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


March 26, 1997


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, 1996.

The financial  statements  included in the enclosed Annual Report on Form 10K 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>





               SECURITIES AND EXCHANGE COMMISSION
                     Washington DC 20549

                          FORM 10K

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

          For the fiscal year ended December 31, 1996

                 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)

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

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.
[  ]

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  Amendment 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 as of July
         26, 1990 to purchase,  own,  operate,  lease,  and sell  equipment (the
         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 when the  Registrant had raised a total of  $125,000,000  from the
         offering.

         See  Item 10  herein  for a  description  of the  Registrant's  General
         Partners.

(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. Buying the cars at fleet prices and selling them
                  in  the  secondary   market  are  also  key  elements  to  the
                  successful operation of a rental car business.

                  Container  leasing  companies and the Registrant  operate in a
                  similar manner by owning and leasing a worldwide  fleet of new
                  and used transportation  containers to international  shipping
                  companies  hauling various types of goods among numerous trade
                  routes. In addition to paying a daily rental rate, all lessees
                  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,  special
                  handling fees and/or  drop-off  charges may also be charged in
                  certain markets.  Container leasing companies compete with one
                  another on the basis of lease rates, availability of equipment
                  and services  provided.  Revenues and profits are generated by
                  maintaining the highest lease rates and the highest  equipment
                  utilization  factors  allowed  by  market  conditions.  Rental
                  revenues from containers  result primarily under master leases
                  which are comparable to the corporate rate  agreements used by
                  rental car companies. The master leases provide that container
                  leasing  customers,  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  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  Partnership  Equipment,  see  "Leasing
                  Policy"   under   "Business   of  the   Partnership"   in  the
                  Registrant's Prospectus as supplemented.  Rental car companies
                  usually  purchase  only new  cars,  but since  containers  are
                  completely  standardized,  a  used  container  in  serviceable
                  condition  usually  rents  for  the  same  rate  as a new  one
                  although  the purchase  price is lower.  The  Registrant  also
                  sells   containers   in  the   course  of  its   business   if
                  opportunities  arise or at the end of the  container's  useful
                  life.  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  rental  billings for  the  year ended
                  December 31, 1996  which  was  10% or more of the total rental
                  billings 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  93% of the total
                  equipment held  by all container  leasing  companies.  The top
                  two  container  leasing  companies  control  approximately 28%
                  each  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 controls  approximately  9% of
                  the equipment held by all container  leasing  companies.  The 
                  Registrant   alone   is  not a  material  participant  in  the
                  worldwide  container  leasing  market.  The principal  methods
                  of  competition  are  price  and  the  provision  of worldwide
                  service to the international shipping community. Additionally,
                  shipping   alliances  and   other  operational  consolidations
                  among  shipping  lines have  recently  allowed shipping  lines
                  to  operate  with  fewer  containers,  thereby decreasing  the
                  demand for leased containers.  Competition  among lessors such
                  as the Registrant has, therefore, increased.

(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 has 26  employees.  Textainer
                  Equipment  Management  Limited  (TEM),  an  Associate  General
                  Partner,  is  responsible  for the  management  of the leasing
                  operations of the Registrant and has a total of 138 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  17.10%,  14.44%, and 19.81%, of the Registrant's  rental
         revenue  during  the years  ended  December  31,  1996,  1995 and 1994,
         respectively,   was  derived  from  operations  sourced  or  terminated
         domestically.  These  percentages  do not reflect the proportion of the
         Partnership's  income from operations  generated in domestic waterways.
         Substantially  all of the  Partnership's  income is derived from assets
         employed in foreign  operations.  See "Business of the Partnership" and
         for  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, 1996, the Registrant owned the following types and quantities
of equipment:

<TABLE>
<CAPTION>
<S>      <C>                                                                                 <C>   
         20-foot standard dry freight containers                                             10,528
         40-foot standard dry freight containers                                             13,533
         40-foot high cube dry freight containers                                             6,544
                                                                                            -------
                                                                                             30,605
</TABLE>

During  December 1996,  approximately  79% of these shipping  containers were on
lease to  international  shipping  companies and the balance was being stored at
shipping container manufacturers' locations and a large number of storage depots
located worldwide.

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

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

(a)      Market Information.

(a)(1)(i)         The units of limited  partnership  in the  Registrant  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.

(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, 1997 there were  8,138  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 6 - SELECTED FINANCIAL DATA

          (Dollar amounts in thousands except for per unit amounts)
<TABLE>
<CAPTION>

                                                                   Year Ended December 31,
                                        -------------------------------------------------------------------------------
                                             1996            1995             1994             1993           1992
                                             ----            ----             ----             ----           ----

<S>                                        <C>                <C>                <C>           <C>            <C>   
Rental Income                              $   21,349          23,724             23,007        22,601         20,874

Net Earnings                               $    7,795          10,319              8,217         4,234          4,959

Net Earnings Per Unit of
    Limited Partnership Interest           $     1.24            1.64              1.30            .66            .90

Distributions Per Unit of
    Limited Partnership Interests          $     1.85            1.82              1.66           1.89           2.09

Distributions Per Unit of
   Limited Partnership Interest
   representing a return of capital        $     0.61            0.18              0.36           1.23           1.19

Total Assets                               $   88,765          92,981            96,128        100,947        106,455

Outstanding Balance on
Revolving Credit Line                      $        -              -                  -          3,450          1,500
</TABLE>

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

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

The Financial Statements contain information which will assist in evaluating the
financial  condition of the  Partnership  for the years ended December 31, 1996,
1995 and 1994.  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  was involved in the
offering  of  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  interests was
closed at $125,000.

The Partnership  has set up a program whereby limited  partners may redeem units
for a specified  redemption  value.  The redemption  price is set by formula and
varies  depending on length of time the units are  outstanding.  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,  1996,  the
Partnership   redeemed   25,191  units  for  a  total  dollar  amount  of  $323,
representing  an average  redemption  price of $12.80.  The Partnership has used
cash flow from operations to pay for the redeemed units.

The Partnership  invests working capital and cash flow from operations  prior to
its distribution or reinvestment in additional  equipment in short-term,  highly
liquid  investments.  It is the policy of the  Partnership to maintain a minimum
working  capital  reserve in an amount  which is the lesser of (i) 1% of capital
contributions  or (ii) $100.  At December 31, 1996,  the  Partnership's  cash of
$2,426 was invested in a market-rate account.

During  the  year  ended  December  31,  1996,  the  Partnership  declared  cash
distributions  to limited  partners  pertaining to the period from December 1995
through November 1996 in the amount of $11,438.  These  distributions  represent
9.25% of original  capital  (measured on an  annualized  basis) on each unit. Of
these  distributions,  on a GAAP  basis,  $3,763 was a return of capital and the
balance was from net earnings.  On a cash basis, all of these distributions were
from operations.

At December 31, 1996, the Partnership had committed to purchase  Equipment at an
approximate  total purchase price of $265,  which includes  acquisition  fees of
$13. The Partnership  expects to fund the purchase of Equipment with its cash on
hand. In the event the Partnership decides not to purchase the Equipment, one of
the General  Partners or its  affiliates  will retain the  Equipment for its own
account.

For the year ended December 31, 1996, the  Partnership  had net cash provided by
operating  activities  of $15,353,  compared with net cash provided by operating
activities  of $17,496 for the year ended  December 31, 1995.  This decrease was
primarily  attributable to a decrease in net earnings of $2,524, offset slightly
by a decrease in accounts  receivable  from  operations  of $629.  Net  earnings
decreased 25% in 1996 from 1995 due to a 10% decrease in rental income and a 32%
increase in direct container  expenses.  The decrease in rental revenues between
periods was due to a decline in utilization and rental rates and the increase in
direct  container  expenses between the periods was primarily due to the decline
in  utilization.  Accounts  receivable  decreased  overall  due to lower  rental
income.

Certain factors have adversely affected and may continue to adversely affect the
Partnership's operations.  Shipping lines, which are the Partnership's principal
lessees,  continue to experience over-capacity which is directly related to: (i)
the delivery of new and much larger ships and,  (ii) a general  slow-down in the
growth of world  containerized  cargo trade. This over-capacity has led to lower
shipping rates, resulting in shipping lines' need to reduce operating costs. The
drive to reduce costs,  coupled with the  availability of inexpensive  financing
and lower container prices,  encouraged shipping lines to purchase,  rather than
lease, a greater number of new containers in 1996 than in previous years. All of
these  factors have led to: (i) a downward  pressure on  container  lease rates;
(ii) an increase in leasing  incentives  and other  discounts  being  granted to
shipping  lines by  container  lessors;  and (iii) a decline in  utilization  of
leased containers. Declining container utilization is discussed more fully below
under "Results of Operations".

