  1984).  Mr.  Pedersen  is  a  graduate  of  the  A.P.  Moller  shipping  and
transportation program and the Merkonom Business School in Copenhagen,  majoring
in Company Organization.

          Ernest J. Furtado is Senior Vice President,  CFO and Secretary of TGH,
TEM,  TL, TCC and TFS and a Director  of TCC and TFS,  in which  capacity  he is
responsible for all accounting,  financial  management,  and reporting functions
for TGH, TEM, TL, TCC and TFS.  Additionally,  he is a member of the  Investment
Advisory  Committee for which he serves as Secretary,  the Equipment  Investment
Committee and the Credit  Committee (see  "Committees",  below).  Prior to these
positions,  he held a number of accounting and financial management positions at
Textainer, of increasing responsibility. Prior to joining Textainer in May 1991,
Mr.  Furtado was Controller for Itel Instant Space and manager of accounting for
Itel Containers International  Corporation,  both in San Francisco, from 1984 to
1991. Mr.  Furtado's  earlier  business  affiliations  include  serving as audit
manager for Wells Fargo Bank and as senior accountant with John F. Forbes & Co.,
both in San Francisco.  He is a Certified Public  Accountant and holds a B.S. in
business  administration  from the  University  of California at Berkeley and an
M.B.A. in information systems from Golden Gate University.

         Wolfgang  Geyer is based  in  Hamburg,  Germany  and is  Regional  Vice
President - Europe,  responsible for coordinating all leasing activities in this
area of  operation.  Mr.  Geyer joined  Textainer in 1993 and was the  Marketing
Director  in  Hamburg  through  July  1997.  From 1991 to 1993,  Mr.  Geyer most
recently was the Senior Vice President for Clou Container  Leasing,  responsible
for its  worldwide  leasing  activities.  Mr.  Geyer spent the  remainder of his
leasing career,  1975 through 1991,  with Itel  Container,  during which time he
held numerous positions in both operations and marketing within the company.

         Mak Wing Sing is based in Singapore and is the Regional Vice  President
- South Asia,  responsible  for container  leasing  activities in  North/Central
People's  Republic of China,  Hong Kong,  South China (PRC), and Southeast Asia.
Mr. Mak most recently was the Regional Manager,  Southeast Asia, for Trans Ocean
Leasing, working there from 1994 to 1996. From 1987 to 1994, Mr. Mak worked with
Tiphook as their Regional General Manager,  and with OOCL from 1976 to 1987 in a
variety of positions, most recently as their Logistics Operations Manager.

          Masanori  Sagara is based in Yokohama,  Japan and is the Regional Vice
President - North Asia,  responsible for container leasing  activities in Japan,
Korea,  and Taiwan.  Mr. Sagara  joined  Textainer in 1990 and was the company's
Marketing  Director  in  Japan  through  1996.  From  1987 to  1990,  he was the
Marketing Manager at IEA. Mr. Sagara's other experience in the container leasing
business includes marketing  management at Genstar from 1984 to 1987 and various
container  operations  positions  with Thoresen & Company from 1979 to 1984. Mr.
Sagara  holds a Bachelor  of Science  degree in  Economics  from  Aoyama  Bakuin
University.

          John A. Lore is based in  Hackensack,  New Jersey and is the  Regional
Vice  President - Americas,  responsible  for  container  leasing  activities in
North/South America,  Australia/New Zealand, Africa, the Middle East and Persian
Gulf.  Prior to joining  Textainer  in 1999,  Mr.  Lore was the  America's  Vice
President  for Xtra  International  Limited from 1996 to 1999 and Area  Director
from 1990 to 1996. He has held various  positions  within the container  leasing
industry since 1978. Mr. Lore holds a B.B.A. in Marketing Management from Baruch
College and an M.B.A. in Executive Management from St. John's University.

          Stefan Mackula is Vice President - Equipment  Resale,  responsible for
coordinating the worldwide sale of equipment into secondary markets. Mr. Mackula
also  served  as Vice  President  -  Marketing  from  1989 to 1991  where he was
responsible for coordinating all leasing  activities in Europe,  Africa, and the
Middle East.  Mr. Mackula  joined  Textainer in 1983 as Leasing  Manager for the
United Kingdom. Prior to joining Textainer, Mr. Mackula held, beginning in 1972,
a variety of positions in the international container shipping industry.

