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


March 25, 2004


Securities and Exchange Commission
Washington, DC  20549

Ladies and 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, 2003.

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

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

Sincerely,

Nadine Forsman
Controller
<PAGE>



                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               Washington DC 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 2003

                         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
                                (TITLE OF CLASS)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. [ X ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes __ No X
                                               -
State the aggregate market value of the voting and non-voting common equity held
by  nonaffiliates  computed by reference to the price at which the common equity
was last sold, or the average bid and asked prices of such common equity,  as of
the last business day of the registrant's most recently  completed second fiscal
quarter. Not Applicable.
         --------------
Documents Incorporated by Reference

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


<PAGE>



                                     PART I

ITEM 1.      DESCRIPTION OF BUSINESS


(a)       General Development of Business

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

          In April 2002,  the  Registrant  entered into its  liquidation  phase.
          During this phase,  the Registrant will no longer add to its container
          fleet but will  instead sell its  containers  (i) in one or more large
          transactions or (ii) gradually,  either as they reach the end of their
          useful marine lives or when an analysis  indicates  that their sale is
          warranted based on existing market conditions and the container's age,
          location and condition.  To date, the  Partnership has sold containers
          only  gradually  rather than in large  transactions.  Sales  proceeds,
          after reserves for working  capital,  will generally be distributed to
          the Partners.  The Registrant  will be terminated and dissolved on the
          earlier of December 31, 2010 or the sale of all or  substantially  all
          of its equipment.

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

(b)       Financial Information About Industry Segments

          Inapplicable.

(c)       Narrative Description of Business

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

                    Container leasing companies and the Registrant  operate in a
                    similar manner by owning a worldwide fleet of transportation
                    containers  and leasing these  containers  to  international
                    shipping lines hauling various types of goods among numerous
                    trade  routes.  All lessees  pay a daily  rental rate and in
                    certain  markets  may  pay  special   handling  fees  and/or
                    drop-off charges.  In addition to these fees and charges,  a
                    lessee must either  provide  physical  damage and  liability
                    insurance or purchase a damage  waiver from the  Registrant,
                    in  which  case  the  Registrant  agrees  to pay the cost of
                    repairing certain physical damage to containers. (This later
                    arrangement  is called the  "Damage  Protection  Plan.") The
                    Registrant,   and  not  the  lessee,   is  responsible   for
                    maintaining  the containers  and repairing  damage caused by
                    normal deterioration of the containers. This maintenance and
                    repair,  as well as any  repairs  required  under the Damage
                    Protection Plan, are performed in depots in major port areas
                    by  independent  agents  retained for the  Registrant by the
                    General  Partners.  These same  agents  handle  and  inspect
                    containers that are picked up or redelivered by lessees, and
                    these agents store  containers  not  immediately  subject to
                    re-lease.

                    Container  leasing companies compete with one another on the
                    basis of lease rates,  fees charged,  services  provided and
                    availability of equipment.  By maintaining the highest lease
                    rates  and the  highest  equipment  utilization  allowed  by
                    market  conditions,  the  Registrant  attempts  to  generate
                    revenue and profit.

                    The majority of the  Registrant's  equipment is leased under
                    master  operating  leases,   which  are  comparable  to  the
                    corporate rate agreements used by rental car companies.  The
                    master  leases  provide  that the  lessee,  for a  specified
                    period  of time,  may rent  containers  at  specific  terms,
                    conditions  and  rental  rates.  Although  the  terms of the
                    master lease  governing  each  container  under lease do not
                    vary,  the number of containers in use can vary from time to
                    time  within  the term of the  master  lease.  The terms and
                    conditions  of the master lease provide that the lessee pays
                    a daily rental rate for the entire time the  container is in
                    the  lessee's  possession  (whether  or not it is used),  is
                    responsible for certain types of damage, and must insure the
                    container against liabilities.

                    Equipment not subject to master leases may instead be leased
                    under  long-term  lease  agreements.   Unlike  master  lease
                    agreements,   long-term   lease   agreements   provide   for
                    containers to be leased for periods of between three to five
                    years.  Such leases are generally  cancelable with a penalty
                    at the  end of each  twelve-month  period.  Another  type of
                    lease, a direct finance lease,  currently  covers a minority
                    of the Partnership's equipment. Under direct finance leases,
                    the containers are usually leased from the  Partnership  for
                    the remainder of the container's useful life with a purchase
                    option at the end of the lease term.

                    Leases specify an array of port  locations  where the lessee
                    may pick up or return the containers.  The Registrant incurs
                    expenses in  repositioning  containers to a better  location
                    when  containers  are  returned  to a  location  that has an
                    over-supply.   Sales  of  containers  in  these  low  demand
                    locations   can  occur,   if  a  sale  is  judged  a  better
                    alternative to repositioning and re-leasing the container.

                    The  Registrant  is  currently  in  its  liquidation  phase.
                    Regular leasing  operations  continue during this phase, but
                    the Registrant is allowing its fleet to permanently diminish
                    through  sales  of  containers.  As  noted  above,  sales of
                    containers  to date have been  made only  gradually,  rather
                    than in  large  transactions.  See Item 7  herein.  Once the
                    Registrant has sold  substantially  all of its fleet and the
                    liquidation  phase has been  completed,  the Registrant will
                    begin  its  final  dissolution  and  the  winding  up of its
                    business.

(c)(1)(ii)          Inapplicable.

(c)(1)(iii)         Inapplicable.

(c)(1)(iv)          Inapplicable.

(c)(1)(v)           Inapplicable.

(c)(1)(vi)          Inapplicable.

(c)(1)(vii)         During the year ended  December 31, 2003,  no single  lessee
                    generated  lease  revenue which was 10% or more of the total
                    revenue of the Registrant.

(c)(1)(viii)        Inapplicable.

(c)(1)(ix)          Inapplicable.

 (c)(1)(x)          Among the various container leasing  companies,  the top ten
                    control approximately 86% of the total equipment held by all
                    container leasing  companies.  The top two container leasing
                    companies  combined control  approximately  26% 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 largest  standard  dry freight  container
                    leasing  company  and  manages   approximately  14%  of  the
                    equipment  held  by all  container  leasing  companies.  The
                    customers for leased containers are primarily  international
                    shipping  lines.  The  Registrant  alone  is not a  material
                    participant in the worldwide  container leasing market.  The
                    principal methods of competition are price, availability and
                    the  provision  of  worldwide  service to the  international
                    shipping  community.  Competition  in the container  leasing
                    market has  increased  over the past few years.  Since 1996,
                    shipping  alliances  and  other  operational  consolidations
                    among  shipping  lines have allowed  shipping lines to begin
                    operating  with fewer  containers,  thereby  decreasing  the
                    demand for leased  containers  and allowing  lessees to gain
                    concessions  from lessors  about price,  special  charges or
                    credits and, in certain  markets,  the age  specification of
                    leased  containers.  Furthermore,  primarily  as a result of
                    lower new container prices and low interest rates,  shipping
                    lines now own,  rather than lease,  a higher  percentage  of
                    containers.  The  decrease  in demand from  shipping  lines,
                    along  with the  entry of new  leasing  company  competitors
                    offering  low   container   rental   rates,   has  increased
                    competition among container lessors such as the Registrant.

                    Furthermore,  changes in worldwide  demand for shipping have
                    placed  additional  strains on  competition.  Utilization of
                    containers   can  be  maximized  if  containers   that  come
                    off-lease can be re-leased in the same  location.  If demand
                    for containers is strong in some parts of the world and weak
                    in others,  containers  that come  off-lease  may have to be
                    repositioned,  usually at the Registrant's  expense,  before
                    they can be re-leased.  Over the last several years,  demand
                    for goods  brought  into Asia has been lower than demand for
                    goods  brought out of Asia.  This  imbalance has created low
                    demand locations in certain areas of international  shipping
                    routes, where containers coming off-lease after the delivery
                    of goods cannot quickly be re-leased. Shipping lines have an
                    advantage over container  leasing  companies with respect to
                    these low demand  locations,  because the shipping lines can
                    frequently  reposition  their own containers,  while leasing
                    companies  have to find  alternative  ways of  repositioning
                    their containers,  including offering incentives to shipping
                    lines or paying directly for the repositioning.

(c)(1)(xi)          Inapplicable.

(c)(1)(xii)         Inapplicable.

(c)(1)(xiii)        The  Registrant  has  no  employees.   Textainer   Financial
                    Services  Corporation  (TFS),  a wholly owned  subsidiary of
                    Textainer  Capital   Corporation  (TCC),  and  the  Managing
                    General  Partner of the  Registrant,  is responsible for the
                    overall  management of the business of the Registrant and at
                    December  31,  2003  had 3  employees.  Textainer  Equipment
                    Management  Limited (TEM), an Associate General Partner,  is
                    responsible for the management of the leasing  operations of
                    the  Registrant  and at December 31, 2003 had a total of 149
                    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 lines for use in world trade and approximately
          14%, 9% and 13% of the  Registrant's  rental  revenue during the years
          ended December 31, 2003, 2002 and 2001, respectively, was derived from
          operations  sourced or terminated  domestically.  These percentages do
          not reflect the proportion of the Partnership's income from operations
          generated domestically or in domestic waterways.  Substantially all of
          the  Partnership's  income  from  operations  is derived  from  assets
          employed  in  foreign  operations.  For a  discussion  of the risks of
          leasing  containers  for use in world  trade  see  "Risk  Factors  and
          Forward-Looking Statements" in Item 7 herein.


ITEM 2.      PROPERTIES

As of December 31, 2003, the Registrant owned the following types and quantities
of equipment:

            20-foot standard dry freight containers            5,790
            40-foot standard dry freight containers            6,367
            40-foot high cube dry freight containers           5,350
                                                              ------
                                                              17,507
                                                              ======

During  December 2003,  approximately  84% of these  containers were on lease to
international  shipping lines,  and the balance were being stored primarily at a
large number of storage depots located  worldwide.  Generally,  the  Partnership
sells containers when (i) a container reaches the end of its useful life or (ii)
an  analysis  indicates  that the sale is  warranted  based on  existing  market
conditions and the  container's  age,  location and  condition.  At December 31,
2003,  approximately  12% of the  Partnership's  off-lease  equipment  had  been
specifically  identified  as  being  for  sale.  The  Partnership  expects  more
containers  to  be  identified  for  sale  as  the  Partnership   continues  its
liquidation  plans. Some containers  identified for sale have been written down,
as described below in Item 7, "Results of Operations."

See Item 7, "Results of Operations"  for more  information  about changes in the
size of the Registrant's  container fleet,  container sales and write-downs,  as
well as the location of the Registrant's off-lease containers.
<PAGE>

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

Part 201:

(a)            Market Information.

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

(a)(1)(ii)          Inapplicable.

(a)(1)(iii)         Inapplicable.

(a)(1)(iv)          Inapplicable.

(a)(1)(v)           Inapplicable.

(a)(2)              Inapplicable.

(b)            Holders.

(b)(1)              As of January 1, 2004 there were 7,453  holders of record of
                    limited partnership interests in the Registrant.

(b)(2)              Inapplicable.

(c)            Dividends.

Now  that  the  Registrant  is  in  its  liquidation  phase,  it  makes  monthly
distributions  to its limited  partners in an amount  equal to the  Registrant's
excess cash,  after  redemptions and working capital  reserves.  During the year
ended December 31, 2003, the Registrant paid distributions at an annualized rate
equal to 6.9% of a Unit's initial cost, or $1.38 per Unit. During the year ended
December 31, 2002, the Registrant paid distributions at an annualized rate equal
to 8.95% of a Unit's initial cost or $1.79 per Unit. The Registrant  entered its
liquidation phase in April of 2002. Consequently,  distributions paid during the
last  three  quarters  of 2002  were made at an  annualized  rate of 10.27% of a
Unit's  initial cost,  or $2.05 per Unit,  while  distributions  made during the
first  quarter of 2002 were paid at a rate of 5% of a Unit's  initial  cost,  or
$1.00 per unit.  The  difference in rates  reflects the  different  distribution
policy adopted for the Registrant's  liquidation  phase. See Item 7 herein.  For
information  about the amount of distributions  paid during the five most recent
fiscal  years,  see Item 6 "Selected  Financial  Data."  Distributions  are made
monthly by the Registrant to its limited partners.

Part 701:      Inapplicable.

<PAGE>
<TABLE>
<CAPTION>

ITEM 6.      SELECTED FINANCIAL DATA

                                                          (Amounts in thousands except for per unit amounts)

                                                                       Years Ended December 31,
                                               ------------------------------------------------------------------------
                                                      2003          2002          2001           2000           1999
                                                      ----          ----          ----           ----           ----
<S>                                                   <C>          <C>           <C>            <C>              <C>
Rental income (1).........................         $ 9,577       $ 9,465       $11,858        $15,135        $15,224

(Loss) income from operations.............         $  (318)      $(2,681)      $(1,433)       $ 2,466        $  (179)

Net (loss) earnings.......................         $  (312)      $(2,648)      $(1,340)       $ 2,710        $   (21)

Net (loss) earnings per unit of
  limited partner interest................         $ (0.07)      $ (0.46)      $ (0.23)       $  0.43        $ (0.02)

Distributions per unit of
  limited partner interest (2)............         $  1.38       $  1.79       $  1.23        $  1.40        $  1.61


Distributions per unit of limited
   partner interest representing
   a return of capital....................         $  1.38       $  1.79       $  1.23        $  0.97        $  1.61

Total assets..............................         $25,846       $34,536       $49,045        $59,080        $64,803
</TABLE>

  (1)     The Registrant entered its liquidation phase in April 2002, from which
          time the  Registrant  has no longer been  replenishing  its  container
          fleet by purchasing  containers.  Sales of containers now  permanently
          diminish the Registrant's  fleet. For information about changes in the
          size of the Registrant's fleet, see Item 7.

  (2)     As noted above, the Registrant entered its liquidation phase in April,
          2002, from which time forward it began  distributing  its excess cash,
          after  redemptions  and working capital  reserves.  This cash includes
          some proceeds from container  sales, as well as cash from  operations.
          See Item 7.

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

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

The Financial Statements contain information which will assist in evaluating the
financial  condition of the  Partnership  for the years ended December 31, 2003,
2002 and 2001.  Please refer to the  Financial  Statements  and Notes thereto in
connection with the following discussion.