Net cash used in investing  activities  (the purchase and sale of Equipment) for
the year ended  December  31, 1996 was  $1,994,  compared to $8,008 for the year
ended  December 31, 1995.  This  difference  is due to the fact that,  on a cash
basis,  the Partnership  purchased more equipment in the year ended December 31,
1995 than in the equivalent  period in 1996,  primarily due to  reinvestment  of
proceeds  from the sale of its trailer  fleet in September  and October of 1994.
Consistent   with  its  investment   objectives,   and  the  General   Partners'
determination  that the Equipment can be profitably  sold or bought at any time,
the Partnership intends to reinvest all or a significant amount of proceeds from
future Equipment sales in additional Equipment.

Results of Operations

The  Partnership's  income from  operations,  which  consists of rental  income,
container  depreciation,   direct  container  expenses,   management  fees,  and
reimbursement  of  administrative  expenses were directly related to the size of
the container fleet ("inventory")  during each of the three years ended December
31, 1996,  1995 and 1994. The following is a summary of the container  fleet (in
units) available for lease during those periods:

<TABLE>
<CAPTION>
                                                             1996             1995            1994
                                                             ----             ----            ----

<S>                                                           <C>              <C>             <C>   
                Opening inventory.......................      30,236           28,426          28,122
                Closing inventory.......................      30,605           30,236          28,426
                Average.................................      30,421           29,331          28,274
</TABLE>

The average  inventory (in units) increased by 3.7% from the year ended December
31, 1995 to the  equivalent  period in 1996 and from the year ended December 31,
1994 to the same  period  in 1995.  Average  inventory  increased  between  both
periods  mainly due to purchases of new equipment in 1995 and 1996 with proceeds
from the sales of the Partnership's storage and trailer fleets.

Rental  income and direct  container  expenses  are also  affected  by the lease
utilization  percentages  for the  Equipment,  which were 84%,  93%,  and 90% on
average during the years ended December 31, 1996,  1995 and 1994,  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, 1996,  1995 and 1994.

The  Partnership's  income from operations for the years ended December 31, 1996
and 1995 was $7,569 and $10,003,  respectively,  on rental income of $21,349 and
$23,724,  respectively. The decrease in rental income of $2,375 or 10%, from the
year ended December 31, 1995 to 1996, was primarily  attributable to income from
container  rentals,  the major  component of total revenue,  which  decreased by
$2,105,  or 9.7% from 1995 to 1996.  Income  from  container  rentals is largely
dependent upon three factors: equipment available for lease (average inventory),
average  on-hire  (utilization)  percentage,  and average  daily  rental  rates.
Average inventory increased 3.7%, average utilization decreased 10%, and average
daily  rental rates  decreased  4% from the year ended  December 31, 1995 to the
year ended December 31, 1996.

The  Partnership's  income from operations for the years ended December 31, 1995
and 1994 was $10,003 and $7,509,  respectively,  on rental income of $23,724 and
$23,007,  respectively.  The increase in rental  income of $717,  or 3% from the
year ended December 31, 1994 to 1995 was primarily  attributable  to income from
container  rentals,  which increased by $1,075, or 5% from 1994 to 1995. Average
inventory  increased 3.7%, average  utilization  increased 3%, and average daily
rental rates were generally  stable from the year ended December 31, 1994 to the
year ended December 31, 1995.

Container  utilization  began to  decline  in late  1995 and  that  decline  has
persisted  throughout 1996 and into 1997. The General Partners believe that this
decrease in demand for leased containers is the result of recent adverse changes
in  the  business  of  its  shipping  line  customers.   These  changes  consist
principally  of: (i) a general  slowdown  in the  growth of world  containerized
cargo  trade,  particularly  in the  Asia-North  America and  Asia-Europe  trade
routes;  (ii)  over-capacity  resulting from the 1996 and 1997 additions of new,
larger  ships to the  existing  container  ship fleet at a rate in excess of the
growth rate in  containerized  cargo trade;  (iii)  shipping line  alliances and
other  operational  consolidations  that have allowed  shipping lines to operate
with fewer containers thereby  decreasing the demand for leased containers;  and
(iv) as noted above,  shipping  lines'  purchased,  rather than leased a greater
number of  containers.  All of these  factors have led to lower  utilization  of
leased  containers,  which in turn has led to  downward  pressure  on  container
rental  rates and  higher  leasing  incentives  and other  discounts  for leased
containers,  further eroding Partnership  profitability.  For the near term, the
General  Partners do not foresee  any changes in this  outlook and caution  that
both utilization and lease rates could continue to 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 Equipment under short-term operating leases.

The balance of rental income consists of other  lease-related  items,  primarily
income  from  charges  to the  lessees  for  pick-up  of  containers  from prime
locations  less  credits  granted to lessees  for leasing  containers  from less
desirable locations (location income),  income for handling and returning marine
containers and income from charges to the lessees for a damage  protection plan.
For the year ended  December  31, 1996,  the total of these other rental  income
items was $1,697,  a decrease of $270 from the equivalent  period in 1995.  This
decrease was primarily due to location  income,  which  decreased by $324 due to
lower demand for  containers  which drove down  drop-off  charges and  increased
pick-up credits to lessees for picking up Units at less desirable locations. For
the year ended  December 31, 1995,  the total of these other rental income items
was $1,967, a decrease of $358 over the equivalent  period in 1994 due primarily
to the sale of the  trailer  fleet in 1994  which  had  generated  $455 in other
lease-related income during 1994.

Direct container expenses  (excluding bad debt expense),  increased by $809 from
the year ended  December 31, 1995,  to the same period in 1996.  The increase in
direct expenses were due to increases in costs incurred for storage, maintenance
and repair  (both for  containers  covered and not covered by the  Partnership's
damage  protection plan) and costs incurred for the repositioning of containers.
Storage costs increased due to lower  utilization.  Maintenance and repair costs
were higher in the year ended  December 31, 1996,  due to higher per unit repair
costs compared to the same period in 1995.  Repositioning costs increased due to
an  increase  in the  number  of units  repositioned  as a result  of  inventory
build-up in lower demand locations.

Direct  container  expenses,  (excluding bad debt expense),  decreased by $1,133
from the year ended  December  31, 1994,  to the same period in 1995.  The three
primary  components of this decrease were costs  incurred for storage  expenses,
maintenance  expense  (both  for  containers  covered  and  not  covered  by the
Partnership's  damage  protection  plan) and  repositioning  costs.  Storage and
repositioning  costs decreased due to higher utilization rates in the year ended
December 31, 1995,  compared to the same period in 1994.  Maintenance costs were
higher in the year ended December 31, 1994,  than in 1995, due to the accrual in
1994  for  future   estimated  repair  costs  on  the  European  trailer  fleet,
subsequently sold in the second half of 1994.

Bad debt expense decreased by $300 from the year ended December 31, 1995, to the
same  period of 1996,  primarily  due to lower  reserve  requirements  for three
specific  lessees.  Bad debt  expense  decreased  by $529  from  the year  ended
December  31,  1994,  to the same period in 1995 due to lower  specific  reserve
requirements  in the year ended  December 31, 1995,  primarily  for two specific
lessees which did not require  significant  additional reserves in 1995, as well
as the sale of the trailer and storage fleets in 1994 which had related bad debt
expense totaling $87 for the year ended December 31, 1994.

Depreciation  and  amortization  expenses  increased  by $90 from the year ended
December 31, 1995,  to 1996,  primarily  due to an increase in the average fleet
size.

Depreciation  and  amortization  expenses  decreased by $132 from the year ended
December 31,  1994,  to 1995,  due to the sale of the trailer  fleet in 1994 and
sale of both storage fleets, one in 1994 and the other in 1995.

Management  fees to affiliates were 9.2% and 8.8% of rental income for the years
ended December 31, 1996 and 1995, respectively. Incentive management fees, which
are  based  on the  Partnership's  distributions  to  the  limited  and  general
partners,  were 2.3% and 2.0% of gross  revenue in the years ended  December 31,
1996 and  1995.  Equipment  management  fees were 7% of gross  revenue  for both
periods.

Management fees to affiliates  increased by $35 from the year ended December 31,
1994 to the same  period in 1995.  The  increase is mostly due to an increase in
incentive management fees. Distribution rates ranged from 9% to 9.25% during the
year ended December 31, 1995 whereas  distribution  rates in 1994 ranged from 8%
to 9%.

General and  administrative  costs to  affiliates  decreased by $391 in the year
ended December 31, 1996,  compared to the same period in 1995.  These costs were
5.4% of total gross rental income for the year ended December 31, 1996, compared
to 6.5% for the same period in 1995.  This decrease was the result of a decrease
in overhead costs allocated from TEM.