          Anthony  C.  Sowry  is  Vice  President  -  Corporate  Operations  and
Acquisitions.  He is also a member of the Equipment Investment Committee and the
Credit   Committee  (see   "Committees",   below).   Mr.  Sowry  supervises  all
international  container  operations and maintenance and technical functions for
the fleets under Textainer's management.  In addition, he is responsible for the
acquisition of all new and used containers for the Textainer Group. He began his
affiliation  with  Textainer in 1982,  when he served as Fleet  Quality  Control
Manager for Textainer  Inc.  until 1988.  From 1980 to 1982,  he was  operations
manager for Trans Container  Services in London; and from 1978 to 1982, he was a
technical  representative  for Trans Ocean Leasing,  also in London. He received
his B.A. degree in business  management from the London School of Business.  Mr.
Sowry is a member of the Technical  Committee of the International  Institute of
Container Lessors and a certified container inspector.

          Richard G. Murphy is Vice President, Risk Management,  responsible for
all credit and risk management functions.  He also supervises the administrative
aspects of  equipment  acquisitions.  He is a member of and acts as secretary to
the Equipment  Investment and Credit  Committees (see  "Committees",  below). He
previously  served as TEM's Director of Credit and Risk  Management from 1989 to
1991  and as  Controller  from  1988  to  1989.  Prior  to the  takeover  of the
management of the Interocean  Leasing Ltd. fleet by TEM in 1988, Mr. Murphy held
various  positions in the accounting and financial  areas with that company from
1980,  acting as Chief  Financial  Officer from 1984 to 1988.  Prior to 1980, he
held various  positions with firms of public  accountants in the U.K. Mr. Murphy
is an Associate of the Institute of Chartered  Accountants  in England and Wales
and holds a Bachelor of Commerce degree from the National University of Ireland.

          Janet S.  Ruggero  is Vice  President,  Administration  and  Marketing
Services.  Ms.  Ruggero is  responsible  for the  tracking and billing of fleets
under TEM management, including direct responsibility for ensuring that all data
is input in an  accurate  and timely  fashion.  She assists  the  marketing  and
operations  departments by providing statistical reports and analyses and serves
on the Credit Committee (see "Committees", below). Prior to joining Textainer in
1986,  Ms.  Ruggero held various  positions with Gelco CTI over the course of 15
years,  the last one as Director of Marketing and  Administration  for the North
American  Regional  office in New York City.  She has a B.A. in  education  from
Cumberland College.

          Jens W.   Palludan  is  based in   Hackensack,  New  Jersey and is the
Regional  Vice  President  - Logistics  Division,  responsible for  coordinating
container  logistics.  He joined Textainer in 1993 as Regional Vice  President -
Americas/Africa/Australia,  responsible for coordinating all leasing  activities
in North and South America,   Africa and  Australia/New  Zealand.  Mr.  Palludan
spent his career from 1969 through  1992 with Maersk Line of Copenhagen, Denmark
in a variety of key  management  positions in both Denmark   and  overseas.  Mr.
Palludan's  most  recent  position  at  Maersk was that  of   General   Manager,
Equipment and Terminals,  where he was responsible for the entire managed fleet.
Mr.  Palludan holds an M.B.A. from the Centre  European D'Education  Permanente,
Fontainebleau, France.

          Sheikh Isam K. Kabbani is a director of TGH and TL. He is Chairman and
principal  stockholder of the IKK Group,  Jeddah,  Saudi Arabia, a manufacturing
and trading group which is active both in Saudi Arabia and  internationally.  In
1959 Sheikh Isam Kabbani joined the Saudi Arabian  Ministry of Foreign  Affairs,
and in 1960 moved to the Ministry of Petroleum for a period of ten years. During
this time he was seconded to the Organization of Petroleum  Exporting  Countries
(OPEC).  After a period as Chief  Economist of OPEC, in 1967 he became the Saudi
Arabian  member of OPEC's  Board of  Governors.  In 1970 he left the ministry of
Petroleum to establish his own business, the National Marketing Group, which has
been his principal business activity for the past 18 years. Sheikh Kabbani holds
a B.A.  degree from  Swarthmore  College,  Pennsylvania,  and an M.A.  degree in
Economics and International Relations from Columbia University.

          James  A. C. Owens is a director of TGH and TL.  Mr.  Owens  has  been
associated  with the Textainer  Group  since 1980. In 1983 he was  appointed  to
the Board of  Textainer  Inc.,  and served as President of Textainer  Inc.  from
1984 to 1987.  From 1987 to 1998,  Mr. Owens  served as an alternate director on
the Boards of TI, TGH and TL.  Apart  from his  association  with the  Textainer
Group,   Mr.  Owens has  been  involved in  insurance  and financial   brokerage
companies and captive insurance  companies. He is a member of a number of Boards
of  Directors. Mr. Owens holds a Bachelor of Commerce degree from the University
of South Africa.