Textainer  Financial Services  Corporation (TFS) is the Managing General Partner
of the  Partnership  and  is a  wholly-owned  subsidiary  of  Textainer  Capital
Corporation (TCC).  Textainer  Equipment  Management Limited (TEM) and Textainer
Limited (TL) are  Associate  General  Partners of the  Partnership.  The General
Partners manage and control the affairs of the Partnership.

Introduction

The  Partnership is a finite-life  entity whose  principal  business is to own a
fleet of  containers  for  lease to the  international  shipping  industry.  The
Partnership's revenues come primarily from the rental income generated by leased
containers  and, to a smaller  extent,  from services  related to rental income,
such as  handling  charges  paid by lessees.  The  Partnership's  revenues  are,
therefore,  dependent  on  demand  for  leased  containers.  Demand  for  leased
containers drives not only the percentage of the  Partnership's  containers that
are on lease (utilization),  but also, to a certain extent, the rental rates the
Partnership  can charge  under its  leases.  When demand  declines,  utilization
falls,  and the  Partnership has fewer  containers on lease,  often earning less
revenue,  and more containers  off-lease  incurring storage expense. In times of
reduced demand,  then, the Partnership has higher expenses and may have to offer
lessees incentives such as free rental periods or credits.  The General Partners
try at all times to take  advantage  of the  opportunities  created by different
levels of demand for leased containers, either by changing services, lease terms
or lease rates offered to customers or by concentrating on different  geographic
markets.

Demand for containers is driven by many factors, including the overall volume of
worldwide  shipping,  the  number  of  containers  manufactured,  the  number of
containers  available  for lease in specific  locations  and the capacity of the
worldwide shipping industry to transport containers on its existing ships. Since
many of the  Partnership's  customers are shipping lines that also own their own
containers, the price and availability of new containers directly affects demand
for leased  containers.  If  shipping  lines have the cash or  financing  to buy
containers and find that alternative  attractive,  demand for leased  containers
will fall.  Current  demand and related  market  conditions  for  containers are
discussed  below  under  "Comparative  Results  of  Operations:  Current  Market
Conditions for Leased Containers."  Competition for shipping lines' business has
increased in recent years due to operational consolidations among shipping lines
and the entry of new leasing  companies  that  compete  with  entities  like the
Partnership. This competition has generally driven down rental rates and allowed
shipping lines to obtain other favorable lease terms.

The  Partnership  also  recognizes  gains  and  losses  from  the  sale  of  its
containers.  Containers  are  generally  sold either at the end of their  useful
life, or when an economic analysis indicates that it would be more profitable to
sell the  container  rather than to continue to own it. An example of the latter
would be when  re-leasing  a container  might be  relatively  expensive,  either
because of  expenses  required  to repair the  container  or to  reposition  the
container to a location where the container could be readily leased.

The sales  price of used  containers  is  affected by supply and demand for used
containers.  The Partnership's  containers are primarily sold to wholesalers who
subsequently  sell  to  buyers  such  as  mini-storage  operators,  construction
companies,  farmers and other non-marine users. Additionally,  if a container is
lost or completely damaged by a lessee,  the Partnership  receives proceeds from
the  lessee  for the  value  of the  container.  The  Partnership  counts  these
transactions  as sales,  as well as the more  traditional  sales to wholesalers.
Generally,  since  1998,  used  container  prices  have  declined,  causing  the
Partnership to realize less from the sale of its used containers. Used container
sales prices appear to have stabilized in 2002 and 2003.

The  Partnership's  operations  and  financial  results are also affected by the
price of new  containers.  The price for new  containers  has fallen since 1995.
This decrease has  significantly  depressed rental rates. This decrease has also
caused the Partnership to evaluate the carrying cost of its container fleet, and
has resulted in write-downs of some  containers the  Partnership  has decided to
sell.  These  matters are  discussed  in detail  below under the caption  "Other
Income and  Expenses:  Write Down of Certain  Containers  Identified  for Sale."
Prior to the start of the Partnership's  liquidation period,  which is discussed
below,  the  Partnership  purchased  new  containers,  and the decrease in price
worked to the Partnership's advantage.

The  Partnership is in its liquidation  phase,  which means that regular leasing
operations  continue,  but the  Partnership  no longer  seeks to  replenish  its
container  fleet  by  buying  new  containers.   As  containers  are  sold,  the
Partnership's fleet is permanently decreasing. Eventually,  substantially all of
its  containers  will  be  sold,  and  the  Partnership  will  begin  its  final
dissolution and winding up of its business. The liquidation phase can take up to
six or more years, and the Partnership  currently estimates that the liquidation
phase will be longer  rather than  shorter,  due to the current  market for, and
opportunities to sell, used containers.

Liquidity and Capital Resources

Historical

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

General

In April 2002, the  Partnership  entered its liquidation  phase,  which may last
from two to six or more years  depending on whether the  containers are sold (i)
in one or more large  transactions or (ii)  gradually,  either as they reach the
end of their useful marine lives or when an analysis  indicates  that their sale
is  warranted  based on existing  market  conditions  and the  container's  age,
location and  condition.  To date,  the  Partnership  has sold  containers  only
gradually rather than in large  transactions.  The Partnership  anticipates that
all excess  cash,  after  redemptions  and  working  capital  reserves,  will be
distributed  to the  general  and limited  partners  on a monthly  basis.  These
distributions  will  consist  of cash from  operations  and/or  cash from  sales
proceeds. As the Partnership's  container fleet decreases,  cash from operations
is expected to decrease, while cash from sales proceeds is expected to fluctuate
based on the number of containers  sold and the actual sales price per container
received.  Consequently, the Partnership anticipates that a large portion of all
future  distributions  will be a return of capital.  Additionally,  the May 2002
distribution,  the  first  distribution  paid  during  the  liquidation  period,
included cash from  reserves,  as the General  Partners  decided to decrease the
Partnership's  working  capital  reserves  now  that the  Partnership  is in its
liquidation phase.

Sources of Cash

Rental income and proceeds from container sales are the Partnership's  principal
sources of liquidity,  and the source of funds for distributions.  Rental income
and container sales prices are affected by market conditions for leased and used
containers.  Cash provided from these sources will fluctuate based on demand for
leased and used  containers.  Demand for leased and used containers is discussed
more fully in "Results of Operations." Cash provided by operating  activities is
affected by rental  income,  operating  expenses and the timing of both payments
received  from  lessees  and  payments  made by the  Partnership  for  operating
expenses.  Additionally, a continued stream of rental income is dependent partly
on the Partnership's  ability to re-lease containers as they come off lease. See
the  discussion  of  "Utilization"  below under  "Results of  Operations."  Cash
provided by investing  activities is affected by the number of containers  sold,
the sale price received on these containers, and the timing of payments received
for these sales.  Previously reported cash from operations and sales proceeds is
not indicative of future cash flows as these amounts can fluctuate significantly
based on  demand  for new and used  containers,  fleet  size and  timing  of the
payments made and received.  Fluctuations in rental income,  operating expenses,
and sale  prices for used  containers  are  discussed  more fully in "Results of
Operations."

Operating and investing activities are discussed in detail below.

Cash from Operations

Net cash provided by operating  activities for the years ended December 31, 2003
and 2002, was $6,235 and $4,968,  respectively.  The increase of $1,267, or 26%,
was primarily due to a smaller net loss, adjusted for non-cash  transactions and
fluctuations  in accounts  payable and accrued  liabilities  and accrued  damage
protection  plan costs  between the  periods.  Net loss,  adjusted  for non-cash
transactions,  declined  primarily due to decreases in direct container expenses
and other  general and  administrative  costs and an increase in rental  income.
These  income and  expense  items are  discussed  more fully  under  "Results of
Operations."  The changes in accounts payable and accrued  liabilities  resulted
from  timing  differences  in the payment of  expenses  and fees,  as well as in
fluctuations  in these amounts.  The increase in accrued damage  protection plan
costs during the year ended  December 31, 2003 was  primarily due to an increase
in the number of containers covered under the damage protection plan.

Cash from Sale of Containers

Current Uses:  For the years ended December 31, 2003 and 2002, net cash provided
by  investing  activities  (the  sale of  containers)  was  $2,210  and  $3,853,
respectively.  The  decrease  of $1,643  was  primarily  due to the  Partnership
selling fewer  containers  during the year ended December 31, 2003,  compared to
the equivalent  period in 2002. The Partnership  primarily sells containers when
they come  off-lease,  and an analysis  indicates  that the container  should be
sold.  Fluctuations between periods in the number of containers sold reflect the
age and condition of containers coming off-lease, the geographic market in which
they come off-lease, and other related market conditions.  Fluctuations can also
be  affected  by the  number  of  containers  sold to  lessees,  who pay for any
containers that are lost or damaged beyond repair.

Effect of Market  Conditions on  Liquidation:  Due, in part,  to current  market
conditions and their effect on demand for used  containers,  the Partnership has
been primarily selling containers only if the containers are at the end of their
useful lives or if an analysis  indicates that their sale is warranted  based on
existing market conditions and the container's age, location and condition.  Low
demand  locations,  the decline in the value of used  containers and the related
market conditions are discussed more fully under "Results of Operations."  These
market conditions have caused the Partnership to implement its liquidation phase
to date by selling  containers  gradually.  The  Partnership  will  continue  to
evaluate its options for selling  containers in the context of both these market
conditions and the Partnership's liquidation plans.

Effect of Liquidation on Future Cash Flows:  The number of containers  sold both
in low demand  locations and elsewhere,  as well as the amount of sales proceeds
and cash provided by operating activities,  will affect how much the Partnership
will pay in future distributions to Partners.  Future distributions are expected
to decline as cash from  operations and cash from sales proceeds  decrease along
with  the  Partnership's   fleet.  The  fleet  will  decrease  as  part  of  the
Partnership's liquidation and eventual termination.

Uses of Cash

Distributions to partners are the Partnership's  primary use of cash. The amount
of distributions  paid to partners is dependent on cash received from operations
and the sale of  containers,  less  amounts used to pay  redemptions  or held as
working capital.

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

These activities are discussed in detail below.

Distributions: During the year ended December 31, 2003, the Partnership declared
cash distributions to limited partners  pertaining to the fourth quarter of 2002
through  the third  quarter of 2003 in the amount of $8,144,  which  represented
$1.38 per unit. On a cash basis,  as reflected in the  Statements of Cash Flows,
after paying  redemptions  and general  partner  distributions,  $6,040 of these
distributions  was from  operating  activities  and the  balance of $2,104 was a
return of capital.  On an accrual  basis,  as  reflected  on the  Statements  of
Partners' Capital, all of these distributions were a return of capital.

Capital Commitments:  Redemptions:  During the year ended December 31, 2003, the
Partnership  redeemed  28,031  units  for a total  dollar  amount  of $111.  The
Partnership  also  redeemed  3,800  units  for a total  dollar  amount of $14 in
January 2004.  The  Partnership  used cash flows from  operations to pay for the
redeemed units.

The  Partnership  invests  working  capital  and cash flow from  operations  and
investing  activities  prior to its  distribution to the partners in short-term,
liquid investments.

Results of Operations

The  Partnership's  income from operations,  which consists  primarily of rental
income  less  costs  and  expenses  (including  container  depreciation,  direct
container  expenses,   management  fees,  and  reimbursement  of  administrative
expenses) is primarily  affected by the size of its container  fleet, the number
of containers it has on lease  (utilization) and the rental rates received under
its leases. The current status of each of these factors is discussed below.

Size of Container Fleet

                                                 2003      2002      2001
                                                 ----      ----      ----

       Beginning container fleet..........     20,536    24,561    27,152
       Ending container fleet.............     17,507    20,536    24,561
       Average container fleet............     19,022    22,549    25,857


The average  container fleet decreased 16% and 13% from the years ended December
31, 2002 to 2003 and from December 31, 2001 to 2002, respectively, primarily due
to the  continuing  sale of  containers.  While the decline in  container  fleet
resulted  in lower  rental  income,  this  decrease  was more than offset by the
improvement in utilization,  resulting in the increase in rental income from the
year ended  December 31, 2002 to the same period in 2003. An overall  decline in
rental  income is  expected  to  continue  in future  years,  as the size of the
Partnership's container fleet continues to decrease.

Utilization

Rental  income and direct  container  expenses are also  affected by the average
utilization of the container fleet, which was 84%, 67% and 64% on average during
the years ended December 31, 2003,  2002 and 2001,  respectively.  The remaining
container fleet is off-lease and is being stored  primarily at a large number of
storage depots.  At December 31, 2003,  2002 and 2001,  utilization was 85%, 84%
and 59%,  respectively,  and the Partnership's  off-lease  containers (in units)
were located in the following locations:
<PAGE>

                                            2003        2002        2001
                                            ----        ----        ----

        Americas                             973       1,946       2,552
        Europe                               385         821       1,254
        Asia                               1,134         509       6,059
        Other                                 55          64          94
                                           -----       -----       -----
        Total off-lease containers         2,547       3,340       9,959
                                           =====       =====       =====

At December 31, 2003 and 2002  approximately  12% and 13%,  respectively  of the
Partnership's off-lease containers had been specifically identified as for sale.

Rental Rates

In addition to utilization, rental income is affected by daily rental rates. The
average daily rental rate for the Partnership's  containers decreased 7% and 11%
from the years ended  December  31, 2002 to 2003 and  December 31, 2001 to 2002,
respectively. Average rental rates declined primarily due to the decline in long
term lease  rates.  The  decline in average  rental  rates under  master  leases
between the periods was minor. The majority of the  Partnership's  rental income
was generated  from master  leases,  but in the past several years an increasing
percentage of the  Partnership's  containers  have been on lease under long term
leases. At December 31, 2003, 2002 and 2001, 41%, 36% and 36%, respectively,  of
the Partnership's on-lease containers were on lease under long term leases. Long
term leases  generally  have lower rental rates than master  leases  because the
lessees have  contracted  to lease the  containers  for several years and cannot
return  the  containers  prior  to  the  termination  date  without  a  penalty.
Fluctuations  in rental rates under either type of lease  generally  will affect
the Partnership's operating results.