General and  administrative  costs to  affiliates  decreased by $106 in the year
ended December 31, 1995,  compared to the same period in 1994.  These costs were
6.5% of total gross rental income for the year ended December 31, 1996, compared
to 7.2% for the same period in 1994.  This  decrease was the result of a decline
in allocable  overhead  from  Contrail  International  Services  B.V.  (CIS) and
Multi-Storage  Systems Limited (MSS) associated with the sale of the trailer and
storage fleet in 1994.

Other  income  contained a gain on sales of equipment of $140 for the year ended
December  31, 1996,  compared to a gain of $262 for the year ended  December 31,
1995.  The gain on sales of equipment  in 1995  includes the gain on the sale of
the storage fleet. Interest income increased by $32 from the year ended December
31, 1995, to the comparable period in 1996.

Other  income  contained a gain on sales of equipment of $262 for the year ended
December  31, 1995,  compared to a gain of $715 for the year ended  December 31,
1994.  The gain in 1994 was  primarily  due to the  sale of the  trailer  fleet.
Interest  income  decreased by $9 from the year ended  December 31, 1994, to the
comparable period in 1995. Interest expense decreased by $70 from the year ended
December  31, 1994 to the year ended  December  31, 1995 due to repayment of the
credit facility in 1994.

Net earnings per limited partnership unit decreased from $1.64 to $1.24 per unit
from the year ended  December  31,  1995,  to the year ended  December 31, 1996,
reflecting the decrease in net earnings from $10,319 for the year ended December
31,  1995,  to $7,795 for the same  period in 1996.  Net  earnings  per  limited
partnership  unit  increased  from  $1.30 to $1.64 per unit from the year  ended
December 31, 1994, to the year ended December 31, 1995,  reflecting the increase
in net earnings from $8,217 in 1994 to $10,319 in 1995.

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  Equipment.  The  Partnership's  business  risk in its foreign
operations lies with the  creditworthiness of the lessees, and the Partnership's
ability to keep the Equipment under lease,  rather than the geographic  location
of the  Equipment  or the domicile of the  lessees.  The  Equipment is generally
operated on the international  high seas rather than on the domestic  waterways.
The  Equipment  is subject to the risk of war or other  political,  economic  or
social  occurrence  where the Equipment is used, which may result in the loss of
Equipment,  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, 1996 which would result in such risk
materializing.

Other risks of the Partnership's  leasing  operations include  competition,  the
cost of  repositioning  Equipment  after  it  comes  off-lease,  the  risk of an
uninsured  loss,  increases in maintenance  expenses or other costs of operating
the  Equipment,  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.


ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Attached pages 11 to 24.


<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, 1996 and
1995, and the related  statements of earnings,  partners' capital and cash flows
for the years ended December 31, 1996, 1995 and 1994. 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, 1996 and 1995,  and the results of its  operations,
its partners'  capital and its cash flows for the years ended December 31, 1996,
1995 and 1994, in conformity with generally accepted accounting principles.


                        KPMG Peat Marwick LLP



San Francisco, California
February 17, 1997


<PAGE>
                                                                

                              TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                                  (a California limited partnership)

                                         Balance Sheets

                                    December 31, 1996 and 1995
                                       (Amounts in thousands)
<TABLE>
<CAPTION>

                                                                              1996                1995
                                                                         ---------------     ---------------

<S>                                                                  <C>                     <C>
Assets
Container rental equipment, net of accumulated
   depreciation of  $30,943 (1995:  $24,768)                           $         81,075              85,982

Cash                                                                              2,426                 986

Accounts receivable, net of allowance
   for doubtful accounts of $1,616 (1995: $1,516)                                 5,219               5,966

Prepaid expenses                                                                     45                  47
                                                                         ---------------     ---------------

                                                                       $         88,765              92,981
                                                                         ===============     ===============

Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                    $           492                 383

   Accrued liabilities                                                              35                 135

   Accrued damage protection plan costs (note 1)                                   422                 373

   Warranty claims (note 1)                                                        267                 306

   Due to affiliates, net (note 2)                                                  52                  37

   Deferred quarterly distribution (note 1)                                        116                 122

   Equipment purchases payable                                                     580                 738
                                                                         ---------------     ---------------

      Total liabilities                                                          1,964               2,094
                                                                         ---------------     ---------------

Partners' capital:
   General partners                                                                 -                   -

   Limited partners                                                             86,801              90,887
                                                                         ---------------     ---------------

      Total partners' capital                                                   86,801              90,887
                                                                         ---------------     ---------------

Commitments (note 7)
                                                                       $        88,765              92,981
                                                                         ===============     ===============

See accompanying notes to financial statements
</TABLE>




<PAGE>


                     TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                        (a California limited partnership)

                            Statements of Earnings

               Years  ended  December  31,  1996,  1995  and  1994
    (Dollar  amounts  in  thousands  except  for unit and per unit amounts)



<TABLE>
<CAPTION>

                                                       1996               1995              1994
                                                 -----------------  ----------------- -----------------

                                            
<S>                                            <C>                    <C>              <C>   
Rental Income                                  $           21,349             23,724            23,007
                                                 -----------------  ----------------- -----------------

Costs and expenses:
     Direct container expenses                              3,323              2,514             3,647

     Bad debt expense                                         254                554             1,083

     Depreciation and amortization                          6,782              6,692             6,824

     Professional fees                                         34                 47                48

     Management fees to affiliates (note 2)                 1,966              2,078             2,043

     General and administrative costs
       to affiliates (note 2)                               1,161              1,552             1,658

     Other general and administrative costs                   260                284               195
                                                 -----------------  ----------------- -----------------

                                                           13,780             13,721            15,498
                                                 -----------------  ----------------- -----------------

     Income from operations                                 7,569             10,003             7,509
                                                 -----------------  ----------------- -----------------

Other income:
     Interest income (expense)                                 86                 54               (7)

     Gain on sale of equipment (note 6)                       140                262               715
                                                 -----------------  ----------------- -----------------

                                                              226                316               708
                                                 -----------------  ----------------- -----------------

     Net earnings                              $            7,795             10,319             8,217
                                                 =================  ================= =================

Allocation of net earnings (note 1):
     General partners                          $              120                135               105

     Limited partners                                       7,675             10,184             8,112
                                                 -----------------  ----------------- -----------------

                                               $            7,795             10,319             8,217
                                                 =================  ================= =================
Limited partners' per unit share
     of net earnings                           $             1.24               1.64              1.30
                                                 =================  ================= =================

Limited partners' per unit share
     of distributions                          $             1.85               1.82              1.66
                                                 =================  ================= =================

Weighted average number of limited
     partnership units outstanding                      6,185,397          6,205,740         6,244,044
                                                 =================  ================= =================


See accompanying  notes to financial statements
</TABLE>




<PAGE>


                            TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                               (a California limited partnership)

                                 Statements of Partners' Capital

                          Years ended December 31, 1996, 1995 and 1994
                                     (Amounts in thousands)


<TABLE>
<CAPTION>
                                                             Partners' Capital
                                          --------------------------------------------------------
                                            General              Limited               Total
                                          ------------       ----------------      ---------------


<S>                                    <C>                    <C>                  <C>   
Balances at December 31, 1993           $          -                  95,102               95,102

Distributions                                   (105)               (10,346)             (10,451)

Redemptions (note 1)                               -                   (611)                (611)

Net earnings                                      105                  8,112                8,217
                                          ------------       ----------------      ---------------

Balances at December 31, 1994                      -                  92,257               92,257
                                          ------------       ----------------      ---------------


Distributions                                   (135)               (11,297)             (11,432)

Redemptions (note 1)                               -                   (257)                (257)

Net earnings                                      135                 10,184               10,319
                                          ------------       ----------------      ---------------

Balances at December 31, 1995                      -                  90,887               90,887
                                          ------------       ----------------      ---------------


Distributions                                   (120)               (11,438)             (11,558)

Redemptions (note 1)                               -                   (323)                (323)

Net earnings                                      120                  7,675                7,795
                                          ------------       ----------------      ---------------

Balances at December 31, 1996           $          -                  86,801               86,801
                                          ============       ================      ===============


See accompanying notes to financial statements
</TABLE>




<PAGE>


                    TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                       (a California limited partnership)

                            Statements of Cash Flows
                  Years ended December 31, 1996, 1995 and 1994
                             (Amounts in thousands)

<TABLE>
<CAPTION>

                                                                            1996               1995                1994
                                                                       ---------------    ----------------    ----------------
Cash flows from operating activities:
<S>                                                                  <C>                 <C>                  <C>  
   Net earnings                                                      $          7,795              10,319               8,217

   Adjustments  to  reconcile  net  earnings to net cash  provided 
   by  operating activities:

         Depreciation                                                           6,782               6,654               6,787