          S. Arthur  Morris is a director  of TGH,  TEM and TL. He is a founding
partner in the firm of Morris and Kempe,  Chartered Accountants  (1962-1977) and
currently  functions  as a  correspondent  member of a number  of  international
accounting  firms through his firm Arthur Morris and Company (1977 to date).  He
is also President and director of Continental Management Limited (1977 to date).
Continental  Management Limited is a Bermuda corporation that provides corporate
representation,   administration  and  management  services  and  corporate  and
individual  trust  administration   services.  Mr.  Morris  has  over  30  years
experience in public  accounting and serves on numerous  business and charitable
organizations  in the Cayman  Islands and Turks and Caicos  Islands.  Mr. Morris
became a director of TL and TGH in 1993, and TEM in 1994.

          Dudley R.  Cottingham  is Assistant  Secretary,  Vice  President and a
director  of TGH,  TEM and TL. He is a partner  with  Arthur  Morris and Company
(1977 to date) and a Vice  President  and  director  of  Continental  Management
Limited (1978 to date), both in the Cayman Islands and Turks and Caicos Islands.
Continental  Management Limited is a Bermuda corporation that provides corporate
representation,   administration  and  management  services  and  corporate  and
individual  trust  administration  services.  Mr.  Cottingham  has over 20 years
experience  in  public   accounting  with   responsibility   for  a  variety  of
international and local clients.  Mr. Cottingham became a director of TL and TGH
in 1993, and TEM in 1994.

         Nadine Forsman is the Controller of TCC and TFS. Additionally, she is a
member of the Investment Advisory Committee and Equipment  Investment  Committee
(See  "Committees"  below). As controller of TCC and TFS, she is responsible for
accounting, financial management and reporting functions for TCC and TFS as well
as  overseeing  all  communications  with  the  Limited  Partners  and as  such,
supervises  personnel in performing these functions.  Prior to joining Textainer
in August 1996, Ms. Forsman was employed by KPMG LLP, holding various positions,
the most recent of which was manager,  from 1990 to 1996.  Ms.  Forsman  holds a
B.S. in Accounting and Finance from San Francisco  State  University and holds a
general securities license and a financial and operations  principal  securities
license.

Committees

          The Managing  General  Partner has  established  the  following  three
committees to facilitate decisions involving credit and organizational  matters,
negotiations,  documentation,  management and final disposition of equipment for
the Partnership and for other programs organized by the Textainer Group:

          Equipment  Investment  Committee.  The Equipment  Investment Committee
will review the equipment leasing  operations of the  Partnership  on a  regular
basis with emphasis on matters  involving equipment purchases, the equipment mix
in the Partnership's   portfolio,  equipment remarketing  issues, and  decisions
regarding  ultimate  disposition  of  equipment.  The  members of the  committee
are  John A.  Maccarone (Chairman),  James E. Hoelter, Anthony C. Sowry, Richard
G. Murphy (Secretary),   Alex  M. Brown,  Philip K. Brewer,  Robert D. Pedersen,
Ernest J. Furtado and Nadine Forsman.

          Credit  Committee. The Credit Committee  will  establish credit limits
for every  lessee and  potential lessee  of equipment  and  periodically  review
these limits.  In setting such limits,  the Credit Committee  will consider such
factors as customer  trade routes, country, political risk, operational history,
credit references,  credit agency analyses,  financial   statements,  and  other
information.  The  members  of  the   Credit  Committee are  John  A.  Maccarone
(Chairman),  Richard G. Murphy (Secretary),  Janet S. Ruggero, Anthony C. Sowry,
Philip K. Brewer, Ernest J. Furtado and Robert D. Pedersen.

          Investment  Advisory Committee. The Investment Advisory Committee will
review investor program operations on at least  a quarterly  basis,  emphasizing
matters  related  to  cash  distributions  to investors,  cash flow  management,
portfolio  management,  and  liquidation. The Investment  Advisory Committee  is
organized  with a view to  applying an   interdisciplinary  approach,  involving
management,  financial,   legal  and  marketing   expertise,  to the analysis of
investor program  operations.  The members of the Investment Advisory  Committee
are  John A.   Maccarone  (Chairman),   James  E.  Hoelter,  Ernest  J.  Furtado
(Secretary), Nadine Forsman, Harold J. Samson, Alex M. Brown and Neil I. Jowell.