Comparative Results of Operations

The  following is a comparative  analysis of the results of  operations  for the
years ended December 31, 2003, 2002 and 2001:

                                              2003        2002       2001
                                              ----        ----       ----

      Loss from operations                 ($  318)    ($2,681)   $(1,433)
      Rental income                         $9,577      $9,465    $11,858

      Percent change from previous
      year in
         Utilization                           25%          5%       (18%)
         Average container fleet              (16%)       (13%)      ( 5%)
         Average rental rates                  (7%)       (11%)      ( 5%)

The  Partnership's  rental  income  increased  $112,  or 1%, from the year ended
December  31, 2002 to 2003.  The  increase  was due to  increases in income from
container rentals and other rental income, which is discussed below. Income from
container  rentals  increased  $111,  or 1%  primarily  due to the  increase  in
utilization,  offset by the  declines in average  fleet size and rental rates as
detailed above.

The decrease in rental income of $2,393, or 20% from the year ended December 31,
2001 to 2002 was due to the declines in both income from  container  rentals and
other rental  income.  Income from  container  rentals  declined  $2,184 or 21%,
primarily due to the declines in average  container  fleet and rental rates,  as
detailed above.

Current  Market  Conditions  for Leased  Containers:  Beginning  in March  2002,
utilization  began to improve  and  improved  steadily  through the end of 2002.
Utilization   declined   slightly  in  the  first  quarter  of  2003,  which  is
traditionally  a slow period for container  demand,  improved  during the second
quarter  and was stable for the  remainder  of 2003.  Utilization  has  remained
relatively  strong due to a large  volume of export  cargo out of Asia, a larger
percentage  of  containers  under  long term lease and  efforts  by the  General
Partners to reduce the  quantities of containers  that lessees can return in low
demand  locations.  However,  rental rates continued to slowly decline primarily
due to low new container prices, low interest rates and low rental rates offered
by  competitors.  The General  Partners are cautiously  optimistic  that current
utilization  levels can be maintained  during the next several months.  However,
the General Partners caution that market  conditions could deteriorate again due
to global economic and political conditions.  Demand for leased containers could
therefore  weaken  again and result in a decrease  in  utilization  and  further
declines in lease rates and  container  sale  prices,  adversely  affecting  the
Partnership's operating results.

Sale of Containers in Low Demand Locations Created by Current Market Conditions:
Although demand for leased containers has improved,  the trade imbalance between
Asia and the Americas and Europe continues.  As a result, a large portion of the
Partnership's  off-lease  containers are located in low demand  locations in the
Americas  and Europe as  detailed  above in  "Utilization."  For these and other
off-lease containers, the Partnership determines whether these containers should
be sold or held for continued  use. The decision to sell  containers is based on
the current expectation that the economic benefit of selling these containers is
greater  than  the  estimated  economic  benefit  of  continuing  to  own  these
containers.  The majority of the  containers  sold in low demand  locations  are
older containers. The expected economic benefit of continuing to own these older
containers is significantly  less than that of newer containers.  This is due to
their  shorter  remaining  marine life,  the cost to  reposition  them,  and the
shipping lines' preference for leasing newer containers when they have a choice.
Until  demand for  containers  improves  in certain  low demand  locations,  the
Partnership  plans to continue selling some of its containers that are off-lease
in these locations rather than incurring the expense of repositioning them.

Other Income and Expenses

The following is a discussion of other income earned by the  Partnership and its
expenses:

Other Rental Income

Other rental income consists of other lease-related items, primarily income from
charges to lessees for dropping off containers in surplus locations less credits
granted to lessees for  leasing  containers  from  surplus  locations  (location
income),  income  from  charges to lessees for  handling  related to leasing and
returning  containers (handling income) and income from charges to lessees for a
Damage Protection Plan (DPP).

For the year ended  December  31,  2003,  other  rental  income was  $1,259,  an
increase  of $1 from the  equivalent  period in 2002.  Other  rental  income was
comparable  between the periods as the increase in DPP income of $179 was offset
by the decreases in handling and location income of $152 and $33, respectively.

For the year ended December 31, 2002, other rental income was $1,258, a decrease
of $209 from the  equivalent  period in 2001.  The decrease was primarily due to
decreases in DPP and location income of $142 and $116,  respectively,  offset by
an increase in handling income of $51.

Direct Container Expenses

Direct container  expenses  decreased $735, or 27%, from the year ended December
31, 2002 to the equivalent period in 2003, primarily attributable to the decline
in the average fleet size.  The decrease in expenses was primarily  attributable
to  declines in storage and  handling  expenses of $933 and $101,  respectively,
offset  by  increases  in  repositioning  and DPP  expenses  of $224  and  $122,
respectively. These changes are discussed in detail below.

Storage  expense  decreased  not only due to the decrease in average fleet size,
but also due to the increase in utilization noted above and a slight decrease in
the average storage cost per container. The decrease in handling expense was due
to the decline in container movement, partially offset by an increase in average
handling  costs.  Repositioning  expense  increased  due to an  increase  in the
average repositioning costs due to (i) expensive  repositioning moves related to
one lessee who required containers to be delivered to certain locations and (ii)
longer average  repositioning  moves.  This increase was partially offset by the
decline  in the number of  containers  repositioned  between  the  periods.  The
increase  in DPP  expense  was  primarily  due to the  increase in the number of
containers covered under DPP.

Direct container expenses decreased $1,467, or 35%, from the year ended December
31, 2001 to the equivalent  period in 2002,  primarily due to the decline in the
average fleet size. The declines in repositioning,  storage, DPP and maintenance
expenses  were  $600,  $498,  $155 and $147,  respectively.  These  changes  are
discussed in detail below.

Repositioning expense decreased due to the decrease in the average repositioning
cost per container due to shorter average  repositioning moves and a decrease in
the number of containers  repositioned.  Storage expense decreased primarily due
to the decrease in average  fleet size,  and the increase in  utilization  noted
above.  DPP expense  declined  primarily  due to the decrease in the average DPP
repair cost per container.  Maintenance expense decreased due to the decrease in
the number of  containers  requiring  maintenance  and a decrease in the average
maintenance cost per container.

Bad Debt Expense or Benefit

Bad debt expense  (benefit) was $85, ($7) and ($44) for the years ended December
31,  2003,  2002  and  2001,  respectively.  Fluctuations  in bad  debt  expense
(benefit) reflect the adjustments to the bad debt reserve, after deductions have
been taken  against the  reserve,  and are based on  management's  then  current
estimates of the portion of accounts  receivable that may not be collected,  and
which will not be covered by insurance.  These  estimates are based primarily on
management's  current assessment of the financial condition of the Partnership's
lessees  and their  ability  to make  their  required  payments.  See  "Critical
Accounting  Policies and Estimates"  below. The expense recorded during the year
ended December 31, 2003 reflects a higher reserve estimate, after deductions had
been taken against the reserve,  from December 31, 2002.  The benefits  recorded
during  the years  ended  December  31,  2002 and 2001  reflect a lower  reserve
estimate, after deductions had been taken against the reserve, from December 31,
2001 and 2000.

Depreciation Expense

The  increase  in  depreciation  expense  of $230,  or 4%,  from the year  ended
December  31, 2001 to 2002 was  primarily  due to the  Partnership  revising its
estimate  for  container  salvage  value in 2002.  Effective  July 1, 2002,  the
Partnership  revised its estimate for container  salvage value from a percentage
of equipment  cost to an estimated  dollar  residual  value.  The effect of this
change  resulted in an  increased  rate of  depreciation.  During the year ended
December 31, 2002, the Partnership  recorded an additional  depreciation expense
of $1,001 for units that had not been  fully  depreciated  prior to July 1, 2002
and an  additional  depreciation  expense of $91 to adjust the net book value of
fully depreciated containers to the new estimated salvage values.

Depreciation  expense  was  comparable  at $5,571 and $5,611 for the years ended
December  31, 2003 and 2002,  respectively,  as the effect of the decline in the
average fleet was offset by the increased  depreciation  rate that was effective
beginning in July 2002. For a further discussion of changes to depreciation, see
"Critical Accounting Policies and Estimates" below.

Write Down of Certain Containers Identified for Sale

The  Partnership  stopped  purchasing   containers  in  2002,  but  its  leasing
activities are affected by fluctuations in new container  prices.  New container
prices  steadily  declined  from 1995 through 1999 and have remained low through
2003.  As a result,  the cost of new  containers  purchased  in recent  years is
significantly less than the average cost of containers purchased in prior years.
The Partnership evaluated the recoverability of the recorded amount of container
rental  equipment  at December 31, 2003 and 2002 for  containers  to be held for
continued  use and  determined  that a reduction to the carrying  value of these
containers was not required.  The Partnership also evaluated the  recoverability
of the recorded amount of containers  identified for sale in the ordinary course
of business and  determined  that a reduction  to the carrying  value of some of
these  containers was required.  The  Partnership  wrote down the value of these
containers to their  estimated net realizable  value,  which was based on recent
sales prices less cost to sell.

Write-down  expense  decreased  $1,053, or 76%, from the year ended December 31,
2002  to  2003  primarily  due  to the  decrease  in the  number  of  containers
identified  for sale and a lower  average  required  write  down.  The number of
containers  identified  for sale  decreased  primarily due to the decline in the
number of  containers  located in low demand  locations as detailed  above.  The
decline  in the  average  write  down was  primarily  a result of the  increased
depreciation rate.

Write-down expense increased $279, or 25%, from the year ended December 31, 2001
to 2002 primarily due to an increase in the number of containers  identified for
sale that required a write-down and a larger average  required  write-down.  See
"Critical Accounting Policies and Estimates" below.

Gain and Loss on Sale of Containers

The  following  details the loss on the sale of  containers  for the years ended
December 31, 2003, 2002 and 2001:

                                                   2003      2002     2001
                                                   ----      ----     ----

       Loss on written-down containers             $ 80      $105     $119
       Loss on other containers                     337       631      576
                                                    ---       ---      ---
       Total loss on container sales               $417      $736     $695
                                                    ===       ===      ===


The  Partnership  recorded losses on the sale of written down containers for the
years ended  December 31, 2003,  2002 and 2001, as the estimated  sales proceeds
used to determine the write-down amount were greater than the actual sales price
received on these containers.  See "Critical  Accounting Policies and Estimates"
below.

As the Partnership  determines the number of containers  identified for sale and
the related  write-down  amount on a monthly  basis,  some  containers  are sold
before they are written down. The loss on these containers is referred to in the
table  above as "Loss on other  containers."  The  amount of loss on the sale of
these other  containers  has  fluctuated  due to the specific  conditions of the
containers  sold, the type of container sold, the locations where the containers
were sold and their net book value, rather than any identifiable trend. In fact,
container sales prices appear to have  stabilized,  after declining for the past
several years,  as the average sales price for containers  sold by TEM on behalf
of the  Partnership  as well as other  container  owners was  comparable for the
years ended December 31, 2003 and 2002.

Management Fees and General and Administrative Costs

Management fees to affiliates  consist of equipment  management  fees, which are
primarily based on rental income, and incentive management fees, which are based
on the Partnership's  limited and general partner  distributions  made from cash
from operations and partners' capital.  The following details these fees for the
years ended December 31, 2003, 2002 and 2001:

                                                   2003      2002     2001
                                                   ----      ----     ----

       Equipment management fees                   $671      $657   $  818
       Incentive management fees                    245       188      308
                                                    ---       ---    -----
         Management fees to affiliates             $916      $845   $1,126
                                                    ===       ===    =====

Equipment  management fees fluctuated based on the fluctuations in rental income
and were  approximately  7% of rental  income for the years ended  December  31,
2003,  2002 and 2001.  Fluctuations  in  incentive  management  fees between the
periods were primarily due to fluctuations in the amount of  distributions  paid
from cash from operations.

General and administrative  costs to affiliates decreased $64, or 13%, and $102,
or 17%, from the years ended  December 31, 2002 to 2003 and December 31, 2001 to
2002, respectively.  These decreases were primarily due to decreases in overhead
costs  allocated from TEM, as the  Partnership  represented a smaller portion of
the total fleet managed by TEM.

Other  general and  administrative  costs  decreased  $165,  from the year ended
December 31, 2002 to the same period in 2003 and  increased  $90,  from the year
ended  December  31, 2001 to 2002.  These  fluctuations  were  primarily  due to
fluctuations in other service fees between the periods.

Contractual Obligations

The  Partnership  Agreement  provides  for the  ongoing  payment to the  General
Partners of the management fees and the reimbursement of the expenses  discussed
above.  Since these fees and expenses are  established  by the  Agreement,  they
cannot be considered the result of arms' length negotiations with third parties.
The Partnership Agreement was formulated at the Partnership's  inception and was
part of the terms  upon which the  Partnership  solicited  investments  from its
limited partners. The business purpose of paying the General Partners these fees
is to  compensate  the  General  Partners  for the  services  they render to the
Partnership.  Reimbursement  for  expenses  is made to offset  some of the costs
incurred by the General  Partners in managing the  Partnership and its container
fleet.

Since the  Partnership  Agreement  requires the  Partnership  to continue to pay
these fees and  expenses  to the  General  Partners  and  reimburse  the General
Partners for expenses  incurred by them or other service  providers  selected by
the General Partners, these payments are contractual obligations.

The  following  details  the  amounts  payable at  December  31,  2003 for these
obligations:
<TABLE>
<CAPTION>

         ------------------------------------------------------------------------------------------------
                                                                Payments due by period
                                             ------------------------------------------------------------
                                                          Less
                                                         than 1       1-3         3-5        More than
          Contractual Obligations                Total    year       years       years        5 years
         ------------------------------------------------------------------------------------------------
<S>                                               <C>     <C>      <C>          <C>          <C>

         Equipment management fees                $102      102        *           *              *
         Incentive management fees                  53       53        *           *              *
         Equipment liquidation fee (1)               0        0
         Reimbursement of general and
         administrative costs to:
           Affiliates                               66       66        *           *              *
           Other service providers                 134      134        *           *              *

         -------------------------------------------------------------------------------------------------
             Total                                $355   $355
         -------------------------------------------------------------------------------------------------

* The Partnership has not recorded liabilities for these fees and reimbursements
related  to  periods  subsequent  to  December  31,  2003,  as  these  fees  and
reimbursements  cannot be estimated as they are dependent on variable factors as
detailed below:

         Equipment management fee                             7% of gross operating lease revenues
                                                              2% of gross full payout lease revenues
         Incentive management fee                             4% of distributable cash from operations
         Reimbursements to affiliates                         Dependent on the amount of expenses incurred
          and other service providers                          that are allocable to the Partnership
         Service fee to other service                         Monthly fee dependent on the number of limited partners
          provider
</TABLE>

(1) The  Partnership  is  required  to pay the  General  Partners  an  equipment
liquidation  fee, but this fee is payable only after limited  partners receive a
certain amount of distributions  from the Partnership.  The Partnership does not
currently expect to pay this liquidation fee.