         Increase in allowance for doubtful accounts                              100                  50                 931

         Gain on sale of rental equipment                                       (140)               (262)               (715)

         Amortization of organization costs                                         -                  38                  37

         Changes in assets and liabilities:

            Decrease (increase) in accounts receivable                            629                (62)             (2,039)

            Increase in due to affiliates, net                                    166                 381                 636

            Increase (decrease) in accounts payable
              and accrued liabilities                                               9                  80             (1,039)

            (Decrease) increase in warranty claims                               (39)                 296                 (3)

            Increase in accrued damage protection plan costs                       49                   4                  58

            Decrease (increase) in prepaid expenses                                 2                 (2)                 (7)
                                                                       ---------------    ----------------    ----------------

            Net cash provided by operating activities                          15,353              17,496              12,863
                                                                       ---------------    ----------------    ----------------

Cash flows from investing activities:
     Proceeds from sale of container rental equipment                           1,355               2,178               9,061

     Container purchases                                                       (3,349)            (10,186)             (6,352)

     Decrease in value added taxes receivable                                       -                   -                 416
                                                                       ---------------    ----------------    ----------------

            Net cash (used in) provided by investing activities                (1,994)             (8,008)              3,125
                                                                       ---------------    ----------------    ----------------

Cash flows from financing activities:
    Repayment of note payable to bank                                               -                   -             (3,450)

    Redemptions                                                                  (323)               (257)              (611)

    Distributions to partners                                                 (11,596)            (11,401)            (10,459)
                                                                       ---------------    ----------------    ----------------

            Net cash used in financing activities                             (11,919)            (11,658)            (14,520)
                                                                       ---------------    ----------------    ----------------

Net increase (decrease) in cash                                                 1,440              (2,170)               1,468

Cash at beginning of period                                                       986                3,156               1,688
                                                                       ---------------    ----------------    ----------------

Cash at end of period                                                $          2,426                  986               3,156
                                                                       ===============    ================    ================

Interest paid during the period                                      $              -                    -                  73
                                                                       ===============    ================    ================


See accompanying notes to financial statements
</TABLE>




<PAGE>


                                TEXTAINER EQUIPMENT INCOME FUND III, L.P.
                                    (A California limited partnership)

                                    Statements of Cash Flows--Continued
                               Years Ended December 31, 1996, 1995 and 1994
                                          (Amounts in thousands)


Supplemental Disclosures:

Supplemental schedule of non-cash investing and financing activities:

The following table summarizes the amounts of equipment purchases, distributions
to partners,  and proceeds from sale of container rental equipment which had not
been paid or received by the Partnership as of December 31, 1996, 1995 ,1994 and
1993 resulting in differences in amounts  recorded and amounts of cash disbursed
or received by the Partnership, as shown in the Statements of Cash Flows.
<TABLE>
<CAPTION>

                                                                 1996            1995            1994           1993
                                                                 ----            ----            ----           ----
<S>                                                           <C>               <C>            <C>            <C>
Equipment purchases included in:
     Due to (from) affiliates.................................$.    -              86             185            (3)
     Accounts payable and accrued liabilities...................    -               -               -             9
     Equipment purchases payable................................  580             738           2,929           421

Distributions to partners included in:
     Due to affiliates..........................................   10              42               7            27
     Deferred quarterly distribution payable....................  116             122             126           114

Proceeds from sale of equipment included in:
     Due from affiliates........................................  381             348             330           335
     Accounts receivable........................................    -              19             587           790
</TABLE>

The following  summarizes the amounts of equipment  purchases,  distributions to
partners and proceeds from sale of container  rental  equipment  recorded by the
Partnership  and the amounts paid or received as shown in the Statements of Cash
Flows for the years ended December 31, 1996, 1995 and 1994.

<TABLE>
<CAPTION>
                                                                  1996           1995             1994
                                                                  ----           ----             ----

<S>                                                           <C>               <C>             <C>  
Equipment purchases recorded............................      $  3,105          7,896           9,039
Equipment purchases paid................................         3,349         10,186           6,352

Distributions to partners declared......................        11,558         11,432          10,451
Distributions to partners paid..........................        11,596         11,401          10,459

Proceeds from sale of
   container rental equipment recorded..................         1,369          1,628           8,853
Proceeds from sale of
   container rental equipment received..................         1,355          2,178           9,061

</TABLE>

See accompanying notes to financial statements


<PAGE>


                   TEXTAINER EQUIPMENT INCOME FUND III
                   (A California Limited Partnership)

                Notes To Financial Statements--Continued


             Years ended  December  31,  1996,  1995,  and 1994
     (Dollar  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,  was formed on July 26, 1990 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,  marine vessels,  trailers and
      other  container-related  equipment (the 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 admitted the
      maximum  number  of units  allowed  into the  Partnership.  On that  date,
      admittance  into the Partnership  was closed with 6,250,000  units,  for a
      total of $125,000.

     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) (prior to being redomiciled on December
     20,  1994,  TEM was  known as  Textainer  Equipment  Management  N.V.)  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.   Textainer  Acquisition
     Services  Limited  (TAS) is an  affiliate  of the  General  Partners  which
     performs  services  relative to the  acquisition  of Equipment  outside the
     United  States on behalf of the  Partnership.  TCC  Securities  Corporation
     (TSC),  a licensed  broker and dealer in securities and an affiliate of the
     General  Partners,  was the managing  sales agent for the offering of Units
     for sale.  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  equipment  rental
      contracts.  These  contracts  are  typically  for a one-year  term and are
      classified as operating  leases.  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.

      (c)  Equipment

      The  Equipment  is carried  at the lower of cost of the  assets  purchased
      which includes  acquisition  fees, or the estimated  recoverable  value of
      such  assets.   Depreciation  of  new  equipment  is  computed  using  the
      straight-line  method over the estimated  useful life of 12 years to a 28%
      salvage  value.  Used  equipment is  depreciated  based upon its 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 accounts and any resulting
      gain or loss is recognized as income for the period.

      In March 1995, the Financial  Accounting  Standards Board issued Statement
      No.  121,   "Accounting  for  the  Impairment  of  Long-Lived  Assets  and
      Long-Lived  Assets to be Disposed of" (SFAS 121). The Partnership  adopted
      SFAS 121  during  1995.  In  accordance  with  SFAS 121,  the  Partnership
      periodically  compares  the  carrying  value of the  Equipment to expected
      future market  conditions for the purpose of assessing the  recoverability
      of the recorded amounts. There were no reductions to the carrying value of
      the Equipment made during 1996 or 1995.

      (d)  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.  Once the Equipment is on-hire with a lessee,
      the  Partnership  has no way of knowing its location.  The domicile of the
      lessee  is  not  indicative  of  where  the  lessee  is  transporting  the
      Equipment.  The Partnership's business risk in its foreign operations lies
      with the  creditworthiness  of the  lessees  rather  than  the  geographic
      location of the Equipment 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, 1996, 1995 and 1994.

      (e)  Allocation of Net Earnings and Partnership Distributions

      In accordance with the Partnership  Agreement,  net earnings or losses and
      partnership distributions are allocated 1% to the General Partners and 99%
      to the limited partners with the exception of gross income,  as defined in
      the  Partnership  Agreement.  Gross  income is  allocated  to the  General
      Partners to the extent that their  capital  accounts'  deficit  exceed the
      portion  of  syndication   and  offering  costs   allocated  to  them.  On
      termination  of the  Partnership  the General  Partners shall be allocated
      gross income equal to their allocations of syndication and offering costs.

      Actual  cash  distributions  to  the  Limited  Partners  differ  from  the
      allocated net earnings 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 these  distributions as an accrued  liability
      at December 31, 1996 and 1995.

      (f)  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.

      (g)  Value-added Taxes Receivable

      During  1993 and 1992,  the  Partnership  purchased  trailer  and  storage
      equipment  from  foreign  manufacturers  which was subject to  value-added
      taxes.  These  value-added  taxes were fully  refunded to the  Partnership
      during 1994.

      (h)  Organization Costs

      Organization  costs  were  amortized  on a  straight-line  basis over five
      years. These costs were fully amortized during 1995.

      (i)  Acquisition Fees

      In accordance with the Partnership Agreement, acquisition fees are paid to
      the General  Partners or TAS equal to 5% of Equipment  purchase price (see
      note 2). These fees are capitalized as part of the cost of the Equipment.

      (j)  Damage Protection Plan

      The Partnership  offers a Damage  Protection Plan (the Plan) to lessees of
      its  Equipment.  Under  the  terms  of the  Plan,  the  Partnership  earns
      additional  revenues on a daily basis and, as a result, has agreed to bear
      certain repair costs.  It is the  Partnership's  policy to recognize these
      revenues  when  earned  and  provide  a  reserve  sufficient  to cover the
      Partnership's  obligation for estimated  future repair costs.  At December
      31, 1996 and 1995, this reserve was equal to $422 and $373, respectively.