ITEM 11.     EXECUTIVE COMPENSATION

The Registrant  has no executive  officers and does not reimburse TFS, TEM or TL
for the  remuneration  payable  to their  executive  officers.  For  information
regarding  reimbursements  made by the Registrant to the General  Partners,  see
note 2 of the Financial Statements in Item 8.


<PAGE>


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)      Security Ownership of Certain Beneficial Owners

         There is no person or "Group" who is known to the  Registrant to be the
         beneficial owner of more than five percent of the outstanding  units of
         limited partnership interest in the Registrant.

(b)      Security Ownership of Management

         As of January 1, 2000:

                                                        Number
         Name of Beneficial Owner                      Of Units      % All Units
                                                       --------       ----------
         James E. Hoelter........................         2,500          0.0407%
         John A. Maccarone.......................         2,520          0.0411%
         Harold Samson...........................         2,500          0.0407%
         Anthony C. Sowry........................           274          0.0045%
                                                          -----          -------

         Officers and Management
            as a Group..........................          7,794          0.1270%
                                                          =====          =======

(c)      Changes in control.

         Inapplicable.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                                          (Amounts in thousands)

(a)      Transactions with Management and Others.

          At December 31, 1999 and 1998, due from affiliates,  net, is comprised
          of:

                                                           1999             1998
                                                           ----             ----
          Due from affiliates:
           Due from TEM..........................        $  864           $1,087
                                                          -----            -----

          Due to affiliates:
           Due to TFS............................            34               37
           Due to TCC............................            13                8
           Due to TL.............................             1                1
                                                          -----            -----
                                                             48               46
                                                          -----            -----

         Due from affiliates, net                        $  816           $1,041
                                                          =====            =====

         These amounts  receivable  from and payable to affiliates were incurred
         in the  ordinary  course of business  between the  Partnership  and its
         affiliates and represent timing  differences in the accrual and payment
         of expenses and fees  described  above or in the accrual and remittance
         of net rental revenues from TEM.

         In  addition,  the  Registrant  paid or will  pay the following amounts
         to the General Partners and TAS:

         Acquisition  fees in  connection  with the  purchase of  containers  on
         behalf of the Registrant:

                                        1999              1998              1997
                                        ----              ----              ----

         TAS....................      $   -           $     39            $  216
         TEM....................         172                16                 -
                                       -----           -------             -----

         Total..................      $  172          $     55            $  216
                                       =====           =======             =====

         Management fees in connection with the operations of the Registrant:

                                        1999              1998              1997
                                        ----              ----              ----

         TEM....................      $1,154            $1,364            $1,443
         TFS....................         320               354               375
                                       -----             -----             -----

         Total..................      $1,474            $1,718            $1,818
                                       =====             =====             =====

         Reimbursement  for  administrative  costs  in  connection  with  of the
         operations of the Registrant:

                                        1999              1998              1997
                                        ----              ----              ----

        TEM....................        $ 701           $   914            $1,020
        TFS....................           84                95               133
                                         ---             -----             -----

        Total..................        $ 785            $1,009            $1,153
                                         ===             =====             =====

(b)      Certain Business Relationships.

         Inapplicable.

(c)      Indebtedness of Management

         Inapplicable.

(d)      Transactions with Promoters

         Inapplicable.

See the  "Management"  and  "Compensation  of General  Partners and  Affiliates"
sections of the Registrant's Prospectus,  as supplemented,  and the Notes to the
Financial Statements in Item 8.


                                          PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.       Audited financial  statements of  the  Registrant for the year
                  ended  December  31,  1999  are  contained  in  Item 8 of this
                  Report.

         2.       Financial Statement Schedules.

                  (i)    Independent Auditors' Report on Supplementary Schedule.

                  (ii)   Schedule II - Valuation and Qualifying Accounts.

         3.       Exhibits Incorporated by reference.

                  (i)    The   Registrant's   Prospectus   as     contained   in
                         Pre-Effective   Amendment  No.  2 to the   Registrant's
                         Registration Statement (No. 33-36255),    as filed with
                         the Commission  December 21, 1990, as   supplemented by
                         Post-Effective  Amendments  No. 1, 2 and   3 filed with
                         the  Commission  under Section 8(c) of the   Securities
                         Act of 1993 on March 1, 1991,    January  13,  1992 and
                         February 4, 1992, respectively.

                  (ii)   The Registrant's limited partnership agreement, Exhibit
                         A to the Prospectus.

(b)       During the year  ended  1999,  no reports on  Form 8-K have been filed
          by the Registrant.