For the amount of fees and  reimbursements  made to the General Partners for the
years  ended  December  31,  2003,  2002 and 2001,  see Note 2 to the  Financial
Statements  in Item 8. For the amount of fees and  reimbursements  made to other
service  providers,  see  Other  general  and  administrative  expenses  in  the
Statements of Operations in Item 8.

<PAGE>



Net Earnings or Loss per Limited Partnership Unit

                                            2003       2002       2001
                                            ----       ----       ----
        Net loss per limited
          partnership unit                ($0.07)    ($0.46)    ($0.23)

        Net loss allocated
          to limited partners              ($312)   ($2,758)   ($1,419)

Net earnings/loss per limited  partnership unit fluctuates based on fluctuations
in net  earnings/loss  allocated  to limited  partners  as detailed  above.  The
allocation of net  earnings/loss for the years ended December 31, 2003, 2002 and
2001 included a special  allocation  of gross income to the General  Partners of
$87, $136, and $92, respectively, in accordance with the Partnership Agreement.


Critical Accounting Policies and Estimates

Certain estimates and assumptions were made by the Partnership's management that
affect  its  financial  statements.  These  estimates  are  based on  historical
experience and on assumptions believed to be reasonable under the circumstances.
These  estimates and assumptions  form the basis for making  judgments about the
carrying value of assets and liabilities. Actual results could differ.

The Partnership's management believes the following critical accounting policies
affect its more  significant  judgments and estimates used in the preparation of
its financial statements.

Allowance for Doubtful Accounts: The allowance for doubtful accounts is based on
management's  current assessment of the financial condition of the Partnership's
lessees and their  ability to make their  required  payments.  If the  financial
condition  of the  Partnership's  lessees were to  deteriorate,  resulting in an
impairment  of their  ability to make  payments,  additional  allowances  may be
required, which would adversely affect the Partnership's operating results.

The General Partners have established a Credit Committee, which actively manages
and monitors the collection of  receivables  on at least a monthly  basis.  This
committee  establishes  credit limits for every lessee and  potential  lessee of
equipment,   monitors   compliance  with  these  limits,   monitors   collection
activities,  follows up on the  collection of outstanding  accounts,  determines
which  accounts  should be  written-off  and estimates  allowances  for doubtful
accounts.  As a result of  actively  managing  these  areas,  the  Partnership's
allowance for bad debt as a percentage of accounts receivable has ranged from 5%
to 16%  and  has  averaged  approximately  15%  over  the  last 5  years.  These
allowances have historically covered all of the Partnership's bad debts.

Container  Depreciation  Estimates:  The  Partnership  depreciates its container
rental equipment based on certain  estimates  related to the container's  useful
life and salvage value. The Partnership  estimates a container's  useful life to
be 12 years,  an estimate which it has used since the  Partnership's  inception.
Prior to July 1, 2002, the Partnership  estimated  salvage value as a percentage
of equipment cost.  Effective July 1, 2002, the Partnership revised its estimate
for container  salvage value to an estimated  dollar residual value,  reflecting
current expectations of ultimate residual values.

The  Partnership  will  evaluate the  estimated  residual  values and  remaining
estimated  useful  lives on an on-going  basis and will revise its  estimates as
needed.  The  Partnership  will revise its estimate of residual  values if it is
determined that these estimates are no longer  reasonable  based on recent sales
prices and revised  assumptions  regarding future sales prices.  The Partnership
will revise its estimate of container  useful life if it is determined  that the
current  estimates  are  no  longer  reasonable  based  on  the  average  age of
containers  sold and revised  assumptions  regarding  future  demand for leasing
older containers.

As a  result,  depreciation  expense  could  fluctuate  significantly  in future
periods as a result of any  revisions  made to these  estimates.  A decrease  in
estimated   residual  values  or  useful  lives  of  containers  would  increase
depreciation expense,  adversely affecting the Partnership's  operating results.
Conversely, any increase in these estimates would result in a lower depreciation
expense,  resulting in an improvement in operating results.  These changes would
not affect cash generated from operations, as depreciation is a non-cash item.

Container  Impairment  Estimates:  Write-downs of containers are made when it is
determined  that the recorded  value of the containers  exceeds their  estimated
fair value. Containers held for continued use and containers identified for sale
in the ordinary  course of business are considered to have  different  estimated
fair values.

In  determining  estimated  fair value for a container  held for continued  use,
management must estimate the future  undiscounted  cash flows for the container.
Estimates  of future  undiscounted  cash flows  require  estimates  about future
rental  revenues to be  generated  by the  container,  future  demand for leased
containers,  and the length of time for which the  container  will  continue  to
generate  revenue.  To date,  management  has not found the  estimates of future
undiscounted  cash flows to be less than the recorded value of the Partnership's
containers.  Therefore,  the  Partnership  has not recorded any  write-downs  of
containers  to be  held  for  continued  use.  Estimates  regarding  the  future
undiscounted  cash flows for these containers  could prove to be inaccurate.  If
these containers are sold prior to the end of their useful lives and before they
are written down, as a result of being  identified as for sale, the  Partnership
may incur losses on the sale of these containers.

In  determining  estimated  fair value for a container  identified for sale, the
current estimated sales price for the container, less estimated cost to sell, is
compared to its recorded  value.  This recorded  value has been found to be less
than the estimated sales price, less cost to sell, for some containers and these
containers  have been  written  down.  See  "Write  Down of  Certain  Containers
Identified for Sale" above. The Partnership has,  however,  recorded some losses
on the sale of these previously  written-down  containers.  Losses were recorded
because  the  estimated  sales  price was  higher  than the actual  sales  price
realized.  Estimated  sales prices are  difficult to predict,  and  management's
estimates  proved  too  high in  these  cases.  See  "Gain  and  Loss on Sale of
Containers" above.

The Partnership will continue to monitor the  recoverability  of its containers.
If actual market  conditions for leased containers are less favorable than those
projected,  if  actual  sales  prices  are lower  than  those  estimated  by the
Partnership,  or if the estimated useful lives of the  Partnership's  containers
were  shortened,  additional  write-downs  may be required  and/or losses may be
incurred.  Any  additional  write-downs  or losses  would  adversely  affect the
Partnership's operating results.

Risk Factors and Forward Looking Statements

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

Other risks of the Partnership's  leasing  operations include  competition,  the
cost of  repositioning  containers  after  they come  off-lease,  the risk of an
uninsured loss,  including bad debts,  the risk of  technological  obsolescence,
increases in  maintenance  expenses or other costs of operating the  containers,
and the effect of world  trade,  industry  trends  and/or  general  business and
economic  cycles  on the  Partnership's  operations.  See  "Critical  Accounting
Policies and  Estimates"  above for  information on the  Partnership's  critical
accounting  policies and how changes in those estimates  could adversely  affect
the Partnership's results of operations.

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

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Exchange Rate Risk

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 does pay a small amount
of its expenses in various foreign  currencies.  For the year ended December 31,
2003,  approximately 6% of the Partnership's  expenses were paid in 17 different
foreign currencies. As there are no significant payments made in any one foreign
currency, the Partnership does not hedge these expenses.


ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Attached pages 22 to 33.


<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, 2003 and
2002, and the related statements of operations, partners' capital and cash flows
for each of the years in the three-year  period ended  December 31, 2003.  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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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, 2003 and 2002,  and the results of its  operations,
partners'  capital and cash flows for each of the years in the three-year period
ended  December 31, 2003 in  conformity  with  accounting  principles  generally
accepted in the United States of America.



                                  /s/ KPMG LLP



San Francisco, California
February 19, 2004


<PAGE>
<TABLE>
<CAPTION>

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

Balance Sheets

December 31, 2003 and 2002
(Amounts in thousands)
----------------------------------------------------------------------------------------------------------

                                                                           2003                 2002
                                                                     ----------------     ----------------
<S>                                                                <C>                   <C>
Assets
Container rental equipment, net of accumulated
   depreciation of  $34,299 (2002:  $37,818) (note 1(e))             $        22,714      $        31,401
Cash                                                                             627                  548
Accounts receivable, net of allowance for doubtful
   accounts of $175 (2002: $119)                                               2,182                2,441
Due from affiliates, net (note 2)                                                290                  121
Prepaid expenses                                                                  33                   25
                                                                     ----------------     ----------------

                                                                     $        25,846      $        34,536
                                                                     ================     ================

Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                  $           178      $           200
   Accrued liabilities                                                           252                  332
   Accrued damage protection plan costs (note 1(j))                              302                  185
   Warranty claims (note 1(l))                                                     -                   30
   Deferred quarterly distributions (note 1(g))                                   65                   88
   Deferred damage protection plan revenue (note 1(k))                           156                  157
                                                                     ----------------     ----------------

      Total liabilities                                                          953                  992
                                                                     ----------------     ----------------

Partners' capital:
   General partners                                                                -                    -
   Limited partners                                                           24,893               33,544
                                                                     ----------------     ----------------

      Total partners' capital                                                 24,893               33,544
                                                                     ----------------     ----------------


                                                                     $        25,846      $        34,536
                                                                     ================     ================

See accompanying notes to financial statements

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

Statements of Operations

Years ended December 31, 2003, 2002 and 2001
(Amounts in thousands except for unit and per unit amounts)
----------------------------------------------------------------------------------------------------------------

                                                                 2003              2002               2001
                                                          -----------------  ----------------  -----------------
<S>                                                       <C>                <C>              <C>
Rental income                                             $          9,577   $         9,465   $         11,858
                                                          -----------------  ----------------  -----------------

Costs and expenses:
      Direct container expenses                                      1,988             2,723              4,190
      Bad debt expense (benefit)                                        85                (7)               (44)
      Depreciation (note 1(e))                                       5,571             5,611              5,381
      Write-down of containers (note 1(e))                             336             1,389              1,110
      Professional fees                                                 20                58                 30
      Management fees to affiliates (note 2)                           916               845              1,126
      General and administrative costs
        to affiliates (note 2)                                         439               503                605
      Other general and administrative costs                           123               288                198
      Loss on sale of containers, net (note 1(e))                      417               736                695
                                                          -----------------  ----------------  -----------------

                                                                     9,895            12,146             13,291
                                                          -----------------  ----------------  -----------------

      Loss from operations                                            (318)           (2,681)            (1,433)
                                                          -----------------  ----------------  -----------------

      Interest income                                                    6                33                 93
                                                          -----------------  ----------------  -----------------

      Net loss                                            $           (312)  $        (2,648)  $         (1,340)
                                                          =================  ================  =================

Allocation of net earnings (loss) (note 1(g)):
      General partners                                    $             84   $           110   $             79
      Limited partners                                                (396)           (2,758)            (1,419)
                                                          -----------------  ----------------  -----------------

                                                          $           (312)  $        (2,648)  $         (1,340)
                                                          =================  ================  =================
Limited partners' per unit share
      of net loss                                         $          (0.07)  $         (0.46)  $          (0.23)
                                                          =================  ================  =================

Limited partners' per unit share
      of distributions                                    $           1.38   $          1.79   $           1.23
                                                          =================  ================  =================

Weighted average number of limited
      partnership units outstanding (note 1(m))                  5,920,040         6,012,795          6,095,766
                                                          =================  ================  =================


See accompanying notes to financial statements

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND III, L.P.
(a California Limited Partnership)

Statements of Partners' Capital

Years ended December 31, 2003, 2002 and 2001
(Amounts in thousands)
----------------------------------------------------------------------------------------------------

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

                                              General                Limited               Total
                                          ---------------        --------------       --------------
<S>                                      <C>                     <C>               <C>
Balances at December 31, 2000             $            -         $      56,884        $      56,884

Distributions                                        (79)               (7,522)              (7,601)

Redemptions (note 1(n))                                -                  (198)                (198)

Net earnings (loss)                                   79                (1,419)              (1,340)
                                          ---------------        --------------       --------------

Balances at December 31, 2001                          -                47,745               47,745
                                          ---------------        --------------       --------------


Distributions                                       (110)              (10,768)             (10,878)

Redemptions (note 1(n))                                -                  (675)                (675)

Net earnings (loss)                                  110                (2,758)              (2,648)
                                          ---------------        --------------       --------------

Balances at December 31, 2002                          -                33,544               33,544
                                          ---------------        --------------       --------------


Distributions                                        (84)               (8,144)              (8,228)

Redemptions (note 1(n))                                -                  (111)                (111)

Net earnings (loss)                                   84                  (396)                (312)
                                          ---------------        --------------       --------------

Balances at December 31, 2003             $            -         $      24,893        $      24,893
                                          ===============        ==============       ==============


See accompanying notes to financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

Statements of Cash Flows
Years ended December 31, 2003, 2002 and 2001
(Amounts in thousands)
--------------------------------------------------------------------------------------------------------------------------

                                                                                  2003            2002            2001
                                                                             -------------   -------------   -------------
<S>                                                                          <C>              <C>               <C>
Cash flows from operating activities:
   Net loss                                                                  $       (312)   $     (2,648)   $     (1,340)
   Adjustments to reconcile net loss to net cash provided
      by operating activities:
         Depreciation and container write-downs (note 1(e))                         5,907           7,000           6,491
         Increase (decrease) in allowance for doubtful accounts                        56            (113)           (233)
         Loss on sale of containers                                                   417             736             695
         Decrease (increase)  in assets:
            Accounts receivable                                                       205             241             818
            Due from affiliates, net                                                  (14)            (25)            690
            Prepaid expenses                                                           (8)             (9)             (1)
         (Decrease) increase in liabilities:
            Accounts payable and accrued liabilities                                 (102)           (206)           (140)
            Accrued damage protection plan costs                                      117              23            (117)
            Deferred damage protection plan revenue                                    (1)              8              72
            Warranty claims                                                           (30)            (39)            (40)
                                                                             -------------   -------------   -------------

            Net cash provided by operating activities                               6,235           4,968           6,895
                                                                             -------------   -------------   -------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                 2,210           3,853           2,744
   Container purchases                                                                  -             (11)         (1,434)
                                                                             -------------   -------------   -------------

            Net cash provided by investing activities                               2,210           3,842           1,310
                                                                             -------------   -------------   -------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                          (111)           (675)           (198)
   Distributions to partners                                                       (8,255)        (10,840)         (7,629)
                                                                             -------------   -------------   -------------

            Net cash used in financing activities                                  (8,366)        (11,515)         (7,827)
                                                                             -------------   --------------   -------------

Net increase (decrease) in cash                                                        79          (2,705)            378

Cash at beginning of period                                                           548           3,253           2,875
                                                                             -------------   -------------   -------------

Cash at end of period                                                        $        627    $        548    $      3,253
                                                                             =============   =============   =============



See accompanying notes to financial statements
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

Statements of Cash Flows - Continued

Years ended December 31, 2003, 2002 and 2001
(Amounts in thousands)
--------------------------------------------------------------------------------

Supplemental Disclosures:

Supplemental schedule of non-cash investing and financing activities:

The following table summarizes the amounts of container purchases, distributions
to partners  and  proceeds  from sale of  containers  which had not been paid or
received as of December 31, 2003,  2002 and 2001,  resulting in  differences  in
amounts  recorded and amounts of cash disbursed or received by the  Partnership,
as shown in the  Statements of Cash Flows for the years ended December 31, 2003,
2002 and 2001.

