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


March 26, 2003


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, 2002.

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, 2002

                         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). [ ]

State the aggregate market value of the voting and non-voting common equity held
by nonaffiliates of the Registrant. The aggregate market value shall be computed
by  reference to the price at which the common  equity was sold,  or the average
bid and ask 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

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

<PAGE>



                                     PART I

ITEM 1.      DESCRIPTION OF BUSINESS

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

(a)       General Development of Business

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

          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 new and used
               transportation   containers  and  leasing  these   containers  to
               international  shipping  companies hauling various types of goods
               among numerous trade routes.  All lessees pay a daily rental rate
               and in certain  markets  may pay  special  handling  fees  and/or
               drop-off charges. In addition to these fees and charges, a lessee
               must either provide  physical  damage and liability  insurance or
               purchase a damage waiver from the  Registrant,  in which case the
               Registrant  agrees to pay the cost of repairing  certain physical
               damage to containers.  Container  leasing  companies compete with
               one another on the basis of lease rates,  fees charged,  services
               provided   and   availability   of   equipment.   To  ensure  the
               availability  of equipment to its  customers,  container  leasing
               companies and the  Registrant  may pay to  reposition  containers
               from  low  demand  locations  to  higher  demand  locations.   By
               maintaining  the highest  lease  rates and the highest  equipment
               utilization 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 his
               possession   (whether  or  not  he  is  actively  using  it),  is
               responsible for any damage, and must insure the container against
               liabilities.

               A substantial  portion of the  Partnership's  equipment is leased
               under  long-term  lease  agreements,  rather than master  leases.
               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.  Direct finance
               leases currently cover 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.  For a
               more  detailed  discussion  of the  leases  for the  Registrant's
               equipment,   see  "Leasing   Policy"   under   "Business  of  the
               Partnership" in the Registrant's Prospectus as supplemented.

(c)(1)(ii)     Inapplicable.

(c)(1)(iii)    Inapplicable.

(c)(1)(iv)     Inapplicable.

(c)(1)(v)      Inapplicable.

(c)(1)(vi)     Inapplicable.

(c)(1)(vii)    No single lessee had generated  lease revenue for the years ended
               December 31, 2002,  2001  and  2000 which  was 10% or more of the
               total revenue of the Registrant.

(c)(1)(viii)   Inapplicable.

(c)(1)(ix)     Inapplicable.

(c)(1)(x)      There are approximately 80 container  leasing  companies of which
               the top ten control approximately 85% 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. The Registrant has
               frequently been required to reposition  containers from these low
               demand locations, or to sell containers, if an analysis indicates
               that the sale may yield greater economic  benefits than continued
               ownership,  given the costs of  repositioning  and  estimates  of
               future rental rates and  opportunities.  Containers sold in these
               low demand  locations  have  frequently  been  older  containers.
               Shipping lines have an advantage over container leasing companies
               with respect to these low demand locations,  because the shipping
               companies 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),   the  Managing   General   Partner  of  the
               Registrant,  is  responsible  for the overall  management  of the
               business  of  the  Registrant  and at  December  31,  2002  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, 2002
               had a total of 147 employees.

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

     The  Registrant  is  involved  in the  leasing of  shipping  containers  to
     international  shipping  companies for use in world trade and approximately
     9%, 13% and 15% of the  Registrant's  rental revenue during the years ended
     December 31, 2002, 2001 and 2000, respectively, was derived from operations
     sourced or terminated  domestically.  These  percentages do not reflect the
     proportion  of  the   Partnership's   income  from   operations   generated
     domestically   or  in  domestic   waterways.   Substantially   all  of  the
     Partnership's  income from  operations  is derived from assets  employed in
     foreign  operations.  See "Business of the Partnership" in the Registrant's
     Prospectus,  as supplemented,  and 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, 2002, the Registrant owned the following types and quantities
of equipment:

         20-foot standard dry freight containers             6,293
         40-foot standard dry freight containers             7,987
         40-foot high cube dry freight containers            6,256
                                                            ------
                                                            20,536
                                                            ======

During  December 2002,  approximately  83% of these  containers were on lease to
international shipping companies, 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,
2002,  approximately  13% 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 for these reasons and 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."

For  information  about  the  Registrant's   property,   see  "Business  of  the
Partnership" and "Risk Factors" in the Registrant's Prospectus, as supplemented.
See also Item 7, "Results of Operations"  for more  information  about container
sales and  write-downs,  as well as the location of the  Registrant's  off-lease
containers.

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, 2003  there were  7,491  holders of record of
                  limited partnership interests in the Registrant.

(b)(2)            Inapplicable.

(c)        Dividends.

                  Inapplicable.

From January 1, 2002 through March 31, 2002,  the  Registrant was paying monthly
distributions  to its limited  partners at an  annualized  rate equal to 5% of a
Unit's  initial  cost,  or $1.00  per  Unit.  Effective  April,  2002,  when the
Registrant   began  its   liquidation   phase,   the  Registrant   made  monthly
distributions  to its limited  partners in an amount  equal to the  Registrant's
excess cash, after redemptions and working capital reserves.  From the beginning
of the  liquidation  phase,  through  December 31,  2002,  the  Registrant  paid
distributions  at an annualized rate equal to 10.3% of a Unit's initial cost, or
$2.06 per Unit per year.  For the year ended  December 31, 2001,  the Registrant
was  paying  monthly  distributions  at an  annualized  rate of 6.2% of a Unit's
initial  cost  or  $1.23  per  Unit.  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.

<TABLE>
<CAPTION>

ITEM 6.      SELECTED FINANCIAL DATA

                                                          (Amounts in thousands except for per unit amounts)

                                                                         Years Ended December 31,
                                               ------------------------------------------------------------------------
                                                      2002          2001          2000           1999           1998
                                                      ----          ----          ----           ----           ----
<S>                                              <C>           <C>           <C>            <C>            <C>
Rental income...............................      $  9,465      $ 11,858      $ 15,135       $ 15,224       $ 18,904

(Loss) income from operations...............      $ (2,681)     $ (1,433)     $  2,466       $   (179)      $  3,769

Net (loss) earnings.........................      $ (2,648)     $ (1,340)     $  2,710       $    (21)      $  3,886

Net (loss) earnings per unit of
  limited partner interest..................      $  (0.46)     $  (0.23)     $   0.43       $  (0.02)      $   0.61

Distributions per unit of
  limited partner interest..................      $   1.79      $   1.23      $   1.40       $   1.61       $   1.77

Distributions per unit of limited
   partner interest representing
   a return of capital......................      $   1.79      $   1.23      $   0.97       $   1.61       $   1.16

Total assets................................      $ 34,664      $ 49,045      $ 59,080       $ 64,803       $ 74,579

</TABLE>

<PAGE>


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

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

The Financial Statements contain information which will assist in evaluating the
financial  condition of the  Partnership  for the years ended December 31, 2002,
2001 and 2000.  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.

Liquidity and Capital Resources

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

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.

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.

The Partnership invests working capital, cash flow from operations and investing
activities  prior to its  distribution  to the  partners in  short-term,  liquid
investments.  Rental income is the  Partnership's  principal source of liquidity
and provides a major  source of funds for  distributions.  Rental and  container
sales  prices are  affected  by current  market  conditions  for leased and used
containers.   Market   conditions  are  discussed  more  fully  in  "Results  of
Operations." The  Partnership's  cash is affected by cash provided by or used in
operating, investing and financing activities. These activities are discussed in
detail below.

During  the  year  ended  December  31,  2002,  the  Partnership  declared  cash
distributions  to limited  partners  pertaining to the period from December 2001
through  November 2002, in the amount of $10,768,  which  represented  $1.79 per
unit. On a cash basis (after  redemptions  and general  partner  distributions),
$4,183 of these distributions was from current year operating  activities,  $407
was from cash provided by previous  years'  operating  activities  (that had not
been distributed or used to purchase containers or redeem units) and the balance
of $6,178 was a return of capital.  On a financial statement basis, all of these
distributions were a return of 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.  During the year ended  December 31,  2002,  the
Partnership  redeemed  152,260  units for a total  dollar  amount  of $675.  The
Partnership used cash flow from operations to pay for the redeemed units.