<PAGE>




             Independent Auditors' Report on Supplementary Schedule



The Partners
Textainer Equipment Income Fund III, L.P.:

Under the date of February  18,  2000,  we  reported  on the  balance  sheets of
Textainer  Equipment Income Fund III, L.P. (the  Partnership) as of December 31,
1999 and 1998, and the related  statements of operations  partners'  capital and
cash flows for each of the years in the  three-year  period  ended  December 31,
1999,  which are included in the 1999 annual  report on Form 10-K. In connection
with our audits of the aforementioned financial statements,  we also audited the
related  financial  statement  schedule  as  listed in Item 14.  This  financial
statement  schedule is the responsibility of the Partnership's  management.  Our
responsibility  is to express an opinion on this  financial  statement  schedule
based on our audits.

In our  opinion,  such  schedule,  when  considered  in  relation  to the  basic
financial  statements  taken  as a  whole,  presents  fairly,  in  all  material
respects, the information set forth therein.



                          KPMG LLP



San Francisco, California
February 18, 2000


<PAGE>
<TABLE>
<CAPTION>



TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(A California Limited Partnership)

Schedule II - Valuation and Qualifying Accounts

(Amounts in thousands)
-----------------------------------------------------------------------------------------------------------------

                                                            Charged                                  Balance
                                         Balance at         to Costs     Charged                     at End
                                         Beginning            and        to Other                      of
                                         of Period          Expenses     Accounts      Deduction     Period
                                         ----------         --------     --------      ---------     -------
<S>                                     <C>                 <C>            <C>            <C>            <C>
For the year ended December 31, 1999:

Allowance for
  doubtful accounts                         $    439        $    353     $      -      $    (36)    $     756
                                            --------        --------     --------      ---------    ---------


Recovery cost reserve                       $    116        $    149     $      -      $   (100)    $     165
                                            --------        --------     --------      ---------    ---------


Damage protection
  plan reserve                              $    291        $    692     $      -      $   (547)    $     436
                                            --------        --------     --------      ---------    ---------


For the year ended December 31, 1998:

Allowance for
  doubtful accounts                         $  1,534        $   (244)    $   (680)     $   (171)    $     439
                                            --------        --------     --------      ---------    ---------

Recovery cost reserve                       $    119        $    232     $      -      $   (235)    $     116
                                            --------        --------     --------      ---------    ---------


Damage protection
  plan reserve                              $    351        $    299     $      -      $   (359)    $     291
                                            --------        --------     --------      ---------    ---------



For the year ended December 31, 1997:

Allowance for
  doubtful accounts                         $  1,616        $    166     $      -      $   (248)    $   1,534
                                            --------        --------     --------        -------    ---------


Recovery cost reserve                       $     71        $    244     $      -      $   (196)    $     119
                                            --------        --------     --------      ---------    ---------


Damage protection
  plan reserve                              $    422        $    303     $      -      $   (374)    $     351
                                            --------        --------     --------      ---------    ---------

</TABLE>


<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.

                                 TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                                 A California Limited Partnership

                                 By Textainer Financial Services Corporation
                                 The Managing General Partner

                                 By___________________________
                                 Ernest J. Furtado
                                 Senior Vice President

Date:  March 28, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>


Signature                                          Title                                        Date
<S>                                               <C>                                           <C>



__________________________
Ernest J. Furtado                                  Senior Vice President, CFO                   March 28, 2000
                                                   (Principal Financial and
                                                   Accounting Officer),
                                                   Secretary and Director
__________________________
John A. Maccarone                                  President (Principal Executive               March 28, 2000
                                                   Officer), and Director


__________________________                         Chairman of the Board and Director           March 28, 2000
Neil I. Jowell

</TABLE>


<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.

                                   TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                                   A California Limited Partnership


                                   By Textainer Financial Services Corporation
                                   The Managing General Partner

                                   By /s/Ernest J. Furtado
                                   ______________________________
                                   Ernest J. Furtado
                                   Senior Vice President

Date: March 28, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer  Financial
Services  Corporation,  the Managing  General Partner of the Registrant,  in the
capacities and on the dates indicated:
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Signature                                        Title                                        Date


<S>                                               <C>                                          <C>


/s/Ernest J. Furtado
_______________________
Ernest J. Furtado                                 Senior Vice President, CFO                    March 28, 2000
                                                  (Principal Financial and
                                                  Accounting Officer),
                                                  Secretary and Director

/s/John A. Maccarone
_______________________                           President (Principal Executive                March 28, 2000
John A. Maccarone                                 Officer), and Director


/s/Neil I. Jowell
_______________________                           Chairman of the Board and Director            March 28, 2000
Neil I. Jowell

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