                                                                                   2003           2002           2001
                                                                                   ----           ----           ----
<S>                                                                                <C>           <C>             <C>
Container purchases included in:
   Due to (from) affiliates..........................................              $  -           $  -           $ (7)
   Container purchases payable.......................................                 -              -              -

Distributions to partners included in:
   Due to affiliates.................................................                 5              9              5
   Deferred quarterly distributions..................................                65             88             54

Proceeds from sale of containers included in:
   Due from affiliates...............................................               512            361            708

The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts  paid or received as shown in the  Statements  of Cash Flows for the
years ended December 31, 2003, 2002 and 2001.

                                                                                   2003           2002           2001
                                                                                   ----           ----           ----

Container purchases recorded.........................................            $    -        $    18         $  781
Container purchases paid.............................................                 -             11          1,434

Distributions to partners declared...................................             8,228         10,878          7,601
Distributions to partners paid.......................................             8,255         10,840          7,629

Proceeds from sale of containers recorded............................             2,361          3,506          3,171
Proceeds from sale of containers received............................             2,210          3,853          2,744

The  Partnership  has  entered  into direct  finance  leases,  resulting  in the
transfer of containers from container rental  equipment to accounts  receivable.
The carrying  values of containers  transferred  during the years ended December
31, 2003, 2002 and 2001 were $2, $114 and $47, respectively.

See accompanying notes to financial statements
</TABLE>


<PAGE>

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

Notes to Financial Statements

Years ended December 31, 2003, 2002 and 2001
(Amounts in thousands except for unit and per unit amounts)
--------------------------------------------------------------------------------

Note 1.  Summary of Significant Accounting Policies

     (a)  Nature of Operations

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

     In April 2002, the  Partnership  entered its liquidation  phase,  which may
     last up to six or more years.  The final  termination and winding up of the
     Partnership,  as well as payment of liquidating and/or final distributions,
     will occur at the end of the  liquidation  phase when all or  substantially
     all of the  Partnership's  containers  have been  sold and the  Partnership
     begins its dissolution.

     Textainer  Financial  Services  Corporation  (TFS) is the managing  general
     partner of the  Partnership  and is a wholly-owned  subsidiary of Textainer
     Capital Corporation (TCC). Textainer Equipment Management Limited (TEM) and
     Textainer  Limited (TL) are associate  general partners of the Partnership.
     The  managing  general  partner  and the  associate  general  partners  are
     collectively  referred to as the General Partners and are commonly owned by
     Textainer Group Holdings  Limited (TGH).  The General  Partners also act in
     this capacity for other limited  partnerships.  The General Partners manage
     and control the affairs of the Partnership.

     (b)  Basis of Accounting

     The  Partnership  utilizes  the accrual  method of  accounting.  Revenue is
     recorded  when  earned  according  to the  terms  of the  container  rental
     contracts.  These  contracts are  classified as operating  leases or direct
     finance  leases based on the criteria of Statement of Financial  Accounting
     Standards No. 13: "Accounting for Leases."

     (c) Critical Accounting Policies and Estimates

     Certain estimates and assumptions were made by the Partnership's management
     that affect the reported  amounts of assets and liabilities and disclosures
     of  contingent  assets  and  liabilities  at  the  date  of  the  financial
     statements  and the  reported  amounts of revenue and  expenses  during the
     reporting period. The Partnership's  management  evaluates its estimates on
     an  on-going  basis,  including  those  related  to  the  container  rental
     equipment, accounts receivable and accruals.

     These  estimates  are based on historical  experience  and on various other
     assumptions that are believed to be reasonable under the circumstances, the
     results of which form the basis for making judgments regarding the carrying
     values of assets and  liabilities.  Actual  results could differ from those
     estimates under different assumptions or conditions.

     The following critical  accounting  policies are used in the preparation of
     its financial statements.

     The Partnership  maintains  allowances for doubtful  accounts for estimated
     losses  resulting  from  the  inability  of its  lessees  to make  required
     payments.  These allowances are based on management's current assessment of
     the financial  condition of the Partnership's  lessees and their ability to
     make their required payments.

     The Partnership depreciates its container rental equipment based on certain
     estimates  related  to the  container's  useful  life  and  salvage  value.
     Additionally, the Partnership writes down the value of its containers if an
     evaluation  indicates  that the  recorded  amounts  of  containers  are not
     recoverable  based on estimated  future  undiscounted  cash flows and sales
     prices.   These  estimates  are  based  upon  historical  useful  lives  of
     containers and container  sales prices as well as assumptions  about future
     demand for leased containers and estimated sales prices.

    (d)  Fair Value of Financial Instruments

     In accordance  with  Statement of Financial  Accounting  Standards No. 107,
     "Disclosures  about Fair Value of Financial  Instruments,"  the Partnership
     calculates  the fair  value of  financial  instruments  and  includes  this
     additional  information in the notes to the financial  statements  when the
     fair value is different than the book value of those financial instruments.
     At  December  31,  2003  and  2002,  the fair  value  of the  Partnership's
     financial  instruments (cash,  accounts receivable and current liabilities)
     approximates the related book value of such instruments.

     (e)  Container Rental Equipment

     Container rental equipment is recorded at the cost of the assets purchased,
     which includes  acquisition  fees, less accumulated  depreciation  charged.
     Through June 30, 2002 depreciation of new containers was computed using the
     straight-line  method  over an  estimated  useful life of 12 years to a 28%
     salvage value.  Used containers were depreciated based upon their estimated
     remaining  useful  life at the date of  acquisition  (from 2 to 11  years).
     Effective July 1, 2002, the Partnership  revised its estimate for container
     salvage  value from a percentage of equipment  cost to an estimated  dollar
     residual  value,  reflecting  current  expectations  of  ultimate  residual
     values.  The effect of this change for the year ended December 31, 2002 was
     an increase to depreciation  expense of $1,092.  When assets are retired or
     otherwise  disposed of, the cost and related  accumulated  depreciation are
     removed  from the  equipment  accounts  and any  resulting  gain or loss is
     recognized in income for the period.

     In accordance  with  Statement of Financial  Accounting  Standards No. 144,
     "Accounting  for the  Impairment  or Disposal of  Long-Lived  Assets" (SFAS
     144),  the  Partnership  periodically  compares the  carrying  value of the
     containers  to expected  future cash flows for the purpose of assessing the
     recoverability  of the  recorded  amounts.  If the carrying  value  exceeds
     expected  future cash flows,  the assets are written down to estimated fair
     value.  In  addition,  containers  identified  for sale are recorded at the
     lower of carrying amount or fair value less cost to sell.

     The  Partnership  evaluated the  recoverability  of the recorded  amount of
     container  rental equipment at December 31, 2003 and 2002 for containers to
     be held for continued use and  determined  that a reduction to the carrying
     value of these containers was not required.  The Partnership also evaluated
     the recoverability of the recorded amount of containers identified for sale
     in the ordinary  course of business and determined  that a reduction to the
     carrying value of these containers was required. The Partnership wrote down
     the value of these  containers  to their  estimated  fair value,  which was
     based on recent sales prices less cost of sales.

     During the years ended  December  31, 2003,  2002 and 2001 the  Partnership
     recorded write-down expenses of $336, $1,389 and $1,110,  respectively,  on
     876,  2,047 and 1,841  containers  identified  as for sale and  requiring a
     reserve. During the years ended December 31, 2003 and 2002, the Partnership
     also  transferred  48 and 432  containers,  respectively,  from  containers
     identified  for  sale  to  containers  held  for  continued  use due to the
     improvement  in  demand  for  leased  containers  in  Asia.  There  were no
     transfers during the year ended December 31, 2001. At December 31, 2003 and
     2002,  the net book value of the 303 and 430  containers  identified as for
     sale was $241 and $393,  respectively.  These  containers  are  included in
     container rental equipment in the balance sheets.

     During the years ended December 31, 2003,  2002 and 2001,  the  Partnership
     sold 957, 2,271 and 1,091,  respectively,  of these previously written down
     containers for losses of $80, $105 and $119, respectively.

     The  Partnership  also sold  containers  that had not been written down and
     recorded  losses of $337, $631 and $576 during the years ended December 31,
     2003, 2002 and 2001, respectively.

     (f)  Nature of Income from Operations

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

     No single lessee had generated  lease revenue for the years ended  December
     31, 2003,  2002 and 2001 which was 10% or more of the total  revenue of the
     Partnership.

     (g)  Allocation of Net Earnings (Loss) and Partnership Distributions

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

     Actual cash distributions to the Limited Partners differ from the allocated
     net earnings  (losses) as presented in these financial  statements  because
     cash  distributions  are based on cash  available  for  distribution.  Cash
     distributions  are paid to the general  and  limited  partners on a monthly
     basis in accordance with the provisions of the Partnership Agreement.  Some
     limited partners have elected to have their  distributions  paid quarterly.
     The  Partnership  has  recorded  deferred  distributions  of $65 and $88 at
     December 31, 2003 and 2002, respectively.

     (h)  Income Taxes

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

     (i)  Acquisition Fees

     In accordance with the Partnership Agreement,  acquisition fees equal to 5%
     of  the  container  purchase  price  were  paid  to  TEM.  These  fees  are
     capitalized as part of the cost of the containers.

     (j)  Damage Protection Plan

     The  Partnership  offers a Damage  Protection  Plan (DPP) to lessees of its
     containers.  Under  the  terms of DPP,  the  Partnership  earns  additional
     revenues on a daily basis and, in return, has agreed to bear certain repair
     costs. It is the Partnership's  policy to recognize revenue when earned and
     provide a reserve  sufficient to cover the  estimated  future repair costs.
     DPP expenses are included in direct container expenses in the Statements of
     Operations and the related  reserve at December 31, 2003 and 2002, was $302
     and $185, respectively.

     (k)  Deferred Damage Protection Plan Revenue

     Under certain DPP coverage,  the  Partnership  receives a prepayment of the
     DPP revenue.  The Partnership  records these prepayments as Deferred Damage
     Protection  Plan Revenue and  recognizes  these amounts as revenue when the
     containers are returned by the lessee.  At December 31, 2003 and 2002 these
     amounts were $156 and $157, respectively.

     (l)  Warranty Claims

     During 1995, the  Partnership  settled  warranty claims against a container
     manufacturer.  The Partnership is amortizing the settlement amount over the
     remaining estimated useful lives of the applicable  containers (between six
     and seven years),  reducing maintenance and repair costs over that time. At
     December 31, 2002, the  unamortized  portion of the  settlement  amount was
     $30.  During  the year  ended  December  31,  2003,  this  amount was fully
     amortized.

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

     Limited  partners' per unit share of both net loss and  distributions  were
     computed using the weighted average number of units outstanding  during the
     years  ended  December  31,  2003,  2002 and 2001,  which  were  5,920,040,
     6,012,795, and 6,095,766, respectively.
<TABLE>
<CAPTION>

     (n)  Redemptions

     The following  redemption  offerings were  consummated  by the  Partnership
     during the years ended December 31, 2003, 2002 and 2001:

                                                        Units                 Average
                                                       Redeemed           Redemption Price           Amount Paid
                                                       --------           ----------------           -----------
<S>                                                    <C>                <C>                         <C>
      Total Partnership redemptions as of
      December 31, 2000....................             135,538                $12.34                   $1,673
                                                        -------                                          -----
      Year ended:
            December 31, 2001.................           26,537                $ 7.46                      198
            December 31, 2002.................          152,260                $ 4.43                      675
            December 31, 2003.................           28,031                $ 3.96                      111
                                                        -------                                          -----


      Total Partnership redemptions as of
      December 31, 2003...................              342,366                $ 7.76                   $2,657
                                                        =======                                          =====
</TABLE>

     The redemption price is fixed by formula in accordance with the Partnership
     Agreement.

     (o)  Reclassifications

     Certain  reclassifications,  not affecting net earnings  (loss),  have been
     made to  prior  year  amounts  in order to  conform  to the 2003  financial
     statement presentation.

<PAGE>
Note 2.  Transactions with Affiliates

     As part of the operation of the  Partnership,  the Partnership is to pay to
     the General  Partners an acquisition  fee, an equipment  management fee, an
     incentive  management fee and an equipment  liquidation fee. These fees are
     for various  services  provided in connection with the  administration  and
     management of the Partnership. No acquisition fees were incurred during the
     years ended December 31, 2003 and 2002. The Partnership  capitalized $32 of
     container  acquisition  fees as a component of  container  costs during the
     year ended December 31, 2001. The Partnership incurred $245, $188, and $308
     of incentive  management fees during each of the three years ended December
     31, 2003, 2002 and 2001,  respectively.  No equipment liquidation fees were
     incurred during these periods.

     The  Partnership's  containers  fleet  is  managed  by TEM.  In its role as
     manager,  TEM has  authority  to acquire,  hold,  manage,  lease,  sell and
     dispose of the containers.  TEM holds,  for the payment of direct operating
     expenses,   a  reserve  of  cash  that  has  been  collected  from  leasing
     operations;  such cash is included in due from affiliates, net, at December
     31, 2003 and 2002.

     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 revenues attributable to full payout net leases. These fees
     totaled $671, $657, and $818, respectively for the years ended December 31,
     2003, 2002 and 2001.