      (k)   Warranty Claims

      During 1992 and 1995, the Partnership  settled  warranty claims against an
      equipment  manufacturer.  The  Partnership  is amortizing  the  settlement
      amounts over the remaining useful life of the equipment (between seven and
      eight  years),  reducing  maintenance  and repair costs over that time. At
      December  31, 1996 and 1995,  the  unamortized  portion of the  settlement
      amounts was equal to $267 and $306, respectively.

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

      Limited  partners'  per unit share of both net earnings and  distributions
      were  computed  using the  weighted  average  number of units  outstanding
      during  each year of the  Partnership's  operations  which was  6,185,397,
      6,205,740,  and 6,244,044  during the years ended December 31, 1996,  1995
      and 1994, respectively.

      (m) Redemptions

      The following  redemption  offerings were  consummated by the  Partnership
      during the years ended 1996, 1995 and 1994:
<TABLE>
<CAPTION>

                                                                                  Average
                                                         Units Redeemed      Redemption Price           Amount Paid


<S>                                                      <C>                 <C>                       <C>
      Year ended  December  31, 1994:
          3rd quarter................                        15,760               $16.38                    $ 258
          4th quarter................                        22,271               $15.86                      353
                                                             ------                                           ---

                                                             38,031               $16.08                      611
                                                             ------                                           ---

     Year ended  December  31, 1995:
         1st quarter.................                         3,570               $14.63                       52
         3rd quarter.................                         8,106               $14.12                      114
         4th quarter.................                         6,200               $14.61                       91
                                                              -----                                          ----
                                                             17,876               $14.39                      257
                                                             ------                                           ---


    Year ended  December  31, 1996:
        1st quarter.................                          4,350               $13.94                       61
        3rd quarter.................                         14,265               $12.88                      184
        4th quarter.................                          6,576               $11.86                       78
                                                              -----                                          ----
                                                             25,191               $12.80                      323
                                                             ------                                           ---

   Partnership to date.............                          81,098               $14.69                  $ 1,191
                                                             ======                                         =====
                                                                          
</TABLE>

      The  redemption  price is fixed by  formula  and varies  depending  on the
      length of time the units have been outstanding.

      (n)  Fair Value of Financial Instruments

      To meet the reporting requirements of Financial Accounting Standards Board
      Statement   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, 1996 and 1995, the fair
      value of the Partnership's  financial instruments  approximate the related
      book value of such instruments.

      (o)  Reclassifications

      Certain  reclassifications,  not affecting net earnings, have been made to
      prior year amounts in order to conform with the 1996  financial  statement
      presentation.

Note 2.   Transactions with Affiliates

      During the offering  period,  the Partnership  paid a managing sales agent
      fee to TSC of up to 9% of the  gross  proceeds  from the  sale of  limited
      partnership   units,  from  which  TSC  paid  commissions  to  independent
      participating   broker/dealers   who   participated   in   the   offering.
      Additionally,  the Partnership reimbursed the General Partners and TSC for
      certain organizational and offering costs, incurred in connection with the
      organization of the  Partnership,  up to a maximum of 6% of gross proceeds
      raised as allowed  in the  Partnership  Agreement.  These  amounts,  which
      totaled  $14,800,  were deducted as syndication  and offering costs in the
      determination  of  net  limited  partnership  contributions.  Organization
      expenses,  which  resulted  from the  formation of the  Partnership,  were
      capitalized as organization costs and were fully amortized in 1995.

      As part of the operation of the Partnership,  the Partnership is to pay to
      the General  Partners or TAS an incentive  management  fee, an acquisition
      fee, an equipment  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 $156, $480, and $294 of equipment  acquisition fees as part of
      the  Equipment  costs during the years ended  December 31, 1996,  1995 and
      1994,  respectively,  and  incurred  $481,  $477,  and  $440 of  incentive
      management  fees in  1996,  1995  and  1994,  respectively.  No  equipment
      liquidation fees were paid in 1996, 1995 or 1994.

      The  Equipment  of  the  Partnership  is  managed  by  TEM.  Prior  to the
      Partnership's  sale of its  storage  fleets  during  1994 and 1995 and its
      trailer  fleet  during  1994,  TEM had entered  into  agreements  with its
      100%-owned subsidiaries Textainer Storage Services (TSS) and Multi-Storage
      Systems Limited (MSS) to manage these storage containers and its 50%-owned
      subsidiary  Contrail  International  Services  B.V.  (CIS) to manage these
      trailers  (note 6). In its role as manager,  TEM has authority to acquire,
      hold,  manage,  lease,  sell and dispose of the  Partnership's  Equipment.
      Additionally,  TEM holds, for the payment of direct operating expenses,  a
      reserve of cash that has been collected from container leasing operations;
      such cash is included in the amount due from  affiliates  at December  31,
      1996 and 1995.

      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.
      Such fee is either  retained  by TEM or,  prior to the sale of its storage
      and container  fleets,  the fee allocable to CIS, TSS and MSS, if any, was
      passed  through  by TEM for  services  rendered.  During  the years  ended
      December 31, 1996, 1995 and 1994, the Partnership paid $1,485, $1,601, and
      $1,603,  respectively,  in equipment  management fees to TEM, CIS, TSS and
      MSS. The Partnership's Equipment is or was leased by TEM, CIS, TSS and MSS
      to third party  lessees on operating  master  leases,  spot  leases,  full
      payout net leases and term leases.  The majority 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 borne by TFS,  TEM and,  prior to the sales of its storage
      and trailer  fleets,  TSS, MSS and CIS.  During 1996,  1995 and 1994 costs
      allocated to the  Partnership  for  salaries  were $610,  $773,  and $926,
      respectively and other general and  administrative  costs were $551, $779,
      and $732, respectively.

      TEM,  TSS,  MSS and CIS  allocate  these  costs  based on the ratio of the
      Partnership's interest in managed Equipment to the total equipment managed
      by  TEM,  TSS,  MSS  and CIS  during  the  period.  Indirect  general  and
      administrative costs allocated to the Partnership by TEM, TSS, MSS and CIS
      were $1,011, $1,326, and $1,434 during 1996, 1995 and 1994, respectively.

      TFS allocates indirect general and administrative costs to the Partnership
      based on the ratio of the  Partnership's  Equipment to the total Equipment
      of all limited  partnerships  managed by TFS. TFS allocated $150, $226 and
      $224 of these  indirect  costs to the  Partnership  during 1996,  1995 and
      1994, respectively.

      The General  Partners or TAS may acquire  Equipment  in their own name and
      hold  title on a  temporary  basis for the  purpose  of  facilitating  the
      acquisition of such Equipment for the Partnership.  The Equipment 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  or TAS  are  entitled  to an  acquisition  fee  for any
      Equipment resold to the Partnership.

      At December 31, 1996 and 1995,  due from and to  affiliates  are comprised
      of:

<TABLE>
<CAPTION>
                                                                                 1996              1995
                                                                                 ----              ----
<S>                                                                         <C>                   <C>
                 Due from affiliates:
                    Due from TEM and TSS ...........................        $      27               119
                                                                                   --               ---



                 Due to affiliates:
                    Due to TAS......................................                -                54
                    Due to TFS......................................               52                76
                    Due to TL and TGH...............................                1                10
                    Due to TCC......................................               26                16
                                                                                 ----              ----
                                                                                   79               156
                                                                                 ----               ---

                 Net due to affiliates                                      $      52                37
                                                                                 ====              ====
</TABLE>

      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 and TSS.

      Prior to July,  1994, it was the policy of the Partnership and the General
      Partners to charge interest on intercompany balances which are outstanding
      for more than one month.  Interest  was charged at the prime rate plus 2%.
      As of July 1994,  this policy was changed so that the  Partnership  is not
      charged  interest on  intercompany  balances except for loans on equipment
      purchases.  Interest  is charged at a rate not  greater  than the  General
      Partners'  or  affiliates'  own cost of funds.  The  Partnership  incurred
      interest expense of $5 on intercompany balances payable to TFS and TEM for
      the year ended December 31, 1994.  There was no interest  expense incurred
      on intercompany balances for the years ended December 31, 1995 or 1996.

Note 3.   Rentals under Operating Leases

      The following is a schedule by year of minimum future  rentals  receivable
      on noncancelable operating leases as of December 31, 1996:

<TABLE>
<CAPTION>
                     Year ending December 31:

<S>                   <C>                                                              <C>    
                      1997....................................................         $ 1,520
                      1998....................................................             233
                      1999....................................................              86
                      2000....................................................               7
                                                                                       -------

                     Total minimum future rentals receivable..................         $ 1,846
                                                                                         =====
</TABLE>

Note 4.   Note Payable

      On December 9, 1992, the Partnership  was granted a revolving  credit line
      with an  available  limit of $4,000  which  was  available  for  equipment
      purchases. In 1994, the credit line was repaid in full and terminated.