Net cash provided by operating  activities for the years ended December 31, 2002
and 2001,  was $4,968 and $6,895,  respectively.  The decrease of $1,927 or 28%,
was primarily  attributable  to fluctuations  in due from  affiliates,  net, the
increase in net loss,  adjusted for non-cash  transactions  and  fluctuations in
gross  accounts  receivable.  The  fluctuations  in due  from  affiliates,  net,
resulted  from  timing  differences  in  the  payment  of  expenses,   fees  and
distributions  and the  remittance of net rental  revenues and  container  sales
proceeds,  as well as  fluctuations  in these  amounts.  Net loss,  adjusted for
non-cash transactions,  increased primarily due to the decline in rental income,
partially  offset by the decline in the direct container  expenses.  These items
are  discussed  more fully in "Results  of  Operations".  The  decrease in gross
accounts  receivable  of $241  during  the  year  ended  December  31,  2002 was
primarily due to the decrease in rental income,  and was partially offset by the
increase in the average collection period of accounts  receivable.  The decrease
in gross accounts  receivable of $818 during the  comparable  period in 2001 was
primarily due to the decrease in rental income.

For the year ended  December 31, 2002 and 2001,  net cash  provided by investing
activities  (the  purchase  and  sale of  containers)  was  $3,842  and  $1,310,
respectively.  Net cash provided by investing activities increased by $2,532 due
to the  decrease  in cash  used for  container  purchases  and the  increase  in
proceeds  from  container  sales.  Cash used for container  purchases  decreased
$1,423,  as the  Partnership did not purchase  containers  during the year ended
December  31,  2002.  Proceeds  from  container  sales  increased  $1,109 as the
Partnership (i) received  proceeds from containers sold in the previous year and
(ii) sold more  containers  during the year ended  December 31, 2002 than in the
same period in 2001.  This increase was partially  offset by the decrease in the
average sales price  received on container  sales.  The sale prices  received on
container sales continued to decrease as a result of current market  conditions,
which have  adversely  affected the value of used  containers,  particularly  in
certain low demand  locations.  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.  Other  containers will also
likely be sold as the Partnership  continues its liquidation  phase as discussed
above.

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 they are located in these
low demand locations. Therefore, the Partnership has implemented 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.  The number of containers
sold both in low demand locations and elsewhere,  as well as the amount of sales
proceeds,  will affect how much the Partnership will pay in future distributions
to Partners.

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)  was directly  related to the size of the  container  fleet during the
years ended  December 31, 2002,  2001 and 2000, as well as certain other factors
as discussed below. The following is a summary of the container fleet (in units)
available for lease during those periods:

                                               2002       2001       2000
                                               ----       ----       ----

      Beginning container fleet...........   24,561     27,152     27,225
      Ending container fleet..............   20,536     24,561     27,152
      Average container fleet.............   22,549     25,857     27,189


The average  container  fleet decreased 13% and 5% from the years ended December
31, 2001 to 2002 and from December 31, 2000 to 2001, respectively, primarily due
to continuing  sales of containers  (i) that had reached the end of their useful
lives or (ii) that an analysis had indicated their sale was otherwise warranted.
Included in this second group were containers  located in low demand  locations.
The  Partnership  expects  that the size of its  container  fleet  will  further
decline  as  additional  containers  are  sold  for  these  reasons  and  as the
Partnership continues its liquidation plans. The declines in the container fleet
have  contributed  to overall  declines  in rental  income  from the years ended
December  31, 2001 to 2002 and  December  31, 2000 to 2001.  These  declines are
expected to continue in future years, as the size of the Partnership's container
fleet continues to decrease.

Rental income and direct container expenses are also affected by the utilization
of the container  fleet,  which was 67%, 64% and 78% on average during the years
ended December 31, 2002, 2001 and 2000,  respectively.  The remaining  container
fleet is off-lease  and is being  stored  primarily at a large number of storage
depots.   At  December  31,  2002  and  2001,   utilization  was  83%  and  58%,
respectively, and the Partnership's off-lease containers (in units) were located
in the following locations:

                                                    2002          2001
                                                    ----          ----

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


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

In addition to utilization, rental income is affected by daily rental rates. The
average daily rental rate decreased 11% between the periods. The decrease in the
average  rental  rate was due to  declines  in both  master  and long term lease
rates,  which  are the two  principal  types  of  leases  for the  Partnership's
containers.  The majority of the Partnership's  rental income was generated from
leasing of the Partnership's  containers under master operating  leases,  but in
the past several years the percentage of the  Partnership's  containers on lease
under  long term  leases  has  increased.  At both  December  31,  2002 and 2001
approximately  36% of the Partnerships  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.

The  following is a comparative  analysis of the results of  operations  for the
years ended December 31, 2002, 2001 and 2000.

The Partnership's loss from operations for the years ended December 31, 2002 and
2001 was  $2,681  and  $1,433,  respectively,  on rental  income  of $9,465  and
$11,858, respectively. The decrease in rental income of $2,393, or 20%, from the
year ended December 31, 2001 to the same period in 2002 was  attributable to the
decrease in container rental income and other rental income,  which is discussed
below.  Income from  container  rentals,  the major  component of total revenue,
decreased  $2,184,  or 21%,  primarily due to decreases in average fleet size of
13% and average  rental rates of 11%,  offset by an increase in average  on-hire
utilization of 5% between the periods.

The Partnership's (loss) income from operations for the years ended December 31,
2001 and 2000 was ($1,433) and $2,466, respectively, on rental income of $11,858
and $15,135, respectively. The decrease in rental income of $3,277, or 22%, from
the year  ended  December  31,  2000 to the year  ended  December  31,  2001 was
attributable to the decrease in container rental income, partially offset by the
increase in other rental income. Income from container rentals decreased $3,284,
or 24%,  primarily due to the decreases in average  on-hire  utilization of 18%,
average fleet size of 5% and average rental rates of 5% between the periods.

In the fourth  quarter of 2000,  utilization  began to decline and  continued to
decline  during 2001 and the  beginning  of 2002.  This decline was due to lower
overall  demand by shipping lines for leased  containers,  which was primarily a
result of the worldwide economic slowdown.  Two other factors reduced the demand
for leased  containers.  Shipping  lines added larger  vessels to their  fleets,
which  combined with lower cargo volume  growth,  made it easier for them to use
otherwise  empty vessel space to reposition  their own  containers  back to high
demand  locations.  Additionally,  in anticipation of the delivery of these new,
larger  vessels,  many shipping  lines placed large orders for new containers in
2000 and 2001, thus temporarily  reducing their need to lease containers.  These
orders  for  additional  containers  are part of a  general  increase  in vessel
capacity for the shipping lines.  This increase in vessel  capacity  amounted to
12% in 2001 and 10% in 2002.

Utilization has improved steadily since March 2002  through  the end of 2002 due
to:
o        An increase in export cargo out of Asia
o        Prior repositioning of containers to Asia which placed large quantities
         of containers in areas of high demand
o        Disposal of older containers and fewer purchases  of  new containers by
         both container lessors and shipping lines in 2001  and  2002, resulting
         in an overall better-balanced supply of containers
o        The labor disagreement that affected U.S. West Coast ports in the third
         and  part  of the  fourth  quarter  had  short-term positive effects on
         demand for  containers as  shipping lines  were not  able to reposition
         enough  containers  to  Asia and had  to lease  more containers to meet
         their customers' demands

Although  utilization  appears to have  stabilized in the beginning of 2003, the
General Partners caution that market  conditions could  deteriorate again due to
global economic 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.