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

                                                 2003     2002      2001
                                                 ----     ----      ----

              Salaries                           $254     $319      $363
              Other                               185      184       242
                                                  ---      ---       ---
                Total general and
                   administrative costs          $439     $503      $605
                                                  ===      ===       ===

     TEM allocates these general and administrative  costs based on the ratio of
     the Partnership's interest in the managed containers to the total container
     fleet managed by TEM during the period.  TFS allocates these costs based on
     the ratio of the  Partnership's  investors to the total number of investors
     of all limited partnerships managed by TFS or equally among all the limited
     partnerships  managed by TFS. The General Partners  allocated the following
     general and administrative  costs to the Partnership during the years ended
     December 31, 2003, 3002 and 2001:

                                                 2003     2002      2001
                                                 ----     ----      ----

              TEM                                $375     $436      $529
              TFS                                  64       67        76
                                                  ---      ---       ---
                Total general and
                   administrative costs          $439     $503      $605
                                                  ===      ===       ===

     The General Partners were entitled to acquire  containers in their own name
     and held title on a  temporary  basis for the purpose of  facilitating  the
     acquisition of such containers for the  Partnership.  The containers  could
     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.  One or more
     General Partners could have also arranged for the purchase of containers in
     its or their names, and the Partnership  could then have taken title to the
     containers by paying the seller directly. In addition, the General Partners
     were  entitled  to an  acquisition  fee  for  containers  acquired  by  the
     Partnership under any of these arrangements.

      At December 31, 2003 and 2002, due from affiliates, net, is comprised of:

                                                         2003           2002
                                                         ----           ----
              Due from affiliates:
                   Due from TEM....................      $353           $194
                                                          ---            ---

              Due to affiliates:
                   Due to TFS......................        54             56
                   Due to TCC......................         8             16
                   Due to TL.......................         1              1
                                                          ---            ---
                                                           63             73
                                                          ---            ---

              Due from affiliates, net                   $290           $121
                                                          ===            ===

     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 remittance of expenses,
     fees and distributions described above and in the accrual and remittance of
     net rental revenues and container sales proceeds from TEM.

Note 3.  Lease Rental Income (unaudited)

     Leasing income arises principally from the renting of containers to various
     international  shipping lines. Revenue is recorded when earned according to
     the terms of the container rental contracts.  These contracts are typically
     for  terms of five  years or less.  The  following  is the lease mix of the
     on-lease containers (in units) at December 31, 2003 and 2002:

                                                      2003       2002
                                                      ----       ----

              On-lease under master leases           8,780     10,965
              On-lease under long-term leases        6,180      6,231
                                                    ------     ------

              Total on-lease containers             14,960     17,196
                                                    ======     ======

     Under  master  lease  agreements,  the lessee is not  committed  to lease a
     minimum number of containers from the Partnership during the lease term and
     may generally  return any portion or all the containers to the  Partnership
     at any time, subject to certain restrictions in the lease agreement.  Under
     long-term  lease  agreements,   containers  are  usually  leased  from  the
     Partnership  for periods of between  three to five  years.  Such leases are
     generally cancelable with a penalty at the end of each twelve-month period.
     Under direct  finance  leases,  the  containers are usually leased from the
     Partnership  for  the  remainder  of the  container's  useful  life  with a
     purchase option at the end of the lease term.

     The remaining containers are off-lease and are located primarily at a large
     number of storage depots. At December 31, 2003 and 2002,  approximately 12%
     and 13%, respectively,  of the Partnership's  off-lease containers had been
     specifically identified as for sale.


Note 4.   Income Taxes

     At December 31, 2003,  2002 and 2001,  there were temporary  differences of
     $18,855,  $25,748,  and  $34,315,   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
     loss for financial  statement purposes to net income for federal income tax
     purposes  for the  years  ended  December  31,  2003,  2002  and 2001 is as
     follows:
<TABLE>
<CAPTION>

                                                                         2003              2002            2001
                                                                         ----              ----            ----
<S>                                                                      <C>               <C>             <C>

      Net loss per financial statements........................        $ (312)          $(2,648)        $(1,340)

      Increase (decrease) in provision for bad debt............            56              (113)           (233)
      Depreciation for federal income tax purposes
        less than depreciation for
       financial statement purposes............................         3,979             4,372           3,023
      Gain on sale of fixed assets for federal income
        tax purposes in excess of gain/loss recognized
        for financial statement purposes.......................         2,771             4,324           3,718
      Increase (decrease) in damage protection plan costs......           117                23            (117)
      Warranty reserve income for tax purposes in excess
        of financial statement purposes........................           (30)              (39)            (40)
                                                                        -----            ------           -----

      Net income for federal income tax purposes...............        $6,581           $ 5,919         $ 5,011
                                                                        =====            ======           =====
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

Selected Quarterly Financial Data (Unaudited)
-----------------------------------------------------------------------------------------------------------------------

The following is a summary of selected quarterly financial data for the years ended
December 31, 2003 and 2002:

                                                                              (Amounts in thousands)
                                                                               2003 Quarters Ended
                                                          -------------------------------------------------------------
                                                            Mar. 31          June 30         Sept. 30          Dec. 31
                                                          -------------------------------------------------------------
<S>                                                        <C>                <C>              <C>            <C>
Rental income                                               $ 2,546          $ 2,437          $ 2,353          $ 2,241

(Loss) income from operations (1)                           $  (220)         $  (136)         $  (110)         $   148

Net (loss) earnings                                         $  (218)         $  (134)         $  (109)         $   149

Limited partners' share of net (loss) earnings              $  (238)         $  (156)         $  (132)         $   130

Limited partners' share of distributions                    $ 1,977          $ 2,124          $ 2,220          $ 1,823


                                                                               2002 Quarters Ended
                                                          -------------------------------------------------------------
                                                            Mar. 31          June 30         Sept. 30          Dec. 31
                                                          -------------------------------------------------------------

Rental income                                               $ 2,278          $ 2,152          $ 2,427          $ 2,608

(Loss) income from operations                               $(1,289)         $  (522)         $(1,112)         $   242

Net (loss) earnings                                         $(1,275)         $  (509)         $(1,109)         $   245

Limited partners' share of net (loss) earnings              $(1,291)         $  (566)         $(1,124)         $   223

Limited partners' share of distributions                    $ 1,521          $ 5,625          $ 1,444          $ 2,178
</TABLE>

(1) In the fourth quarter,  the  Partnership  reduced it's estimate for recovery
costs as a result of defaults under it's leases that it expects to incur,  which
are in excess of estimated  insurance  proceeds.  The  adjustment  resulted in a
decrease of $93 in depreciation expense.

<PAGE>

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

There have been none.

ITEM 9.A. CONTROLS AND PROCEDURES

Based on an evaluation of the Partnership's  disclosure  controls and procedures
(as defined in Rules 13a-15 and 15d-15 of the Securities  Exchange Act of 1934),
the  managing  general  partner's  principal  executive  officer  and  principal
financial officer have found those controls and procedures to be effective as of
the end of the  period  covered by the  report.  There has been no change in the
Partnership's internal control over financial reporting that occurred during the
Partnership's  last fiscal quarter (the  Partnership's  fourth fiscal quarter in
the  case of an  annual  report),  and  which  has  materially  affected,  or is
reasonably likely materially to affect, the Partnership's  internal control over
financial reporting.

                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Registrant has no officers or directors.

The Registrant's three general partners are TFS, TEM and TL. TFS is the Managing
General Partner of the Partnership and is a wholly-owned  subsidiary of TCC. TEM
and TL are Associate  General Partners of the Partnership.  The Managing General
Partner and  Associate  General  Partners  are  collectively  referred to as the
General  Partners.  TCC, TEM and TL are  wholly-owned  subsidiaries of Textainer
Group  Holdings  Limited  (TGH).  The General  Partners act in this capacity for
other limited partnerships.

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 were 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, 2003,  all Section 16(a) filing  requirements  were complied
with. No member of management,  or beneficial owner,  owned more than 10 percent
of limited  partnership  interest in the  Partnership.  None of the  individuals
subject  to  section  16(a)  failed  to  file  or  filed  late  any  reports  of
transactions in the Units.

Code of Ethics
--------------

The  Registrant  has  adopted a code of ethics  that  applies  to its  principal
executive officer,  principal financial officer, principal accounting officer or
controller,  or persons performing similar functions.  The Registrant has posted
this  code  of  ethics  on  its  Internet  website  at  the  following  address:
www.textainer.com/sharehld/codeofethics.pdf.
-------------------------------------------

Directors and Executive Officers of the General Partners
---------------------------------------------------------
<TABLE>
<CAPTION>

The directors and executive officers of the General Partners are as follows:

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

Neil I. Jowell                   70      Director and Chairman of TGH, TEM, TL, TCC and TFS
John A. Maccarone                59      President, CEO and Director of TGH, TEM, TL, TCC and TFS
James E. Hoelter                 64      Director of TGH, TCC and TFS
Philip K. Brewer                 47      Senior Vice President - Asset Management Group and Director of TL
Robert D. Pedersen               44      Senior Vice President - Leasing Group, Director of TEM
Ernest J. Furtado                48      Senior Vice  President,  CFO and  Secretary  of TGH,  TEM,  TL, TCC and TFS,
                                         Director of TL, TCC and TFS
Gregory W. Coan                  40      Vice President and Chief Information Officer of TEM
Wolfgang Geyer                   50      Regional Vice President - Europe
Mak Wing Sing                    46      Regional Vice President - South Asia
Masanori Sagara                  48      Regional Vice President - North Asia
Stefan Mackula                   51      Vice President -  Equipment Resale
Anthony C. Sowry                 51      Vice President - Corporate Operations and Acquisitions
Richard G. Murphy                51      Vice President - Risk Management
Janet S. Ruggero                 55      Vice President - Administration and Marketing Services
Jens W. Palludan                 53      Regional Vice President - Americas and Logistics
Isam K. Kabbani                  69      Director of TGH
James A. C. Owens                64      Director of TGH, TEM and TL
S. Arthur Morris                 70      Director of TGH, TEM and TL
Dudley R. Cottingham             52      Assistant Secretary, Vice President and Director of TGH, TEM and TL
Cecil Jowell                     68      Director of TGH, TEM and TL
Henrick van der Merwe            56      Director of TGH, TEM and TL
James E.  McQueen                59      Director of TGH, TEM and TL
Harold J. Samson                 82      Director of TCC and TFS
Nadine Forsman                   36      Controller of TCC and TFS
</TABLE>

Unless  otherwise  noted,  all directors have served as directors of the General
Partners as detailed  above at least since 1993 when the  reorganization  of the
General Partners occurred, as described on the previous page.

     Neil I. Jowell is Director and Chairman of TGH,  TEM, TL, TCC and TFS and a
member  of  the  Investment   Advisory   Committee  and  Audit   Committee  (see
"Committees"  below). Mr. Jowell became Director and Chairman of TEM in 1994. He
has served on the Board of Trencor  Ltd.  (Trencor)  since 1966 and as  Chairman
since 1973. He is also a Director of Mobile  Industries  Ltd.  (Mobile) (1969 to
present),  which is the major shareholder in Trencor,  a publicly traded company
listed on the JSE Securities  Exchange South Africa.  Trencor's core  businesses
are the owning,  financing,  leasing and managing of marine cargo containers and
returnable  packaging units  worldwide,  finance  related  activities and supply
chain  management  services.  Other  interests are the manufacture and export of
tank containers for international markets and road trailer manufacturing.  He is
also a Director of a number of Mobile's and Trencor's  subsidiaries.  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 TGH in 1992.  Mr.  Jowell has over 40 years'  experience  in the
transportation  industry. He holds an M.B.A. degree from Columbia University and
Bachelor of Commerce and Ll.B.  degrees from the  University  of Cape Town.  Mr.
Neil I. Jowell and Mr. Cecil Jowell are brothers.

     John A.  Maccarone is President,  CEO and Director of TGH, TEM, TL, TCC and
TFS. Mr. Maccarone became  President,  CEO of TGH, TL, TCC and TFS in 1998 and a
director of TEM in 1994. In this capacity,  he is responsible for overseeing the
management of and coordinating the activities of Textainer's  worldwide fleet of
marine  cargo   containers   and  the  activities  of  TGH,  TL,  TCC  and  TFS.
Additionally,  he is Chairman of the Equipment Investment Committee,  the Credit
Committee and the Investment  Advisory Committee (see "Committees",  below). Mr.
Maccarone was instrumental in co-founding Intermodal Equipment Associates (IEA),
a marine container leasing company based in San Francisco, and held a variety of
executive  positions with IEA from 1979 until 1987, when he joined the Textainer
Group.  Mr.  Maccarone  was  previously a Director of Marketing  for Trans Ocean
Leasing  Corporation in Hong Kong with responsibility for all leasing activities
in  Southeast  Asia.   From  1969  to  1977,  Mr.   Maccarone  was  a  marketing
representative  for IBM  Corporation.  He holds a Bachelor of Science  degree in
Engineering  Management  from  Boston  University  and  an  M.B.A.  from  Loyola
University of Chicago.

     James E.  Hoelter is a  director  of TGH,  TCC and TFS.  In  addition,  Mr.
Hoelter  is a member  of the  Equipment  Investment  Committee,  the  Investment
Advisory  Committee  and the Audit  Committee  (see  "Committees",  below).  Mr.
Hoelter was the President and Chief Executive Officer of TGH and TL from 1993 to
1998 and was a director of TEM and TL until March 2003.  Mr. Hoelter serves as a
consultant  to Trencor  (1999 to  present).  Mr.  Hoelter  became a director  of
Trencor in December 2002 and he serves as a director of Trenstar Ltd., a Trencor
affiliate.  Prior to  joining  the  Textainer  Group in 1987,  Mr.  Hoelter  was
president of IEA. Mr. Hoelter  co-founded IEA in 1978 with Mr. Maccarone and was
president  from  inception  until 1987.  From 1976 to 1978, Mr. Hoelter was vice
president  for Trans Ocean  Ltd.,  San  Francisco,  a marine  container  leasing
company,  where he was  responsible  for North  America.  From 1971 to 1976,  he
worked for Itel Corporation,  San Francisco,  where he was director of financial
leasing for the container  division.  Mr. Hoelter received his B.B.A. in finance
from the University of Wisconsin, where he is an emeritus member of its Business
School's Dean's Advisory Board, and his M.B.A.  from the Harvard Graduate School
of Business Administration.