Note 5.   Income Taxes

      As of December 31, 1996, 1995, and 1994, there were temporary  differences
      of $46,956,  $36,275,  and  $34,024  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 loss for federal income tax
      purposes  for the  years  ended  December  31,  1996,  1995 and 1994 is as
      follows:

<TABLE>
<CAPTION>
                                                                              1996              1995            1994
                                                                              ----              ----            ----

<S>                                                                    <C>                    <C>              <C>  
       Net income per financial statements...........................  $     7,795            10,319           8,217

       Increase in provision for bad debt............................          100                50             931
       Depreciation for income tax purposes in excess of
         depreciation for financial statement purposes...............      (11,757)          (11,289)        (10,384)
       Gain on sale of fixed assets in excess of gain
         recognized for financial statement purposes.................          703               491           1,651
       Increase in damage protection plan reserve....................           49                 4              58
       Decrease in reserve for
         trailer maintenance and repairs.............................            -                (2)           (791)
       Increase (decrease) in warranty claim.........................          260                (3)             (3)
       Other.........................................................            -                36              33
                                                                        ----------         ---------        --------

       Net loss for federal income tax purposes......................  $    (2,850)             (394)           (288)
                                                                           ========         =========         =======
</TABLE>

Note 6.  Sale of Trailer and Storage Fleet

      In August 1995, the Partnership sold its storage container fleet,  managed
      by TSS, to a third party  investor.  The proceeds  from the sale were $345
      compared to the  Partnership's  cost basis in the  equipment of $333.  The
      resulting  gain from the sale was $12.  The  Partnership  has invested the
      proceeds from this sale into marine container rental equipment.


      In the  second  half of 1994,  the  Partnership  sold its  trailer  fleet,
      managed by CIS, to an unrelated purchaser. The proceeds from the sale were
      approximately  $6,033  compared  to the  Partnership's  cost  basis in the
      equipment of approximately  $5,433.  (This cost basis does not include the
      repair reserve of $807 which the Partnership maintained while it owned the
      equipment.) The resulting gain from the sale was  approximately  $600. The
      Partnership has invested the proceeds from the sale into marine  container
      equipment.


      In the second quarter of 1994, the  Partnership  sold a portion of the MSS
      refrigerated  storage  container fleet as an installment  sale with twelve
      quarterly payments.  An imputed interest rate of 10% was used to calculate
      principal  and  interest   associated  with  the   installment   payments.
      Throughout  1994,  the  remaining  MSS  fleet was  sold.  The  Partnership
      recognized  losses on the sales of  approximately  $217.  During 1993, the
      Partnership  recorded a provision  of $214 to write down the  refrigerator
      storage  container  fleet  to its  estimated  net  realizable  value.  The
      Partnership has invested the proceeds from this sale into marine container
      rental equipment.

Note 7.  Commitments

      At December 31, 1996, the Partnership has committed to purchase  Equipment
      at an approximate total purchase price of $265 which includes  acquisition
      fees of $13. These  commitments were made to TAS which, as the contracting
      party,  has in turn  committed to purchase this equipment on behalf of the
      Partnership.



<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 TI which have comprised the Textainer Group. Effective October
1, 1993,  the Textainer  Group  streamlined  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 have 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.  Textainer Inc. (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 a
corporate  reorganization effective October 1, 1993 which caused TFS, TEM and TL
to fall under the common  ownership of Textainer  Group Holdings  Limited.  (The
managing  general  partner  and  associate  general  partners  are  collectively
referred  to as the  General  Partners).  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,  TEM and TL now serve as General
Partners  for  the  Registrant  and  are  wholly-owned  or   substantially-owned
subsidiaries  of TGH. The General  Partners  also act in this capacity for other
limited  partnerships.  Textainer  Acquisition  Services  Limited  (TAS),  is an
affiliate  of the General  Partners,  which  performs  services  relative to the
acquisition of Equipment outside the United States on behalf of the Partnership.
TCC Securities Corporation (TSC), a licensed broker and dealer in securities and
an  affiliate  of the General  Partners,  was the  managing  sales agent for the
offering of Units for sale.

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, 1996, all Section 16(a) filing requirements
      were  complied  with,  except  that  Philip K.  Brewer  filed his  initial
      statement of beneficial interest on Form 3 late. No director,  officer, or
      beneficial  owner  owned  more  than 10  percent  of any  interest  in the
      Partnership.  None of the  foregoing  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                    63    Director and Chairman of TGH, TEM, TL, TFS and TCC

James E. Hoelter                  57    President  and CEO of TGH, TL, TFS and TCC,  Director of TGH,  TEM, TL, TFS,
                                        TCC and TSC
John A. Maccarone                 52    President and CEO of TEM, Vice  President of TGH,  Director of TGH, TEM, TL,
                                        TFS, TCC and TSC
Cara D. Smith                     34    President and CEO of TSC and Director of TCC and TFS
John R. Rhodes                    47    Executive  Vice  President,  CFO, and Secretary of TGH, TEM, TL, TFS and TCC
                                        and Director of TEM, TFS and TCC
Alex M. Brown                     58    Director of TGH, TEM, TL, TCC and TSC
Harold J. Samson                  75    Director of TGH, TL and TSC
Philip K. Brewer                  40    Senior Vice President - Capital Markets for TGH and TL
Robert D. Pedersen                38    Senior Vice President - Marketing for TEM
Anthony C. Sowry                  44    Vice President - Operations and Acquisitions for TEM
Jens W. Palludan                  46    Vice President - Americas/Africa/Australia for TEM
Robert S.A. Goodall               39    Vice President - Europe/Middle East/India for TEM
Wing Sing Mak                     39    Vice President - South Asia for TEM
Masanori Sagara                   41    Vice President - North Asia for TEM
Stefan Mackula                    44    Vice President - Equipment Resale for TEM
Ernest J. Furtado                 41    Vice President, Finance and Assistant Secretary of TGH, TEM and TL
Richard G. Murphy                 44    Vice President - Risk Management for TEM
Janet S. Ruggero                  48    Vice President - Administration and Marketing Services for TEM
Adnan Z. Abou Ayyash              52    Director of TGH and TL
Isam K. Kabbani                   62    Director of TGH and TL
S. Arthur Morris                  63    Director of TGH, TEM and TL
Dudley R. Cottingham              45    Assistant Secretary, Vice President and Director of TGH, TEM and TL
James S. McCaffrey                41    Executive Vice President,  Chief Operating Officer,  Assistant Secretary and
                                        Director for TFS and TCC
Jeanene K. Gomes                  43    Assistant Secretary of TFS and TCC, Secretary and Compliance Officer of TSC
</TABLE>


          Neil I. Jowell is Director and  Chairman of TGH,  TEM, TL, TFS and TCC
and a member of the  Investment  Advisory  Committee  and  Equipment  Investment
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,
transport,  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
a B.Com.L.L.B. from the University of Cape Town.

          James E. Hoelter is President and Chief Executive  Officer of TGH, TL,
TFS and TCC and a director of TGH,  TEM, TL, TFS, TCC and TSC. As President  and
Chief  Executive  Officer of TGH, Mr. Hoelter is responsible  for overseeing the
management of, and  coordinating  the activities of, TEM, TL, TFS and TCC. He is
also  responsible  for overseeing  TEM's  equipment  management  operations.  In
addition,  Mr.  Hoelter is  Chairman  of the Credit  Committee,  the  Investment
Advisory  Committee and the Equipment  Investment  Committee (see  "Committees",
below).  Prior to joining the Textainer Group in 1987, Mr. Hoelter was president
of Intermodal  Equipment Associates ("IEA") in San Francisco,  California,  from
the  company's  inception in 1979 until 1987.  Mr.  Hoelter  co-founded  IEA and
directed its sponsorship of ten public and private  investment  programs,  which
provided  more than $100 million of equity from 10,000  investors.  From 1976 to
1978,  Mr.  Hoelter was Vice President - North America for Trans Ocean Ltd., San
Francisco,  a marine container leasing company, where he was responsible for all
leasing  operations in that area. From 1971 to 1976, he was associated with Itel
Corporation, San Francisco, where he held a number of positions, the most recent
of which was director of financial  leasing for Itel's Container  Division.  Mr.
Hoelter  received his B.B.A. in business  administration  from the University of
Wisconsin, where he currently serves as a member of its Business School's Dean's
Advisory  Board,  and  his  M.B.A  from  the Harvard Graduate School of Business
Administration.