Despite the  improvement  in  utilization,  the  Partnership  continues  to sell
(rather than reposition) some older containers  located in low demand locations.
For the number of off-lease  containers located in the lower demand locations in
the Americas and Europe,  see chart above.  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 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.

Once the decision was made to sell  containers,  the Partnership  wrote down the
value of these  specifically  identified  containers when the carrying value was
greater than the  container's  estimated  fair value,  which was based on recent
sales prices less cost of sales. Due to declines in container sales prices,  the
actual sales prices  received on some  containers  were lower than the estimates
used for the write-down,  resulting in the Partnership incurring losses upon the
sale  of  some  of  these  containers.  Until  market  conditions  improve,  the
Partnership  may incur  further  write-downs  and/or  losses on the sale of such
containers  before they reach the end of their useful life. The Partnership will
continue  to evaluate  whether  additional  write-downs  are  necessary  for its
container rental equipment.

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, 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. DPP income
declined primarily due to fluctuations in the number of containers covered under
DPP and a decrease  in the average DPP price  charged  per  container.  Location
income  declined  primarily due to a decrease in charges to lessees for dropping
off containers in surplus locations,  offset by a decrease in credits granted to
lessees  for picking up  containers  from  certain  locations.  Handling  income
increased  primarily  due  to the  increase  in  average  handling  charged  per
container.

For the year ended  December  31,  2001,  other  rental  income was  $1,467,  an
increase of $7 from the  equivalent  period in 2000.  The increase was primarily
due to an increase in location  income of $169,  offset by decreases in handling
and  DPP  income  of $121  and  $43,  respectively.  Location  income  increased
primarily  due to the  decline in credits  granted  to  lessees  for  picking up
containers from surplus  locations as there were fewer  lease-out  opportunities
for which  credits  could be  offered.  Handling  income  decreased  despite the
increase in the average  handling  charge per container,  due to the decrease in
container  movement  from the year ended  December  31,  2000 to the  equivalent
period  in  2001.  DPP  income  declined  due to a  decrease  in the  number  of
containers  covered  under DPP,  offset by an  increase in the average DPP price
charged per container.

Direct container  expenses decreased $1,467, or 35% from the year ended December
31, 2001 to the same period in 2002,  primarily  due to the  decrease in average
fleet size. Repositioning, storage, DPP and maintenance expenses decreased $600,
$498,  $155 and  $147,  respectively.  Repositioning  expense  decreased  due to
shorter average repositioning moves resulting in decreased average repositioning
costs per  container  and a decrease in the number of  containers  repositioned.
Storage expense decreased  primarily due to the increase in average  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.

Direct container expenses increased $339, or 9% from the year ended December 31,
2000 to the same period in 2001, primarily due to an increase in storage expense
of $885,  offset  by  decreases  in  repositioning,  maintenance,  and  handling
expenses of $233, $155, and $89, respectively.  Storage expense increased due to
the decrease in average  utilization  noted above and a higher  average  storage
cost per  container.  Repositioning  expense  decreased due to a decrease in the
average  repositioning  cost per  container.  The  decrease  was  offset  by the
inclusion of certain credits given to lessees to reposition containers which had
previously  been applied  against  location  income and a slight increase in the
number of  containers  repositioned  during the year  ended  December  31,  2001
compared to the same period in 2000.  Maintenance  expense  decreased due to the
decrease in the number of containers requiring maintenance and a decrease in the
average  maintenance  cost per  container.  The decline in handling  expense was
primarily due to a decline in container movement.

Bad debt benefit was $7, $44 and $23 for the years ended December 31, 2002, 2001
and 2000, respectively.  Fluctuations in bad debt benefit reflect the adjustment
to the bad debt allowance 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.  The benefits recorded during the
years ended  December 31, 2002,  2001 and 2000 reflect lower  reserve  estimates
from the prior years.

Depreciation  expense  increased  $230, or 4%, from the year ended  December 31,
2001 to 2002,  primarily due to an increase in the depreciation rate as a result
of a change in estimated  salvage values as discussed  below.  This increase was
partially  offset  by the  decline  in  the  average  fleet  size  noted  above.
Depreciation expense decreased $365, or 6% from the year ended December 31, 2000
to 2001, primarily due to the decline in average fleet size.

Effective  July 1, 2002,  the  Partnership  revised its estimate  for  container
salvage  value from a  percentage  of equipment  cost to an  estimated  residual
dollar value. The effect of this change for the year ended December 31, 2002 was
an increase to depreciation expense of $1,092. 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. As a result, depreciation expense
may fluctuate in future periods based on  fluctuations  in these  estimates.  If
estimates  regarding  residual value and remaining useful life of the containers
were to decline,  depreciation  expense would increase,  adversely affecting the
Partnership's operating results.

New  container  prices  steadily  declined  from  1995  through  1999.  Although
container prices increased in 2000, these prices declined again in 2001 and have
remained low during 2002. 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,  2002  and  2001 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,
2002,  2001 and 2000 the  Partnership  recorded  write-down  expenses of $1,389,
$1,110 and $595, respectively,  on 2,047, 1,841 and 890 containers identified as
for sale and requiring a reserve.  During the year ended  December 31, 2002, the
Partnership also transferred 432 containers 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 years ended December 31,
2001 and 2000. At December 31, 2002 and 2001,  the net book value of the 430 and
1,054 containers identified as for sale was $393 and $986 respectively.

The  Partnership  sold 2,271 of these  previously  written down containers for a
loss of $105 during the year ended  December 31, 2002 and sold 1,091  previously
written  down  containers  for a loss of $119  during  the same  period in 2001.
During the year ended  December 31, 2000,  the  Partnership  sold 984 previously
written down  containers for a loss of $57. The  Partnership  incurred losses on
the sale of some containers  previously  written down as the actual sales prices
received  on  these  containers  were  lower  than  the  estimates  used for the
write-downs.

The Partnership also sold containers that had not been written down and recorded
losses of $631,  $576 and $84 during the years ended December 31, 2002, 2001 and
2000, respectively.

As more  containers are  subsequently  identified for sale or if container sales
prices continue to decline, the Partnership may incur additional  write-downs on
containers  and/or may incur losses on the sale of containers.  The  Partnership
will continue to evaluate the recoverability of the recorded amount of container
rental equipment.

Management  fees to affiliates  decreased  $281 or 25% and $278 or 20%, from the
years  ended  December  31,  2001  to  2002  and  December  31,  2000  to  2001,
respectively.  The  decreases  were  due to  decreases  in  both  equipment  and
incentive  management  fees.  Equipment  management  fees  decreased  due to the
decrease in rental income,  upon which  equipment  management fees are primarily
based.  These fees were  approximately  7% of rental  income for these  periods.
Incentive  management  fees,  which are based on the  Partnership's  limited and
general  partner  distributions  made from cash from  operations  and  partners'
capital  decreased due to (i) decrease in the amount of distributions  paid from
cash from operations and (ii) decreases in partners'  capital due to redemptions
of limited partners units

General and administrative costs to affiliates decreased $102 or 17% and $131 or
18%,  from the years ended  December  31, 2001 to 2002 and  December 31, 2000 to
2001,  respectively.  These  decreases  were  primarily  due to decreases in the
allocation of overhead costs from TEM, as the Partnership  represented a smaller
portion of the total fleet managed by TEM.

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.  More details about these fees and expenses are included in footnote 2 to
the Financial Statements.

Other general and  administrative  costs  increased  $90, or 45% and $41, or 26%
from the years ended  December  31, 2001 to 2002 and  December 31, 2000 to 2001,
respectively.  The  increases  were  primarily due to increases in other service
fees between the periods.