     Philip K. Brewer is Senior Vice President - Asset  Management Group and has
been such since 1999.  Mr. Brewer has been a director of TL since 2000 and was a
director of TEM from August 2002 through March 2003. He was President of TCC and
TFS from  January 1, 1998 to December 31, 1998 until his  appointment  as Senior
Vice  President  - Asset  Management  Group.  As Senior  Vice  President,  he is
responsible for optimizing the capital  structure of and identifying new sources
of  finance  for  Textainer,  as  well  as  overseeing  the  management  of  and
coordinating the activities of Textainer's  risk  management,  logistics and the
resale divisions.  Mr. Brewer is a member of the Equipment Investment Committee,
the  Credit  Committee  and was a member of the  Investment  Advisory  Committee
through December 31, 1998 (see "Committees"  below).  Prior to joining Textainer
in 1996, as Senior Vice  President - Capital  Markets for TGH and TL, Mr. Brewer
worked at  Bankers  Trust from 1990 to 1996,  starting  as a Vice  President  in
Corporate  Finance  and ending as  Managing  Director  and  Country  Manager for
Indonesia;  from 1989 to 1990,  he was Vice  President in  Corporate  Finance at
Jarding Fleming; from 1987 to 1989, he was Capital Markets Advisor to the United
States  Agency for  International  Development;  and from 1984 to 1987 he was an
Associate with Drexel Burnham Lambert in New York. Mr. Brewer holds an M.B.A. in
Finance from the Graduate School of Business at Columbia University,  and a B.A.
in Economics and Political Science from Colgate University.

     Robert D. Pedersen is Senior Vice-President - Leasing Group responsible for
worldwide sales and marketing related  activities and operations since 1999. Mr.
Pederson  has also served as a Director of TEM,  since 1997.  Mr.  Pedersen is a
member of the  Equipment  Investment  Committee  and the Credit  Committee  (see
"Committees"  below). He joined Textainer in 1991 as Regional Vice President for
the Americas  Region.  Mr.  Pedersen has  extensive  experience  in the industry
having  held a  variety  of  positions  with  Klinge  Cool,  a  manufacturer  of
refrigerated container cooling units (from 1989 to 1991), where he was worldwide
sales and marketing  director,  XTRA, a container lessor (from 1985 to 1988) and
Maersk Line, a container  shipping line (from 1978 to 1984).  Mr.  Pedersen is a
graduate of the A.P. Moller shipping and transportation program and the Merkonom
Business School in Copenhagen, majoring in Company Organization.

     Ernest J. Furtado is Senior Vice President,  CFO and Secretary of TGH, TEM,
TL, TCC and TFS and has been such since 1999.  Mr.  Furtado is a Director of TCC
and TFS,  and has served as such since 1997.  He was a director of TEM from 2002
through  March 2003 and became a director  of TL in March  2003.  As Senior Vice
President,  CFO and Secretary,  he is responsible for all accounting,  financial
management, and reporting functions for TGH, TEM, TL, TCC and TFS. Additionally,
he is a member  of the  Investment  Advisory  Committee  for  which he serves as
Secretary,  the Equipment  Investment  Committee and the Credit  Committee  (see
"Committees",  below). Prior to these positions,  he held a number of accounting
and financial management positions at Textainer,  of increasing  responsibility.
Prior to joining  Textainer in May 1991,  Mr.  Furtado was  Controller  for Itel
Instant  Space and  manager  of  accounting  for Itel  Containers  International
Corporation,  both in San Francisco,  from 1984 to 1991. Mr.  Furtado's  earlier
business  affiliations include serving as audit manager for Wells Fargo Bank and
as senior  accountant with John F. Forbes & Co., both in San Francisco.  He is a
Certified Public Accountant and holds a B.S. in business administration from the
University of California at Berkeley and an M.B.A.  in information  systems from
Golden Gate University.

     Gregory W. Coan is Vice President and Chief Information  Officer of TEM and
has served as such since 2001. In this capacity, Mr. Coan is responsible for the
worldwide  information  systems  of  Textainer.  He also  serves  on the  Credit
Committee (see "Committees",  below). Prior to these positions, Mr. Coan was the
Director of Communications  and Network Services from 1995 to 1999, where he was
responsible for Textainer's network and hardware infrastructure.  Mr. Coan holds
a Bachelor of Arts degree in political science from the University of California
at Berkeley  and an M.B.A.  with an emphasis in  telecommunications  from Golden
Gate University.

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

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

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

     Stefan  Mackula is Vice  President  -  Equipment  Resale,  responsible  for
coordinating  the worldwide  sale of equipment  into  secondary  markets and has
served as such since 1993. Mr. Mackula also served as Vice President - Marketing
from  1989 to  1991  where  he was  responsible  for  coordinating  all  leasing
activities in Europe,  Africa, and the Middle East. Mr. Mackula joined Textainer
in 1983 as Leasing Manager for the United Kingdom.  Prior to joining  Textainer,
Mr. Mackula held, beginning in 1972, a variety of positions in the international
container shipping industry.

     Anthony C. Sowry is Vice President - Corporate  Operations and Acquisitions
and has  served  as  such  since  1996.  He is also a  member  of the  Equipment
Investment  Committee and the Credit Committee (see  "Committees",  below).  Mr.
Sowry  supervises  all  international  container  operations,   maintenance  and
technical functions for the fleets under Textainer's management. In addition, he
is  responsible  for the  acquisition  of all new and  used  containers  for the
Textainer Group. He began his affiliation with Textainer in 1982, when he served
as Fleet Quality  Control  Manager for Textainer Inc.  until 1988.  From 1980 to
1982, he was operations manager for Trans Container Services in London; and from
1978 to 1982, he was a technical representative for Trans Ocean Leasing, also in
London.  He  received  his B.A.  degree in business  management  from the London
School of  Business.  Mr.  Sowry is a member of the  Technical  Committee of the
International   Institute  of  Container  Lessors  and  a  certified   container
inspector.

     Richard G. Murphy is Vice President - Risk Management,  responsible for all
credit and risk management  functions and has served as such since 1996. He also
supervises the administrative aspects of equipment acquisitions.  He is a member
of and acts as secretary to the Equipment  Investment and Credit Committees (see
"Committees",  below). He has held a number of positions at Textainer, including
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
and has served as such since 1993. Ms.  Ruggero is responsible  for the tracking
and billing of fleets under TEM management,  including direct responsibility for
ensuring that all data is input in an accurate and timely  fashion.  She assists
the marketing and operations  departments by providing  statistical  reports and
analyses and serves on the Credit Committee (see "Committees",  below). Prior to
joining  Textainer in 1986,  Ms.  Ruggero held various  positions with Gelco CTI
over the  course  of 15  years,  the  last  one as  Director  of  Marketing  and
Administration  for the North American Regional office in New York City. She has
a B.A. in education from Cumberland College.

     Jens W.  Palludan is based in  Hackensack,  New Jersey and is the  Regional
Vice  President - Americas and  Logistics,  responsible  for  container  leasing
activities in North/South  America and for coordinating  container logistics and
has served as such since 2001.  He joined  Textainer  in 1993 as  Regional  Vice
President - Americas/Africa/Australia,  responsible for coordinating all leasing
activities in North and South America,  Africa and  Australia/New  Zealand.  Mr.
Palludan spent his career from 1969 through 1992 with Maersk Line of Copenhagen,
Denmark in a variety of key  management  positions in both Denmark and overseas.
Mr.  Palludan's  most  recent  position  at Maersk was that of General  Manager,
Equipment and Terminals,  where he was responsible for the entire managed fleet.
Mr. Palludan holds an M.B.A.  from the Centre European  D'Education  Permanente,
Fontainebleau, France.

     Sheikh  Isam K.  Kabbani  is a  director  of TGH and was a  director  of TL
through March 2003. 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 since been his  principal
business activity.  Sheikh Kabbani holds a B.A. degree from Swarthmore  College,
Pennsylvania,  and an M.A. degree in Economics and International  Relations from
Columbia University.

     James A. C. Owens is a director of TGH and TL, and beginning in March 2003,
a director of TEM. Mr. Owens has been  associated with the Textainer Group since
1980.  In 1983 he was  appointed to the Board of Textainer  Inc.,  and served as
President  of Textainer  Inc.  from 1984 to 1987.  From 1987 to 1998,  Mr. Owens
served as an  alternate  director on the Boards of TI, TGH and TL and has served
as  director  of TGH and TL since  1998.  Apart  from his  association  with the
Textainer  Group,  Mr.  Owens  has been  involved  in  insurance  and  financial
brokerage companies and captive insurance companies.  He is a member of a number
of Boards of  Directors  of non-U.S.  companies.  Mr.  Owens holds a Bachelor of
Commerce degree from the University of South Africa.

     S. Arthur  Morris is a director  of TGH,  TEM and TL. Mr.  Morris  became a
director  of TL and TGH in 1993 and  became a director  of TEM in 1994.  He is a
founding  partner  in the  firm  of  Morris  and  Kempe,  Chartered  Accountants
(1962-1977)  and currently  functions as a  correspondent  member of a number of
international  accounting firms through his firm Arthur Morris and Company (1977
to date).  He is also President and director of Continental  Management  Limited
(1977 to  date)  and  Continental  Trust  Corporation  Limited  (1994 to  date).
Continental  Management Limited is a Bermuda corporation that provides corporate
representation,  administration  and management  services and Continental  Trust
Corporation  Limited  is a  Bermuda  Corporation  that  provides  corporate  and
individual trust  administration  services.  He has also served as a director of
Turks & Caicos First  Insurance  Company Limited since 1993. 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.

     Dudley R. Cottingham is Assistant Secretary,  Vice President and a director
of TGH,  TEM and TL. Mr.  Cottingham  became a  director  of TEM in 1994 and has
served in these other  positions  since 1993. 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) and Continental  Trust  Corporation  Limited,
which are all 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 Continental  Trust
Corporation  Limited  is a  Bermuda  corporation  that  provides  corporate  and
individual trust  administration  services.  He has also served as a director of
Turks & Caicos First Insurance  Company  Limited since 1993. Mr.  Cottingham has
over 20 years experience in public accounting with  responsibility for a variety
of international and local clients.

     Cecil Jowell is a director of TGH, TEM and TL and has been such since March
2003.  Mr.  Jowell is also a Director  and  Chairman of Mobile  Industries  Ltd.
(Mobile), which is a public company, quoted on the JSE Securities Exchange South
Africa.  Mr.  Jowell has been a Director of Mobile since 1969 and was  appointed
Chairman in 1973.  It is the major  shareholder  in Trencor  Ltd.  (Trencor),  a
publicly  traded  company  listed on the JSE  Securities  Exchange South Africa.
Trencor's  core  businesses are the owning,  financing,  leasing and managing of
marine cargo  containers  and  returnable  packaging  units  worldwide,  finance
related activities and supply chain management services. Other interests are the
manufacture  and export of tank  containers for  international  markets and road
trailer  manufacturing.  He is an Executive  Director of Trencor and has been an
executive  in that group for over 40 years.  Mr.  Jowell is also a Director of a
number  of  Mobile's  and  Trencor's  subsidiaries  as  well  as a  Director  of
Scientific Development and Integration (Pty) Ltd, a scientific research company.
Mr.  Jowell  was  a  Director  and  Chairman  of  WACO  International  Ltd.,  an
international  industrial  group  listed on the JSE  Securities  Exchange  South
Africa,  and with  subsidiaries  listed on the Sydney and London Stock Exchanges
from 1997  through  2000.  Mr.  Jowell  holds a Bachelor of  Commerce  and Ll.B.
degrees from the  University  of Cape Town and is a graduate of the Institute of
Transport. Mr. Cecil Jowell and Mr. Neil I. Jowell are brothers.

     Hendrik R. van der Merwe is a Director of TGH, TEM and TL and has served as
such since  March  2003.  Mr.  van der Merwe is also an  Executive  Director  of
Trencor Ltd.  (Trencor) and has served as such since 1998. In this capacity,  he
is  responsible  for certain  operating  entities and  strategic  and  corporate
functions  within the Trencor group of companies.  Trencor is a publicly  traded
company listed on the JSE Securities  Exchange South Africa. Its core businesses
are the owning,  financing,  leasing and managing of marine cargo containers and
returnable  packaging units  worldwide,  finance  related  activities and supply
chain  management  services.  Other  interests are the manufacture and export of
tank containers for international  markets and road trailer  manufacturing.  Mr.
van der Merwe is currently  also  Chairman of TrenStar,  Inc.,  based in Denver,
Colorado and a Director of various  companies  in the  TrenStar  group and other
companies in the wider Trencor  group and has been such since 2000.  Mr. van der
Merwe served as Deputy Chairman for Waco  International  Ltd., an  international
industrial  group listed on the JSE  Securities  Exchange  South Africa and with
subsidiaries  listed on the Sydney and London Stock Exchanges from 1991 to 1998,
where he served on the  Boards of those  companies.  From 1990 to 1991,  he held
various senior executive positions in the banking sector in South Africa, lastly
as Chief Executive Officer of Sendbank,  the  corporate/merchant  banking arm of
Bankorp  Group Ltd.  Prior to entering  the  business  world,  Mr. van der Merwe
practiced as an attorney at law in Johannesburg, South Africa. Mr. van der Merwe
holds a Bachelor of Arts and Ll.B.  degrees from the University of  Stellenbosch
and an Ll.M (Taxation) degree from the University of the Witwatersrand.

     James E.  McQueen is a Director  of TGH,  TEM and TL and has served as such
since March 2003. Mr. McQueen joined Trencor Ltd. (Trencor) in June 1976 and has
served on the Board of the  company as  Financial  Director  (CFO)  since  1996.
Trencor is a publicly traded company listed on the JSE Securities Exchange South
Africa. Its core businesses are the owning,  financing,  leasing and managing of
marine cargo  containers  and  returnable  packaging  units  worldwide,  finance
related activities and supply chain management services. Other interests are the
manufacture  and export of road tank  containers for  international  markets and
trailer  manufacturing.  Mr. McQueen is also a Director of a number of Trencor's
subsidiaries.  Prior to joining Trencor, Mr. McQueen was an accountant in public
practice.  He holds a Bachelor of Commerce  degree from the  University  of Cape
Town and is a Chartered Accountant (South Africa).