          John A.  Maccarone is President and CEO of TEM, Vice  President of TGH
and a director  of TGH,  TEM,  TL,  TFS,  TCC and TSC.  In this  capacity  he is
responsible  for the  performance  of  TEM's  worldwide  fleet of  marine  cargo
containers.  Additionally, he is a member of the Equipment Investment Committee,
the Credit Committee and the Investment  Advisory  Committee (see  "Committees",
below).  Mr.  Maccarone was instrumental in co-founding IEA with Mr. Hoelter 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 B.S.  degree  in
Engineering  Management  from  Boston  University  and  an  M.B.A.  from  Loyola
University of Chicago.

          Cara  D. Smith  is  President  and  Chief  Executive Officer of TSC, a
director of TFS and TCC and a member of the Investment  Advisory  Committee (see
"Committees",  below).  In  this  capacity  Ms.  Smith  is  responsible  for the
organization,  marketing and after-market support of TSC's investment  programs.
Ms. Smith  joined  Textainer  in 1992,  and  prior to 1996,  was Vice  President
of  Marketing.  Ms. Smith has worked in the securities  industry for the past 13
years.  Ms. Smith's  extensive  experience  ranges from compliance  and investor
relations to  administration  and marketing of equipment  leasing,  multi-family
housing and tax credit investment programs.  She holds five securities  licenses
and is a  registered principal.  Ms. Smith is also a member of the International
Association of Financial Planners.


          John R. Rhodes is Executive Vice President,  Chief  Financial  Officer
and  Secretary of TGH,  TEM, TL, TFS and TCC and a director of TEM, TFS and TCC.
In this capacity he is responsible for all accounting, financial management, and
reporting  functions for the Textainer  Group. He is also a member of the Credit
Committee,  the Equipment Investment Committee and Investment Advisory Committee
(see  "Committees",  below).  Prior to joining  Textainer in November  1987, Mr.
Rhodes was Vice President of Finance for Greenbrier  Capital  Corporation in San
Francisco,  a trailer  leasing and management  company,  from 1986 to 1987; from
1981 to 1985, he was employed by Gelco Rail Services, an intermodal refrigerated
trailer  company in San  Francisco,  first in the capacity of Vice President and
Controller  and then as Senior Vice President and General  Manager.  Mr. Rhodes'
earlier  business  affiliations  include  serving as Vice  President and General
Manager  of Itel  Capital  Corporation  and as  senior  accountant  with  Arthur
Andersen & Co., both in San Francisco.  He is a Certified Public  Accountant and
holds a B.A. in economics from Stanford  University and an M.B.A.  in accounting
from Golden Gate University.

          Alex  M.  Brown  is  a  director  of  TGH,   TEM,  TL,  TCC  and  TSC.
Additionally,  he is a member  of the  Equipment  Investment  Committee  and the
Investment  Advisory  Committee  (see  "Committees",  below).  Mr.  Brown became
affiliated  with the  Textainer  Group in April 1986.  From August 4, 1987 until
October 1993, he was President and Chief  Executive  Officer of Textainer,  Inc.
and the Chairman of the Textainer  Group.  From June 1993 to present,  Mr. Brown
has been Chief Executive Officer of AAF, a company  affiliated with Trencor Ltd.
AAF is a publicly listed company on the London Stock Exchange and is involved in
manufacturing  and leasing modular buildings and construction  scaffolding.  Mr.
Brown  is  Chairman  of  WACO  International  Corporation,  which  is  based  in
Cleveland,  Ohio.  WACO  manufactures,  rents and erects  scaffolding  and other
associated  construction products throughout the USA. Mr. Brown was the managing
director of Cross  County  Leasing in England from 1984 until it was acquired by
Textainer in 1986.

          Harold J.  Samson is a director of TGH,  TL and TSC and is a member of
the  Investment  Advisory  Committee  (see  "Committees",  below).   Mr.  Samson
served as a consultant  to various  securities  firms since 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 is Senior  Vice  President  -  Capital  Markets  for
TGH and TL. Mr.  Brewer is responsible  for  optimizing  the  capital  structure
of and  identifying  new  sources  of  finance  for Textainer.  Prior to joining
Textainer in 1996,  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 based in San  Francisco  and is  Senior  Vice
President - Marketing for TEM,  responsible  for  worldwide  sales and marketing
related  activities.  Mr.  Pedersen  is a member of the  Credit  Committee  (see
"Committees"  below).  He joined TEM 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 Maersk Line, a container  shipping  line (from
1978 to 1984),  XTRA,  a  container  lessor  (1985 to 1988) and Klinge  Cool,  a
manufacturer of refrigerated  container  cooling units (1989 to 1991),  where he
was worldwide  sales and marketing  director.  Mr. Pedersen is a graduate of the
A.P. Moller shipping and transportation  program and Merkonom Business School in
Copenhagen, majoring in Company Organization.

          Anthony C. Sowry is Vice President - Operations and  Acquisitions  for
TEM. Mr. Sowry supervises all international container operations and maintenance
and technical  functions  for the fleets under  management.  In addition,  he is
responsible for the acquisition of all new and used containers for the Textainer
Group. He began his affiliation with TEM in 1988 and previously  served as Fleet
Quality  Control  Manager for Textainer Inc. from 1982 through March 1988. He is
also a member of the Credit  Committee  and the Equipment  Investment  Committee
(see  "Committees",  below).  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.

          Jens W. Palludan is based in New York and is Vice President - Americas
/Africa/Australia for TEM, 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.
Prior to joining  TEM  in 1993 Mr. Palludan was General  Manager,  Equipment and
Terminals,  where he was responsible for a  fleet  of  over  200,000  TEUs.  Mr.
Palludan  holds  an  M.B.A. from  the  Centre  European  D'Education Permanente,
Fontainebleau, France.

         Robert S.A. Goodall is based in London and is Vice President  -  Europe
/Middle East/India for TEM, in which capacity he is responsible for coordinating
all leasing  activities in these three areas of operation.  Mr.  Goodall  joined
TEM  in  September  1994.  Previously,  Mr.  Goodall  spent his career from July
1990 until August 1994 with Tiphook  Container  Rental,  during  which  time  he
held numerous senior marketing positions within the company.  He was responsible
for  setting  up  their  green  field  operation  in  North  America,  which  he
successfully   ran   from   inception   for   three   years.  Mr.  Goodall  also
spearheaded  a  quality  program  within  the   company   which   received   ISO
accreditation  for the Tank Container operation and associated  business  areas.
Mr.Goodall has spent nearly sixteen years in the container leasing and transport
industry.  Mr. Goodall  graduated from Bloxham College, Oxfordshire and Business
Studies at West London College.

         Wing  Sing Mak is based in Singapore and is the Regional Vice President
- South  Asia.  Mr. Mak is  responsible  for  container  leasing  activities  in
North/Central People's Republic of China (PRC), Hong Kong and 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 the Regional Vice  President - North Asia of TEM.
Mr. Sagara is responsible for Textainer's marketing 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
with 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.

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

          Ernest J. Furtado is Vice President,  Finance and Assistant  Secretary
of TGH,  TEM and TL, in which  capacity he is  responsible  for all  accounting,
financial  management,  and  reporting  functions  for TGH, TEM and TL. 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.

          Richard G. Murphy is Vice  President,  Risk  Management  for TEM.  Mr.
Murphy is responsible for all credit and risk  management  functions for TEM and
supervises the administrative aspects of equipment acquisitions.  He is a member
of and acts as secretary to the Credit and Equipment Investment  Committees (see
"Committees",  below).  He  previously  served as  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 for TEM.  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.

          Dr.  Adnan Z. Abou Ayyash is a director of  TGH and TL.  Since 1974 he
has been  General  Manager and  Chief  Executive  Officer  of one of the largest
firms of consulting  engineers in Saudi Arabia,  Rashid Engineering.  Dr.  Adnan
Abou  Ayyash  holds  a B.S.  degree  in  Civil  Engineering  from  the  American
University  of Beirut,  as well as M.S. and Ph.D.  degrees in Civil  Engineering
from the  University  of Texas.

          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 17 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.

          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 (1978 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.

          James S.  McCaffrey  is  Executive  Vice  President,  Chief  Operating
Officer,  Assistant Secretary and a director of TFS and TCC. In this capacity he
is responsible for all accounting, financial management, and reporting functions
for TFS and TCC.  He is a  member  of and acts as  secretary  to the  Investment
Advisory Committee and serves as a member of the Equipment  Investment Committee
(see "Committees" below). Prior to joining Textainer in July 1993, Mr. McCaffrey
was Vice  President  of Finance for  Meridian  Point  Properties,  a real estate
syndication and management company,  from 1985 to 1993; from 1983 to 1985 he was
employed by Trans-west  Capital as Controller and Chief Financial  Officer.  Mr.
McCaffrey's  earlier  business   affiliations  include  serving  as  manager  of
financial reporting for Fox and Carskadon Financial  Corporation and as a senior
accountant  with  Arthur  Andersen & Co. Mr.  McCaffrey  is a  Certified  Public
Accountant  and holds a B.S. in business  administration  and  mathematics  from
Southern Oregon State College and two securities licenses.