Loss on sale of containers  increased $41 and $554 from the years ended December
31, 2001 to 2002 and  December  31, 2000 to 2001,  respectively.  Although,  the
average loss on sale of  containers  decreased in 2002,  the increase in loss on
sale of  containers from 2002 to 2001 was  primarily  due to the increase in the
number of containers  sold. The increase in loss on container sales from 2000 to
2001 was primarily due to the increase in the average loss recorded on container
sales and the  increase in the number of  containers  sold during the year ended
December 31, 2001, compared to the same period in 2000.

Net loss per limited  partnership  unit  increased  from $0.23 to $0.46 from the
year ended  December 31, 2001 to the  equivalent  period in 2002,  respectively,
reflecting the increase in net loss allocated to limited partners from $1,419 to
$2,758,   respectively.   Net  earnings  (loss)  per  limited  partnership  unit
fluctuated  from  earnings  of  $0.43 to a loss of  $0.23  from  the year  ended
December 31, 2000 to the equivalent  period in 2001,  reflecting the decrease in
net earnings  allocated to limited partners from earnings of $2,620 to a loss of
$1,419, respectively.  The allocation of net earnings (loss) for the years ended
December 31, 2002,  2001 and 2000 included a special  allocation of gross income
to the General Partners of $136, $92, and $63, respectively,  in accordance with
the Partnership Agreement.

Critical Accounting Policies and Estimates

The Partnership's discussion and analysis of its financial condition and results
of operations are based upon the Partnership's financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America.  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 Partnership's management believes the following critical accounting policies
affect its more  significant  judgments and estimates 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.  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  Partnership  depreciates  its container  rental  equipment based on certain
estimates  related to the  container's  useful  life and  salvage  value.  These
estimates are based upon assumptions  about future demand for leased  containers
and the  estimated  sales  price  at the  end of the  container's  useful  life.
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
Partnership will evaluate the estimated residual values and remaining  estimated
useful lives on an on-going basis and will revise its estimates as needed.  As a
result,   depreciation   expense  may  fluctuate  in  future  periods  based  on
fluctuations in these estimates.  If the estimates  regarding residual value and
remaining  useful life of the containers were to decline,  depreciation  expense
would increase, adversely affecting the Partnership's operating results.

Additionally,  the  recoverability  of the recorded  amounts of containers to be
held for  continued  use and  identified  for  sale in the  ordinary  course  of
business are evaluated to ensure that  containers held for continued use are not
impaired and that containers identified for sale are recorded at amounts that do
not exceed the estimated fair value of the containers. Containers to be held for
continued  use are  considered  impaired and are written down to estimated  fair
value  when the  estimated  future  undiscounted  cash  flows  are less than the
recorded  values.  Containers  identified for sale are written down to estimated
fair  value when the  recorded  value  exceeds  the  estimated  fair  value.  In
determining  the  estimated  future  undiscounted  cash  flows and fair value of
containers,  assumptions are made regarding future demand and market  conditions
for leased containers and the sales prices for used containers. If actual market
conditions are less favorable than those projected or if actual sales prices are
lower than those  estimated by the  Partnership,  additional  write-downs may be
required  and/or losses may be realized.  Any  additional  write-downs or losses
would adversely affect the Partnership's operating results.

Accounting Pronouncement

In April 2002,  the FASB issued SFAS No. 145,  "Rescission of FASB Statement No.
4, 44 and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections."
SFAS No. 145 rescinds FASB Statement No. 4, "Reporting  Gains and Losses of Debt
Extinguishments" and an amendment of that Statement, FASB Statement No. 64. SFAS
No. 145 also rescinds FASB Statement No. 44,  "Accounting for Intangible  Assets
of Motor Carriers." FASB 145 also amends FASB Statement No. 13,  "Accounting for
Leases",  to eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications that have economic effects similar to sale-leaseback transactions.
These rescissions and amendment are not anticipated to have a material impact on
the financial statements of the Partnership.

In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated With
Exit or Disposal  Activities".  SFAS No. 146 addresses financial  accounting and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force (EITF)  Issue No. 94-3  "Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including Certain Costs Incurred in a Restructuring)."  This Statement requires
that a liability  for a cost  associated  with an exit or  disposal  activity be
recognized when the liability is incurred.  The provisions of this Statement are
effective for exit or disposal  activities that are initiated after December 31,
2002, with early application  encouraged.  The Partnership  anticipates that the
adoption  of SFAS  No.  146 will not have a  material  impact  on its  financial
statements.

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,  increases in maintenance expenses or other
costs of  operating  the  containers,  and the effect of world  trade,  industry
trends  and/or  general  business  and  economic  cycles  on  the  Partnership's
operations. See "Risk Factors" in the Partnership's Prospectus, as supplemented,
for additional information on risks of the Partnership's business. 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  therefor,
alterations in the costs of maintaining and repairing used containers, increases
in competition,  changes in the Partnership's  ability to maintain insurance for
its  containers  and its  operations,  the effects of  political  conditions  on
worldwide  shipping and demand for global trade or of other general business and
economic cycles on the  Partnership,  as well as other risks detailed herein and
from time to time in the Partnership's  filings with the Securities and Exchange
Commission.  The  Partnership  does  not  undertake  any  obligation  to  update
forward-looking statements.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

             Inapplicable.

ITEM 8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

             Attached pages 16 to 30.


<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, 2002 and
2001, and the related statements of operations, partners' capital and cash flows
for each of the years in the three-year  period ended  December 31, 2002.  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, 2002 and 2001,  and the results of its  operations,
its partners' capital and its cash flows for each of the years in the three-year
period  ended  December  31,  2002  in  conformity  with  accounting  principles
generally accepted in the United States of America.



                                  /s/ KPMG LLP



San Francisco, California
February 14, 2003


<PAGE>

<TABLE>
<CAPTION>


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

Balance Sheets

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

                                                                           2002                 2001
                                                                     ----------------     ----------------
<S>                                                                 <C>                  <C>
Assets
Container rental equipment, net of accumulated
   depreciation of  $37,690 (2001:  $42,049) (note 1(e))             $        31,529      $        42,867
Cash                                                                             548                3,253
Accounts receivable, net of allowance for doubtful
   accounts of $119 (2001: $232)                                               2,441                2,455
Due from affiliates, net (note 2)                                                121                  454
Prepaid expenses                                                                  25                   16
                                                                     ----------------     ----------------

                                                                     $        34,664      $        49,045
                                                                     ================     ================

Liabilities and Partners' Capital
Liabilities:
   Accounts payable                                                  $           200      $           490
   Accrued liabilities                                                           332                  182
   Accrued recovery costs (note 1(j))                                            128                  194
   Accrued damage protection plan costs (note 1(k))                              185                  162
   Warranty claims (note 1(m))                                                    30                   69
   Deferred quarterly distributions (note 1(g))                                   88                   54
   Deferred damage protection plan revenue (note 1(l))                           157                  149
                                                                     ----------------     ----------------

      Total liabilities                                                        1,120                1,300
                                                                     ----------------     ----------------

Partners' capital:
   General partners                                                                -                    -
   Limited partners                                                           33,544               47,745
                                                                     ----------------     ----------------

      Total partners' capital                                                 33,544               47,745
                                                                     ----------------     ----------------


                                                                     $        34,664      $        49,045
                                                                     ================     ================

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, 2002, 2001 and 2000
(Amounts in thousands except for unit and per unit amounts)
---------------------------------------------------------------------------------------------------------------

                                                                 2002              2001              2000
                                                          -----------------  ----------------  ----------------
<S>                                                      <C>                <C>               <C>
Rental income                                             $          9,465   $        11,858   $        15,135
                                                          -----------------  ----------------  ----------------