     Harold J. Samson is a director of TCC and TFS since 2003 and is a member of
the Investment  Advisory  Committee and the Audit  Committee  (see  Committees",
below).  He was a director of TGH and TL from 1993 and from 1994,  respectively,
and through  December 31, 2002.  Mr.  Samson  served as a consultant  to various
securities  firms  from 1981 to 1989.  From 1974 to 1981 he was  Executive  Vice
President  of Foster & Marshall,  Inc.,  a New York Stock  Exchange  member firm
based in Seattle.  Mr. Samson was a director of IEA from 1979 to 1981. From 1957
to 1984 he served as Chief Financial  Officer in several New York Stock Exchange
member  firms.  Mr.  Samson  holds a B.S.  in Business  Administration  from the
University  of  California,  Berkeley  and  is  a  California  Certified  Public
Accountant.

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


Committees

     The Managing  General Partner has  established the following  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.  Further,  the Managing
General Partner has established an audit committee, as described below.

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

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

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

     Audit  Committee.  The Managing  General  Partner has  established an audit
committee to oversee the accounting and financial reporting processes and audits
of the financial  statements of the  Partnership  as well as other  partnerships
managed by the General Partners. The members of the audit committee are James E.
Hoelter,  Neil I. Jowell and Harold J. Samson.  The Managing  General  Partner's
board of  directors  has  determined  that the audit  committee  has a financial
expert serving on it. That member is Harold J. Samson and he is independent,  as
that term is used in Item  7(d)(3)(iv)  of  Schedule  14A  under the  Securities
Exchange Act of 1934.


ITEM 11.     EXECUTIVE COMPENSATION

The Registrant  has no executive  officers and does not reimburse TFS, TEM or TL
for the  remuneration  payable  to their  executive  officers.  For  information
regarding  reimbursements  made by the Registrant to the General  Partners,  see
note 2 of the Financial Statements in Item 8. See also Item 13(a) below.


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)      Security Ownership of Certain Beneficial Owners

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

(b)      Security Ownership of Management

         As of January 1, 2004:
<TABLE>
<CAPTION>

                                                                     Number
                     Name of Beneficial Owner                       Of Units      % All Units
                     ------------------------                       --------      -----------
<S>                 <C>                                             <C>           <C>

                     James E. Hoelter.......................          2,500         0.0423%
                     John A. Maccarone......................          2,520         0.0427%
                     Harold Samson..........................          2,500         0.0423%
                     Anthony C. Sowry.......................            274         0.0046%
                                                                      -----         -------

                     Directors, Officers and Management
                        as a Group..........................          7,794          0.1319%
                                                                      =====          =======
</TABLE>

(c)      Changes in control.

         Inapplicable.
<PAGE>
PART 201 (d) Securities under Equity Compensation Plans.

         Inapplicable.


ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                             (Amounts in thousands)


(a)      Transactions with Management and Others.

         At December 31, 2003, due from affiliates, net, is comprised of:


           Due from affiliates:
              Due from TEM.........................               $353
                                                                   ---

           Due to affiliates:
              Due to TFS...........................                 54
              Due to TCC...........................                  8
              Due to TL............................                  1
                                                                   ---
                                                                    63

           Due from affiliates, net                               $290
                                                                   ===

         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
         remittance of expenses,  fees and distributions  and in the accrual and
         remittance of  net rental  revenues and container  sales  proceeds from
         TEM.

         In addition, for the year ended  December 31, 2003, the Registrant paid
         or will pay the following amounts to the General Partners:

         Management fees in connection with the operations of the Registrant:



                  TEM....................               $725
                  TFS....................                191
                                                         ---

                  Total..................               $916
                                                         ===

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



                  TEM....................               $375
                  TFS....................                 64
                                                         ---

                  Total..................               $439
                                                         ===


         For  more  information   on  these  transactions,  see  Note  2 to  the
         Financial  Statements  in  Item 8.  The  Registrant  contemplates  that
         payments and reimbursements  will be made to the General Partners under
         these same arrangements in the current fiscal year.

(b)      Certain Business Relationships.

         Inapplicable.

(c)      Indebtedness of Management.

         Inapplicable.

(d)      Transactions with Promoters.

         Inapplicable.


ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES

Registrant incurred the following accounting fees from KPMG LLP during the years
ended December 31, 2003 and 2002:

                                                             2003        2002
                                                             ----        ----

         Audit fees....................................       $28         $32
                                                               ==          ==

The Registrant  first  established its audit committee in 2002. The Registrant's
audit  committee  has approved the audit  services  for the  preparation  of the
Registrant's  current year's  financial  statements and any related,  underlying
business  transactions,  as well as tax consultation  services up to a specified
dollar amount,  all subject to ongoing reports made to the audit committee.  The
committee has not otherwise authorized pre-approvals, or delegated its authority
to grant pre-approvals, of audit or non-audit services.

                                     PART IV


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.    Audited financial statements of the Registrant for the year ended
               December 31, 2003 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

               Exhibits 31.1 and 31.2 Certifications pursuant to Rules 13a-14 or
               15d-14 of the Securities and Exchange Act of 1934.

               Exhibits  32.1  and 32.2  Certifications  pursuant  to 18  U.S.C.
               Section  1350,  as  adopted,  and  regarding  Section  906 of the
               Sarbanes-Oxley Act of 2002.


               Exhibits Incorporated by reference

                    The Registrant's limited partnership agreement, Exhibit A to
                    the Prospectus,  as contained in Pre-Effective Amendment No.
                    2 to the Registrant's Registration Statement (No. 33-36255),
                    as  filed  with  the   Commission   December  21,  1990,  as
                    supplemented  by  Post-Effective  Amendments  No. 1, 2 and 3
                    filed  with  the  Commission   under  Section  8(c)  of  the
                    Securities  Act of 1933 on March 1, 1991,  January  13, 1992
                    and February 4, 1992, respectively.


(b)      During the year ended 2003, 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  19,  2004,  we  reported  on the  balance  sheets of
Textainer  Equipment Income Fund III, L.P. (the  Partnership) as of December 31,
2003 and 2002, and the related  statements of operations,  partners' capital and
cash flows for each of the years in the  three-year  period  ended  December 31,
2003,  which are included in the 2003 annual  report on Form 10-K. In connection
with our audit of the aforementioned  financial statements,  we also audited the
related  financial  statement  schedule  as  listed in Item 15.  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.



                                  /s/ KPMG LLP



San Francisco, California
February 19, 2004

<PAGE>

<TABLE>
<CAPTION>

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

Schedule II - Valuation and Qualifying Accounts

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

                                                                         Charged                      Balance
                                                          Balance at    to Costs                       at End
                                                          Beginning        and                           of
                                                          of Period     Expenses       Deduction       Period
                                                          ----------    --------       ---------      -------
<S>                                                      <C>           <C>               <C>          <C>
For the year ended December 31, 2003:

Allowance for
  doubtful accounts                                            $119         $ 85           $ (29)        $175
                                                                ---          ---            ----          ---

Accrued damage protection
  plan costs                                                   $185         $275           $(158)        $302
                                                                ---          ---            ----          ---

For the year ended December 31, 2002:

Allowance for
  doubtful accounts                                            $232         $ (7)          $(106)        $119
                                                                ---          ---            ----          ---

Accrued damage protection
  plan costs                                                   $162         $153           $(130)        $185
                                                                ---          ---            ----          ---


For the year ended December 31, 2001:

Allowance for
  doubtful accounts                                            $465         $(44)          $(189)        $232
                                                                ---          ---            ----          ---

Accrued damage protection
  plan costs                                                   $279         $308           $(425)        $162
                                                                ---          ---            ----          ---


</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

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

                                By Textainer Financial Services Corporation
                                The Managing General Partner

                                By
                                  _________________________________________
                                  Ernest J. Furtado
                                  Chief Financial Officer

Date:  March 25, 2004

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:

Signature                                        Title                                        Date

<S>                                              <C>                                      <C>

                                                                                              March 25, 2004
_____________________________                    Chief Financial Officer, Senior
Ernest J. Furtado                                Vice President, Secretary and
                                                 Director (Chief Financial and
                                                 Principal Accounting Officer)



_____________________________                    Chief Executive Officer, President           March 25, 2004
John A. Maccarone                                and Director




_____________________________                    Chairman of the Board and Director           March 25, 2004
Neil I. Jowell


</TABLE>



<PAGE>

<TABLE>
<CAPTION>

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

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


                                  By Textainer Financial Services Corporation
                                  The Managing General Partner

                                  By /s/Ernest J. Furtado
                                     _________________________________________
                                     Ernest J. Furtado
                                     Chief Financial Officer

Date:  March 25, 2004

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:

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


/s/ Ernest J. Furtado
_________________________________                Chief Financial Officer, Senior              March 25, 2004
Ernest J. Furtado                                Vice President, Secretary and
                                                 Director (Chief Financial and
                                                 Principal Accounting Officer)



/s/ John A. Maccarone
_________________________________                Chief Executive Officer, President           March 25, 2004
John A. Maccarone                                and Director


/s/ Neil I. Jowell
_________________________________                Chairman of the Board and Director           March 25, 2004
Neil I. Jowell

</TABLE>


<PAGE>


                                  EXHIBIT 31.1


CERTIFICATIONS

I, John A. Maccarone, certify that:

1.   I have  reviewed  this annual  report on Form 10-K of  Textainer  Equipment
     Income Fund III, L.P.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and  15d-15(e))  for the registrant and we
     have:

     a.)  designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this annual report is being prepared;

     b.)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c.)  disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent function):

     a.)  all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b.)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.


March 25, 2004

                                       /s/ John A. Maccarone
                                       ________________________________________
                                       John A. Maccarone
                                       Chief Executive Officer, President
                                       and Director of TFS




<PAGE>


                                  EXHIBIT 31.2

CERTIFICATIONS

I, Ernest J. Furtado, certify that:

1.   I have  reviewed  this annual  report on Form 10-K of  Textainer  Equipment
     Income Fund III, L.P.;

2.   Based on my knowledge, this report does not contain any untrue statement of
     a material  fact or omit to state a  material  fact  necessary  to make the
     statements made, in light of the circumstances  under which such statements
     were made,  not  misleading  with  respect  to the  period  covered by this
     report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in  this  report,  fairly  present  in all  material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules  13a-15(e) and  15d-15(e))  for the registrant and we
     have:

     a.)  designed  such  disclosure  controls  and  procedures,  or caused such
          disclosure   controls  and   procedures  to  be  designed   under  our
          supervision,  to ensure  that  material  information  relating  to the
          registrant,  including its consolidated subsidiaries, is made known to
          us by others within those entities,  particularly during the period in
          which this annual report is being prepared;

     b.)  evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures and presented in this report our conclusions  about the
          effectiveness of the disclosure controls and procedures, as of the end
          of the period covered by this report based on such evaluation; and

     c.)  disclosed  in this  report  any  change in the  registrant's  internal
          control over financial reporting that occurred during the registrant's
          most recent fiscal quarter (the registrant's  fourth fiscal quarter in
          the case of an annual  report)  that has  materially  affected,  or is
          reasonably  likely to materially  affect,  the  registrant's  internal
          control over financial reporting; and

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's  auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent function):

     a.)  all significant  deficiencies and material weaknesses in the design or
          operation  of internal  control  over  financial  reporting  which are
          reasonably  likely to  adversely  affect the  registrant's  ability to
          record, process, summarize and report financial information; and

     b.)  any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          control over financial reporting.

March 25, 2004

                            /s/ Ernest J. Furtado
                            ____________________________________________________
                            Ernest J. Furtado
                            Chief Financial Officer, Senior Vice President,
                            Secretary and Director of TFS


<PAGE>


                                  EXHIBIT 32.1



                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                        AS ADOPTED, REGARDING SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002




In  connection  with the Annual Report of Textainer  Equipment  Income Fund III,
L.P., (the  "Registrant")  on Form 10-K for the year ended December 31, 2003, as
filed on March  25,  2004  with the  Securities  and  Exchange  Commission  (the
"Report"),  I, John A.  Maccarone,  the Chief Executive  Officer,  President and
Director of  Textainer  Financial  Services  Corporation  ("TFS") and  Principal
Executive  Officer of TFS,  the  Managing  General  Partner  of the  Registrant,
certify,  pursuant to 18 U.S.C. ss. 1350, as adopted,  regarding  Section 906 of
the Sarbanes-Oxley Act of 2002, that:

(i)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(ii) The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition,  results of operations and cash flows of
     the Registrant.



March 25, 2004



                                        By  /s/ John A. Maccarone
                                           _____________________________________
                                           John A. Maccarone
                                           Chief Executive Officer,President and
                                           Director of TFS



     A signed  original of this  written  statement  required by Section 906 has
     been provided to the  Registrant and will be retained by the Registrant and
     furnished  to the  Securities  and  Exchange  Commission  or its staff upon
     request.


<PAGE>



                                  EXHIBIT 32.2



                            CERTIFICATION PURSUANT TO
                               18 U.S.C. ss. 1350,
                        AS ADOPTED, REGARDING SECTION 906
                        OF THE SARBANES-OXLEY ACT OF 2002



In  connection  with the Annual Report of Textainer  Equipment  Income Fund III,
L.P., (the  "Registrant")  on Form 10-K for the year ended December 31, 2003, as
filed on March  25,  2004  with the  Securities  and  Exchange  Commission  (the
"Report"), I, Ernest J. Furtado, Chief Financial Officer, Senior Vice President,
Secretary and Director of Textainer  Financial Services  Corporation ("TFS") and
Principal  Financial and Accounting Officer of TFS, the Managing General Partner
of the  Registrant,  certify,  pursuant  to 18  U.S.C.  ss.  1350,  as  adopted,
regarding Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)  The Report fully complies with the  requirements  of Section 13(a) or 15(d)
     of the Securities Exchange Act of 1934; and

(ii) The information  contained in the Report fairly  presents,  in all material
     respects, the financial condition,  results of operations and cash flows of
     the Registrant.



March 25, 2004



                          By  /s/ Ernest J.  Furtado
                              _________________________________________________
                              Ernest J. Furtado
                              Chief Financial Officer, Senior Vice President,
                              Secretary and Director of TFS



     A signed  original of this  written  statement  required by Section 906 has
     been provided to the  Registrant and will be retained by the Registrant and
     furnished  to the  Securities  and  Exchange  Commission  or its staff upon
     request.