         Jeanene K. Gomes is Assistant  Secretary  of TFS and TCC and  Secretary
and Compliance  Officer of TSC. Ms. Gomes is responsible for  administering  the
public  partnerships  sponsored by the Textainer  Group.  She is responsible for
ensuring that all data relating to investor  accounts is input,  monitored,  and
stored  in a  timely  manner  and in  accordance  with the  limited  partnership
agreement for each of the  partnerships as well as state and federal  securities
regulations. Ms. Gomes oversees all communications with the limited partners and
as such  directly  supervises  all  personnel in performing  this  function.  As
compliance  officer for TSC, Ms. Gomes is  responsible  for ensuring  compliance
with all  securities  regulations.  Ms.  Gomes  also  serves  on the  Investment
Advisory  Committee (see  "Committees"  below).  Ms. Gomes holds five securities
licenses and was, prior to joining Textainer in 1989, the compliance officer for
CIS Investment Corporation, a broker-dealer.

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  programs 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   James  E.  Hoelter  (Chairman),   John  A.  Maccarone,   John  R.  Rhodes,
Anthony C. Sowry, James McCaffrey,  Richard G. Murphy (Secretary), Alex M. Brown
and Neil I. Jowell.

          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 James E. Hoelter
(Chairman),  John A. Maccarone, Richard G. Murphy (Secretary), Janet S. Ruggero,
John R. Rhodes, Anthony C. Sowry 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 James E. Hoelter (Chairman),  John A. Maccarone,  Cara  D. Smith,  James  S.
McCaffrey  (Secretary),  John  R. Rhodes,  Jeanene  K. Gomes,  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.


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 investment of the Registrant.

b)        Security Ownership of Management

<TABLE>
<CAPTION>
                  As of January 1, 1997:
                                                                                   Number
                  Name of Beneficial Owner                                         Of Units             %All Units

<S>                                                                               <C>                    <C>   
                  James E. Hoelter...................................                  2,500                  .0405%
                  John R. Rhodes.....................................                    280                  .0045%
                  Anthony C. Sowry...................................                    274                  .0044%
                  John A. Maccarone..................................                  2,520                  .0409%
                  Harold J. Samson...................................                  2,500                  .0405%
                                                                                   ---------                  ------

                  Officers and Management
                     as a Group......................................                  8,074                  .1309%
                                                                                   =========                  ======
</TABLE>

c)       Changes in control

         Inapplicable

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)      Transactions with Management and Others.

          At December 31, 1996 and 1995, net due to affiliates is comprised of:
<TABLE>
<CAPTION>

                                                                                 1996              1995
                                                                                 ----              ----
<S>                                                                        <C>                   <C>
                 Due from affiliates:
                    Due from TEM and TSS ...........................        $      27               119
                                                                                   --               ---


                 Due to affiliates:
                    Due to TAS......................................                -                54
                    Due to TFS......................................               52                76
                    Due to TL and TGH...............................                1                10
                    Due to TCC......................................               26                16
                                                                                 ----              ----
                                                                                   79               156
                                                                                 ----               ---

                 Net due to affiliates                                      $      52                37
                                                                                 ====              ====
</TABLE>

         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 and Textainer  Storage  Services (TSS),
         which is a 100% owned subsidiary of TEM.

         In addition,  the Registrant paid or will pay the following  amounts to
         the General  Partners for the years ended  December 31, 1996,  1995 and
         1994, respectively:

         Acquisition Fees in connection with the purchase of equipment on behalf
         of the Registrant:

<TABLE>
<CAPTION>
                                                                     1996           1995             1994
                                                                     ----           ----             ----

<S>                                                             <C>                <C>              <C>
                    TAS.................................        $     156            480              294
                                                                      ===            ===              ===
</TABLE>

         Management fees in connection with the operations of the Registrant:

<TABLE>
<CAPTION>
                                                                     1996           1995             1994
                                                                     ----           ----             ----

<S>                                                             <C>               <C>              <C>
                    TFS                                         $     376            372              343
                    TEM, CIS, TSS and MSS...............            1,590          1,706            1,700
                                                                    -----          -----            -----
                    Total                                        $  1,966          2,078            2,043
                                                                    =====          =====            =====
</TABLE>

         Reimbursement for administrative  costs in respect of the operations of
         the Registrant:

<TABLE>
<CAPTION>
                                                                     1996           1995             1994
                                                                     ----           ----             ----

<S>                                                             <C>               <C>              <C>
                    TFS                                         $     150            226              224
                    TEM, CIS, TSS and MSS...............            1,011          1,326            1,434
                                                                    -----          -----            -----
                    Total                                        $  1,161          1,552            1,658
                                                                    =====          =====            =====
</TABLE>

(b)      Certain Business Relationships.

         Inapplicable.

(c)      Indebtedness of Management

         Inapplicable.

(d)      Transactions with Promoters

         Inapplicable.

See  the  "Management"  and   "Compensation  of  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, 1996 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 on 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.

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

(b)      During  the  year ended 1996, 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  17,  1997,  we  reported  on the  balance  sheets of
Textainer  Equipment Income Fund III, L.P. (the  Partnership) as of December 31,
1996 and 1995 and the related statements of earnings, partners' capital and cash
flows for the year ended December 31, 1996, 1995 and 1994, which are included in
the 1996  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 Peat Marwick LLP




San Francisco, California
February 17, 1997


<PAGE>

<TABLE>
<CAPTION>

                                     TCC EQUIPMENT INCOME FUND III, L.P.
                                      (a California limited partnership)

                               Schedule II - Valuation and Qualifying Accounts
                                        (Dollar 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, 1996:

Allowance for
  doubtful accounts                            $  1,516             254           -             (154)           1,616
                                                  -----             ---        ----             -----           -----

Damage protection
  plan reserve                                 $    373             411           -             (362)             422
                                                 ------             ---        ----             -----           -----  

Warranty settlement                            $    306            (39)           -                -             267
                                                -------             ---        ----             -----          ------


For the year ended December 31, 1995

Allowance for
  doubtful accounts                            $  1,466             554           -            (504)           1,516
                                                  -----             ---         ----           -----           -----

Damage protection
  plan reserve                                 $    369             282           -             (278)             373
                                                 ------             ---         ----            -----             ---

Warranty settlement                            $    10              (2)          298               -              306
                                                -------             ---         ----            -----             ---


For the year ended December 31, 1994:

Allowance for doubtful accounts                $    535           1,083           -             (152)           1,466
                                                    ---           -----         ----            -----           -----

Damage protection plan reserve                 $    310             483           -             (424)             369
                                                  ------           ----         ----            -----            ----

Warranty settlement                            $     12             (2)           -                -               10
                                                  ------          -----         ----           ------           -----

Reserve for trailer
maintenance and repairs                        $    791             458           -           (1,249)               -
                                                  -----           -----         ----          -------           -----



</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/John R. Rhodes
                                        John R. Rhodes
                                        Executive Vice President

Date:  March 26, 1997

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> 
/s/John R. Rhodes                                 Executive Vice President                     March 26, 1997
---------------------------------------------
John R. Rhodes                                    (Principal Financial and
                                                  Accounting Officer), and
                                                  Secretary

/s/James E. Hoelter                               President(Principal Executive                March 26, 1997
---------------------------------------------
James E. Hoelter                                  Officer) and Director


/s/James S. McCaffrey                             Executive Vice President,                    March 26, 1997
------------------------------------------
James S. McCaffrey                                Chief Operating Officer and Director


/s/ John A. Maccarone                             Director                                     March 26, 1997
-------------------------------------------
John A. Maccarone


/s/Cara D. Smith                                  Director                                     March 26, 1997
-------------------------------------------
Cara Smith
</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
                                        John R. Rhodes
                                        Executive Vice President

Date:  March 26, 1997

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> 
                                                  Executive Vice President                     March 26, 1997
John R. Rhodes                                    (Principal Financial and
                                                  Accounting Officer),and
                                                  Secretary


                                                  President(Principal Executive                March 26, 1997
James E. Hoelter                                  Officer) and Director


                                                  Executive Vice President, Chief              March 26, 1997
James S. McCaffrey                                Operating Officer and Director



John Maccarone                                    Director                                     March 26, 1997


Cara D. Smith                                     Director                                     March 26, 1997

</TABLE>