Costs and expenses:
      Direct container expenses                                      2,723             4,190             3,851
      Bad debt benefit                                                  (7)              (44)              (23)
      Depreciation (note 1(e))                                       5,611             5,381             5,746
      Write-down of containers (note 1(e))                           1,389             1,110               595
      Professional fees                                                 58                30                62
      Management fees to affiliates (note 2)                           845             1,126             1,404
      General and administrative costs
        to affiliates (note 2)                                         503               605               736
      Other general and administrative costs                           288               198               157
      Loss on sale of containers, net (note 1(e))                      736               695               141
                                                          -----------------  ----------------  ----------------

                                                                    12,146            13,291            12,669
                                                          -----------------  ----------------  ----------------

      (Loss) income from operations                                 (2,681)           (1,433)            2,466
                                                          -----------------  ----------------  ----------------

      Interest income                                                   33                93               244
                                                          -----------------  ----------------  ----------------

      Net (loss) earnings                                 $         (2,648)  $        (1,340)  $         2,710
                                                          =================  ================  ================

Allocation of net (loss) earnings (note 1(g)):
      General partners                                    $            110   $            79   $            90
      Limited partners                                              (2,758)           (1,419)            2,620
                                                          -----------------  ----------------  ----------------

                                                          $         (2,648)  $        (1,340)  $         2,710
                                                          =================  ================  ================
Limited partners' per unit share
      of net (loss) earnings                              $          (0.46)  $         (0.23)  $          0.43
                                                          =================  ================  ================

Limited partners' per unit share
      of distributions                                    $           1.79   $          1.23   $          1.40
                                                          =================  ================  ================

Weighted average number of limited
      partnership units outstanding (note 1(n))                  6,012,795         6,095,766         6,127,711
                                                          =================  ================  ================


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, 2002, 2001 and 2000
(Amounts in thousands)
-----------------------------------------------------------------------------------------------------

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

                                              General               Limited                Total
                                          ---------------        --------------       ---------------
<S>                                      <C>                    <C>                 <C>

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

Distributions                                        (90)               (8,581)               (8,671)

Redemptions (note 1(o))                                -                  (166)                 (166)

Net earnings                                          90                 2,620                 2,710
                                          ---------------        --------------       ---------------

Balances at December 31, 2000                          -                56,884                56,884
                                          ---------------        --------------       ---------------


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

Redemptions (note 1(o))                                -                  (198)                 (198)

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

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


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

Redemptions (note 1(o))                                -                  (675)                 (675)

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

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


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, 2002, 2001 and 2000
(Amounts in thousands)
------------------------------------------------------------------------------------------------------------------------------------

                                                                                      2002            2001           2000
                                                                                  ------------    ------------   ------------
<S>                                                                               <C>            <C>             <C>
Cash flows from operating activities:
   Net (loss) earnings                                                            $    (2,648)    $    (1,340)   $     2,710
   Adjustments to reconcile net (loss) earnings to net cash provided
      by operating activities:
         Depreciation and container write-downs (note 1(e))                             7,000           6,491          6,341
         Decrease in allowance for doubtful accounts                                     (113)           (233)          (291)
         Loss on sale of containers                                                       736             695            141
         Decrease (increase)  in assets:
            Accounts receivable                                                           241             818          1,257
            Due from affiliates, net                                                      (25)            690           (211)
            Prepaid expenses                                                               (9)             (1)             3
         (Decrease) increase in liabilities:
            Accounts payable and accrued liabilities                                     (140)           (141)           172
            Accrued recovery costs                                                        (66)              1             28
            Accrued damage protection plan costs                                           23            (117)          (157)
            Deferred damage protection plan revenue                                         8              72              -
            Warranty claims                                                               (39)            (40)           (40)
                                                                                  ------------    ------------   ------------

            Net cash provided by operating activities                                   4,968           6,895          9,953
                                                                                  ------------    ------------   ------------

Cash flows from investing activities:
   Proceeds from sale of containers                                                     3,853           2,744          3,030
   Container purchases                                                                    (11)         (1,434)        (4,624)
                                                                                  ------------    ------------   ------------

            Net cash provided by (used in) investing activities                         3,842           1,310         (1,594)
                                                                                  ------------    ------------   ------------

Cash flows from financing activities:
   Redemptions of limited partnership units                                              (675)           (198)          (166)
   Distributions to partners                                                          (10,840)         (7,629)        (8,673)
                                                                                  ------------    ------------   ------------

            Net cash used in financing activities                                     (11,515)         (7,827)        (8,839)
                                                                                  ------------    ------------   ------------

Net (decrease) increase in cash                                                        (2,705)            378           (480)

Cash at beginning of period                                                             3,253           2,875          3,355
                                                                                  ------------    ------------   ------------

Cash at end of period                                                             $       548     $     3,253    $     2,875
                                                                                  ============    ============   ============



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, 2002, 2001 and 2000
(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, 2002, 2001, 2000 and 1999,  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, 2002, 2001 and 2000.

                                                                     2002          2001           2000           1999
                                                                     ----          ----           ----           ----
<S>                                                                  <C>          <C>            <C>              <C>
Container purchases included in:
   Due (from) to affiliates..............................            $  -          $ (7)          $  -           $  -
   Container purchases payable...........................               -             -            646            243

Distributions to partners included in:
   Due to affiliates.....................................               9             5              8              8
   Deferred quarterly distributions......................              88            54             79             81

Proceeds from sale of containers included in:
   Due from affiliates...................................             361           708            281            601

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, 2002, 2001 and 2000.

                                                                                   2002           2001           2000
                                                                                   ----           ----           ----

Container purchases recorded.........................................           $    18         $  781         $5,027
Container purchases paid.............................................                11          1,434          4,624

Distributions to partners declared...................................            10,878          7,601          8,671
Distributions to partners paid.......................................            10,840          7,629          8,673

Proceeds from sale of containers recorded............................             3,506          3,171          2,710
Proceeds from sale of containers received............................             3,853          2,744          3,030

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, 2002, 2001 and 2000 were $114, $47 and $102, 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, 2002, 2001 and 2000
(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 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.   The  Partnership
     anticipates  that all excess cash,  after  redemptions  and working capital
     reserves,  will be  distributed  to the limited  and general  partners on a
     monthly basis.

     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 Partnership's  management  believes the following  critical  accounting
     policies  affect its more  significant  judgments and estimates 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.   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.

     The Partnership depreciates its container rental equipment based on certain
     estimates related to the container's  useful life and salvage value.  These
     estimates  are based  upon  assumptions  about  future  demand  for  leased
     containers  and the  estimated  sales  price at the end of the  container's
     useful life. 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. As a result, depreciation expense may fluctuate in
     future periods based on fluctuations in these estimates.

     Additionally,  the  recoverability of the recorded amounts of containers to
     be held for continued use and identified for sale in the ordinary course of
     business are evaluated to ensure that containers held for continued use are
     not  impaired  and that  containers  identified  for sale are  recorded  at
     amounts  that do not exceed  the  estimated  fair value of the  containers.
     Containers  to be held for continued  use are  considered  impaired and are
     written down to estimated fair value when the estimated future undiscounted
     cash flows are less than the recorded  values.  Containers  identified  for
     sale are  written  down to  estimated  fair value when the  recorded  value
     exceeds the estimated  fair value.  In  determining  the  estimated  future
     undiscounted cash flows and fair value of containers,  assumptions are made
     regarding future demand and market conditions for leased containers and the
     sales prices for used  containers.  If actual  market  conditions  are less
     favorable  than those  projected  or if actual  sales prices are lower than
     those estimated by the Partnership,  additional write-downs may be required
     and/or losses may be realized.

     (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,  2002  and  2001,  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.  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.  As a result,
     depreciation  expense may fluctuate in future periods based on fluctuations
     in these estimates.  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 disposal are recorded at the
     lower of carrying amount or fair value less cost to sell.

     New container  prices  steadily  declined from 1995 through 1999.  Although
     container prices increased in 2000, these prices declined again in 2001 and
     have  remained low during  2002.  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, 2002 and 2001 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, 2002,  2001
     and 2000 the Partnership recorded write-down expenses of $1,389, $1,110 and
     $595,  respectively,  on 2,047, 1,841 and 890 containers  identified as for
     sale and requiring a reserve.  During the year ended December 31, 2002, the
     Partnership also transferred 432 containers 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 years
     ended  December 31, 2001 and 2000.  At December 31, 2002 and 2001,  the net
     book value of the 430 and 1,054 containers  identified as for sale was $393
     and $986, respectively.

     The Partnership sold 2,271 of these previously  written down containers for
     a loss of $105  during  the year  ended  December  31,  2002 and sold 1,091
     previously  written  down  containers  for a loss of $119  during  the same
     period in 2001.  During the year ended December 31, 2000,  the  Partnership
     sold  984  previously  written  down  containers  for a loss  of  $57.  The
     Partnership  incurred  losses  on the  sale of some  containers  previously
     written down as the actual sales prices  received on these  containers were
     lower than the estimates used for the write-downs.

     The  Partnership  also sold  containers  that had not been written down and
     recorded  losses of $631,  $576 and $84 during the years ended December 31,
     2002, 2001 and 2000, respectively.

     As more  containers  are  subsequently  identified for sale or if container
     sales prices decline,  the Partnership may incur additional  write-downs on
     containers  and/or  may  incur  losses  on  the  sale  of  containers.  The
     Partnership  will continue to evaluate the  recoverability  of the recorded
     amount of container rental equipment.

     (f)  Nature of Income from Operations

     Although  substantially all of the Partnership's  income from operations is
     derived from assets employed in foreign  operations,  virtually all of this
     income is denominated in United States dollars. The Partnership's customers
     are  international  shipping lines 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, 2002,  2001 and 2000 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 $88 and $54 at
     December 31, 2002 and 2001, 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)  Recovery Costs

     The  Partnership  accrues an  estimate  for  recovery  costs as a result of
     defaults under its leases that it expects to incur,  which are in excess of
     estimated  insurance  proceeds.  At December 31, 2002 and 2001, the amounts
     accrued were $128 and $194, respectively.

     (k)  Damage Protection Plan

     The  Partnership  offers a Damage  Protection  Plan (DPP) to lessees of its
     containers.  Under  the  terms of DPP,  the  Partnership  earns  additional
     revenues on a daily basis and, in return, has agreed to bear certain repair
     costs. It is the Partnership's  policy to recognize revenue when earned and
     provide a reserve  sufficient to cover the  estimated  future repair costs.
     DPP expenses are included in direct container expenses in the Statements of
     Operations and the related  reserve at December 31, 2002 and 2001, was $185
     and $162, respectively.

     (l)  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.  At December 31, 2002 and 2001 these amounts were
     $157 and $149, respectively.

     (m)  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 and 2001,  the  unamortized  portion of the  settlement
     amount was equal to $30 and $69, respectively.

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

     Limited   partners'  per  unit  share  of  both  net  earnings  (loss)  and
     distributions  were  computed  using the weighted  average  number of units
     outstanding  during the years ended December 31, 2002, 2001 and 2000, which
     were 6,012,795, 6,095,766, and 6,127,711, respectively.
<TABLE>
<CAPTION>

     (o)  Redemptions

     The following  redemption  offerings were  consummated  by the  Partnership
     during the years ended December 31, 2002, 2001 and 2000:

                                                         Units                 Average
                                                       Redeemed           Redemption Price           Amount Paid
                                                       --------           ----------------           -----------
<S>                                                     <C>               <C>                         <C>
      Total Partnership redemptions as of
       December 31, 1999...................             113,066                $ 13.33                  $1,507
                                                        -------                                          -----
      Year ended:
          December 31, 2000...............               22,472                $  7.39                     166
          December 31, 2001...............               26,537                $  7.45                     198
          December 31, 2002...............              152,260                $  4.43                     675
                                                        -------                                          -----


      Total Partnership redemptions as of
       December 31, 2002...................             314,335                $  8.10                  $2,546
                                                        =======                                          =====
</TABLE>

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

     (p)  Reclassifications

     Certain reclassifications, not affecting net earnings (loss) have been made
     to prior year amounts in order to conform with the 2002 financial statement
     presentation.

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
     year ended December 31, 2002. The  Partnership  capitalized $32 and $239 of
     container  acquisition  fees as a component of  container  costs during the
     years ended  December  31,  2001 and 2000,  respectively.  The  Partnership
     incurred $188,  $308, and $361 of incentive  management fees during each of
     the three years ended December 31, 2002,  2001 and 2000,  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, 2002 and 2001.

     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 $657,  $818, and $1,043,  respectively for the years ended December
     31, 2002, 2001 and 2000.

     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:

                                                2002      2001       2000
                                                ----      ----       ----

           Salaries                             $319      $363       $380
           Other                                 184       242        356
                                                 ---       ---        ---
             Total general and
                administrative costs            $503      $605       $736
                                                 ===       ===        ===

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

                                                    2002      2001       2000
                                                    ----      ----       ----

               TEM                                  $436      $529       $641
               TFS                                    67        76         95
                                                     ---       ---        ---
                 Total general and
                    administrative costs            $503      $605       $736
                                                     ===       ===        ===

     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, 2002 and 2001, due from affiliates, net, is comprised of:

                                                              2002         2001
                                                              ----         ----
                   Due from affiliates:
                        Due from TEM...............           $194         $502
                                                               ---          ---

                   Due to affiliates:
                        Due to TFS.................             56           25
                        Due to TCC.................             16           22
                        Due to TL..................              1            1
                                                               ---          ---
                                                                73           48
                                                               ---          ---

                   Due from affiliates, net                   $121         $454
                                                               ===          ===

     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, 2002 and 2001:

                                                               2002      2001
                                                               ----      ----

              On-lease under master leases                   10,965     9,345
              On-lease under long-term leases                 6,231     5,257
                                                             ------    ------

              Total on-lease containers                      17,196    14,602
                                                             ======    ======

     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, 2002 and 2001, the Partnership's
     off-lease containers were in the following locations:
<PAGE>

                                                             2002      2001
                                                             ----      ----

                Americas                                    1,946     2,552
                Europe                                        821     1,254
                Asia                                          509     6,059
                Other                                          64        94
                                                            -----     -----

                Total off-lease containers                  3,340     9,959
                                                            =====     =====


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


Note 4.   Income Taxes

     At December 31, 2002,  2001 and 2000,  there were temporary  differences of
     $25,748,  $34,315,  and  $40,667,   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)  income for financial  statement  purposes to net income for federal
     income tax purposes for the years ended December 31, 2002, 2001 and 2000 is
     as follows:
<TABLE>
<CAPTION>

                                                                         2002              2001            2000
                                                                         ----              ----            ----
<S>                                                                     <C>              <C>             <C>
      Net (loss) income per financial statements...............       $(2,648)          $(1,340)         $2,710

      Decrease in provision for bad debt.......................          (113)             (233)           (291)
      Depreciation for federal income tax purposes
        less than depreciation for
        financial statement purposes...........................         4,372             3,023           1,571
      Gain on sale of fixed assets for federal income
        tax purposes in excess of gain/loss recognized
        for financial statement purposes.......................         4,324             3,718           2,839
      Increase (decrease) in damage protection plan costs......            23              (117)           (157)
      Warranty reserve income for tax purposes in excess
        of financial statement purposes........................           (39)              (40)            (40)
                                                                       ------            ------           -----

      Net income for federal income tax purposes...............       $ 5,919           $ 5,011          $6,632
                                                                       ======            ======           =====
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


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

Selected Quarterly Financial Data
-------------------------------------------------------------------------------------------------------------------------

The following is a summary of selected quarterly financial data for the years ended
December 31, 2002, 2001 and 2000:



                                                                             (Amounts in thousands)
                                                                               2002 Quarters Ended
                                                        -----------------------------------------------------------------
                                                            Mar. 31         June 30         Sept. 30         Dec. 31
                                                        -----------------------------------------------------------------
<S>                                                        <C>             <C>             <C>              <C>
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


                                                                               2001 Quarters Ended
                                                        -----------------------------------------------------------------
                                                            Mar. 31         June 30         Sept. 30         Dec. 31
                                                        -----------------------------------------------------------------

Rental income                                               $ 3,373         $ 2,984          $ 2,909         $ 2,592

Loss from operations                                        $   (68)        $  (132)         $  (171)        $(1,062)

Net loss                                                    $   (32)        $  (108)         $  (153)        $(1,047)

Limited partners' share of net loss                         $   (54)        $  (131)         $  (171)        $(1,063)

Limited partners' share of distributions                    $ 2,137         $ 2,135          $ 1,728         $ 1,522

                                                                               2000 Quarters Ended
                                                        -----------------------------------------------------------------
                                                            Mar. 31         June 30         Sept. 30         Dec. 31
                                                        -----------------------------------------------------------------

Rental income                                               $ 3,782         $ 3,824          $ 3,761         $ 3,768

Income from operations                                      $   357         $   801          $   702         $   606

Net earnings                                                $   413         $   873          $   765         $   659

Limited partners' share of net earnings                     $   390         $   851          $   742         $   637

Limited partners' share of distributions                    $ 2,148         $ 2,148          $ 2,144         $ 2,141
</TABLE>

<PAGE>



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

There have been none.
                                    PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Registrant has no officers or directors.

As described in the Prospectus, the Registrant's three original general partners
were TCC, TEM and Textainer Inc. (TI),  which  comprised the original  Textainer
Group.   Effective  October  1,  1993,  the  Textainer  Group  restructured  its
organization by forming a new holding company,  Textainer Group Holdings Limited
(TGH),  and the  shareholders  of the  underlying  companies  which  include the
General  Partners  accepted  shares in TGH in exchange  for their  shares in the
individual  companies.  Textainer  Financial  Services  Corporation (TFS) is the
Managing  General Partner of the Partnership  (prior to its name change on April
4, 1994, TFS was known as Textainer Capital Corporation).  TFS is a wholly-owned
subsidiary of Textainer  Capital  Corporation (TCC) (prior to its name change on
April 4, 1994, TCC was known as Textainer (Delaware) Inc.).  Textainer Equipment
Management Limited (TEM) is an Associate General Partner of the Partnership.  TI
was an Associate  General Partner of the Partnership  through September 30, 1993
when it was replaced in that capacity by Textainer Limited (TL), pursuant to the
corporate  restructuring effective October 1, 1993, which caused TFS, TEM and TL
to fall under the common ownership of TGH.  Pursuant to this  restructuring,  TI
transferred  substantially  all of its  assets  including  all of its rights and
duties as Associate  General  Partner to TL. This  transfer was  effective  from
October 1, 1993. The end result was that TFS now serves as the Managing  General
Partner and TEM and TL now serve as the Associate General Partners. The Managing
General Partner and Associate  General Partners are collectively  referred to as
the General  Partners  and are  wholly-owned  subsidiaries  of TGH.  The General
Partners also 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, 2002,  all Section 16(a) filing  requirements  were complied
with. No member of management, or beneficial owner owned more than 10 percent of
any  interest in the  Partnership.  None of the  individuals  subject to section
16(a) failed to file or filed late any reports of transactions in the Units.

<PAGE>
<TABLE>
<CAPTION>

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

Name                             Age     Position
----                             ---     --------
<S>                             <C>      <C>
Neil I. Jowell                   69      Director and Chairman of TGH, TEM, TL, TCC and TFS
John A. Maccarone                58      President, CEO and Director of TGH, TEM, TL, TCC and TFS
James E. Hoelter                 63      Director of TGH, TCC and TFS
Philip K. Brewer                 46      Senior Vice President - Asset Management Group and Director of TL
Robert D. Pedersen               43      Senior Vice President - Leasing Group, Director of TEM
Ernest J. Furtado                47      Senior Vice  President,  CFO and  Secretary  of TGH,  TEM,  TL, TCC and TFS,
                                         Director of TL, TCC and TFS
Gregory W. Coan                  39      Vice President and Chief Information Officer of TEM
Wolfgang Geyer                   49      Regional Vice President - Europe
Mak Wing Sing                    45      Regional Vice President - South Asia
Masanori Sagara                  47      Regional Vice President - North Asia
Stefan Mackula                   50      Vice President -  Equipment Resale
Anthony C. Sowry                 50      Vice President - Corporate Operations and Acquisitions
Richard G. Murphy                50      Vice President - Risk Management
Janet S. Ruggero                 54      Vice President - Administration and Marketing Services
Jens W. Palludan                 52      Regional Vice President - Americas and Logistics
Isam K. Kabbani                  68      Director of TGH
James A. C. Owens                63      Director of TGH, TEM and TL
S. Arthur Morris                 69      Director of TGH, TEM and TL
Dudley R. Cottingham             51      Assistant Secretary, Vice President and Director of TGH, TEM and TL
Cecil Jowell                     67      Director of TGH, TEM and TL
Henrick van der Merwe            55      Director of TGH, TEM and TL
James E.  McQueen                58      Director of TGH, TEM and TL
Harold J. Samson                 81      Director of TCC and TFS
Nadine Forsman                   35      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 business is
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 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.  Mr.  Hoelter  became a
director of TEM in 1994. 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 President of TCC, Mr. Brewer was
responsible for overseeing the management of, and coordinating the activities of
TCC and TFS. As Senior Vice  President,  he is  responsible  for  optimizing the
capital  structure of and identifying  new sources of finance for Textainer,  as
well  as  overseeing  the  management  of and  coordinating  the  activities  of
Textainer's risk management, logistics and the resale divisions. Mr. Brewer is a
member of the Equipment  Investment  Committee,  the Credit  Committee and was a
member of the  Investment  Advisory  Committee  through  December  31, 1998 (see
"Committees"  below).  Prior to  joining  Textainer  in  1996,  as  Senior  Vice
President - Capital  Markets for TGH and TL, Mr.  Brewer worked at Bankers Trust
from 1990 to 1996,  starting as a Vice President in Corporate Finance and ending
as Managing  Director and Country  Manager for Indonesia;  from 1989 to 1990, he
was Vice President in Corporate  Finance at Jarding Fleming;  from 1987 to 1989,
he was Capital  Markets  Advisor to the United States  Agency for  International
Development;  and from  1984 to 1987 he was an  Associate  with  Drexel  Burnham
Lambert in New York.  Mr.  Brewer  holds an M.B.A.  in Finance from the Graduate
School of Business at Columbia University, and a B.A. in Economics and Political
Science from Colgate University.

     Robert D. Pedersen is Senior Vice-President - Leasing Group 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.  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 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.  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 business is 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 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 business is
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  business is 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).  Through  December 31, 2002, he was a director of TGH and TL. 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.


Committees

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

     Equipment Investment Committee.  The Equipment Investment Committee 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.

     Additionally,  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 Partner.  The members of the audit committee are James E.
Hoelter, Neil I. Jowell and Harold J. Samson.

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, 2003:
<TABLE>
<CAPTION>

                                                                     Number
                     Name of Beneficial Owner                       Of Units      % All Units
                     ------------------------                       --------      -----------
<S>                 <C>                                              <C>            <C>
                     James E. Hoelter.......................          2,500          0.0421%
                     John A. Maccarone......................          2,520          0.0425%
                     Harold Samson..........................          2,500          0.0421%
                     Anthony C. Sowry.......................            274          0.0046%
                                                                      -----          -------

                     Directors, Officers and Management
                        as a Group..........................          7,794          0.1313%
                                                                      =====          =======
</TABLE>

(c)       Changes in control.

          Inapplicable.

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, 2002 and 2001, due from affiliates, net, is comprised of:


                                                              2002         2001
                                                              ----         ----
                Due from affiliates:
                   Due from TEM....................           $194        $ 502
                                                               ---          ---

                Due to affiliates:
                   Due to TFS......................             56           25
                   Due to TCC......................             16           22
                   Due to TL.......................              1            1
                                                               ---          ---
                                                                73           48
                                                               ---          ---

                Due from affiliates, net                      $121        $ 454
                                                               ===          ===

     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,  the Registrant paid or will pay the following  amounts to the
     General Partners:

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

                                        2002              2001              2000
                                        ----              ----              ----

                  TEM.............      $  -               $32              $239
                                          --                --               ---


     Management fees in connection with the operations of the Registrant:

                                        2002              2001              2000
                                        ----              ----              ----

                  TEM.............      $698            $  886            $1,122
                  TFS.............       147               240               282
                                         ---             -----             -----

                  Total...........      $845            $1,126            $1,404
                                         ===             =====             =====

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

                                        2002              2001              2000
                                        ----              ----              ----

                  TEM.............      $436              $529              $641
                  TFS.............        67                76                95
                                         ---               ---               ---

                  Total...........      $503              $605              $736
                                         ===               ===               ===


     The General Partners were entitled to acquire  containers in their own name
     and hold title on a  temporary  basis for the purpose of  facilitating  the
     acquisition of such containers for the  Partnership.  The containers  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.
<PAGE>

(b)  Certain Business Relationships.

     Inapplicable.

(c)  Indebtedness of Management

     Inapplicable.

(d)  Transactions with Promoters

     Inapplicable.

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


ITEM 14. CONTROLS AND PROCEDURES

Based on an evaluation of the Partnership's  disclosure  controls and procedures
(as defined in Rules 13a-14 and 15d-14 of the  Securities  Exchange Act of 1934)
conducted  within  ninety days of the filing date of this  report,  the managing
general partner's  principal  executive officer and principal  financial officer
have found those  controls and  procedures to be  effective.  There have been no
significant  changes in the Partnership's  internal controls or in other factors
that could  significantly  affect these controls subsequent to the date of their
evaluation   including  any  corrective   actions  with  regard  to  significant
deficiencies and material weaknesses.


                                     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, 2002 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 99.1 and 99.2  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.

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

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

(b)     During the year ended 2002, 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  14,  2003,  we  reported  on the  balance  sheets of
Textainer  Equipment Income Fund III, L.P. (the  Partnership) as of December 31,
2002 and 2001, and the related  statements of operations,  partners' capital and
cash flows for each of the years in the  three-year  period  ended  December 31,
2002,  which are included in the 2002 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 14, 2003


<PAGE>
<TABLE>
<CAPTION>

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

Schedule II - Valuation and Qualifying Accounts

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

                                                            Charged                                      Balance
                                         Balance at         to Costs       Charged                       at End
                                         Beginning            and          to Other                        of
                                         of Period          Expenses       Accounts    Deduction         Period
                                         ----------         --------       --------    ---------         -------
<S>                                      <C>                <C>            <C>           <C>             <C>
For the year ended December 31, 2002:

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

Accrued recovery costs                       $ 194            $  90         $    -        $ (156)         $ 128
                                               ---              ---           ----          ----            ---

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 recovery costs                       $ 193            $  94         $    -        $  (93)         $ 194
                                               ---              ---           ----          ----            ---

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

For the year ended December 31, 2000:

Allowance for
  doubtful accounts                          $ 756            $ (23)        $    -        $ (268)         $ 465
                                               ---              ---           ----          ----            ---

Accrued recovery costs                       $ 165            $ 119         $    -        $  (91)         $ 193
                                               ---              ---           ----          ----            ---

Accrued damage protection
  plan costs                                 $ 436            $ 331         $    -        $ (488)         $ 279
                                               ---              ---           ----          ----            ---

</TABLE>


<PAGE>


                                   SIGNATURES
<TABLE>
<CAPTION>


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 26, 2003

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>


___________________________________              Chief Financial Officer, Senior              March 26, 2003
Ernest J. Furtado                                Vice President, Secretary and
                                                 Director (Chief Financial and
                                                 Principal Accounting Officer)





___________________________________              President and Director                       March 26, 2003
John A. Maccarone




___________________________________              Chairman of the Board and Director           March 26, 2003
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 26, 2003

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 26, 2003
Ernest J. Furtado                                Vice President, Secretary and
                                                 Director (Chief Financial and
                                                 Principal Accounting Officer)



/s/ John A. Maccarone
_________________________________                President and Director                       March 26, 2003
John A. Maccarone


/s/ Neil I. Jowell
_________________________________                Chairman of the Board and Director           March 26, 2003
Neil I. Jowell
</TABLE>

<PAGE>


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  annual 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 annual report;

3.    Based  on  my  knowledge,  the  financial statements, and  other financial
      information included in this annual 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 annual
      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-14 and 15d-14) for the registrant and we
      have:

      a.)   designed  such disclosure  controls  and  procedures 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 as of a date within 90 days  prior to the filing date
            of this annual report ( the "Evaluation Date"); and

      c.)   presented   in  this  annual  report   our  conclusions  about   the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most  recent  evaluation,  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 in  the design or operation of internal
            controls which could  adversely affect the  registrant's  ability to
            record,  process,  summarize  and report  financial  data  and  have
            identified  for the registrant's  auditors any  material  weaknesses
            in internal controls ; and

      b.)   any  fraud,  whether  or  not material,  that involves management or
            other  employees who have a  significant  role  in the  registrant's
            internal controls; and

6.    The registrant's  other certifying  officers  and I have indicated in this
      annual report whether there were significant  changes in internal controls
      or in  other  factors that  could significantly affect  internal  controls
      subsequent  to  the date  of our most  recent  evaluation,  including  any
      corrective actions with  regard to  significant  deficiencies and material
      weaknesses.


March 26, 2003

                                           /s/ John A. Maccarone
                                           __________________________________
                                           John A. Maccarone
                                           President and Director of TFS



<PAGE>


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  annual 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 annual report;

3.    Based  on  my  knowledge,  the  financial statements, and  other financial
      information included in this annual 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 annual
      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-14 and 15d-14) for the registrant and we
      have:

      a.)   designed  such disclosure  controls  and  procedures 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 as of a date within 90 days  prior to the filing date
            of this annual report ( the "Evaluation Date"); and

      c.)   presented   in  this  annual  report   our  conclusions  about   the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officers and I have disclosed, based on
      our most  recent  evaluation,  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 in  the design or operation of internal
            controls which could  adversely affect the  registrant's  ability to
            record,  process,  summarize  and report  financial  data  and  have
            identified  for the registrant's  auditors any  material  weaknesses
            in internal controls ; and

      b.)   any  fraud,  whether  or  not material,  that involves management or
            other  employees who have a  significant  role  in the  registrant's
            internal controls; and

6.    The registrant's  other certifying  officers  and I have indicated in this
      annual report whether there were significant  changes in internal controls
      or in  other  factors that  could significantly affect  internal  controls
      subsequent  to  the date  of our most  recent  evaluation,  including  any
      corrective actions with  regard to  significant  deficiencies and material
      weaknesses.

March 26, 2003

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


<PAGE>


                                  EXHIBIT 99.1



                            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, 2002, as
filed on March  26,  2003  with the  Securities  and  Exchange  Commission  (the
"Report"),  I, John A.  Maccarone,  the  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 26, 2003



                                        By /s/ John A. Maccarone
                                           __________________________________
                                           John A. Maccarone
                                           President and Director of TFS

<PAGE>



                                  EXHIBIT 99.2



                            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, 2002, as
filed on March  26,  2003  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 26, 2003



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